On a slow day last winter, a couple of employees at Lululemon’s Hyde Park location in Chicago were chatting when two women walked in.

“Oh, this is off-brand,” one of the women said to the other after being greeted by the store’s staff, the employees recalled. Both customers were white; all of the store’s sales associates were Black.

It wasn’t the first time Hyde Park employees had been told they didn’t match the yoga-inspired apparel brand’s aesthetic. According to the store’s general manager, Michael “Muffy” Collins, Lululemon’s corporate leadership, too, resisted the idea of a team of Black associates staffing its location on Chicago’s South Side.

Collins pitched the concept to reflect the brand’s first store in the area located just south of Chicago’s historic “Black Belt,” a wide swath of the city where Black residents were once confined during segregation. But he said he was told repeatedly by regional managers and executives at Lululemon’s corporate office in Vancouver to hire white and Asian sales associates, to reflect the racial makeup of the nearby University of Chicago.

Collins pressed ahead with his plan. After opening in November 2021, the store received compliments for its customer service and sales internally — right up until it closed in August 2023 when most of the team was laid off.

At least six of the store’s 16 former employees have since filed complaints alleging racial discrimination with the Equal Employment Opportunity Commission, a US regulatory agency that investigates workplace discrimination, BoF has learned.

What happened at the Chicago store is not an isolated incident, however. Over the past year, BoF has interviewed 14 current and former Lululemon employees, including sales associates, global ambassadors and corporate managers in the US and Canada, and reviewed multiple written complaints to the EEOC and the company’s people and culture team. Taken together, these accounts describe a corporate culture that is unwelcoming of Black people and leaders regularly use stereotypes to define and ostracise minority employees, who face barriers to career advancement that don’t seem to apply to white colleagues. Staffers who drew the company’s attention to these issues told BoF they were passed over for promotions, reprimanded, and, in several cases, had their employment terminated. (Global ambassadors are influencers such as yoga instructors and professional athletes who help promote the Lululemon brand and endorse its products.)

In response to BoF’s request for comment, a Lululemon spokesperson said the company takes the allegations “very seriously” and that they “do not reflect the culture we have built and worked to maintain across Lululemon.”

In June 2020, Lululemon joined the chorus of corporations promising to more actively improve their internal diversity and create a more equitable playing field for minorities more broadly. But most of the people who spoke with BoF said the situation had only deteriorated since then.

Just under a month after George Floyd was murdered by police officers in Minneapolis, the company issued a statement titled “Lululemon commits to inclusion, diversity, equity, and action.” The brand pledged to hire a head of diversity, equity and inclusion, partner with colleges serving underrepresented groups and launch an internship programme aimed at increasing minority representation, among other initiatives.

The cornerstone of Lululemon’s effort was a new department called “Inclusion Diversity, Equity and Action,” known internally as IDEA. Formally launched in November 2020, IDEA was tasked with increasing staff diversity, expanding training and development around diversity and inclusion, and creating “ongoing dialogue” between underrepresented employees and Lululemon chief executive Calvin McDonald. Stacia Jones, a corporate lawyer who previously headed diversity efforts at Abercrombie & Fitch, was hired to lead a team of about 20, with an annual budget of $5 million.

The experience of the employees who spoke with BoF encapsulates some minorities’ biggest fears regarding how the fashion industry’s diversity efforts would play out after the spotlight on the Black Lives Matter movement died down. Rather than providing a platform for minority employees, those working in or alongside the IDEA department risked being ostracised if they criticised the company’s approach to race, several former Lululemon employees told BoF.

“IDEA is a wave in the company and … we just need to ride the wave until there is something else,” Miya Dotson, a former IDEA manager, recalls her supervisor telling her before she joined the team.

Konesha Armstrong, the Hyde Park’s store’s operations lead said her experience working at Lululemon ultimately amounted to a game of “smoke and mirrors.”

“[Lululemon] makes you feel like it’s going to be supportive and you’re not going to be a part of the history of micro aggressive behaviour and it just isn’t the case,” she told BoF.

