As if Lululemon doesn’t have enough problems already—same store sales have been comping flat to negative since first quarter 2024 in the Americas— it’s now got to find a new CEO to fill the shoes of Calvin McDonald. After his official exit at the end of next month, CFO Meghan Frank and COO André Maestrini will serve as interim co-CEOs until a new chief executive is named. 

Company founder Chip Wilson has long bristled at McDonald’s leadership and the board’s complacency as it oversaw a nearly 65% drop in LULU’s share price over the past two years. Wilson left the company in 2015 but remains a major shareholder, holding over $2 billion in stock, according to Forbes.

 “The erosion of premium brand value in the Company’s core markets demonstrates that the Board does not understand its target customers anymore,” he shared in a press release. “I am deeply concerned about what appears to be a tremendous failure by the Board to competently plan for the future and manage an effective succession process.”

He called on the board to seek out the advice of individuals with specific, unique experience and deep knowledge of the company to advise in the succession process. He’s put forward three independent candidates to join the board— Marc Maurer (former On Holding AG Co-CEO), Laura Gentile (former ESPN CMO), and Eric Hirshberg (former Activision CEO and former Deutsch LA Co-CEO and CCO).

However, research shows that over 90% of shareholders overwhelmingly approve board-nominated candidates. Wilson isn’t on the Lululemon board, and it doesn’t solve the more pressing need for a new CEO.

Candidate Put Forward

Meanwhile, Elliott Investment Management, which has acquired over a $1 billion stake in the company, has brought forward its own candidate: 60-year-old Jane Neilsen, former CFO and COO of Ralph Lauren. Before that, she was CFO at Coach, following nearly 17 years climbing the ladder at PepsiCo in finance, investor relations and strategy. 

She is credited with getting both Ralph Lauren and Coach back on track in the premium/luxury space and reducing reliance on discounting and outlets for growth. 

Lululemon has slipped into the discount space as well, but it’s been a result of product missteps, unlike at Ralph Lauren and Coach, which juiced their results from rampant outlet exposure. 

For Lululemon, discounting is a symptom of underlying problems, not the cause of bigger ones as with the other two brands.

“She certainly has some of the strategic and financial chops required to architect and execute the transformation that needs to be done at Lululemon and experience in senior levels at great brands,” observed John B.R. Long of executive recruitment and advisory firm the Hawksnest Group. 

However, he has reservations. “I’d like to better understand her skillset around the real ‘guts’ of a retail operation—stores, ecommerce, merchandising—that will be central to making the transformation a successful one.”

From Growth To Maturity 

After 30-plus years of experience recruiting C-Suite and board members, Long is about to release a book, Hire Without Ego: The Talent Lifecycle Approach To Improving Your Hiring and Career Decisions, that should be required reading for the executive chair of the board, Marti Morfitt, and the rest of its members. 

The premise of the book is in the subtitle: that ego-driven biases often lead to decisions that unintentionally destroy value, companies and brands. Those biases—typically boardrooms and C-suites are overflowing with ego—are caused by the failure to accurately assess where a company is in its natural growth and maturity lifecycle and, as a result, hiring the wrong leader.

Lululemon is at a critical juncture. It’s past its growth phase and now in maturity where a different skillset is required. It’s the time when self-aware company founders step aside and bring in professional leaders and managers to carefully guide the company forward before it hits the decline phase in its lifecycle when a turnaround expert is needed. 

Lululemon doesn’t need a turnaround expert but a stable, experienced steady hand ready to manage the company to stabilize sales and profit growth in the face of intense competitive pressure. All the while, the in-coming CEO must be ready to reinvent and transform the business from what it was to what it can become. It can’t go back to the old playbook but invent a new one. Otherwise, it will shift into decline, which is much harder to recover from.

“For companies navigating Maturity, success can come from reinvigorating the core business and entering attractive new adjacencies—hence creating new sources of revenue growth,” Long explains.

It’s move into men’s and beyond yoga into fitness more broadly is on point. However, other diversification efforts, such as licensed Mickey Mouse/NFL products, may be too far afield.   

Likewise, its expansion into China and other international markets has delivered impressive growth, but at the expense of the Americas. Through the third quarter this year, the Americas accounted for 69% of revenue, down from 79% in 2023. And more troublesome, the Americas’ same store sales have been flat or declining every quarter since 2024, including off 5% in the third quarter. 

What’s happening in the Americas is a sign of impending decline not sustainable maturity.   

Challenges And Opportunities In Maturity

Lululemon virtually created the athleisurewear category at its founding in 1998. Over the years, it spawned a whole host of competitors that have been steadily eating away at its market share, while the athleisurewear market is also moving from growth to maturity. 

“The Maturity stage mandate is performing and transforming,” wrote Long. “So successful companies must be closely attuned to their customers’ evolving wants and needs. The very best mature companies make decisions with their customers’ current and future wants and needs at the center of every decision.”

Founder Wilson is reading the room right about recommitting to the customer. The new CEO must be laser focused on the customer and what she or he wants and needs. Yet, his call to bring Lululemon back to being a product-first company is not necessarily the solution in its maturity phase, unlike during its growth phase when it defined the category. 

Many competitors have successfully taken on Lululemon in fashion, notably Alo Yoga, Vuori and Gymshark in the premium space, as well as Nike, Fabletics and Athleta in mass, not to mention Costco, which is being sued by Lululemon for producing dupes. While it must continue to lead in fashion—new design director Jonathan Cheung’s collections have yet to be released—Lululemon needs more than on-trend designs to flip the switch.

“In fashion, you’re either going to get the trend right, or not,” shared Long. “For an $11 billion business, that’s an incredibly tough challenge. You’re going to need to have other plays there that can potentially help when you miss the trend.” 

Lululemon has evolved from a fashion into a lifestyle brand, giving it a wider mandate than its competitors stuck in the fashion lane. And its lifestyle goes beyond yoga to fitness and wellness. The Global Wellness Institute projects the wellness economy will grow 7.6% per year through 2029, from $6.8 trillion to $9.8 trillion.  

“New leadership needs to incubate new ideas and new adjacencies that can be explored,” he continued. “They’ve focused on fashion, stores, e-commerce and community, yet there are certainly extensions of these that can be experimented with to create more green shoots throughout the business, like joint ventures and acquisitions.”

Perhaps Lululemon is going to be a little gun-shy with acquisitions, after dropping $500 million to acquire the hardware-centric Mirror connected fitness company in 2020. It wasn’t the right move at the time and in 2023, Lululemon stopped selling the Mirror device and moved to Peloton as its digital fitness content provider in a five-year partnership.

‘Professional Transformer’ Needed

The individual Lululemon needs as its new CEO is what Long describes as a “Professional Transformer,” as opposed to a “Grower.”  McDonald proved to fit the Grower profile, but who, after 7.5 years as CEO, had reached the average seven-year tenure of a CEO’s effectiveness, according to Russell Reynolds Associates.  Note to the board: It should have been planning succession long before now.

In the mature phase of a company’s lifecycle, the Professional Transformer must be focused on delivering consistent performance and maximizing efficiencies yet also be a change agent to fundamentally rethink the business model, not just tweak it.

“The new leader is going to have to think about reinvention and what other highly relevant things it can do. It may be outside fashion to other adjacencies where it can develop products or acquire companies in those adjacencies,” Long said.

 “At its roots, Lululemon was a game-changer, in terms of its clothing, sustainability and the community it built around fitness. The next CEO is going to have to rethink and reinvent Lululemon’s business in a relevant way that is 2025 and beyond. It can’t go backward, but must go forward.”