Lululemon Athletica Inc, said Thursday that its CEO Calvin McDonald is stepping down effective Jan. 31 as the athletic wear maker wrestles with a year of disappointing sales.
The company, based in Vancouver, Canada, said that McDonald and the board are working together to manage a “smooth transition,” and he will serve as a senior advisor to the company through March 31, 2026.
The board said it was conducting a comprehensive search in partnership with a leading executive search firm to select his successor. McDonald took the helm in 2018.
Lululemon said Marti Morfitt, the board’s chair, 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.”
In addition, Meghan Frank, chief financial officer, and André Maestrini, chief commercial officer, will serve as interim co-CEOs following McDonald’s exit, the company said.
The announcement came alongside Lululemon’s third-quarter results, which showed continued malaise in the U.S. Net revenue in the Americas declined 2%, while international revenue increased 33%.
Quarterly profit dropped 13%.
Lululemon has been wrestling with a host of problems such as higher costs from President Donald Trump’s tariffs to stiffer competition from the likes of Alo Yoga. The brand is known for its simple workout sets worn by Kendall Jenner and Hailey Bieber. Meanwhile, Lululemon’s founder Chip Wilson has been an outspoken critic of the company’s direction.
“The perfect pose that the brand used to execute with ease has given way to a much scrappier posture that has been present for quite some time, ” Neil Saunders, managing director of GlobalData Retail, wrote in a note published on Thursday.
Saunders noted that Lululemon faces three problems: The market for athleisure is weaker than it was, while the competition is “more intense and of a higher caliber.” He also said that against this backdrop Lululemon’s execution has faltered.
He noted that Wilson’s criticism of the company made it difficult for McDonald, and he believes that is one of the reasons for his exit.
Shares were up more than 10% in after hours trading Thursday when the news was announced.