Lululemon stock has been a major underperformer in 2025. Year to date, it’s down nearly 50%1 amid subdued demand for its athleisure products, increased levels of competition, and tariff issues. The company is determined to turn things around, however. This is illustrated by the fact that on December 11, it announced that it is currently looking for a new CEO who can get the business back on track.
Lululemon is Looking for a New Leader
In an announcement posted shortly before the company’s Q3 earnings report, Lululemon said that current CEO Calvin McDonald will step down at the end of January 2026. While McDonald has overseen a period of significant growth for the company since his arrival in 2018, recent operational performance has been poor, and the board is now looking for a leader who can “guide the company’s next chapter of success.”
Currently, its board of directors is working with an executive search firm to identify the next CEO. CFO Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs during the search process while Chair Marti Morfitt will take on the expanded role of Executive Chair.
It’s worth noting that the move to replace Calvin McDonald as CEO comes on the back of calls for change from Lululemon’s founder and largest independent shareholder Chip Wilson. He has been pressuring the board to make a change recently, blaming McDonald's leadership for "poor decisions" that have eroded the brand and destroyed shareholder value.
In a research note2, Jefferies analyst Randal Konik said that the move was a positive development. Konik’s view is that under McDonald, the company has lost its way, alienating loyal customers, and allowing competitors to gain a foothold in the market.
Q3 Earnings Were Better Than Expected
As for the company’s Q3 earnings3, they were better than expected with both revenue and earnings beating expectations4. For the quarter, revenue was up 7% year on year to $2.57 billion versus $2.48 billion expected. Earnings per share came in at $2.59, down from $2.87 a year earlier but above the consensus forecast of $2.25.
On the downside, guidance was relatively weak. For the fourth quarter of 2025, the company expects net revenue to be between $3.50 billion and $3.59 billion, representing a decline of 3% to 1%, with earnings in the range of $4.66 to $4.76. Prior to the release, analysts had been looking for $5.03, according to LSEG.
Lululemon Stock Remains Cheap
As for whether a new CEO can boost Lululemon’s performance and stock price, that remains to be seen. Whoever comes in will need to sort out product issues and rebuild the brand so that it can capture market share back from competitors such as Alo Yoga, Fabletics, and Athleta.
There is potential for stock price upside if the new CEO can improve performance though. Looking at the company’s EPS estimate of around $13 for 2025, the stock is currently trading on a P/E ratio of just 16, a ratio well below the market average.
Footnotes:
1Google Finance, as of December 12, 2025
2MorningStar, Lululemon's ousting of CEO draws praise from activist founder, Chip Wilson, as of December 12, 2025
3Lululemon, lululemon athletica inc. Announces Third Quarter Fiscal 2025 Results; Board of Directors Authorizes $1.0 Billion Increase in Its Stock Repurchase Program, as of December 11, 2025
4CNBC, Lululemon jumps in premarket after CEO Calvin McDonald announces departure, as of December 11, 2025
