Calvin McDonald will resign as CEO of Lululemon effective January 31, following a year of underperformance at the athleisure retailer. The company’s board has begun the process of selecting a new leader in collaboration with an executive search firm. Until a successor is named, CFO Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs, while board chair Marti Morfitt assumes the role of executive chair.
McDonald remarked that the decision was timely, acknowledging that leading Lululemon had been his dream job. Morfitt stated that while Lululemon has a robust foundation, the company is in need of a leader capable of steering it through future challenges. McDonald’s departure coincided with the company releasing fiscal third-quarter earnings, which revealed a mixed performance. While earnings per share of $2.59 surpassed projections of $2.25, revenue of $2.57 billion barely exceeded expectations of $2.48 billion.
Lululemon has faced mounting challenges including a decrease in consumer interest, increased competition from brands like Vuori and Alo Yoga, and negative impacts from tariffs. The company has worked to broaden its product offerings, moving beyond athletic wear to include shoes and casual wear. Despite these efforts, sales in the Americas declined by 2%, while international sales grew by 33%.
Looking ahead, Lululemon raised its annual sales forecast to between $10.96 billion and $11.05 billion, aligning closely with market expectations. However, a surge in early holiday season demand was tempered by a slowdown in trends post-Thanksgiving.
Why this story matters:
- It highlights leadership changes at a major retailer facing market pressures.
Key takeaway:
- Lululemon is seeking new leadership to guide it through a dynamic retail landscape amid declining sales in its primary market.
Opposing viewpoint:
- Critics, including the company’s founder, argue that Lululemon has been prioritizing Wall Street interests over customer satisfaction.
