Lululemon Athletica announced the departure of CEO Calvin McDonald without a successor and upgraded its yearly profit projection, leading to a roughly 10% surge in shares during after-hours trading on Thursday.
McDonald, a Canadian who completed his studies at the University of Toronto and Western University, will step down from his role at Lululemon in January after steering the company for nearly seven years. Before joining Lululemon, McDonald held leadership positions at Sephora Americas and Sears Canada.
In 2021, McDonald joined the board of directors at the Walt Disney Company. Reports from The Wall Street Journal suggested that Lululemon’s founder, Chip Wilson, was dissatisfied with the marketing strategies and had been contemplating a proxy battle.
Although renowned for its high-end leggings and athleisure apparel, Lululemon faced challenges in the U.S. market, losing ground to emerging brands like Alo Yoga and private-label imitations. The company acknowledged disappointment with its performance and product offerings in the country in September.
The shake-up in the executive ranks reflects a broader trend in the retail industry, as companies strive to engage a younger, more cautious consumer base and navigate supply chain complexities. Lululemon also authorized a $1 billion increase in its stock repurchase program.
In the interim, the company appointed Meghan Frank, the current finance chief, and André Maestrini, the chief commercial officer, as co-CEOs while actively seeking a permanent replacement for McDonald. The board of Lululemon is conducting an extensive search for the next CEO, as stated in a press release.
Lululemon did not provide an immediate response to inquiries about the reported proxy fight. Analysts noted that the leadership change at Lululemon coincided with recent operational challenges but praised McDonald’s effectiveness as CEO.
Despite a shift from its rapid growth phase, Lululemon remains appealing to investors due to its undervalued stock, leadership transition, and positive early signs in the holiday season. The company raised its annual profit forecast and anticipates a $210 million impact on its 2025 operational income from tariffs.
For the quarter ending November 2, Lululemon reported a net revenue of $2.57 billion, surpassing expectations. The company plans to boost marketing investments in the fourth quarter to enhance brand visibility and drive consumer traffic, especially during the holiday season.
Furthermore, Lululemon is expected to offer higher discounts to clear out older inventory, while showcasing its products at the upcoming Milano Cortina 2026 Olympic and Paralympic Winter Games. The brand has designed the athletic kits for Team Canada at the event.