Lululemon Athletica Inc. announced on Thursday that its CEO Calvin McDonald is stepping down, effective Jan. 31. The company, which is based in Vancouver, Canada said that McDonald and the board are working together to manage a “smooth transition,” and he will serve as a senior advisor to the company through March 31, 2026. The board said it was conducting a comprehensive search in partnership with a leading executive search firm to select his successor.
Lululemon said Marti Morfitt, the board’s chair, will take on the expanded role of executive chair, effective immediately, to “ensure the continued execution of the company’s near- and long-term growth strategy during the leadership transition.” Meanwhile, Meghan Frank, chief financial officer, and André Maestrini, chief commercial officer will serve as interim co-CEOs following McDonald’s exit.
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This comes following a year of disappointing sales for the company. Lululemon has been dealing with problems like President Donald Trump’s tariffs to stiffer competition from companies like Alo Yoga. The brand is known for its simple workout sets, including those worn by celebrities like Kendall Jenner and Hailey Bieber. Meanwhile Lululemon’s founder Chip Wilson has been an outspoken critic of the company’s direction.
“The perfect pose that the brand used to execute with ease has given way to a much scrappier posture that has been present for quite some time, ” Neil Saunders, managing director of GlobalData Retail, wrote in a note published on Thursday.
Saunders mentioned that Lululemon faces three problems — the market for athleisure is weaker than it was, while the competition is “more intense and of a higher caliber.” He also said that against this backdrop Lululemon’s execution has faltered. He also noted that Wilson’s criticism of the company made it difficult for McDonald, and he believes that is one of the reasons for his exit.
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The announcement of McDonald’s exit comes alongside Lululemon’s third-quarter result. Net revenue in the Americas declined 2%, while international revenue increased 33%. Still, the company’s shares (LULU) were up about 7% in extended trading as it lifted its annual profit forecast, helped by stronger sales in international markets, and approved a $1 billion increase to its stock buyback program.
The retailer now expects annual revenue between $10.962 billion and $11.047 billion, compared with its prior forecast of $10.85 billion to $11 billion. It also expects annual profit between $12.92 and $13.02 per share, compared with previous expectations of $12.77 to $12.97 apiece.
Lululemon now expects a $210 million hit to its income from operations in 2025 due to tariffs.
According to data compiled by LSEG, for the quarter ended Nov. 2, the company reported net revenue of $2.57 billion, beating estimates of $2.48 billion.