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Lululemon Athletica said CEO Calvin McDonald is leaving the company without a replacement and raised its full-year profit forecast, sending shares up about 10 percent in extended trading Thursday.
Macdonald, a Canadian who studied at the University of Toronto and Western University, will will leave Lululemon in January in about seven years at the helm.
Prior to joining Lululemon, McDonald served as President and CEO of Sephora Americas. He was also previously President and CEO of Sears Canada.
The Wall Street Journal reported, citing people familiar with the matter, that company founder Chip Wilson was frustrated with the marketing and was considering a proxy fight.
Lululemon, known for its pricey leggings and activewear, has struggled to sell in the U.S. as it loses ground to new brands like Alo Yoga and private-label replicas. In September, executives noted that they were disappointed with the results and sales of products in the country.
The shake-up at the top is also the latest in a string of big changes at retailers' leadership as they seek to attract a younger, more wary audience and address supply chain and operational issues.
The company also approved an increase in its share repurchase program by US$1 billion.
2 interim co-CEOs
The company named its chief financial officer Megan Frank and chief commercial officer Andre Maestrini as interim CEOs while it searches for a new boss.
Lululemon did not immediately respond to a Reuters request for comment on the anti-proxy report.
“Lululemon has been struggling by its usual standards lately, so this is likely part of a CEO transition,” said David Schwartz, an analyst at Morningstar Research, who nonetheless said McDonald has been a very effective CEO.
“Lululemon's hypergrowth days are clearly behind us, and that's not likely to change anytime soon,” said Andrew Rocco, equity strategist at Zacks Investment Research.
“However, thanks to favorable valuations, a new CEO and a promising start to the holiday season, bottom fishers are betting on the stock.”
Lululemon now expects full-year earnings of $12.92 to $13.02 per share, up from previous expectations of $12.77 to $12.97 per share, and also raised its full-year sales guidance.
Now, its U.S. operating revenues will suffer $210 million in 2025 because of the tariffs.
For quarter ended November 2The Vancouver-based company reported net revenue of $2.57 billion.
This exceeded the US$2.48 billion estimate, according to data compiled by LSEG.
The company invests in marketing
Executives also noted a strong start to the holiday shopping season around the Thanksgiving holiday, but said demand has slowed since then.
Interim co-CEO Frank said during its earnings call that Lululemon will invest in marketing in the fourth quarter to help drive traffic and increase brand awareness.
Discounts are also expected to be higher as it helps clear out obsolete inventory.
Canadians will see images of Lululemon in the window at the upcoming 2026 Olympic and Paralympic Winter Games in Milan, Cortina, as planned by the company Team Canada uniform.
