Lululemon CEO to step down — interim chiefs named
Lululemon Athletica Inc. has started the search for a new CEO.
The athleisure retailer said that Calvin McDonald will step down as chief executive officer and board member, effective January 31. Lululemon CFO Meghan Frank and chief commercial officer André Maestrini will serve as interim co-CEOs while the company searches for a new leader.
McDonald has served as CEO of Lululemon since 2018, during which time he built the company into a brand powerhouse. But the company has been underperforming for more than a year, with the weakness most apparent in its core North American market.
McDonald’s resignation was announced the same day Lululemon reported third-quarter results that included a 7% increase in net revenues, to $2.6 billion. Comp sales in the Americas fell 5%, while international comps jumped 18%. Net income fell to $306 million from $351.9 million.
As the company faltered, its stock has taken a big hit. Lululemon’s market capitalization hit an all-time high of $64 billion just under two years ago, reported WWD, but the company has lost $42 billion of that since.
Most recently, Lululemon founder Chip Wilson, has criticized McDonald and the company’s board over its performance, citing a lack of innovation. In October, he took out a full-page advertisement (“Lululemon: in a Nosedive”) in The Wall Street Journal detailing his complaints. Wilson said the company had “lost its edge.”
Lululemon said its board is conducting a comprehensive search process in partnership with a leading executive search firm to identify the company’s next CEO. McDonald will remain with the company as a senior advisor through March.
In other changes, Marti Morfitt, chairman, will take on the expanded role of executive chair, effective immediately, to ensure the continued execution of the company’s near- and long-term growth strategy during the leadership transition.
“On behalf of the board and the entire organization, I want to thank Calvin for his visionary leadership building Lululemon into one of the strongest brands in retail,” said Morfitt. “During his tenure, Calvin led lululemon through a period of impressive revenue growth, with differentiated products and experiences that resonated with guests around the world. As we look to the future, the board is focused on identifying a leader with a track record of driving companies through periods of growth and transformation to guide the company’s next chapter of success."
Under McDonald’s watch, Lululemon has more than tripled its annual revenues. The company expects to generate $11 billion in annual revenue this fiscal year. He also broadened Lululemon’s global reach to more than 30 geographies and grew the company’s China Mainland business into its second largest market.
Additionally, he expanded Lululemon’s product portfolio, growing its athletic and lifestyle categories, and expanding into new high-demand activities such as tennis and golf.
“Serving as CEO of Lululemon has been the highlight of my career, and I am incredibly proud of everything our team has accomplished over the last seven years,” said McDonald. “Together, we have transformed the athletic apparel industry and the opportunity ahead for Lululemon is substantial. I believe the outstanding product pipeline we’ve built, and action plan we’ve put into place, will yield positive results, and deliver value to shareholders in the months and years ahead. I am committed to fully supporting the transition and helping guide our leadership team in my advisory role as they execute against our strategy.”