Lululemon CEO talks candidly about looming athleisure bubble and Chip Wilson

Like an overworked balance ball, the athleisure bubble is bound to pop. But that doesn't have Lululemon (LULU)'s CEO sweating through his moisture-wicking workout garb.

Instead, as specialty shops, emerging brands and activewear powerhouses flood the market with new products, Laurent Potdevin is confident his company can sustain its industry-leading comparable-sales growth. It just has to keep innovating.

"Athleisure, that bubble will pop and the people that are not in it for the right reasons will go away," Potdevin told CNBC in an exclusive interview.

"We are still in a very unique position. ... You've got athletic brands that are mostly a wholesale business, that don't have the margin structure that we have, and that don't have access to the same quality of construction that we have. And then you've got the fashion brands that don't have the technical mindset," he said.

This combination of technical yet fashionable products helped lift Lululemon's comparable sales 6 percent in the most recent quarter. Its redesigned women's pants assortment, which categorizes its styles by feel, and its growth in its menswear business were two key drivers behind that increase. The company plans to roll out even more changes to its products, including a reinvented women's tops assortment that includes less form-fitting styles.

Investors have taken notice. Momentum in its same-store sales — paired with improvement in its gross margin, inventory levels and assortment — helped Wall Street looked right past the company's modest earnings shortfall in the first quarter , when it missed the consensus forecast by a penny. Yet with the battleground stock up nearly 45 percent this year, some analysts have branded it overvalued.

"It's an emotionally charged brand," Potdevin said, explaining that the company is only about 80 percent of the way through its efforts to boost profitability. "We've started seeing margins extend and profitability grow."

Indeed, analysts commended the retailer's gross margin improvement during the first quarter, even though this metric still contracted during the period. Margins were helped by improvements to its supply chain — including cutting back on its use of air freight. The company expects its gross margin to turn positive during the current three-month period, after clearing through excess inventory in the prior quarter.

Potdevin reiterated the company's five-year plan to double its revenue and profitability by 2020, saying international expansion and growth in its menswear business should help it achieve its goals. He likewise repeated that he sees the men's category growing into a billion-dollar business — more than double what it is today, according to Jefferies.

Because the company operates its own retail locations and does not sell its products through wholesale partners, it should be protected from broader concerns about the athleticwear space, Potdevin said. The category has seen recent bankruptcies from The Sports Authority and Sport Chalet, causing Under Armour (UA) to lower its full-year sales and earnings guidance.

Not everyone is a believer. Retail analyst Jan Kniffen told CNBC Friday that the "fad" part of athleisure — for example, a woman wearing yoga pants to a coffee shop — is going to go away. That, he said, will hurt Lululemon.

"That piece of the business is not going to be there," he said, adding that the fashion cycle will soon shift back to denim.

And in a letter to shareholders in June , founder Chip Wilson — whose tumultuous tenure at the brand ended with his resignation from the board last February — said it had "lost its way" and fallen behind its competitors. He argued that the company needed a change in management and strategy to reach its full potential, and he mentioned his 14 percent ownership of its shares.

"As a long-term investor in Lululemon, I am uncomfortable with the lack of urgency, stewardship and performance of our great company," he wrote. "I have not heard a strategy nor seen actions that lead me to believe we will regain our competitive position and secure long-term returns. This is unacceptable and the board needs to understand that I — indeed all shareholders — will be watching closely."

Potdevin countered that Lululemon hasn't lost its way — it's simply found new ones.

"We've put out a plan, you know, of doubling revenues by 2020 and more than doubling profitability. We've reignited innovation. We've got an international strategy. We're building a digital culture. And we're very much on track to deliver on those targets with an engagement and a workforce engagement which I'm so proud of," he said.

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