Lululemon boss leaves the company before the next year begins
The CEO of Lululemon Athletica, known for its foundational system of high-priced yoga and other athletic wear, will step down from the company at the beginning of next year.
Calvin McDonald, the company’s chief executive, will step down at the end of January after more than seven years of leadership.
This decision comes amid a decline in Lululemon’s sales in the United States, its primary market recently, and its shares losing nearly half their value over the past year.
Despite this, the company recently updated its annual revenue forecasts after achieving better-than-expected sales in the past few months.
Mr. McDonald confirmed that the decision to leave the company was made after discussions with the Board of Directors.
He said in a LinkedIn post: “As we approach the end of our five-year strategic plan, and given the presence of a strong senior leadership team, we all agree that the time is right for a change.”
While the Canadian company’s latest results showed a rise in its global sales driven by its operations in China, its performance in the Americas has moved in the opposite direction.
The brand’s shares on the US Nasdaq index peaked in late 2023 and have been declining ever since. In September, its shares saw a sharp decline after it warned of the impact of tariffs imposed by US President Donald Trump on its business.
Lululemon’s concern was particularly about the end of what is known as “the de-minimis exemption,” which is a way for low-priced products from China to enter the US.
Most of the Canadian company’s suppliers are located in China, Vietnam, and other Asian countries. According to estimates announced in September, the new expected tariffs would cost the company approximately $240 million USD (around £178.4 million GBP) during the current year.
However, sales in China and other global regions continued to show positive momentum, driving the company’s net revenue up to $2.6 billion by the end of last November.
Mr. McDonald said: “As we head into the holiday season, we are encouraged by the preliminary sales performance. Despite the recent Thanksgiving period, demand has since softened, coinciding with customers continuing to look for cheaper products.”
Lululemon has faced increasing competition from cheaper rivals like Fabletics and Alo Yoga for its products.
Dean Courtspell, a market director at AJ Bell, noted that the competition was “fierce,” and that the brand needed to “go back to the drawing board and find ways to make its products feel like a necessity again.”
Mr. Courtspell also added that the brand had witnessed, during Mr. McDonald’s tenure, “the humiliation of having to stop selling its highly publicized ‘Breezethrough’ product line after negative media coverage and customer criticism about uncomfortable yoga wear” last year.
The company stopped selling its new $98 product line last summer after buyers criticized the V-shaped belt hole in the back as “unflattering,” and others criticized the pressure of the hole at the top of the belt on their arms.
It was also mocked on social media in 2020 during the promotion of an event about “how to resist capitalism.”
Lululemon has contracted its Chief Financial Officer, Meghan Frank, and its Chief Operating Officer, André Maestrini, as interim co-CEOs while the company searches for new leadership.
Marti Morphew, the brand’s board chair, praised Mr. McDonald “for his visionary leadership in building Lululemon into one of the strongest brands in retail sales.”
She said: “During his tenure, Calvin led Lululemon through a period of incredible revenue growth, and product innovations that distinguished its reach to customers around the world.”
Mr. Courtspell compared Mr. McDonald’s leadership period to “the highest highs and the lowest lows of a player who reaches their peak and then quickly declines.”
He said: “He presided over Lululemon’s greatness during the athleisure trend boom, when people were happy to pay big money for cheap sportswear.”
“Then came a series of mistakes that were exacerbated by external factors beyond control. It is surprising that the company is looking for new leadership, according to that sentence added by him.”
United News Network – UNN Arabic
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