Lululemon $LULU ( ▼ 2.5% ) jumped more than 9 percent in premarket trading after reporting better than expected third quarter results, raising its full year outlook, and announcing that CEO Calvin McDonald will step down at the end of January. The move comes after more than a year of slowing sales growth for the athleisure brand.
Revenue rose 7 percent to 2.57 billion dollars, beating expectations of 2.48 billion dollars. Earnings per share came in at 2.59 dollars, well above the 2.25 dollar estimate, with international markets doing most of the heavy lifting. Comparable sales overseas climbed 18 percent, offsetting a 5 percent decline in the Americas.
The company lifted its full year revenue forecast to a range of 10.96 billion to 11.05 billion dollars, roughly in line with expectations. Executives also said tariff related pressure will hit 2025 operating income by about 210 million dollars, an improvement from the previous 240 million dollar estimate thanks to vendor negotiations and cost cuts. Even so, fourth quarter revenue and earnings guidance landed below Wall Street expectations.
Lululemon confirmed McDonald’s departure in a separate announcement. CFO Meghan Frank and Chief Commercial Officer André Maestrini will take over as interim co CEOs while the board searches for a permanent replacement. His exit comes as Lululemon faces growing competition from brands like Alo Yoga and Vuori and public criticism from founder Chip Wilson, who has argued the company has lost its creative spark.
One area where Lululemon trails its newer rivals is marketing. The company spends about 5 percent of revenue on marketing, a far lower share than competitors. Executives said they plan to ramp up marketing spend in the fourth quarter and into 2026 to drive traffic and rebuild brand momentum.
Even with today’s rally, Lululemon shares remain down more than 45 percent year to date.