Breaking: Lululemon CEO Calvin McDonald to step down as board launches strategic reset
Lululemon just moved to reset its strategy at the top. I can confirm CEO Calvin McDonald will resign on January 31, 2026. He will serve as a senior adviser through March 31, 2026. The board has appointed Marti Morfitt as Executive Chair, effective immediately. CFO Meghan Frank and Chief Commercial Officer André Maestrini will act as interim co‑CEOs while the company searches for a permanent leader.
Why the board moved now
The call comes after a tough quarter in the core U.S. market. Americas revenue fell about 2 percent in fiscal Q3, even as international sales jumped roughly 33 percent. Profit declined by about 13 percent. The split is stark. The global brand is winning abroad, but losing momentum at home.
Pressure has been building. U.S. demand for premium athleisure has cooled. Competition from Alo and Vuori has intensified. Higher U.S. tariffs have squeezed costs. Execution has been uneven, and critics have zeroed in on past strategy choices that did not deliver. The board’s move signals urgency. It shows a focus on fixing the U.S. business while protecting gains in China and other international markets.
Timeline: McDonald exits as CEO on January 31, 2026, then advises through March 31, 2026. Interim leadership is effective now.
What the interim team must fix
Frank and Maestrini face a simple but hard task, stabilize sales and margins in North America, then rebuild momentum into 2026. That starts with product, pricing, and inventory discipline.
Winning back U.S. shoppers will take fresh innovation in core bottoms and tops. It will also require tighter markdown control to protect gross margin. On the cost side, tariff exposure and sourcing mix need attention. The brand’s China growth is a strength, yet overreliance on that growth is a risk if the U.S. stalls for too long.
One near term priority is traffic. Store productivity in the U.S. must improve without heavy discounting. Another is supply chain agility. Faster reads on sell through can cut inventory carrying costs and reduce the need for promotions. Digital marketing and member engagement also need sharper targeting to drive repeat buys.
- Near term priorities: stabilize U.S. traffic, protect gross margin, clean up inventory, keep China growth on track
Investors should watch U.S. comps, gross margin, inventory turns, and any signs of markdown creep in Q4 and Q1.
Market reaction and what it signals
Shares jumped more than 10 percent in after hours trading on the announcement. The market read the leadership change as decisive. Investors are betting that a reset can revive U.S. trends and unlock value in 2026. Relief also played a role, the worst is on the table, and the company is acting.
Expect volatility in the near term. Guidance could be reset lower before it gets better. But management clarity tends to reduce risk premiums. If interim leaders show clean inventory, firm margins, and progress in U.S. traffic by spring, the stock can build a new base.
The board’s choice of co‑CEOs is notable. It keeps financial discipline at the center with Frank, and puts commercial execution front and center with Maestrini. That balance may calm fears of a long strategic drift while the search runs.
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Bigger picture for retail and the economy
Lululemon’s split performance mirrors a two speed retail backdrop. U.S. shoppers are getting more selective on premium basics. Internationally, rising middle class consumers are still trading up. Tariffs are acting like a tax on margins. Brands with pricing power can absorb it, but only if product heat stays high.
This shift matters for investors across apparel and footwear. Companies that lean too hard on price will face margin erosion. Those that keep innovation strong, and move sourcing to offset tariffs, will defend earnings better. Lululemon is now the case to watch.
Key risk to the bull case, prolonged U.S. weakness forces deeper promotions, which could dull the brand and compress margins.
Investment view
The setup is a classic show me period. The stock bounce reflects hope for faster change. For it to stick, interim leaders must improve North America trends without heavy discounting. Cost actions, tariff mitigation, and product refreshes need to land by mid 2026.
Catalysts to track over the next 90 days include holiday sell through, Q4 gross margin guidance, inventory levels, and any early signs of new product traction. A clean exit rate into fiscal 2026 would support multiple stability. A messy one would keep the stock choppy.
Frequently Asked Questions
Q: When does Calvin McDonald leave the CEO role?
A: January 31, 2026. He will advise the company through March 31, 2026.
Q: Who is running Lululemon now?
A: Marti Morfitt is Executive Chair. CFO Meghan Frank and Chief Commercial Officer André Maestrini are interim co‑CEOs.
Q: Why did the stock jump on the news?
A: Investors welcomed decisive action and a clear plan to fix U.S. trends. The move reduces uncertainty and raises hopes for a 2026 reset.
Q: What should investors watch first?
A: U.S. comps, gross margin, inventory, and holiday sell through. Signs of lower markdowns and better traffic would be positive.
Q: What is the biggest risk?
A: A longer U.S. slowdown that forces promotions, which can hurt margins and the brand’s premium position.
Conclusion
Lululemon has pulled the fire alarm, and the board is taking control of the reset. The task is clear, reignite the U.S., protect margins, and keep international growth compounding. If the interim team shows quick progress on inventory, pricing, and product energy, the brand can turn the page. If not, 2026 will be a grind. The next two quarters will tell the story.
