Lululemon Shakeup: Higher Revenue, Lower Profits, and CEO Exit

Lululemon faces the final stretch of its fiscal year at two speeds and with one notable casualty: that of its CEO, Calvin McDonald, who will leave the company at the end of January 2026, after seven years with the company. The company increased its revenue in both the third quarter and the first nine months of the fiscal year, but reduced its net income in both periods.

The company reported revenue of $2.56 billion in the third quarter of the year, up 7% from the same period last year. However, its net profit fell by 12.8%, from $351.9 million in the third quarter of 2024 to $306.8 million in the same period of the current fiscal year.

For the first nine months of the year, Lululemon posted a turnover of $7.46 billion, also up nearly 7%, while its net profit fell by 6.9%, dropping below $1 billion to $992.3 million.

Marti Morfitt and Meghan Frank will act as interim co-CEOs following McDonald’s departure

In conjunction with the release of its earnings release, the company announced the departure of its CEO, Calvin McDonald, who will step down on January 31st, 2026. He and the board of directors are reportedly already working to find a candidate and “ensure an orderly transition” of the company, where McDonald will continue as an advisor until March 31st next year.

On the other hand, Marti Morfitt, until now chairman of the board, will assume the executive chairmanship to “ensure continuity in the execution of the growth strategy” during the transition. Following the departure of the CEO, Meghan Frank, currently CFO, and André Maestrini, chief commercial officer, will take over as interim co-CEOs.

The company has highlighted the fact that, under McDonald’s leadership, Lululemon has “more than tripled its annual revenue”, in an upward trend that is expected to culminate in a turnover of $11 billion by the end of the fiscal year. The executive has also been in charge of “expanding the brand’s global presence”, which is already in more than thirty markets, and “made the Chinese business its second most important market”.

By market, sales in the United States fell by 3% in the third quarter and in Canada by 1%. The 95% growth in Mexico is explained by the fact that in September last year the company acquired the stores and operations of its own brand, which until then were managed by a third party in the region. Overall, the Americas region saw a 2% decline in turnover, while China was up 46% and the rest of the world 19%.

For the fourth quarter of the year, the company expects to post revenues of between $3.5 billion and $3.585 billion, a decline of between 3% and 1%. However, for the full year, the company expects to generate revenues of between $10.962 billion and $11.047 billion, up 4% to 6%. Its operating income will be reduced by approximately $210 million as a result of U.S. tariffs and the elimination of the ‘de minimis’ exemption, among other reasons.