Lululemon CEO Calvin McDonald to step down amid U.S. challenges

Lululemon Athletica simultaneously announced its third quarter fiscal 2025 financial results and a major leadership transition, confirming that Calvin McDonald plans to step down as chief executive officer and a member of the board of directors, effective January 31, 2026. The board has commenced a comprehensive search for a new CEO.

The leadership change at Lululemon follows a period characterized by underperformance, particularly within the crucial U.S. business. This context led to calls for significant change from the company's founder and largest independent shareholder, Chip Wilson. Two months prior to the announcement, Wilson escalated his concerns by taking out a full-page advertisement in the Wall Street Journal, where he asserted that the company was "in a nosedive" and needed to "stop chasing Wall Street at the expense of customers."

Review of Lululemon's Q3 results and leadership transition

Lululemon's third quarter, which ended November 2, 2025, saw net revenue increase 7 percent to 2.6 billion dollars. This growth was primarily driven by international markets, with international net revenue increasing by 33 percent and the segment's comparable sales up 18 percent. Americas net revenue decreased 2 percent and the region's comparable sales dropped 5 percent.

However, despite the overall revenue growth, profitability saw a decline. Diluted earnings per share (EPS) were 2.59 dollars, down from 2.87 dollars in the third quarter of 2024. Gross margin decreased 290 basis points to 55.6 percent, while operating margin decreased 350 basis points to 17 percent. The company opened 12 net new company-operated stores during the third quarter, ending with 796 stores.

Calvin McDonald noted that teams are "focused on driving improvements within our U.S. business and maintaining momentum in our international regions," and that the impact of their action plan is expected to be seen in 2026. “The timing is right for a change,” McDonald said on a call with analysts, “I’ve described being CEO of Lululemon as my dream job. It truly has lived up to every expectation and given me the opportunity of a lifetime.”

The company also announced that board chair Marti Morfitt has been appointed to the expanded role of executive chair, effective immediately. Following McDonald's departure, chief financial officer Meghan Frank and chief commercial officer André Maestrini will serve as interim co-CEOs until the search is concluded.

Share repurchase and weak outlook

The company's board of directors authorized a 1 billion dollars increase in its stock repurchase program. As of December 11, 2025, approximately 1.6 billion dollars remained authorized on the program, including this increase.

Lululemon's fourth quarter guidance fell short of Wall Street estimates. It anticipates sales will be between 3.50 billion dollars and 3.59 billion dollars, below expectations of 3.60 billion dollars, according to LSEG. It's expectations for the earnings per share between 4.66 dollars and 4.76 dollars, is also below analysts' estimate of 5.03 dollars, according to LSEG.

For the full fiscal year 2025, Lululemon now expects net revenue in the range of 10.962 billion dollars to 11.047 billion dollars, representing 4 percent growth, or 5 percent to 6 percent growth excluding the 53rd week of 2024. Diluted EPS is expected to be in the range of 12.92 dollars to 13.02 dollars.