Canadian athleisure company Lululemon Athletica has simultaneously announced its third quarter fiscal 2025 financial results and a significant leadership change. The company confirmed that Calvin McDonald will step down as Chief Executive Officer (CEO) and member of the Board of Directors effective January 31, 2026. The Board of Directors has already started a comprehensive search for a successor.
The change in leadership follows a period of weak corporate performance, particularly in the important US market. Company founder and largest independent shareholder Chip Wilson had therefore called for significant changes. Two months before the official announcement, he stepped up his criticism and took out a full-page ad in the Wall Street Journal. In it he wrote that the company was “on the decline” and needed to stop “chasing Wall Street at the expense of its customers.”
Overview of Lululemon’s Q3 results and leadership transition
In the third quarter ended November 2, 2025, Lululemon’s net sales rose seven percent to $2.6 billion (2.22 billion euros). The growth was primarily driven by international markets. Net sales there increased by 33 percent and like-for-like sales increased by 18 percent. In North and South America, however, net sales fell by two percent and like-for-like sales fell by five percent.
Despite the increase in sales, profitability fell. Diluted earnings per share (EPS) were $2.59, down from $2.87 in the same quarter last year. The gross margin fell by 290 basis points to 55.6 percent, the operating margin fell by 350 basis points to 17 percent. In the third quarter, Lululemon opened twelve more stores of its own and had a total of 796 stores at the end of the quarter.
Calvin McDonald said the teams are focused on “driving improvements in our U.S. business and maintaining momentum in our international regions.” The company expects the first effects of the action plan from 2026. “The time for a change is right,” said McDonald in a telephone conference. “The role of CEO at Lululemon was my dream job. It met all my expectations and gave me the opportunity of a lifetime.”
The company also appointed previous CEO Marti Morfitt as executive chairwoman with immediate effect. After McDonald’s departure, CFO Meghan Frank and Chief Commercial Officer André Maestrini will take over as co-CEOs on an interim basis until a successor is found.
Share buyback and weaker outlook
The board also approved a $1 billion expansion of the stock repurchase program. As of December 11, 2025, a total of around $1.6 billion was available under the program.
Lululemon’s fourth-quarter outlook falls short of Wall Street’s expectations. The company expects revenue between $3.50 billion and $3.59 billion, while LSEG’s estimates are $3.60 billion. The forecast for earnings per share is also lower at $4.66 to $4.76 than the $5.03 expected by analysts.
For the full year 2025, Lululemon now expects net sales of between $10.96 billion and $11.05 billion. This corresponds to growth of four percent. Excluding the additional 53rd week of 2024, growth is five to six percent. Diluted earnings per share are expected to be between $12.92 and $13.02.
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