Lululemon is looking for a brand new chief because it navigates an more and more crowded athleisure market, tariffs and renewed criticisms from its founder. Calvin McDonald, the corporate’s longtime CEO, will step down subsequent 12 months, the corporate introduced yesterday (Dec. 11) together with its newest quarterly earnings launch.
Shares of the Canadian retailer, down 44 % this 12 months, jumped by greater than 10 % at present following the information and a stronger-than-expected earnings report for the August-October interval. Lululemon beat analyst estimates on each income and revenue, with gross sales rising 7 % year-over-year to $2.6 billion, whereas internet revenue fell 13 % to $307 million.
“The timing is correct for a change,” McDonald stated throughout Lululemon’s earnings name. He’ll exit on the finish of January and keep on as an advisor by way of March because the board begins its seek for his successor.
Within the interim, CFO Meghan Frank and Chief Industrial Officer André Maestrini will function co-CEOs, whereas chairwoman Marti Morfitt will assume an expanded function as govt chair.
McDonald took the helm at Lululemon in 2018 after main Sephora’s Americas division. Below his management, Lululemon greater than tripled its annual income, however in current months, progress has slowed amid intensifying competitors from activewear manufacturers like Alo Yoga and Vuori.
The corporate expects sluggish gross sales to proceed into the vacation season. It forecast internet income of $3.5 billion to $3.58 billion for the ultimate three months of 2025, beneath Wall Road expectations.
Tariffs value Lulumen $210 million in 2025
Lululemon can be grappling with the consequences of President Donald Trump’s aggressive tariff coverage and the termination of the ‘de minimis’ exemption, which beforehand allowed for items valued below $800 to enter the U.S. duty-free. Lululemon stated it expects tariffs to chop its revenue by $210 million for the 12 months, with this determine rising to $320 million in 2026.
McDonald’s tenure was outlined partially by a speedy international growth that pushed Lululemon into greater than 30 geographies and made China its second-largest market. However gross sales in its largest market, the U.S., have begun to slide. American income fell 2 % final quarter, in comparison with a 33 % soar in worldwide gross sales.
Wanting forward, the subsequent CEO shall be tasked with executing a three-part turnaround plan targeted on product creation, bettering in-store and on-line experiences and boosting enterprise effectivity. “We imagine these priorities place us effectively for the close to time period and can proceed to set Lululemon up for long-term sustainable progress,” he informed analysts.
McDonald’s departure comes after renewed public criticism from founder Chip Wilson, who launched Lululemon in 1998. In October, Wilson purchased a full-page advert in The Wall Road Journal accusing the CEO and board of presiding over a “lack of cool,” evaluating the corporate’s trajectory to “a airplane crash.” Wilson resigned because the retailer’s chairman in 2013 after making controversial feedback about prospects’ our bodies.
Wilson escalated his critique at present. “I’m deeply involved about what seems to be an amazing failure by the board to competently plan for the longer term and handle an efficient succession course of,” Wilson stated, denouncing the board as one which has failed “to ship product innovation and as an alternative has led with complacency.”
