Summary

lululemon has not stopped growing, but the market is repricing it from a “growth stock” into a possible “value stock.” It is now the world’s third-largest single sportswear brand with more than $10B in revenue. In fiscal Q1 2025, ended May 4, revenue rose 7% year over year to $2.37B, while inventory rose 23%, net income fell 2.1%, Americas comparable-store sales declined 2%, and China comparable-store growth slowed from 26% to 7%; the stock fell from an all-time high of roughly $500 to below $200. Zheng Haorong stressed that the accurate description is: “Growth has peaked, but it will still grow.” What matters to the market is whether it shifts from growth stock to value stock.
lululemon’s structural problem is that a women’s brand reaching $10B can neither remain confined to its original customer base nor preserve its identity easily while expanding. Zheng estimates women’s apparel contributes about $6.5B; menswear, after roughly 10 years, still accounts for about 25%; footwear and other categories contribute roughly 13%–14%. In practice, growth depends on adding categories, customers, and regions, though the company could still focus deeply on 32-year-old women and pursue an ultra-specialized positioning. Chip Wilson’s warning was: “When everyone is your customer, you have no customers.” Zheng argues that Alo’s positioning as “the daughter of a lululemon user,” alongside identities such as the IT Girl, shows how the brand equity and identity built during lulu’s Super Girls era may be weakening.
Alo Yoga and Vuori are not merely sharing in market growth; they are taking customers directly in a market lululemon already spent years educating. Both open North American stores near lulu locations, and Zheng believes they may use the same playbook overseas, though China remains an open question. If half of their combined revenue came from lulu, that would equal roughly 15% of lulu’s revenue. Alo grew from about $200M in 2020 to roughly $1.5B, powered mainly by TikTok, Instagram, celebrities, influencers, and visual design; Vuori uses communities, sporting contexts, and relatively measured expansion to replicate lulu’s early method of building connections.
Under Armour shows the most dangerous path after a vertical brand fails to expand, and lululemon has not reached that point. Under Armour expanded from moisture-wicking tops into basketball, running, women’s apparel, and overseas markets, eventually becoming “a brand that has Curry, but only Curry.” Inventory, discounting, outlet stores, falling profits, and brand downgrading formed a vicious cycle. The episode cited prior-year revenue of about $5.2B, down 9%, a loss of roughly $200M, and a stock decline from the $50s to the $6–$7 range. lulu has stronger menswear credibility, non-U.S. growth, and management stability, but “Under Armour wanted to improve too badly” remains a direct warning; the episode also mentioned its founder stepping away from the front line, an SEC investigation, and possible sales inflation.
Nike and adidas have crossed multiple cycles because they first captured the sports-media windfall and then built barriers through footwear. Both locked up sports and media resources during the television, professional-sports, and globalization boom, while regional markets such as China helped smooth the cycle; footwear remains the core category. Zheng gave no specific data but judged that footwear must account for more than half of both companies’ revenue. “Shoes and apparel—the core is shoes,” because footwear wears out faster, demands more technical expertise, and allows decades-old assets such as Air Force 1, AJ 1, Dunk, and Samba to be repeatedly reactivated.
The opportunity for running-shoe upstarts comes from a three-way shift in demographics, use cases, and identity, but rapid growth is already being tested against profitability. Aging populations, post-pandemic health demand, and comfortable commuting are driving a shift toward running and running shoes; the episode highlighted On’s CloudTec, HOKA’s thick cushioning, and distinctive designs as key selling points in premium running footwear. HOKA leans professional and trail-oriented, while On functions more as an elite identity marker in China and emphasizes business settings, with prices that cannot fall below $150. Four days after recording, On disclosed that revenue was still rising but the company had begun to lose money—a reminder that brand expansion does not automatically become profit.
The real moat for Chinese sportswear and outdoor brands is not “cheap substitution,” but supply chains, Asian fits, channel efficiency, and the willingness to reinvest profits into the brand. Pelliot generated RMB1.766B in 2024 revenue, including RMB323M from Douyin; Kailas used nearly 20 years of technical accumulation, races, and hit products to raise prices, though it also faces potential customer churn. Zheng believes domestic brands encounter the choice between category expansion and overseas growth at around RMB1B in revenue, while a sports brand needs “20 or 30 years—otherwise you have no right to say you’ve truly done it well.” Staying alive long enough to catch the next wave is what earns a seat at the table.

