Lululemon Athletica Inc. announced that Calvin McDonald plans to step down as chief executive officer and member of the company’s Board of Directors, effective January 31, 2026.  The announcement comes as the retailer raised its full-year outlook for the year after reporting third-quarter results topped guidance, although comps in the Americas fell 5 percent, worsening from the 4 percent decline seen in the second quarter.

Luluelmon said McDonald and the Board are working together to facilitate a smooth transition, and he will serve as a senior advisor to the company through March 31, 2026. The Board is conducting a comprehensive search process in partnership with a leading executive search firm to identify the company’s next CEO.

The company also announced that Marti Morfitt, chair of the board, 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 transition. Lululemon said both interim co-CEOs “bring extensive global retail experience and proven track records of driving growth at Lululemon, and will support all aspects of the business through the conclusion of the search process.”

Since joining Luluelmon in 2018, McDonald has guided the company through a period of significant growth and innovation. Under his leadership, Luluelmon has more than tripled its annual revenues, and the company expects to generate $11 billion in annual revenue this fiscal year. He also broadened Luluelmon’s global reach to over 30 geographies and grew the company’s China Mainland business into its second-largest market. Additionally, he expanded Luluelmon’s product portfolio, meaningfully growing its athletic and lifestyle categories, and formally expanding into new high-demand activities such as tennis and golf. As a result of these achievements, Luluelmon said it is “well-positioned to continue its global category leadership and create value for shareholders over the long-term.”

“Serving as CEO of Luluelmon 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 Luluelmon 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.”

“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 Luluelmon through a period of impressive revenue growth, with differentiated products and experiences that resonated with guests around the world. We are grateful for Calvin’s numerous contributions and appreciate his continued support over the coming months to facilitate a seamless transition.”

Morfitt added, “The Board is confident in our leadership transition plan, the strength of our teams across the company, and our ability to deliver on our strategy. Luluelmon has a strong foundation in place, and, 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. While the search is underway, I look forward to working closely with Meghan, André, and the rest of the Senior Leadership Team to execute on our strategy with a sense of urgency and meaningfully drive the business forward.”

The changes come as Lululemon announced on November 21 that Celeste Burgoyne, the brand’s president of the Americas and global guest innovation, was leaving the company at the close of the year. She will join Vail Resorts as chief revenue officer, effective January 26, 2026.

Third-Quarter Results
In the third quarter, sales were $2.6 billion, topping guidance in the range of $2.470 billion to $2.500 billion. EPS of $2.59 exceeded guidance between $2.18 to $2.23.

McDonald stated: “In the third quarter, our teams remained focused on driving improvements within our U.S. business and maintaining momentum in our international regions. We are beginning to make progress against our action plan and continue to expect to see the impact of this work in 2026. As we enter the holiday season, we are encouraged by our early performance, and I would like to thank all our Lululemon team members for their hard work and dedication to our guests and communities.”

For the third quarter of 2025, compared to the third quarter of 2024:

  • Net revenue increased 7 percent to $2.6 billion.
    • Americas net revenue decreased 2 percent.
    • International net revenue increased 33 percent.
  • Comparable sales increased 1 percent, or 2 percent on a constant dollar basis.
    • Americas comparable sales decreased 5 percent.
    • International comparable sales increased 18 percent.
  • Gross profit increased 2 percent to $1.4 billion and gross margin decreased 290 basis points to 55.6 percent.
  • Income from operations decreased 11 percent to $435.9 million and operating margin decreased 350 basis points to 17.0 percent.
  • The effective income tax rate for the third quarter of 2025 was 30.5 percent compared to 30.2 percent for the third quarter of 2024.
  • Diluted earnings per share were $2.59 compared to $2.87 in the third quarter of 2024.
  • The company opened 12 net new company-operated stores during the third quarter, ending with 796 stores.

Frank stated: “We delivered better-than-expected revenue and EPS in the third quarter as a result of our disciplined execution and ongoing strength internationally. Looking forward, we will continue to leverage our strong financial position to invest in our growth initiatives, while maintaining operational rigor. In addition, we are pleased our Board of Directors recently increased our share repurchase authorization, which demonstrates our collective confidence in the opportunities ahead for our brand.”

Stock Repurchase Program
During the third quarter of 2025, the company repurchased 1.0 million shares of its common stock for a cost of $189.0 million.

On December 3, 2025, the board of directors approved a $1.0 billion increase to the company’s stock repurchase program. Including this increase, as of December 11, 2025, the company had approximately $1.6 billion remaining authorized on its stock repurchase program.

Balance Sheet Highlights
The company ended the third quarter of 2025 with $1.0 billion in cash and cash equivalents and the capacity under its committed revolving credit facility was $593.0 million.

Inventories at the end of the third quarter of 2025 increased 11 percent to $2.0 billion compared to $1.8 billion at the end of the third quarter of 2024. On a unit basis, inventories increased 4 percent.

2025 Outlook
For the fourth quarter of 2025, the company expects net revenue to be in the range of $3.500 billion to $3.585 billion, representing a decline of 3 percent to 1 percent, or growth of 2 percent to 4 percent excluding the 53rd week of 2024. Diluted earnings per share are expected to be in the range of $4.66 to $4.76 for the quarter. This assumes a tax rate of approximately 30 percent.

For 2025, the company now expects net revenue to be in the range of $10.962 billion to $11.047 billion, representing growth of 4 percent, or 5 percent to 6 percent, excluding the 53rd week of 2024. Diluted earnings per share are now expected to be in the range of $12.92 to $13.02 for the year. This assumes a tax rate of approximately 30 percent.

Previously, guidance for revenues in the range of $10.850 billion to $11.0 billion and EPS in the range of $12.77 to $12.97.

The guidance does not reflect potential future repurchases of the company’s shares.

Image courtesy Lululemon