Lululemon Athletica says longtime chief executive Calvin McDonald will step down at the end of January 2026, as the once-unstoppable athleisure giant works through slowing U.S. sales, rising tariff costs and loud criticism from its billionaire founder.
The Vancouver-based company announced that McDonald will leave his CEO role and board seat on Jan. 31, 2026, then stay on as a senior adviser until March 31. Board chair Marti Morfitt becomes executive chair, while CFO Meghan Frank and Chief Commercial Officer André Maestrini will act as interim co-CEOs during the search for a permanent replacement.
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Shares jumped about 10% in after-hours trading after the announcement landed alongside better-than-expected quarterly results and a higher profit forecast, even though the stock remains down roughly half this year.
What’s new vs. what we already knew
- CEO exit date: McDonald leaves the CEO job and board on Jan. 31, 2026, after nearly seven years in the role.
- Transition structure:
- Meghan Frank (CFO) + André Maestrini (CCO) → interim co-CEOs
- Marti Morfitt → moves from chair to executive chair
- McDonald → senior adviser until March 31, 2026.
- Guidance raised: Full-year 2025 EPS guidance nudged up to US$12.92–$13.02, from US$12.77–$12.97, and sales guidance also increased.
- Tariff hit quantified: The company expects about a US$210 million impact on 2025 income from operations due to U.S. tariffs and changes to de minimis rules.
- Buyback boost: Lululemon added US$1 billion to its share buyback program, bringing remaining authorization to about US$1.6 billion.
What was already building in the background
- Sales slowdown in the U.S.:
- Q3 net revenue rose about 7% to ~US$2.6B, but Americas revenue fell around 2–3%, while international revenue surged by roughly 33–46%, led by China.
- Stock under pressure:
- Shares are down more than 50% year-to-date and about 60% over two years, even after a double-digit after-hours bounce on the news.
- Tariffs and restructuring:
- Earlier this year, Lululemon cut around 150 corporate roles as part of a re-org tied to tariff headwinds and cost control.
- Founder’s public campaign:
- In October, founder Chip Wilson ran a full-page WSJ ad titled “lululemon: In a Nosedive,” accusing the board of favouring “operator/finance CEOs who can ‘speak Wall Street’” over product-driven leadership and saying the brand had “lost its edge.”
- Recent reporting says he has considered a proxy fight and continues to criticize marketing and product execution.
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How strong is Lululemon CEO Calvin McDonald’s track record?
Even critics agree McDonald’s tenure wasn’t a flop. Under his leadership since 2018:
- Annual revenue has more than tripled, with Lululemon expecting about US$11B in sales this fiscal year.
- The brand expanded into 30+ countries, and mainland China became its second-largest market.
- Gross margins stayed near 59–60%, unusually high for apparel retail.
McDonald also brought a deep retail résumé: senior roles at Loblaw, CEO stints at Sears Canada and Sephora Americas, and a board seat at Disney since 2021.
The problem is more about what comes next: Lululemon helps create the modern athleisure market, but now faces fiercer competition from brands like Alo Yoga, Vuori and well-made private-label “dupes”, especially in women’s pants—its historic core.
Why is this happening now?
1. U.S. demand looks tired
The company is still growing globally, but U.S. shoppers are pulling back, trading down to cheaper brands or buying “Lululemon dupes” online. Lululemon itself has acknowledged “disappointing” product execution in the Americas and plans to increase marketing and clean up older inventory with higher discounts.
2. Tariffs are squeezing margins
Changes to U.S. tariff rules on imports from China and the removal of some de minimis relief are expected to shave about US$210M off 2025 operating income and roughly 390 basis points off operating margin.
3. Public pressure from the founder
Wilson’s WSJ ad and subsequent interviews put a spotlight on the board, accusing it of drifting from a product-obsessed culture toward financial engineering. Even if the board says the decision wasn’t driven by him, investors now see this CEO exit partly through that “founder vs. board” lens.
What this means for investors, employees and customers
For investors
- Short-term:
- The market likes decisive action: guidance raised, buyback increased, and CEO transition signalled. That explains the ~10% after-hours bounce.
- Medium-term:
- The next CEO will inherit:
- Shrinking share in core U.S. women’s pants
- Heavy reliance on China for growth
- Tariff-driven margin pressure
- Any hint of a product-focused leader with strong design credibility could be read very positively by the market.
- The next CEO will inherit:
For employees
- Headquarters and design staff have already lived through corporate job cuts and tariff-related restructuring.
- A new CEO could:
- Double down on innovation and design talent (if the board leans into Wilson’s critique), or
- Stay more operations-focused, prioritizing margins and cash returns.
Internal culture will depend heavily on which way that choice goes.
For customers
- In the near term, shoppers are likely to see:
- More promos and markdowns as the company clears older styles
- Heavier marketing in Q4 and into 2026 as Lululemon tries to “re-win” attention, especially in the U.S.
- On the brand side, Lululemon is still very visible:
- It has just unveiled Team Canada’s Milano Cortina 2026 Olympic and Paralympic kits, its third Games as official outfitter, keeping the brand front-and-centre for Canadian fans.
Mini timeline
- 2011–2013: McDonald serves as President & CEO of Sears Canada
- 2013–2018: Leads Sephora Americas as President & CEO.
- Aug 2018: Joins Lululemon as CEO.
- May 2021: Becomes a director at The Walt Disney Company.
- 2023: Lululemon hosts a “dupe swap” event to highlight the quality gap vs. knockoffs.
- Dec 2024: Files to trademark “LULULEMON DUPE” in the U.S.; registration granted Oct. 21, 2025.
- Mid-2025: Cuts ~150 corporate jobs as it braces for tariffs.
- Oct 7, 2025: Founder Chip Wilson publishes “lululemon: In a Nosedive” WSJ ad.
- Nov 18, 2025: Lululemon and Team Canada unveil the Milano Cortina 2026 Olympic kit.
- Dec 11, 2025: Q3 2025 results released and McDonald’s planned exit announced; stock jumps after hours.
