Lululemon Athletica announced the departure of CEO Calvin McDonald without a successor in place and revised its yearly profit outlook, leading to a roughly 10% surge in shares during after-hours trading on Thursday.
McDonald, a Canadian with educational backgrounds from the University of Toronto and Western University, will be stepping down from his role at Lululemon in January after serving as the company’s leader for approximately seven years. Before his tenure at Lululemon, McDonald held executive positions at Sephora Americas and Sears Canada.
Additionally, in 2021, McDonald joined the board of directors at The Walt Disney Company. Reports from The Wall Street Journal, citing insider sources, indicated that Lululemon’s founder, Chip Wilson, had expressed dissatisfaction with the company’s marketing strategies and had contemplated a potential proxy battle.
Renowned for its high-end leggings and athleisure apparel, Lululemon faced challenges in the U.S. market, losing ground to emerging brands like Alo Yoga and private-label competitors. Company executives acknowledged disappointment with sales performance and product offerings in the country earlier in the year.
The leadership change at Lululemon reflects a broader trend in the retail sector, with companies seeking to engage younger, more discerning consumers while navigating supply chain and operational hurdles. Furthermore, Lululemon approved a $1 billion increase to its share repurchase program.
To fill the leadership vacuum left by McDonald, the company appointed Meghan Frank, its finance chief, and André Maestrini, the chief commercial officer, as co-interim CEOs. Lululemon’s board emphasized that a thorough search is underway to identify McDonald’s permanent successor.
Analysts commented on the situation, noting Lululemon’s recent performance and the implications of the CEO transition. Despite challenges, some industry experts highlighted the company’s strategic opportunities, including a favorable valuation, leadership changes, and positive holiday season prospects.
Lululemon adjusted its annual profit forecast to a range between $12.92 to $13.02 per share, up from the previous estimate. The company also raised its sales projections while anticipating a $210 million impact on its 2025 operating income due to tariffs.
In its financial report for the quarter ending in November, Lululemon reported net revenue of $2.57 billion, surpassing analysts’ expectations. As the holiday shopping season unfolds, the company plans to bolster marketing efforts and increase discounts to manage inventory levels effectively.
Moreover, Lululemon’s brand visibility will be enhanced through its collaboration with the Canadian Olympic Committee and Canadian Paralympic Committee for the Milano Cortina 2026 Olympic and Paralympic Winter Games, showcasing Team Canada’s athletic kits designed by the company.