Lululemon Athletica said its chief executive Calvin McDonald will step down at the end of January, ending more than seven years leading the athletic apparel company as it navigates slowing demand in its largest market and heightened competition.
Leadership Change Announced Amid U.S. Sales Pressure
McDonald’s departure comes after a period of weaker performance in the U.S., where Lululemon generates the bulk of its revenue. The company’s share price has fallen by nearly 50% over the past year, after peaking in late 2023. In September, Lululemon warned that new U.S. tariffs would weigh on its business, triggering a sharp drop in its stock.
Despite those challenges, the company recently raised its full-year revenue outlook following stronger-than-expected sales in recent months.
McDonald said his decision followed discussions with the board and coincided with the conclusion of Lululemon’s current five-year strategy. In a LinkedIn post, he said the board and leadership team agreed that it was the right time for a change.
Diverging Performance Across Regions
Lululemon’s latest financial results showed growth outside the Americas, with international sales, particularly in China, contributing to higher overall revenue. Net revenue for the period to early November reached $2.6bn, supported by overseas demand.
By contrast, performance in the Americas has softened. McDonald said that while the company saw encouraging results around the Thanksgiving period, demand slowed afterward as consumers continued to seek lower-priced options.
The company has faced increased competition from brands such as Vuori and Alo Yoga, which offer products at lower price points.
Impact of Tariffs and Supply Chain Exposure
Lululemon has flagged concerns over the removal of the U.S. de-minimis exemption, which previously allowed low-value goods from countries including China to enter the U.S. duty-free. Many of the company’s suppliers are based in China, Vietnam and other parts of Asia.
In September, Lululemon estimated that the newly imposed import tariffs would add about $240m (£178.4m) to its costs this year.
Product Challenges and Public Scrutiny
Under McDonald’s tenure, the company also faced setbacks tied to product launches. Last year, Lululemon withdrew its Breezethrough leggings shortly after launch following customer complaints that the design was uncomfortable. The $98 leggings drew criticism for their V-shaped back seam, which some shoppers described as unflattering, and for a waistband seam that others said dug into their waists.
The brand has also attracted attention in the past for its marketing choices, including criticism in 2020 over an event promoted as focusing on how to “resist capitalism.”
Interim Leadership and Board Response
Lululemon said its chief financial officer Meghan Frank and chief commercial officer André Maestrini will serve as co-interim chief executives while the board searches for a permanent replacement.
Marti Morfitt, chair of Lululemon’s board, said McDonald had overseen a period of strong revenue growth and helped build the brand’s global presence during his time as chief executive.
Featured image credits: Flickr
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