Lululemon lifts revenue as CEO Calvin McDonald to step down

Lululemon reported a 7% rise in third-quarter net revenue to $2.6bn (£2.1bn), driven by a 33% increase in international sales that offset a 2% fall in the Americas.

Operating income fell 11% to $436m (£347m) as margins tightened, while gross profit rose 2% to $1.4bn (£1.12bn). Diluted earnings per share declined to $2.59 (£2.06), down from $2.87 (£2.28) a year earlier.

The company also confirmed that chief executive Calvin McDonald will step down from his role and from the board on 31 January 2026, becoming a senior adviser until 31 March.

Marti Morfitt, chair, has taken on the expanded role of executive chair, with chief financial officer Meghan Frank and chief commercial officer André Maestrini to serve as interim co-chief executives while the board carries out a search for McDonald’s successor.

The company opened 12 stores during the quarter, taking its total to 796. Frank said revenue and earnings were ahead of expectations and highlighted continued investment alongside “operational rigour”. The board increased its share repurchase authorisation by $1bn (£795m), leaving $1.6bn (£1.27bn) available. Lululemon repurchased 1m shares for $189m (£150m) in the quarter.

The business ended the period with $1bn (£795m) in cash and inventories of $2bn (£1.59bn), up 11% year on year. Fourth-quarter revenue is forecast at $3.5bn to $3.59bn (£2.78bn to £2.86bn), with full-year revenue expected to reach up to $11.05bn (£8.78bn).

McDonald said: “Serving as CEO of lululemon has been the highlight of my career, and I am incredibly proud of everything our team has accomplished over the last seven years. Together, we have transformed the athletic apparel industry and the opportunity ahead for lululemon 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.”

Morfitt added: “On behalf of the board and the entire organisation, I want to thank Calvin for his visionary leadership building lululemon into one of the strongest brands in retail. During his tenure, Calvin led lululemon 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.”