Lululemon Athletica announced the departure of CEO Calvin McDonald without an immediate successor, alongside an increased annual profit forecast, propelling shares up approximately 10% during after-hours trading on Thursday. McDonald, a Canadian educated at the University of Toronto and Western University, will be stepping down from his role at Lululemon in January after leading the company for about seven years.
Before joining Lululemon, McDonald held executive positions at Sephora Americas and Sears Canada. He also became a member of the board of directors at the Walt Disney Company in 2021. The Wall Street Journal reported that the company’s founder, Chip Wilson, was unhappy with the marketing strategies and had been contemplating a proxy fight.
Recognized for its premium leggings and athleisure wear, Lululemon faced challenges in the U.S. market as it faced competition from emerging brands like Alo Yoga and private-label alternatives. The company acknowledged disappointment with its U.S. sales and product performance in September.
The leadership change at Lululemon follows a series of significant shifts in top management within the retail sector, as companies aim to attract a younger, more discerning consumer base while navigating supply chain and operational hurdles. Additionally, the company approved a $1 billion increase in its stock buyback program.
In the interim, the company appointed its Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini as co-interim CEOs while actively seeking a permanent replacement for McDonald. Lululemon’s board stated that they are conducting an extensive search for the next CEO.
Market analysts highlighted that Lululemon has faced challenges recently, leading to the CEO transition. Despite this, they acknowledged McDonald’s effectiveness as a leader. Although Lululemon’s rapid growth phase has passed, its stock valuation, coupled with the CEO change and positive holiday season performance, has attracted investors looking for opportunities.
Lululemon now anticipates annual earnings per share between $12.92 and $13.02 compared to the previous outlook of $12.77 to $12.97 and has also revised its annual sales projection. The company expects a $210 million impact on its 2025 operational income due to tariffs. For the quarter ending on Nov. 2, Lululemon reported net revenue of $2.57 billion, surpassing expectations.
Company executives noted a robust start to the holiday shopping season, although demand has slowed subsequently. Interim co-CEO Frank stated that Lululemon plans to increase marketing efforts in the fourth quarter to boost traffic and enhance brand visibility. The company is also preparing for higher discounts to clear out older inventory. Canadians can anticipate seeing Lululemon products showcased at the upcoming Milano Cortina 2026 Olympic and Paralympic Winter Games, as the brand has designed the athletic kits for Team Canada.
