Lululemon shares jumped more than 9% on Friday, after the company announced its CEO Calvin McDonald will step down.

McDonald’s departure, effective Jan. 31, follows more than a year of underperformance at the athleisure company. 

Lululemon’s board of directors is working with a “leading executive search firm” to identify its next CEO, it said in a news release. McDonald will stay on as a senior advisor through March 31. 

“The timing is right for a change,” McDonald said on a call with analysts, “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.”

Lululemon’s CFO Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs during the search process. The company’s board chair Marti Morfitt will also take on the expanded role of executive chair. In a statement, she said the company has a strong foundation in place but needs a new leader that can guide it through a transition.

“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.

The leadership change follows more than a year of underperformance at Lululemon and calls for change from its founder and its largest independent shareholder Chip Wilson. Two months ago, he took out a full page ad in the Wall Street Journal saying the company is “in a nosedive” and it needed to “stop chasing Wall Street at the expense of customers.” 

Lululemon announced McDonald’s departure on the same day it posted fiscal third-quarter earnings and another round of weak guidance. 

Here’s how the company did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $2.59 vs. $2.25 expected
• Revenue: $2.57 billion vs. $2.48 billion expected

The company’s reported net income for the three-month period that ended Nov. 2 was $306.84 million, or $2.59 per share, compared with $351.87 million, or $2.87 per share, a year earlier. 

Sales rose to $2.57 billion, up from $2.40 billion a year earlier. 

For Lululemon’s current quarter, McDonald said the company is “encouraged” by its early performance so far this holiday season — though guidance fell short of Wall Street estimates. It anticipates sales will be between $3.50 billion and $3.59 billion, largely below expectations of $3.60 billion, according to LSEG. 

It’s expecting earnings per share to be between $4.66 and $4.76, well short of expectations of $5.03, according to LSEG. 

In the previous two quarters, Lululemon cut its full-year guidance. On Thursday, more than a month into the final quarter of the year, it raised its full-year expectations.

It now anticipates sales will be between $10.96 billion and $11.05 billion, in line with expectations at the low end, according to LSEG. It expects earnings per share to be between $12.92 and $13.02, roughly…

Lululemon Athletica said that CEO Calvin McDonald was leaving the company without a replacement and raised its annual profit 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.

McDonald joined the board of directors at the Walt Disney Company in 2021.

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.

2 interim co-CEOs

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.

The Lululemon board “is conducting a comprehensive search” to find McDonald’s successor, the company said in a news release.

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…