Deep dive

1. lululemon Has Lost the Growth Narrative, Not Its Scale

The financial signals listed by Mahua are already clear enough: in fiscal Q1 2025, ended May 4, lululemon revenue rose 7% year over year to $2.37B, while inventory rose 23% and net income fell 2.1%—the first decline in net income since 2021.
More important is the quality of growth: the Americas, which contribute more than 70% of revenue, saw comparable-store sales fall 2%; China, its largest overseas market, was still growing, but comparable-store growth fell from 26% a year earlier to 7%. The data show pressure on existing-store productivity, but they do not by themselves prove that all growth is coming from new stores.
The stock priced in the narrative shift early, falling from an all-time high of about $500 to below $200, a roughly 62-month low. A Jefferies analyst even said he saw “signs of decay.” Zheng Haorong, however, stressed that the accurate formulation is: “Growth has peaked, but it will still grow.”
lulu suffered five or six near-halving declines, or at least 40% drawdowns, over the past decade and recovered each time. The market’s real question now is whether it can prove its growth credentials again or permanently enter the Nike- and adidas-style value-stock framework.

2. The Ceiling for a $10B Women’s Brand Is Harder Than the Yoga-Pants War

Zheng Haorong believes lulu cannot be analyzed simply as a sportswear company: “At its core, it is a brand that started in women’s apparel.” A women’s brand founded around 1997 or 1998 and reaching $10B in roughly 25 years is extraordinarily rare in its own right.
By his estimate, lulu’s women’s apparel generates about $6.5B a year. Menswear, after roughly 10 years of investment, accounts for around 25% and may top out at 30%; footwear and other categories contribute roughly 13%–14%, with a possible ceiling of 15%. New categories therefore have little room to replicate the scale of women’s apparel independently.
Women’s apparel offers a high ceiling and fast scale-up, but it is also more exposed to rapidly changing trends and volatility. lulu filled the gap between fast fashion and premium brands, but once a women’s brand has moved beyond the roughly $5B scale reached by Michael Kors at its peak, there is no established path to copy on the way up.

3. The Super Girls’ Era Windfall Is Becoming a Generational Liability

When Chip Wilson founded the company, he targeted “Super Girls”—well-educated, high-income women aged 24 to 35 who loved sports. Twenty-five years later, these women still exist, but social attitudes and the way identity is expressed have changed; the brand’s precise positioning then no longer automatically maps onto young women today.
Zheng quoted a line that is partly a joke but highly accurate: “Alo’s positioning is that it is the daughter of a lululemon user.” Alo repackages the same market through labels such as IT Girl and “white girl,” while lulu keeps adding categories and increasingly resembles a traditional large corporation. Zheng believes that may gradually weaken its identity-based appeal.
China once carried part of this windfall: lulu entered the country around 2013 or 2014, when the economy was rising and consumer sentiment was relatively optimistic. As conditions have changed, whether female consumers still want to identify with that brand mythology is less certain. Zheng’s view is that there may be “some doubt or weakening.”

4. Without Expansion, Growth Stalls; With Expansion, the Brand Dilutes

Since leaving management, Chip Wilson has repeatedly criticized his successors for expanding the customer base and product range. He left behind two sharp judgments: “You could put a new refrigerator in charge of the company and it would still deliver today’s results,” and “When everyone is your customer, you have no customers.”
He once said that Super Girls had boyfriends and mothers around them, but “we still design products only for those 32-year-old women.” Zheng preserves the necessary uncertainty: no one knows how Wilson would run the company in a parallel universe, and his influence at Amer Sports can only be observed indirectly through its brands.
Real-world examples do not support the idea that a brand can remain vertical while growing rapidly. Brooks and Saucony stayed focused on running; the former generates roughly $1B–$1.5B a year, while the latter may have less than $1B in global revenue. They can do well, but they offer little of the high growth expected of a public company.
Without Wall Street pressure, lulu could focus deeply on 32-year-old women, pursue extreme specialization, control DTC costs, and continue raising its premium. But moving further up would bring it close to luxury and status symbolism. The post-IPO reality has been menswear, footwear, down jackets, and even basketball fits—a “very traditional footwear-and-apparel product lineup.”