All told, the rhetoric and promises of 2020 didn’t yield much in the way of long-lasting progress at Lululemon. What was left, in the end, was an overriding mission to protect the company’s image first, ensure minority employees’ wellbeing and career advancement second, if at all, according to the employee accounts.

The Lululemon Store on Chicago’s South Side

Since its founding in 1998, Lululemon has alternately embraced and struggled to shake the idea that it is a brand built to cater to a certain customer — mostly white, thin, upper-middle class women. The brand’s founder, Chip Wilson, repeatedly faced scrutiny for anti-Asian and fat-phobic comments. He stepped down as board chairman in 2013, leaving the board entirely in 2015. Lululemon’s management has mostly avoided public controversy since then.

As the Hyde Park store prepared to open in the autumn of 2021, Lululemon was in the midst of a period of explosive growth. The brand’s stretchy pants and tops proved a perfect match for the comfort-first, work-from-home era ushered in by the pandemic. Revenue shot up 42 percent to $6.3 billion in its fiscal year ending in January 2022.

The Hyde Park store was one of 85 pop-up stores the company operated in 2022 — all meant to test the brand’s appeal and growth prospects in certain underserved markets.

However, tensions were high surrounding the brand’s arrival on the South Side.

A headline in The Chicago Maroon, the University of Chicago’s student newspaper, had bemoaned “The Lululemonification of Hyde Park,” casting the store as the latest sign of the neighbourhood’s gentrification. Though Black residents made up about one quarter of Hyde Park’s population, the South Side is 73 percent Black, and some locals feared that the arrival of affluent, mostly white residents, and businesses catering to them, would displace Black and low-income residents.

Collins was hopeful his idea for an all-Black store team could help build a more authentic connection between the brand and the neighbourhood. It was why he applied for the job in the first place, “to offer Lululemon a different point of view,” he told BoF.

The store seemed like a success, at least to its employees. The location grossed $1.9 million in sales in the first 18 or so months, a “win” given the challenging economic climate on Chicago’s South Side, Collins and multiple staffers told BoF.

So it came as a surprise to Collins this past May when he learned the store would be shut down. Collins said Lululemon told him the store missed its revenue target of $2.4 million. He and five of the store’s former staffers said it was the first time they had heard that figure. (The average Lululemon store generates $5.9 million in annual sales, according to an estimate provided to BoF by BMO Capital Markets. However, as a “create and grow” outpost, Hyde Park’s target would have been much lower.)

Lululemon typically opens dozens of pop-up stores annually to test new markets; not all make it to permanent status. For instance, last year the company shuttered 20 percent of its pop-up locations.

Among the allegations in EEOC complaints viewed by BoF were that regional managers regularly referred to the Black staffers as “you people” and the company denied Black employees job opportunities in favour of their often less-qualified white counterparts. Collins — who held management roles at athletic and sporting goods retailers Stadium Goods, Champion and DTLR — told BoF it took eight interview rounds to convince Lululemon he was qualified to run a store. Meanwhile, Collins says that a white manager at a location in Chicago’s more affluent Lincoln Park neighbourhood told him that he landed his role with two interviews and no retail experience. (BoF was not able to independently verify this claim.)

In his EEOC complaint, Collins also alleged that the company regularly lied to Black employees about the availability of store roles. He also claimed that Black employees who worked at other locations were told that they would “be a better fit at the Hyde Park location.” In most cases, Collins told BoF, he wasn’t authorised to add additional staffers at the time and he believes the intent was to force those employees out of the company.

Code-Switching Required

Adetimisola “Timi” Ogundipe, who worked as a talent manager at Lululemon from December 2021 to August 2022, told BoF he believes he was terminated after filing a racial discrimination claim with Lululemon’s HR department.

Ogundipe, who is Black, said he believes he was targeted by managers for not “code-switching” — or adjusting his language, syntax and grammar to fit in with white colleagues when writing emails and other correspondence.

In June 2022, he was placed on a “feedback for improvement” plan or FFI, which is Lululemon’s equivalent of a performance improvement plan.

