Lululemon reports Q3 sales lift as CEO announces exit

Lululemon has reported a 7% rise in third‑quarter revenues to $2.6  billion (£1.94 billion), driven by strong international demand even as momentum in the Americas softened. This comes just hours after the athleisurewear giant confirmed that CEO Calvin McDonald will depart the brand in early 2026 after seven years in the role.

The Vancouver-based retailer recorded a 1% increase in comparable sales, or 2% on a constant-currency basis. But performance varied sharply by region. International revenues surged 33%, while the Americas declined 2%.

Calvin McDonald, Chief Executive Officer, said: "In the third quarter, our teams remained focused on driving improvements within our US business and maintaining momentum in our international regions. We are beginning to make progress against our action plan and continue to expect to see the impact of this work in 2026.

"As we enter the holiday season, we are encouraged by our early performance, and I would like to thank all our Lululemon team members for their hard work and dedication to our guests and communities."

Lululemon confirmed that McDonald will step down as CEO and director on 31  January 2026, then serve as a senior advisor through 31  March while the company searches for his successor. While the Board searches for his replacement, Board Chair Marti Morfitt will take on the expanded role of Executive Chair, while Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs.

Since joining Lululemon in 2018, McDonald has overseen a period of significant growth and innovation, tripling annual revenues, expanding the company into over 30 geographies. He said: "Serving as CEO of Lululemon has been the highlight of my career, and I am incredibly proud of everything our team has accomplished over the last seven years. Together, we have transformed the athletic apparel industry and the opportunity ahead for Lululemon is substantial."

Despite the top-line lift, profitability came under pressure. Gross profit rose 2% to $1.4 billion (£1.05 billion), but gross margin fell by 290 basis points to 55.6%. Operating income declined 11% to $435.9 million (£325.8 million), with operating margin down to 17%.

The retailer opened 12 net new stores in the period, ending the quarter with 796 globally.

During the quarter, Lululemon also repurchased 1 million shares for $189 million (£141 million). Following the December authorisation, it now has around $1.6 billion (£1.2 billion) remaining under its buyback programme.

Chief Financial Officer, Meghan Frank, added: "We delivered better-than-expected revenue and EPS in the third quarter as a result of our disciplined execution and ongoing strength internationally. Looking forward, we will continue to leverage our strong financial position to invest in our growth initiatives, while maintaining operational rigour. "

For Q4, the business expects revenues between $3.5 billion and $3.585 billion, representing a decline of 3% to 1%, or growth of 2% to 4% excluding the 53rd week of 2024.

Full-year revenue is now expected to reach between $10.962 billion and $11.047 billion (£2.62 billion £8.26 billion), representing approximately 4% growth.

The outlook includes an estimated $210 million (£157 million) reduction in operating income due to assumed increases in US tariffs and the removal of the de minimis exemption. Lululemon warned that actual results may differ depending on tariff rates, sourcing savings, consumer demand and regulatory timing.