5. Under Armour Proves That Trying Too Hard to Improve Can Create a Death Spiral

Under Armour and lulu are near mirror images: one started with tops and male fitness, the other with pants and women’s yoga. The former expanded into football, basketball, running, and women’s apparel; the latter expanded into fitness, running, golf, tennis, and menswear.
Zheng’s summary of Under Armour is that it “wanted to improve too badly.” It entered Nike’s strongest North American categories—basketball and running—at the same time. Its early products were not poorly regarded, but the company could not keep iterating. In basketball, “it has Curry, but it only has Curry”; women’s apparel and overseas expansion failed to fill the gap.
After 2015 and 2016, the company entered the worst possible cycle: rising inventory led to discounting and outlet sales; falling profits lowered the brand’s perceived tier; eventually it was unable to capture the athleisure and outdoor windfalls. Founder Kevin Plank stepped away from the front line, while an SEC investigation and possible sales inflation further drained the company.
The episode cited prior-year revenue of about $5.2B, down 9%, a loss of roughly $200M, and a stock decline from the $50s to the $6–$7 range. lulu currently benefits from stronger menswear credibility, growth in China, and a relatively stable management team, but avoiding Under Armour’s fate ultimately depends on whether new categories can truly break through.

6. Nike and adidas Secured Half a Century of Media Resources First

Nike and adidas also started in single sports, but they caught the window in the 1960s through the 1980s when professional sports, television broadcasting, and global media were taking off. Zheng believes their products were not always vastly superior to competitors; the decisive advantage was how they used “sports resources and media resources.”
Early challenger Reebok entered the U.S. through women’s aerobics shoes, expanded into basketball, and at one point threatened the duopoly before being acquired by adidas. Under Armour and lulu were later viewed as challengers, but over the past 30 years only Nike and adidas have consistently produced a global revenue contest.
Once a leading position is established, scale and brand effects reinforce each other. Broad product lines can span category cycles, while decades of product archives can be reactivated repeatedly; Asian and Chinese markets can provide growth when North America or Europe is under pressure.
Zheng still urged respect for Nike’s scale: over the past decade it grew from roughly $30B to about $50B. “At a $30B scale, to make another $20B” is a fundamentally different challenge from generating double-digit growth off a small base as a new brand.

7. “The Core of Shoes and Apparel Is Shoes,” and That Is the Duopoly’s Deepest Asset

Zheng gave no specific data but judged that footwear contributes more than half of both Nike’s and adidas’s revenue. Shoes wear out more quickly and demand more from fit, lasts, technical attributes, abrasion resistance, and compatibility with the human body. Sportswear as a whole may not be a high-tech industry, but footwear creates a stronger professional barrier than apparel.
Building expertise through shoes and then radiating into apparel is therefore smoother than expanding from clothing into shoes. Apparel is more exposed to fashion cycles, which is a structural weakness for Under Armour and lulu. When investors assess a Nike or adidas recovery, their first instinct is still to look at new-shoe performance.
Both companies also have archives that can be monetized repeatedly: Nike’s Air Force 1, AJ 1, and Dunk, and adidas’s Samba and subsequent retro styles all date back decades. Old shoes can be refreshed as fashion, but technical running shoes still need new materials, new midsoles, and clear iteration; otherwise brand aging becomes visible.
Their recent crises also came from “selling until the coffin was in sight”: adidas pushed Boost and Yeezy until the partnership collapsed, while Nike kept selling Dunk and related lines until consumers tired and inventory piled up. Compared with apparel-first challengers, Anta’s multi-brand acquisition strategy may give it better odds, in Zheng’s view.

8. Alo Sells Visual Freshness, Not Functionality It Actively Narrates

Mahua describes Alo as a brand targeting the American “white girl,” with roughly 130 stores worldwide and many locations close to lulu stores. Zheng’s store experience is that Alo’s men’s and women’s assortments are now relatively balanced, but its colors and styles contrast sharply with lulu: “You don’t get an obvious basic-style feeling.”
The growth engine is heavily social. Alo was founded in 2007 and still generated only about $200M in revenue in 2020; it then used TikTok, Instagram, celebrities, and influencers to surge to roughly $1.5B. Its CMO or another senior executive once described it as “a social-media brand.”
Zheng could barely recall any functional benefits Alo actively communicates: “Its functional marketing usually appears in comment-section discussions, not in its proactive communications.” In China, Mahua compares it to brands built through Xiaohongshu. The advantage is distinctiveness and attention; the risk is polarized views on fabric and tailoring.