The plan, which was viewed by BoF, stated, among other issues, that his communication lacked “clarity, consistency, professionalism and timeliness.” The examples later provided by the company to Ogundipe included emails to colleagues in which Ogundipe wrote “my bad” and “Nah.” At one point he wrote “I didn’t even peep game,” referring to something he had not observed. (The email containing that phrase was sent to another Lululemon employee, who responded in part: “Ah ok got it ... flip it back to all of us later,” they wrote.)

After receiving the improvement plan, Ogundipe submitted a complaint with the people and culture team, raising concerns that he believed racial discrimination was at play. He was told his complaint would be investigated by a “third-party investigator.” The investigation “did not substantiate” his discrimination claims, the company told him at an in-person meeting six weeks later. The following week, Ogundipe was terminated.

In his termination letter, viewed by BoF, Lululemon wrote to Ogundipe that his “belief that Lululemon has a discriminatory culture,” and his potential to share those views with job candidates rendered him unable to promote the company as “a positive place to work,” which is “critical” to his role as a recruiter.

Conflicting Missions

IDEA was created to address the sort of obstacles encountered by Ogundipe and Collins.

“We need to change behaviours both within our own walls and our collective,” McDonald, Lululemon’s CEO, wrote in a letter posted on the company’s website announcing IDEA’s launch.

The IDEA department performs most of the tasks outlined in Lululemon’s June 2020 pledge, including sponsoring internships and awarding grants. The company credits IDEA with helping to boost minority representation in its workforce (last year, 41 percent of employees were racially diverse, up 3 percent from 2021; about 27 percent of directors, defined as assistant manager and above, fall in this category).

But, according to three former employees with direct knowledge of how IDEA operates, the department also played a role in investigating and responding to internal complaints of racism.

This goes against widely held best practices because it has the potential to create conflicting motivations between supporting employees and protecting the company, according to Amber Cabral, a DEI strategist. (Cabral hasn’t worked with Lululemon and spoke broadly about how DEI departments operate.)

“DEI departments should never investigate claims of racial discrimination,” she said.

Lululemon’s protocol is for discrimination claims to be handled by employee relations, a separate division from IDEA, the company told BoF.

“We have independent and objective processes that allow our employees to raise concerns confidentially, and we immediately investigate allegations of discriminatory behaviour to take appropriate action,” a Lululemon spokesman said in an emailed statement.

However, at Lululemon, the head of employee relations and IDEA are one and the same: Jones. This dual role was formalised in May 2023, when she was named head of employee relations, policy and compliance, according to Jones’s LinkedIn profile. But employees who worked in IDEA said her department also had a hand in conducting workplace investigations prior to this year.

Before joining Lululemon, Jones spent much of her career defending Abercrombie & Fitch and other large companies against workplace discrimination suits, wage theft claims and other legal actions.

As head of IDEA, she was often dismissive of employees’ concerns or promised solutions that did not materialise, multiple current and former employees told BoF.

In February 2023, Jones made her way to Hyde Park, where the IDEA team held a Black History Month panel for employees and a few “invite-only” guests who were students at the University of Chicago, Collins said.

During the panel, Armstrong, the store’s operations lead, recounted the white shoppers’ “off-brand” comment.

Armstrong said that she later learned during a monthly “check-in” call with an IDEA manager that Jones viewed her recounting of the “off-brand” incident and other diversity challenges at the brand as distasteful.

“[They] told me it didn’t go over well with Stacia,” Armstrong said. “It felt like, if I wanted to move up in the company … that I would probably be blocked or retaliated against because it was problematic that I’m pointing out the problems in the company.”

It felt like, if I wanted to move up in the company … that I would probably be blocked or retaliated against because it was problematic that I’m pointing out the problems in the company.

—  Konesha Armstrong, former Lululemon employee

Jones took a call with Collins two weeks prior to the store’s closing where he shared his own frustrations.

“I told her, I don’t feel welcome in this company as a Black straight male,” he said. “And she just said, ‘That’s unfortunate, I hope it gets better.’”

On Aug. 10, Collins said he was asked to sign a voluntary resignation form by a people and culture manager, who told him they had been in contact with Jones. Collins told BoF he viewed the request as retaliation by the brand in response to him expressing his discomfort.

