Lululemon boss to step down early next year

The head of Lululemon Athletica, the brand known for its expensive yoga leggings and other activewear, is set to leave the company early next year.

Calvin McDonald, the company’s chief executive, will leave at the end of January after more than seven years at the helm of the group.

The move comes amid Lululemon’s lackluster sales in the United States, its main market, of late and its share price falling nearly 50% over the past year.

However, this week the company raised its annual revenue forecast after better-than-expected sales in recent months.

Mr McDonald said the decision to leave the company was made after discussions with the board.

“As we near the end of our five-year strategy and with our strong leadership team in place, we all agree that now is the time for change,” he said in a LinkedIn post.

While the Canadian company’s latest results reveal an increase in its international sales thanks to its activities in China, its performance in the Americas goes in the opposite direction.

The brand’s share price on the US Nasdaq index peaked in late 2023 and has been on a downward trend ever since. In September, its shares fell sharply after it warned of the impact that tariffs imposed by US President Donald Trump would have on its business.

Lululemon was particularly concerned about the end of the so-called de minimis exemption, a former duty-free loophole for low-cost goods entering America from countries like China.

Many of the Canadian company’s suppliers are based in China, Vietnam and other Asian countries. In September it estimated that new import taxes would cost it around $240m (£178.4m) this year.

However, sales in China and the rest of the world were positive, bringing its net revenue as of early November to $2.6 billion.

“As we enter the festive period, we are encouraged by our early performance,” Mr McDonald said. However, he said that despite a strong Thanksgiving holiday, demand has slowed since then as consumers continue to look for cheaper products.

Lululemon faces increasing competition from cheaper rivals such as Vuori and Alo Yoga for its products.

Dan Coatsworth, head of markets at AJ Bell, told the BBC that competition had been “fierce” and the brand needed to “go back to the drawing board and find ways to make its products ‘must have’ items again.

Mr Coastworth also said that under Mr McDonald the brand had experienced “the embarrassment of having to withdraw its Breezethrough product range after negative reviews and customer complaints about the leggings being uncomfortable to wear” last year.

The company halted sales of its new $98 leggings last summer after shoppers criticized the tights’ V-shaped back seam as “unflattering” and others said the seam at the top of the waistband dug into their waists.

Lululemon was also mocked on social media in 2020 for promoting an event about how to “resist capitalism.”

Lululemon has named its chief financial officer Meghan Frank and its chief commercial officer André Maestrini as interim co-CEOs while it searches for a new leader.

Marti Morfitt, chair of the brand’s board of directors, thanked Mr. McDonald for “his visionary leadership that has made Lululemon one of the strongest retail brands.”

“During his tenure, Calvin led Lululemon through a period of impressive revenue growth, with differentiated products and experiences that resonated with customers around the world. »

Mr. Coatsworth likened Mr. McDonald’s tenure to “akin to the ups and downs of an athlete reaching his peak and then quickly fading away.”

“He led Lululemon to greatness as the athleisure trend was booming, with people happy to pay top dollar for chic leggings.

“Then a series of errors were compounded by factors beyond the company’s control. It’s no wonder Lululemon is looking to hire new leadership,” he added.