9. Vuori Is Taking a More Stable Route Through Community and Restraint

Vuori entered through men’s yoga, surfing, and shorts with a beach-sports sensibility. Early on, it was closer to lulu than Alo: it built connections through sporting contexts and communities, while its events extended beyond exercise into culture and entertainment.
It launched womenswear in 2018 and brought the category to 50% of sales in just 3 years. Outside estimates put current revenue at roughly $1B; it completed an $825M funding round at a valuation of about $5.5B at the end of last year. Zheng is more positive on its pace of entry into China, store strategy, and restrained positioning, and expects it to “do better than Alo in the future.”

10. On and HOKA Are Both Riding Running, Comfort, and Identity Upgrades

Rising demand for running is not only about more runners; it also includes a shift from everyday footwear into running shoes. Zheng’s core context is aging populations: compared with basketball, running has a lower barrier to entry and better matches consumers’ demand for health and immediate participation in developed markets and China.
On and HOKA built recognition through designs once dismissed as “ugly shoes.” On’s perforated sole and HOKA’s extremely thick midsole were initially criticized, but “ugly shoes have become too popular—the uglier, the hotter.” Cushioning, rebound, and protection serve long-distance running while also meeting post-pandemic demand for comfort during commuting, long periods of standing, and walking.
Their professional roots still differ. HOKA accompanied the rise of European trail running before expanding into road running through products such as Bondi and Clifton. On began with niche athletes and communities and only introduced Federer after reaching a broader audience, rather than relying on a major celebrity from day one. Zheng also sees On as having something close to Patagonia’s identity tone in North America and China.
In China, On has a stronger status dimension, actively emphasizes business settings, and insists that prices “cannot fall below $150.” Zheng cited “Zhang Lei wearing On” and “Hillhouse invested in it” as examples of the elite association he observes. He has not seriously studied when that consensus formed, only judging that it emerged over the 2–3 years after the pandemic.

11. ASICS’s Comeback Came From a Two-Track Reset in 2019

Zheng believes ASICS had no mysterious formula; the turning point was 2019. After its traditional flagship KAYANO began to look dated, the company launched racing and cushioning lines such as METASPEED and rebuilt its technical reputation through major marathons in Europe, the United States, and Japan, as well as performances by elite athletes.
That year, ASICS also restructured, creating a “sport style” division and pushing Onitsuka Tiger and other businesses globally through DTC. Collaborations, runway shows, designers, and influencers were not new, but after a brand has gone through a trough and disappeared from view, reappearing can itself restore freshness.
The momentum first developed in Europe, the United States, and Japan, then reached China and Southeast Asia in 2023 and 2024. Prices on secondhand markets such as StockX also reflected the fashion heat. Zheng puts the scale of the move at roughly 800%–900% above pre-pandemic levels for the stock: “This was an overlooked brand.”

12. Decentralization Lets Brands “Rule for 3–5 Years at a Time”

Zheng splits sports brands into two parts: materials, design, and supply chains make up technical functionality; sports resources and distribution channels make up the brand. The biggest change today is that both celebrities and media are decentralizing. Traditional one-to-all communication is no longer controlled by a small number of television networks and elite events.
The relationship between people and sports is also shifting from watching toward participation. Basketball depends heavily on viewing, while running and similar activities depend more on personal involvement. That is why lulu looks for coaches and community ambassadors, while running-shoe brands look for ordinary runners: these dispersed KOLs are better suited to influencing participation.
Marketing spending has not disappeared. It accounts for about 5% of lulu’s revenue, 8%–10% at Nike, and perhaps 12%–13% at adidas. Top-tier celebrities still “influence more people, faster,” but resources are more fragmented, leaving smaller brands temporary opportunities to become the center of attention.
In previous years, Nike and adidas generated roughly $50B and $25B in revenue, with a group of companies below them at around $10B. That structure is being slowly eroded, but not by a single new giant. Zheng expects brands to “rule for 3–5 years at a time” more often and does not rule out incumbents using acquisitions defensively.