The Wrong IDEA

Dotson joined Lululemon’s brand marketing department as a consultant focused on “inclusive marketing” in October 2020, and was hired onto the IDEA team full time in April 2021.

A Black woman with an MBA from the University of Washington, Dotson said she wanted to work in a business management role, but she was encouraged to view IDEA as a stepping stone towards her long-term career goals and a way to help other minority employees.

Instead, she said the role made her intimately aware of the “extensive barriers” in the organisation which “keep down people of colour.”

In July 2022, Jones asked Dotson to accompany her to a store opening in Oakland, California. After they arrived, Dotson said the reason for the trip became clear: Jones encouraged Dotson to use the visit to “put Akilah in her place.”

“Akilah” was Akilah Cadet, an executive coach and diversity consultant who had worked with Lululemon since 2019 as a DEI consultant and brand ambassador.

A few weeks before the Oakland event, Cadet was quoted in a BoF article about the high turnover rate in senior DEI roles, saying that she had rejected an invitation to interview with Lululemon in 2020 for the IDEA chief role eventually awarded to Jones.

Lululemon “wasn’t ready for a behaviour change,” she told BoF.

She and the manager at the Oakland store had also questioned certain design elements at the location, including a mural they believed was “racially insensitive.” The mural included several abstract images, including one that showed a lighter-coloured (orange) human-like figure jumping over a darker (purple) human-like figure.

Shortly before the visit, Cadet posted to Instagram that Lululemon was using her as a “token.” In the post, Cadet said “voices” like hers were being “silenced” by the brand and that the store “doesn’t reflect the diversity, culture or community of Oakland.”

At the store, Cadet voiced her concerns directly to the IDEA team. Dotson intervened and told Cadet she was being “self-righteous.” The brand terminated Cadet’s brand ambassador contract that evening.

After that meeting, Dotson’s suspicions that she had been “tokenised” became heightened. She said felt IDEA leaders were using her identity as a Black woman to shut down talk that the brand was being discriminatory.

It was a question Dotson asked Jones directly when the two were alone that day: “Did you bring me to Oakland because I’m Black? Am I being tokenised?” To which Jones replied “Yes,” according to Dotson.

Lululemon declined BoF’s request to make Jones available for an interview. Jones did not respond to separate requests for comment.

Dotson left the trip uneasy but said it was only the beginning of her challenges with the company. In February 2023, during Black History Month, she was put on a performance improvement plan, which hinged on accusations she was “unprofessional” and “non-collaborative.”

Later that month, the brand unveiled a Black History Month campaign on Instagram, dubbed Take Space, prominently featuring Dotson, with the caption: “When we resist the pressure to shrink, we affirm ourselves and empower others.”

Dotson was let go in April.

In its statement to BoF, Lululemon said it “has made considerable progress since launching IDEA, and we are proud of the goals we have achieved, which include maintaining a continuous two-way dialogue with our people … We remain steadfast in our focus to achieve our IDEA commitments and are confident in the leadership of the IDEA team.”

What Went Wrong

DEI departments cannot turn around deeply entrenched biases within a company on their own. They need the buy-in of the CEO and all major stakeholders, including the board of directors, in order to be successful, experts say.

Unsuccessful DEI departments have several things in common: they are under-resourced, and they aren’t given much authority to create change.

IDEA fell into another common trap, where corporate DEI departments, and their leadership, serve as an extension of the existing guard, rather than unconflicted champions for underrepresented groups.

“It’s really important for a DEI leader… to advocate for folks,” said Cabral. “There’s got to be a willingness to call things out when they’re not right… Sometimes what the company wants is for this person to be a little bit more of a guard dog to make sure [the company] is protected.”

Several former employees, including two who worked in the IDEA department, told BoF that they were sceptical of Jones’ ability to drive the deep organisational change that the IDEA department promised.

At the heart of the scepticism was Jones’ work history: Before assuming the chief diversity and inclusion officer post at Abercrombie & Fitch in 2016, she had spent about 15 years defending the retailer against employee claims, appearing on cases as outside counsel as far back as 2002, and then as an in-house attorney starting in 2008.

