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Lululemon and Canada Goose Have an American Gen Z Problem

Once-defining Canadian fashion exports are fighting softer U.S. demand, younger rivals and a generation less impressed by their old status symbols.

Lululemon turned everyday yoga wear into a status symbol. Canada Goose did the same for winter coats. Now, two of Canada’s best-known fashion exports face a test of their staying power, particularly in the U.S. Both companies’ stock prices are down more than 80 percent from their peaks. ALO Yoga, Vuori and other athleisure rivals are challenging Lululemon, while Canada Goose is trying to stretch its appeal beyond the parka. Their competition for American shoppers is also unfolding amid an escalating U.S.–Canada trade dispute. U.S. duties imposed in August hit Canada Goose’s Canadian-made apparel, while Lululemon’s largely Asian-made products face other U.S. import tariffs.

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Their U.S. sales were already under pressure before the latest tariff escalation. In the most recent quarter ended August, Lululemon’s global sales fell 4 percent, weighed down by an 8 percent decline in the U.S. On the Sept. 3 earnings call, CFO Meghan Frank reported a roughly 20 percent drop in leggings sales and acknowledged “pressure on brand heat and sentiment.”

Canada Goose is weathering a similar slowdown. In its April–June quarter, U.S. revenue dropped 19 percent year-over-year, and global comparable sales fell 3.2 percent, even as overall global sales grew 10.3 percent.

For both brands, the existential question is whether the products that captivated millennials can retain their cachet with a new........

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