The situation: Lululemon athletica’s CEO Calvin McDonald will relinquish his role on January 31, 2026 to an as-yet-unnamed successor. Whoever that person is will face the task of restoring the brand’s authority in a category it once dominated—particularly in North America, where sales have been stagnant or negative for seven straight quarters.

The challenges: Lululemon’s struggles were evident in Q3. While the company beat revenue expectations, all of its growth is coming from the international business, which had a 33% YoY rise in net revenues as comparable sales increased 18%. By contrast, revenues in the Americas declined by 2% YoY—with a 3% drop in the US—while comparable sales fell 5%.

• Competition is fierce. Brands like Alo Yoga and Vuori are winning over fashion-conscious consumers, while cost-sensitive shoppers are seeking lower-cost options from retailers like Costco and Old Navy.
• Tastes have changed. Shoppers are currently more interested in denim than yoga pants—and more inclined to purchase looser fits than the tight-fitting styles that are lululemon’s bread-and-butter offering.
• Merchandising execution has missed the mark. The company has struggled to steadily roll out products that excite its customers; when it has scored a hit, a lack of inventory has hurt its ability to capitalize on interest.

The opportunities: Despite these issues, lululemon has certain advantages.

• The company is growing fast and gaining share in Mainland China, where it has more room for expansion into lower-tier cities.
• Its partnership with American Express’ Platinum card appears to be helping to reactivate higher-income shoppers and boost sales.

Our take: Whoever takes the helm at lululemon should look to refocus the brand on its athleisure roots.

• The company needs to make sure that its core product lines are resonating with consumers before devoting significant resources into other categories like footwear, where it faces a tougher path to building credibility amid entrenched competition.
• Partnerships like its recent deal with the NFL could introduce the brand to larger audiences. But that will only heighten the pressure to execute on merchandising and product relevance.

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