Abercrombie & Fitch has its own troubled past with diversity and inclusion. The 2022 Netflix documentary, White Hot: The Rise & Fall of Abercrombie & Fitch, chronicled how the brand “thrived on exclusion” in the 1990s and early 2000s, and how it agreed to settle a class action lawsuit for racial discrimination in 2004.

It’s not uncommon for diversity departments to include or be helmed by executives with employment law experience, Cabral said. Companies that take this approach might hope that someone with legal experience will help them identify and distinguish between legal and ethical issues that crop up among their workforce and then advise on the best course of action, she said.

A challenge that may often arise, however, is that a diversity chief with a legal background could default to viewing most issues through a legal lens — focusing predominantly on mitigating legal risk rather than fostering inclusion and equity, Cabral said.

“DEI leaders need to be able to recognise that just because something is not illegal, that doesn’t mean it’s equitable,” she said. “That matters because, if you’re in a DEI department, equity is at the centre.”

DEI leaders need to be able to recognise that just because something is not illegal, that doesn’t mean it’s equitable

—  Amber Cabral, DEI strategist.

Meanwhile, the risk in having DEI sit inside HR — as Lululemon’s IDEA department is designed — is that it can be difficult to distinguish between who should be handling what, Cabral said. When a diversity chief like Jones reports to the head of that department rather than a CEO, there’s a significant risk that diversity is left out of the company’s “grand strategy,” which is mostly designed by members of the C-Suite — not the HR department, Cabral said.

In Chicago, the net effect of misguided DEI initiatives was an exodus of Black employees from the company. When it closed, the Hyde Park store had 16 employees; 13 took severance packages. Two of the three remaining employees have filed EEOC complaints for racial discrimination. (Several former store employees told BoF they took the severance because they were disillusioned by their experiences working with the company.)

“This company started out being prejudiced, they basically said ‘we only want tall, blonde, white women and you have to be a size six,’” said Armstrong, the former Hyde Park store operations manager. “A lot of the things that they have in place and even the language that they use still support the foundation of what this company is.”

Editor’s Note: Most of the current and former Lululemon employees who spoke to BoF asked to remain anonymous for fear of retaliation and due to arbitration agreements, which all corporate employees said they signed as a condition of their employment. An employee who signs an arbitration clause agrees not to sue their employer and to settle any disagreements, including allegations of racial discrimination, privately.

November and December are always a battle of wills between consumers and retailers. Shoppers have been trained by decades of Black Friday door busters to be on the lookout for deeper and deeper markdowns as they hunt for gifts. Retailers’ objective every year is to hold the line on pricing, or at least avoid retreating too far past 30 percent off. Few succeed.

This year has the potential to be a true rout. Retail giants from LVMH to Walmart are warning about a spending slowdown. The National Retail Federation predicts overall holiday sales will rise between 3 and 4 percent, a middling pace that would definitively close the book on the post-pandemic “revenge shopping” boom (even in 2022, holiday sales rose 5.4 percent; in the pre-Covid era you have to go back to 2005 to find growth higher than that). Other forecasts are more optimistic.

So far, retailers have been relatively restrained with discounts. WalletHub canvassed 13 big retailers, and found 15.7 percent of apparel items on sale, compared with 21.1 percent last year. The average discount for all items was 35 percent, versus 37.2 percent in 2022.

That discipline is unlikely to hold. If the post-Thanksgiving crowd doesn’t show up at the mall on Friday, or fill their online carts next week, retailers will almost certainly hit the markdown panic button. Many are already sitting on higher inventories than they’d like, a holdover from the supply chain turmoil of 2021 and 2022. They need a good holiday season to clear that remaining overhang out.

Inflation, as always, is the X factor. On the one hand, prices are growing at their slowest pace since early 2021, easing pressure on consumers’ budgets and potentially putting some in the mood to spend. But many are also expecting (futilely, in most cases) that prices will now begin to fall back. Headlines about the falling cost of a typical Thanksgiving dinner only add to that belief.

Those shoppers will hold out for deeper discounts in December. Retailers may have little choice but to comply.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.