Lululemon Athletica beat third-quarter expectations, with shares jumping over 11% after-hours as the company announced the departure of CEO Calvin McDonald.
McDonald joined the athleisure brand in 2018 and is set to step down from his role on 31 January 2026.
While no permanent successor is in place, chief financial officer, Meghan Frank and chief commercial officer André Maestrini will serve as interim co-CEOs to ensure a smooth transition.
This comes as the company announces better-than-expected third-quarter earnings.
While the company found growth globally, it is still struggling to build growth in the Americas, its biggest market.
While comparable sales increased 1% or 2% on a constant dollar basis, and international sales grew 18%, comparable sales in the Americas decreased by 5%.
Overall net revenue rose 7% to US$2.6 billion, surpassing analysts' projections of $2.48 billion.
Despite this, net revenue in the Americas fell 2%.
Adjusted earnings per share of $2.59 also topped estimates of $2.21 according to FactSet. However, this fell below the $2.87 per share that the company reported the same time last year.
"We delivered better-than-expected revenue and EPS in the third quarter as a result of our disciplined execution and ongoing strength internationally,” Frank said.
Following the positive results, the board of directors approved a US$1 billion increase to Lululemon’s stock repurchase program.
“We are pleased our Board of Directors recently increased our share repurchase authorisation, which demonstrates our collective confidence in the opportunities ahead for our brand,” Frank said.
Looking forward to the end of fiscal 2025, the company expects net revenue to be around $11 billion, representing growth of up to 6%.
Diluted earnings per share are anticipated to be between $12.92 and $13.02.
“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,” McDonald said.
At the time of writing, Lululemon Athletica (NASDAQ: LULU) closed 0.33% lower at $187.01 before jumping 10.8% to $207.25 in after-hours deals. The company maintains a market capitalisation of $23.13 billion.
