In a surprising move, Lululemon Athletica’s CEO Calvin McDonald has announced his departure from the company early next year. The decision comes after a period of declining sales in the brand’s crucial US market, with its share price plummeting nearly 50% over the past year.
However, the Canadian athleisure giant has recently upgraded its annual revenue forecast, buoyed by stronger-than-expected sales in recent months. McDonald, who has led the company for over seven years, said the decision to leave was made in consultation with Lululemon’s board, citing the need for “a change” as the firm nears the end of its five-year strategy.
While Lululemon’s international business, particularly in China, has seen a boost in sales, its performance in the Americas has been heading in the opposite direction. The brand’s share price on the Nasdaq index peaked in late 2023 and has been on a downward trend since, with a sharp drop in September following the company’s warning about the impact of US tariffs on its operations.
Lululemon’s main concern was the ending of the so-called de minimis exemption, a former duty-free loophole for low-cost goods entering the US from countries such as China. Many of the company’s suppliers are based in Asia, and Lululemon estimated the newly-imposed import taxes would cost it around £178.4 million this year.
Despite the challenging environment, Lululemon has reported a boost in net revenues to £2.6 billion in the year to early November, driven by strong performance in China and other international markets. However, CEO McDonald acknowledged that demand has slowed since the Thanksgiving period, as consumers continue to seek out more affordable products.
The company has faced increasing competition from lower-priced rivals such as Vuori and Alo Yoga, prompting analysts to suggest that Lululemon needs to “go back to the drawing board” to make its products “must-have” items once again.
Lululemon has named its finance boss Meghan Frank and chief commercial officer André Maestrini as co-interim chief executives while it searches for a new permanent leader. The brand’s board chair, Marti Morfitt, thanked McDonald for his “visionary leadership” in building Lululemon into one of the “strongest brands in retail”.
