Lululemon Stock Pops on Earnings Beat and CEO Change

A Lululemon retail store is seen in the Barton Creek Square mall on June 17, 2025 in Austin, Texas. (Brandon Bell/Getty Images)

Key Points

• Lululemon’s CEO Calvin McDonald will step down on Jan. 31, with interim co-CEOs appointed while a successor is sought.
• Third-quarter revenue rose 7% to $2.6 billion, exceeding projections, and adjusted earnings of $2.59 per share also beat estimates.
• The company increased its full-year net sales guidance to $10.962 billion to $11.047 billion, up from the prior range.

Lululemon Athletica stock jumped Thursday after the company posted a better-than-expected fiscal third quarter and said CEO Calvin McDonald would be stepping down next year.

The company announced that McDonald plans to step down on Jan. 31. The board of directors has yet to name a permanent successor. Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs until then.

“Lululemon has a strong foundation in place, and, as we look to the future, the Board is focused on identifying a leader with a track record of driving companies through periods of growth and transformation to guide the company’s next chapter of success,” said Marti Morfitt, executive chair of the board.

The CEO change comes as Lululemon continues to struggle with building up demand in the Americas, the company’s largest market.

Although total comparable-store sales increased 1% from a year ago— in line with projections— comparable-store sales in the Americas fell 5% from a year ago.

And while Black Friday weekend results were encouraging, demand has softened in the following weeks, McDonald said on a call Thursday, which prompted the company to issue somewhat lackluster fourth-quarter guidance.

Fourth quarter revenue will range from $3.500 billion to $3.585 billion, representing a decline of between 3% and 1% from a year ago, largely because of calendar shifts that gave an extra retailing week to the third quarter. Sales guidance is roughly in line with expectations for $3.57 billion. Earnings per share projections, however, are weaker than the Street is forecasting, with a range of $4.66 to $4.76. The range’s midpoint, $4.71, is below the $4.94

Lululemon’s slowing sales trends have been weighing heavily on the stock this year, with shares down a little over 50%.

“They lost share in a increasingly competitive athleisure market and specifically have not been able to successfully address its weakening share of the core women’s pants despite multiple attempts to address that,” said Matt Jacob, analyst at research and analytics firm M Science. “So that will be a challenge for the new permanent CEO.”

That said, shares were up 9.8% in after-hours trading following the CEO announcement, likely reflecting the market’s enthusiasm that a new chief executive could help turn the company around.

Lululemon’s third-quarter performance helped, as did the board’s approval of a $1 billion increase to the company’s stock repurchase program.

Revenue rose 7% from a year earlier to $2.6 billion, topping analysts’ projections for $2.48 billion. Adjusted earnings of $2.59 a share were also ahead of estimates calling for $2.21 a share, according to FactSet.

Despite the fourth quarter outlook, Lululemon slightly increased its guidance for the fiscal year. It now sees net sales ranging from $10.962 billion to $11.047 billion, slightly higher than the prior range calling for $10.85 billion to $11 billion.

Earnings per share will be between $12.92 to $13.02, up from the prior range of $12.77 to $12.97 for the year. The guidance includes an income reduction of about $210 million stemming from new tariffs and the removal of the de minimis exemption. The company surprised investors a quarter ago by revealing that it had often taken advantage of the exemption to send packages from its Canadian distribution centers to U.S. customers duty free.

Analysts are expecting adjusted earnings of $12.85 a share on $10.96 billion in revenue.

On Thursday, Lululemon outlined certain efforts it was implementing “immediately” to start improving the company’s performance, which focus around making better products, activating consumer demand, and making Lululemon more efficient.

When it comes to product creation, Lululemon is planning to increase the frequency and breadth of new styles, as well as updating several of its existing franchises and fast-tracking product design and production to better respond to trends, Frank said. The company is also improving both its in store and online experience, and plans to invest in more marketing efforts around the world.

Write to Sabrina Escobar at sabrina.escobar@barrons.com