Calvin McDonald, CEO of lululemon Athletica Inc., is interviewed by CNBC at the New York Stock Exchange (NYSE) in New York, United States, March 29, 2023.
Brendan McDermid | Reuters
Lululemon announced Thursday that its CEO, Calvin McDonald, will step down effective Jan. 31 after a year of underperformance at the athleisure company.
The company’s board of directors is currently conducting a search process with a “leading executive search firm” to identify the company’s next CEO, it said in a press release. McDonald will remain senior advisor until March 31.
“Being CEO of lululemon has been the highlight of my career and I am incredibly proud of everything our team has accomplished over the past seven years,” McDonald said in a press release. “Together we have transformed the sportswear industry and the opportunities ahead for lululemon are significant. I believe the exceptional product portfolio we have built and the action plan we have put in place will produce positive results and deliver shareholder value in the months and years to come. »:
He said he was “determined to fully support the transition” through his advisory role.
Lululemon’s business has been under pressure over the past year as it deals with the impact of tariffs, a fragile U.S. consumer and a product assortment that has failed to impress shoppers in the same way it once did. It also faces strong competition in the athleisure space from newcomers like Vuori and Alo Yoga, as well as a shift in consumer preferences. Instead of yoga pants, many shoppers these days are turning to denim.
To drive growth and reach a wider audience, Lululemon has been working to expand its business internationally and offer shoppers a wider assortment. Instead of just workout gear, Lululemon has expanded into footwear, outerwear like coats, jackets, and casual pants that can be worn to work.
The company’s overall business is growing, but this growth is mainly due to its international operations and the opening of new stores. Its largest market, the Americas, is in decline.
Lululemon is also being hit by the end of the de minimis exemption, which allowed low-value packages to enter the U.S. duty-free, somewhat harsher than its peers.
In September, it said it expects the tariffs to dent its annual profits by $240 million and that most of those costs will come from the end of the de minimis exemption.
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