Lululemon Athletica’s Chief Executive Officer, Calvin McDonald, will step down at the end of January as the brand seeks to address recent operational challenges and declining share prices. The Canadian activewear company announced its search for a new CEO on Thursday. McDonald will remain in a senior advisory role until the end of March.
The announcement caused Lululemon’s shares to jump more than 10% in after-hours trading. Recently, the company reported better-than-expected results for the third quarter and announced a $1 billion increase in its stock buyback program. During McDonald’s transition, Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs, while Chair Marti Morfitt will take on an expanded role as executive chair.
McDonald, who became CEO in August 2018, oversaw a significant growth in annual sales, which tripled to $10.6 billion by the end of January. However, the company has faced difficulties maintaining the double-digit growth it enjoyed for the past decade, particularly in the challenging U.S. market. Founder Chip Wilson has expressed concerns about a “loss of cool” at the company, attributing it to leadership that has strayed from a product-driven focus and failed to attract creative talent.
Lululemon’s revenue grew by 7% year-on-year to $2.6 billion in the most recent quarter, but sales in the U.S. declined by 2%. This marked the fifth instance in six quarters where revenue growth fell into the single digits, contrasting sharply with the company’s previous decade of robust growth. Wilson criticized the board for undermining the company’s foundational business model and failing to retain key talent.
- Why this story matters: Leadership changes at prominent companies can significantly affect stock performance and market perceptions.
- Key takeaway: Lululemon’s recent struggles highlight the challenges faced by established brands amid evolving consumer preferences and increased competition.
- Opposing viewpoint: Some may suggest that changes in leadership are necessary for innovation and renewal within the company.
