A lululemon store in New York. Lululemon Athletica (NASDAQ: LULU) has a new chief executive taking the helm this week, and the incoming leader is facing a mountain of urgent problems.

Heidi O'Neill officially assumed the role of CEO on Tuesday at the embattled athletic apparel company. The situation is precarious, coming on the heels of another weak earnings report last week that showed North American sales down 12% and marked the second time in three months the company cut its full-year guidance. The stock plunged roughly 20% on Friday, hitting an eight-year low.

The company attributes part of the slowdown to its own signature products underperforming. Sales in its core category of yoga pants dropped by a steep 20%. Another blow came from a marketing misstep in China, where a promotional campaign mistakenly incorporated elements of Japanese drums, which hurt sales in that market.

The latest disappointing quarterly results have brought into sharp focus a series of long-standing issues that have been building for years. Consumers are shifting toward hipper rivals, the company has seen a public feud with founder Chip Wilson, and all of this is happening against a backdrop of softer overall consumer spending.

What awaits O'Neill, a former Nike executive, as she settles into the company's Vancouver headquarters? Sky Canaves, principal analyst at market research firm Emarketer, notes the timing could hardly be worse. "She's stepping into a very tough situation. The company is in worse shape now than when she accepted the job," she said. Canaves pointed to declining North American sales, stalled overseas growth momentum, and deep-rooted issues in both product and marketing within an increasingly crowded athletic wear market.

O'Neill will need to reposition the brand to appeal to younger consumers — a demographic that has gravitated toward competitors such as Alo Yoga, FP Movement, and Vuori — all while continuing to manage discounting and promotions carefully.

Neil Saunders, managing director at GlobalData, said the overall athleisure sector is still performing reasonably well, meaning "this poor result isn't entirely due to external factors." In a research note, he wrote: "The product assortment is profoundly dull; a large amount of non-core merchandise lacks both style and flair; and there is an absence of innovation. These multiple factors have combined to cause brand heat to fade quickly." Saunders added that investors are "eagerly anticipating a clear corrective strategy to steer Lululemon back onto a stable growth trajectory."