Calvin McDonald, Canadian-born Lululemon leader, to exit company in January

Lululemon Athletica said that CEO melvin calvin McDonald was leaving the companion without a replacing and raised its yearbook benefit forecast, sending shares up about 10 per cent in extended trade on Thursday.

McDonald, a Canadian who studied at the University of Toronto and Western University, will step down from Lululemon in January after about seven years at the helm.

Prior to taking the job at Lululemon, McDonald served as president and CEO of Sephora Americas. He was also previously the president and CEO of Sears Canada.

The Wall Street Journal reported, citing people familiar with the matter, that the company's founder Chip Wilson was frustrated with marketing and had been considering a proxy fight.

Known for its pricey leggings and athleisure clothing, Lululemon's sales have struggled in the U.S. As it lost ground to upstart brands such as Alo Yoga as well as private-label replicas, with executives noting in September that they were disappointed with its results and product execution in the country.

The shakeup at the top also is the latest in a string of big changes in C-suites for retailers as they look to capture a younger, more cautious audience and wade through supply chain and operational issues.

The company also approved a $1-billion US increase to its stock buyback program.

The company named its finance chief Meghan Frank and chief commercial officer André Maestrini as co-interim CEOs while it searches for a new boss.

Lululemon did not immediately respond to a Reuters request for comment about the proxy fight report.

"Lululemon has struggled lately by its usual standards so that's probably part of the CEO change," said David Swartz, analyst at Morningstar Research, who nevertheless said McDonald had been a very effective CEO.

"Lululemon's hyper-growth days are clearly in the past — and that is unable to change any time soon," said Andrew Rocco, stock strategist at Zacks Investment Research.

"However, thanks to a bargain basement valuation, CEO shakeup, and a promising start to the holiday season, bottom fishers are taking a shot at the stock."

Lululemon now expects annual profit between $12.92 US and $13.02 US per share, compared with previous expectations of $12.77 US to $12.97 US apiece, while it also raised its annual sales target.

It now sees a $210-million US hit to its income from operations in 2025 due to tariffs.

For the quarter ended Nov. 2, the Vancouver-based company reported net revenue of $2.57 billion US.

That beat estimates of $2.48 billion US, according to data compiled by LSEG.

Executives also noted a strong start to the holiday shopping season with the Thanksgiving holiday period, but said that demand has slowed since.

Interim co-CEO Frank said on a post-earnings call that Lululemon would invest in marketing in the fourth quarter to help drive traffic and build brand awareness.

Discounts are also expected to be higher as it works to clean out aged inventory.

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