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New Lululemon CEO Calvin McDonald Faces Two Giant Challenges: Fix Culture, Maintain Growth

After being named as Lululemon Athletica‘s new CEO on Tuesday, Calvin McDonald will be under close scrutiny in the fashion industry as to whether he can break with a series of CEO faux-pas that has tarred the company’s reputation—and keep the brand along its impressive growth path.

McDonald, a 46-year-old native of Canada, comes fresh from a top executive role at makeup chain Sephora, part of the LVMH conglomerate.

Back in February, Vancouver-based Lululemon (LULU) started its second CEO search in four years after chief Laurent Potdevin departed abruptly due to improper conduct. It was a time of intense scrutiny for the athletic apparel firm, one that was uncomfortably reminiscent of its 2014 scandal over see-through pants, which culminated in founder Chip Wilson resigning from the board.

At the same time, the Canadian retailer is in a strong position. Its stock has jumped almost 80% in the past year. Analysts hail it as one of the few shining stars in apparel and in May, with no CEO at the helm, the firm reported a net revenue rise of 23% from the previous year, to $649.7 million in the first quarter. Comparable sales climbed 19%, driven by an 8% rise in in-store sales and a 62% jump in online comparable sales. This far exceeded analysts’ expectations.

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McDonald comes to Lululemon from Sephora.Matt Winkelmeyer — Getty Images
Matt Winkelmeyer — Getty Images

All this demonstrates how the company’s strategy has managed to weather the blunders of its management—to date. According to the Financial Times, Stuart Haselden, Lululemon’s chief operating officer, credits “product innovation, global growth, digital acceleration, and, most importantly, investing in our people” with the success. Picking up the baton, McDonald will be expected to rehabilitate the firm’s culture and expand its international presence.

Some have anticipated the introduction of yet another male CEO for a company with mostly female customers with caution. Its gender-related slip-ups in recent years meant a female CEO election could have signaled a fresh start. Nevertheless, Glenn Murphy, Lululemon’s chairman, has praised the appointment of McDonald as an “ideal match,” citing his “impressive track record leading organizations through periods of significant growth and innovation.” McDonald will begin his new position on Aug. 20.