Lululemon shares surge on CEO exit news
A Lululemon store pictured Dec. 2019 in Lynnfield, Mass. On Friday, the Canada-based company’s sock value spiked more than 9% in premarket trading following its announcement CEO Calvin McDonald will step down next month. Photo Provided by CJ Gunther/EPA
Dec. 12 (UPI) — Shares of Lululemon stock surged Friday after CEO Calvin McDonald announced his retirement.
The Canada-based company’s stock value spiked more than 9% in premarket trading following its announcement that McDonald was resigning from his role.
“The timing is right for a change,” McDonald said on a call. “I’ve described being CEO of Lululemon as my dream job. It truly has lived up to every expectation and given me the opportunity of a lifetime.”
McDonald expects a Jan. 31 departure from the athleisure company and will cap more than a year of lackluster performance.
Lululemon’s NYSE shares climbed 9.35% to $204.50 in recent trading, following a roughly 10% surge the day prior.
The company disclosed McDonald’s exit alongside fiscal third-quarter earnings and another batch of disappointing guidance.
According to the company, Lululemon’s board has engaged an unnamed “leading” executive search firm to replace McDonald.
The outgoing CEO will remain as senior adviser until March 31.
Lululemon named CFO Meghan Frank and Chief Commercial Officer Andre Maestrini as interim co-CEOs while it hunts for a permanent leader.
Meanwhile, Board chair Marti Morfitt will assume an expanded role as executive chair.
“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 Morfitt.
Lululemon reported quarterly revenue of $2.57 billion, up from $2.40 billion the same period last year.
McDonald pointed to a robust Thanksgiving weekend demand that helped the company clear outdated inventory through discounts.
He said early holiday results were “encouraging” as it looked ahead to the current quarter.
“I also want to acknowledge we’ve seen trends slow a bit since Thanksgiving, which we’ve taken into account in our Q4 guidance,” McDonald continued.
But he added it projected revenue of $3.50 billion to $3.59 billion, which was slightly under Wall Street forecasts.
Lululemon has grappled with mounting pressures over the past year, including competition and tariffs imposed by U.S. President Donald Trump.
Over the summer, Lululemon sued Costco for selling a “confusingly similar” clothing line.
“However, despite this, we expect revenue trends in the U.S. and Q4 to be modestly improved relative to Q3,” according to McDonald.