Calvin McDonald’s departure is a problem for Lululemon

When Calvin McDonald was appointed CEO of Lululemon in 2018, the activewear brand was a cult brand. But it had the potential to become a retail giant.

Chip Wilson founded Lululemon in Vancouver in 1998 as a yoga brand. When he left the CEO role in 2005, the company was generating $80 million a year. In the decade that followed, Lululemon grew steadily, boosted by the broader athleisure trend. But it was McDonald—who previously spent five years delivering double-digit growth as CEO of Sephora Americas—who transformed Lululemon into one of the biggest clothing companies in the world.

Over the course of his seven-year tenure, McDonald more than tripled the company’s annual revenue from $2.6 billion in 2018 to $10.6 billion in 2024. (Revenue is expected to hit $11 billion this year.) He led the company’s global expansion to 30 countries; international revenue alone is now $3 billion. And he helped Lululemon become known not only for activewear, but also for apparel you could wear to the office.

Now, McDonald is on his way out. Last week, at Lululemon’s earnings call, the company announced that it was looking for a new CEO with experience in “growth and transformation“. This comes after Lululemon’s growth slowed to 10% last year from 19% the year before. There are many reasons for the company’s recent troubles, from product missteps like a widely-panned Disney collaboration to U.S. tariffs to weaker consumer spending. All of this has led Lululemon’s stock to tumble over the past two years. (Lululemon declined to comment for this story.)

But McDonald’s track record suggests that he would have been capable of steering Lululemon back to growth—and the company may ultimately regret its decision to let him go.

Wilson wanted McDonald Out

What’s clear is that Lululemon’s founder, who stepped down from the role of CEO in 2005, wanted McDonald out.

Wilson has famously tried to stay involved with his company, even though he no longer has an official position. In 2013, he was forced to give up his role as board chairman after saying Lululemon’s clothes don’t work for “some women’s bodies,” which was perceived to be body-shaming. Wilson continued to make controversial comments. Last year, he drew backlash after he criticized Lululemon’s “whole diversity and inclusion thing,” adding that “you’ve got to be clear that you don’t want certain customers coming in.”

In response to the outcry, Lululemon issued a statement distancing the company from its founder, and McDonald spoke to Fast Company about how much Lululemon had changed since Wilson’s departure.

But Wilson still has powerful influence because he remains the company’s largest individual shareholder, owning roughly 9% of shares. In October, Wilson took out a full page advertisement in the Wall Street Journal outlining everything he felt was wrong at the company. Wilson wrote that Lululemon’s troubles boil down to the fact that he is no longer leading the company and has been replaced by CEOs who “speak Wall Street.” Since Wilson no longer has a seat on the board, it’s unlikely that his perspective directly affects management’s decisions about the company’s future. But the ad created a lot of buzz, and may have accelerated the decision to find a new leader.

McDonald’s Missteps Don’t Define His Tenure

To be fair, Wilson made some reasonable points in his write-up. It’s true that McDonald has taken some wrong turns in his quest for growth. There was his decision to go beyond Lululemon’s expertise in apparel and enter the fitness market. In 2020, it spent $1 billion on acquiring the smart exercise device Mirror; three years later, Lululemon stopped selling the device and fired 100 employees working on this part of the business.

Then there was what Wilson describes as the “wildly inappropriate” Disney collab. One of Lululemon’s strengths has been how judicious it is about collaborations, setting it apart from the collab-happy fashion industry. Its rare partnerships with designers have been elevated and interesting, such as the 2017 collab with Central Saint Martins and the 2019 collab with the edgy designer Roksanda Ilinčić. By comparison, last year’s Disney collab seemed like a naked cash-grab. Its current capsule collection with the luxury L.A.-based grocery store Erewhon similarly feels like an effort to tap into a short-term trend, rather than focus on the well-designed classic garments that consumers love.

But these mistakes don’t define McDonald’s leadership. He’s also focused on product innovation, which has always been the key to Lululemon’s success. In 2022, after years of development, Lululemon launched its own footwear line, which has been successful. As culture has moved beyond athleisure, he’s directed Lululemon’s designers to produce chic clothing—like blazers and trousers—that can be worn to the office, including the bestselling men’s ABC pant and women’s Daydrift trouser. And the company has continued to develop new fabrics, while leaning into the ones that customers love, like the buttery Nulu material in Lululemon’s best-selling Align leggings. Earlier this year, after acknowledging that some customers felt “fatigue” with the product assortment, McDonald promised to double down on design.

Steering a $10 Billion Brand

In his ad, Wilson laid out a strategy for Lululemon to bounce back. He says the company needs to put product and brand back at the center, empower creative leadership rather than merchants looking at spreadsheets, and focus on designing for the women who dictate culture, rather than follow it. All of this is good advice, and Lululemon’s next CEO should take note. But it is also insufficient because it fails to recognize the scale of the company that Lululemon has become.

Much of Lululemon’s growth in recent years has come from its global expansion, which McDonald has steered. Mainland China has now become the company’s second largest market after the United States. Creating a brand and products that resonates across so many different markets is no small task, and it is something that Wilson never had to tackle.

The growth of this international business has been crucial to Lululemon’s continued growth, particularly because American consumers are curbing their spending. President The President’s tariffs, which have increased the price of goods and inflation, are causing many Americans to tighten their belts. In September, Lululemon said that changes in the U.S. tax code would add roughly $240 million in expenses.

And yet Lululemon’s overall revenue is continuing to grow, thanks to the strength of its international markets. In its third quarter, Lululemon’s international revenue had grown by 33% while its U.S. revenue had declined by 2%.

McDonald has masterfully transformed Lululemon from a brand that made pricey yoga leggings into a global fashion powerhouse. With his departure, Lululemon is losing a leader who knows the company well and has a track record of driving growth. The new CEO will have big shoes to fill. And the world will be watching where McDonald lands next.

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