Analysts view the stock as potentially cheap relative to fundamentals, with a mid-teens P/E, and believe long-term brand strength could support recovery regardless of the next CEO.

Lululemon says CEO Calvin McDonald will depart at the end of January 2026 after more than seven years at the helm, with Meghan Frank and André Maestrini serving as interim co-CEOs during the search for a successor and Marti Morfitt moving to executive chair.

The board has hired a leading executive search firm to identify the next CEO.

McDonald will also leave the board and remain as an advisor through March before stepping away entirely.

In the third quarter, comparable-store sales fell 5% in the Americas, while revenue rose 7% to $2.6 billion thanks to strength in international markets like China; however, operating margin shrank 350 basis points to 17% and EPS declined from $2.87 to $2.59.

The company notes ongoing pressures from tariffs, weaker U.S. demand, and heightened competition from brands such as Alo Yoga and Vuori, contributing to a softer U.S. athleisure market.

Shares rose about 10% in after-hours trading following the leadership transition and earnings context.

McDonald’s tenure began strong in 2018 but faced headwinds over the past two years due to product missteps and softer U.S. consumer spending, contributing to a sizable stock decline.

For the quarter, Lululemon guided revenue of roughly $3.50–$3.59 billion and EPS of about $4.66–$4.76, below consensus; full-year guidance was raised but remains cautious.

Reports mention a potential proxy fight by founder Chip Wilson amid restructuring and broader leadership changes, per The Wall Street Journal.

To spur growth, Lululemon is expanding internationally and broadening beyond yoga pants into shoes, outerwear, and casual/workwear, with gains mainly driven by international expansion and new stores.

Holiday demand started strong but is showing signs of slowing, with discounts likely to rise to clear aged inventory; the company plans inventory levels to be below sales in 2026.