Lululemon CEO Calvin McDonald has led the Vancouver-based athleisure retailer since 2018.DARRYL DYCK/The Canadian Press
Lululemon Athletica Inc. LULU-Q chief executive officer Calvin McDonald will step down at the end of January, as the athleisure pioneer struggles to fend off growing competition and refresh styles that have grown stale with shoppers.
Mr. McDonald, who has led the Vancouver-based retailer since 2018, has been struggling to reassure investors amid a slowdown in its U.S. business and as its stock price plunged by 50 per cent since the beginning of the year.
Lululemon founder Chip Wilson calls for board changes to help CEO search
Lululemon has hired an executive search firm and is looking for its next CEO, the company announced Thursday. Mr. McDonald will leave the role on Jan. 31, 2026, and will also step away from the company’s board of directors but will continue as a senior adviser until March 31.
Chief financial officer Meghan Frank and chief commercial officer André Maestrini will serve as co-CEOs on an interim basis until the search is complete.
Under Mr. McDonald’s leadership, Lululemon’s annual revenues have more than tripled. Sales are expected to reach roughly US$11-billion this year. He has also brought the brand to new global markets and expanded product offerings to include clothing for tennis and golf as well as casual everyday wear.
Although Lululemon was once dominant in the athleisure space, the brand’s cachet has recently slipped and competitors such as Alo Yoga and Vuori have been winning away customers with newer designs.
Lululemon helped to make it fashionable for women to wear leggings and other stretchy clothing outside of the gym and the yoga studio, with trendy customers sporting athleisure throughout the day. The company did particularly well during the pandemic when comfortable leggings and sweatshirts were in high demand.
But it began to see a slowdown in the key U.S. market last year.
In September, Mr. McDonald acknowledged the retailer’s offerings had “become too predictable” and noted some “fatigue” among its most loyal customers as it kept certain styles around too long. That made the brand vulnerable to being usurped by trendy rivals.
Lululemon’s outspoken founder Chip Wilson – who has not sat on the company’s board since 2015 but remains a major shareholder – took out a full-page ad in The Wall Street Journal last month slamming the company for its “loss of cool” and criticizing “finance focused CEOs” who do not understand product and design.
There were also departures of high-profile executives. Last month, the company announced that Celeste Burgoyne, who served as president of the Americas and global guest innovation, had decided to leave in December for another opportunity. Last year, chief product officer Sun Choe left to join footwear company Vans as global brand president.
Compounding those problems is a choppy economic environment, which has made premium $100 leggings a tougher sell for some customers who are being more cautious with their purchases.
Lululemon has been a particular target for online sellers and other retailers offering what are known as “dupes,” which mimic the brand’s style at far lower prices. The company is currently in a legal battle with Costco Wholesale Corp. over alleged knock-offs. Costco has denied that clothing it sold copied designs for Lululemon items such as Scuba hoodies, Define jackets and ABC pants.
As it seeks to revive customer interest and chase trends, Lululemon is working to cut down on the time it takes to bring new products and designs to market, Ms. Frank said on a conference call Thursday afternoon – a process that currently takes 18 to 24 months. Markdowns have been higher than usual for Lululemon, as it seeks to clear out old inventory that was not selling, and the company is on track to have new product represent 35 per cent of its assortment by next spring.
On Thursday, the company reported that its third-quarter revenue grew by 7 per cent compared with the previous year, to US$2.6-billion. The results were driven by a 33-per-cent increase in international sales while revenue in the Americas fell by 2 per cent in the quarter, which ended Nov. 2.
The company’s net income fell to US$306.8-million or US$2.59 a share in the quarter, compared with US$351.9-million or US$2.87 a share in the same period last year.
On Thursday’s call, Mr. McDonald said that being CEO of Lululemon was his “dream job” and added that he would fully support the transition to new leadership.
The company will look for a new CEO “with a track record of driving companies through periods of growth and transformation,” Lululemon board chair Marti Morfitt wrote in Thursday’s release.