13. Lifestyle Expands the Audience; Professionalism Remains the Brand’s Root

After 2015, athleisure became mainstream, and the best-selling products were often sports-lifestyle products. Sports-lifestyle brands such as lulu need to speak to non-sporting contexts to enter commuting, business, and everyday dressing.
But from 2023 and 2024 onward, new brands broadly began strengthening professional-sports communication again, because “every brand knows that professional attributes are the only root they have.” Trends may pass; professional disciplines, athletes, events, and technical narratives maintain long-term credibility. Arc’teryx, On, Salomon, and HOKA are all reinforcing those stories.
adidas offers the clearest narrative experiment, replacing its long-running slogan “Impossible Is Nothing” with “You Got This,” translated in Chinese first as “Like it for no reason” and later adjusted to “You can do it.” Zheng speculates that adidas may be betting on younger people moving from competition and anxiety toward personal pleasure and well-being, but explicitly says, “I’m not sure yet.” He is also unsure whether the Chinese slogan changed this year or last year.
Mahua asked whether this means the two giants are moving in different directions. Zheng believes that is possible, but adidas will not leave “professional sports plus sports fashion.” Nike will continue to tell stories about competition, victory, and athletes; its “Just Do It,” used since 1988, is unlikely to change.

14. Chinese Brands Are Using Fit, Channels, and Price Bands to Seize an Opening

Chinese brands’ underlying advantages are supply chains, manufacturing technology, costs, and shorter response chains; outdoor products are naturally suited to functional positioning. Asian fits also matter: overseas brands often have problems such as sleeve length. Mahua cited MAIA ACTIVE, which also emphasized Asian fits when it started.
Pelliot turned Douyin efficiency into a growth engine. It generated RMB1.766B in total revenue in 2024, including RMB323M from Douyin. Over the past 3 years, revenue from that channel rose from about RMB55M to RMB170M and then RMB323M, nearly doubling consecutively.
The brand filled the price band left open after Kailas raised prices and overseas brands became more expensive. It sits slightly above white-label and mass-market products but below premium outdoor brands. Zheng also listed Camel as a brand occupying this position: “When others leave a price band open, you have to take it.”
Zheng sees UPPERVOID as relatively expensive, with the feel of a designer brand and an emphasis on utility, design, and function. But standing at a high price point from day one is risky for a new brand. Kailas succeeded because of nearly 20 years of technical accumulation, supported by hit products such as skin-feel pieces and the Mont X shell.

15. The Real Growth Trap First Requires a Brand to Survive Long Enough to Have Choices

Women’s sports and outdoor apparel are easier to scale than basketball, tennis, or swimming because the former can ultimately enter the vast women’s styling market, while the latter are harder to move beyond a single sporting context. Outdoor apparel can also replace insulated, commuting, and business outerwear. Traditional vertical brands usually encounter a scale barrier around RMB1B; tennis and golf equipment can be “small and beautiful,” but cannot easily replicate that volume.
Price increases are first about profit, then about using profit to fund marketing, events, communities, services, and brand building. Kailas could “go high and hard” because higher-spending customers were entering the market and its technical story was strong enough to support the pricing. It must accept some churn among older customers to capture the fleeting outdoor window.
Zheng’s counterintuitive judgment is: “Everyone wants to enter the growth trap.” lulu only truly had the right to confront the choice of expanding its customer base once it reached about $1B; Chinese entrepreneurial brands face the decision between category expansion, overseas growth, and staying vertical at around RMB1B. Pelliot is approaching RMB2B and has only just reached that crossroads.
Going overseas may still mean export trade rather than building a brand with physical presence and mid-to-high-end pricing power. Entrepreneurs can choose niche activities such as swimming, fishing, and lure fishing; niche audiences such as IT Girls; or price bands abandoned by large brands. But the prerequisite is survival.
The final measure is time. Among China’s 4 listed sportswear companies—Li-Ning, Anta, 361 Degrees, and Xtep—2 have been around for roughly 30 years and the other 2 for more than 20. Zheng said plainly that a sports brand with “no 20 or 30 years has no right to say it has truly done well”; anyone claiming to blow everything up in 2 or 3 years and span multiple categories is “either a liar or something.”
The biggest uncertainty remains the zeitgeist. Nike has spent 40 or 50 years talking about competition and victory, but there is no answer as to whether young people will continue to accept that message. If adidas’s bet on pleasure and low-pressure narratives works, the long-stable $50B, $25B, and $10B structure could begin to loosen at a deeper level.

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