Lululemon CEO Calvin McDonald resigns due to declining sales in the US

NEW YORK Lululemon Athletica Inc. (LULU) announced on Thursday that CEO Calvin McDonald will step down from his position effective January 31, as the company faces a year of underperforming sales in the United States.

The Vancouver-based athletic wear company stated that McDonald and the board are working closely to ensure a smooth leadership transition. McDonald will continue with the company as a senior advisor until March 31, 2026.

The Lululemon board confirmed that it is conducting an extensive search for McDonald's replacement, in collaboration with a prominent executive search firm. McDonald, who took on the CEO role in 2018, will be succeeded by a new leader in due course.

In the meantime, Marti Morfitt, who currently serves as the board's chair, will assume the additional responsibility of executive chair immediately, with the aim of overseeing the company's ongoing growth strategies during the transition period.

Additionally, Meghan Frank, Lululemon's Chief Financial Officer, and Andr Maestrini, Chief Commercial Officer, will step in as interim co-CEOs after McDonald's departure, the company confirmed.

Following the announcement, Lululemon's stock saw a boost, rising 11% during early trading on Friday.

The news came alongside Lululemon's third-quarter financial results, which highlighted continued struggles in the U.S. market. Net revenue in the Americas declined by 2%, while international sales surged by 33%. Quarterly profits fell by 13%.

The company has been grappling with multiple challenges, including increased costs due to tariffs imposed during President Donald Trump's administration and heightened competition from brands like Alo Yoga. The Lululemon brand is widely recognized for its simple yet stylish workout apparel, often worn by celebrities such as Kendall Jenner and Hailey Bieber. Meanwhile, Lululemons founder, Chip Wilson, has publicly criticized the companys strategic direction in recent years.

Neil Saunders, Managing Director at GlobalData Retail, expressed in a statement that Lululemon's execution has faltered in recent times. He highlighted three key issues: a declining market for athleisure, stronger competition, and internal challenges within the company.

Saunders also noted that Wilson's vocal criticism of the company made McDonald's position increasingly difficult, suggesting that this may have influenced his decision to step down.

In the wake of the announcement, Lululemon's stock price surged by over 10% during after-hours trading.