Photo: Lululemon
Lululemon goes shopping and finds its new CEO at Sephora
Lululemon Athletica has announced the appointment of Calvin McDonald as its new chief executive officer, effective Aug. 20. The athleisure wear retailer’s hire ends its board’s search for a CEO that began in February when Laurent Potdevin resigned after having been found to have engaged in behavior that “fell short” of the company’s “standards of conduct.”
Mr. McDonald joins Lululemon after five years as president and CEO of Sephora’s business in the Americas. Sephora achieved double-digit grow every year during Mr. McDonald’s tenure, while expanding into new markets, including Brazil and Mexico. During his time with the chain, Sephora upgraded its store experiences and developed new digital platforms, according to the press release announcing his hiring.
“Calvin McDonald has an impressive track record leading organizations through periods of significant growth and innovation,” said Glenn Murphy, chairman of Lululemon’s board, in a statement. “He is the ideal match for the lululemon brand and culture given his strong consumer mindset, performance-driven approach and success developing people.”
At Sephora, Mr. McDonald was credited with the chain’s use of mobile tech to engage and assist its customers through every portion of the journey to purchase. Sephora uses mobile, for example, to send location-based texts to customers who live near a store to alert them to the availability of limited-edition products. The chain makes use of daily mobile content to bring users to its site and a Facebook Messenger chatbot that allows customers to book appointments with a stylist at one of its stores. Sephora has also developed numerous features such as the Digital Makeover Guide to assist customers while they shop in the chain’s stores.
Lululemon’s new CEO joins a company on the rise. In May, the chain reported first quarter results that showed its net revenue increased 25 percent year-over-year. Same-store sales were up 20 percent overall, with online growing 62 percent and physical locations up eight percent. Its gross margins increased as did its gross profit, which was up 34 percent over the same quarter in 2017.
Three executives who were responsible for running Lululemon’s day-to-day business following Mr. Potdevin’s departure — Celeste Burgoyne, Stuart Haselden and Sun Choe — will remain with the company and report to Mr. McDonald.
- Lululemon Athletica Inc. Appoints Calvin McDonald Chief Executive Officer – Lululemon Athletica Inc.
- Lululemon Athletica Inc. CEO Laurent Potdevin Resigns – Lululemon Athletica Inc.
- Lululemon Athletica Inc. Announces First Quarter Fiscal 2018 Results – Lululemon Athletica Inc.
- How did mobile become the ‘glue’ in the Sephora shopping experience? – RetailWire
- Lululemon leans on personal development of associates – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: How does a new CEO approach their job coming into a business on the ascent, such as Lululemon, versus one that is on the decline? What do you expect Calvin McDonald to bring to the role of CEO of Lululemon Athletica?
Poll
BrainTrust
Shelley E. Kohan
Associate Professor, Fashion Institute of Technology
Nikki Baird
VP of Strategy, Aptos
Joining a company like Lululemon, which is not only on the rise but has been a very strong performer for a long time, affords the new CEO the opportunity to really focus on continuing to drive growth and innovation. Achieving growth is terrific, but keeping the momentum going is a challenge for every business. Calvin McDonald is a tech-savvy leader who will bring new innovative thinking to a strong brand and business that is already performing very well — this is a great move for Mr. McDonald and Lululemon.
Any new CEO who has the luxury of taking over a growing retail operation should begin the initial review process with an “even better if” mindset. Tweaks will emerge, there’s no need to turn it all upside down just to satisfy an ego!
A new CEO coming into a business on the rise should ask the typical three questions: What to do more, what to stop doing and what is sacred to the culture. Then make sure he has alignment in the organization (do the direct reports the plan or not). Clear the deck of non-supporters, then double down on what is working well to guide it to further short- and long-term wins.
Most importantly — what Calvin McDonald specifically brings is a deep knowledge of a very similar customer base. He already knows and has a sense of confidence about what works with this shopper. He knows her tendencies and what works to motivate her. Now the important part will be tweaking the approach to a new product set. Looks like a setup for further solid growth. Best of luck to Calvin!
What an ideal marriage of a company on the rise and a proven leader to build on that momentum, enhance the brand and drive the company towards sustainability and growth. Lululemon has had their challenges of late, but have turned things around. Now with McDonald’s leadership, and his history of focusing on personalization and enhancing the customer experience across platforms, the company has a real shot at sustainable growth for the next several years.
The same in-store and cross-channel transformation that took place at Sephora could easily be extended to the Lululemon brand, which already has a very lifestyle-oriented business focus and an obsessed fan base. Knowing that McDonald will bring in the right leadership to help drive this growth will make for some very interesting times at Lululemon.
Bravo Lululemon! Calvin McDonald will make a significant impact on the Lululemon brand from a customer perspective. His experience and background in converging the digital and physical worlds into a consistent experience for the customer could be a big win for the athletic brand. Creating a wellness ecosystem and engaging community for the customers are areas where Mr. McDonald can contribute greatly. The beauty and wellness industries are synergistic, and with the current state of business at Lululemon, he should hit the ground running. A first priority would be to ensure the back-of-house infrastructure is set up to support technological advances and cross-channel strategies that favorably impact the totality of the customer experience through all platforms (digital, brick-and-mortar, social media, etc.).
I think Calvin McDonald will take some time to learn the business, see what is working and what is not before making any immediate changes. Selling clothes is a lot different than cosmetics and Lululemon is a much smaller company than Sephora both in size and revenue. What Mr. McDonald has in his favor is that Lululemon is doing well so he can take some time before implementing any new strategies and also take time to test them to make sure they are going to work. Meanwhile, he needs to find out what is causing their success and make sure they continue to stay on course. Overall Mr. McDonald is in an excellent position and just about any executive who becomes a new CEO would love to have the same opportunity. Instead, we usually read about the CEO hired to save the company. Not the case here. I wish Mr. McDonald well, and I’m sure Lululemon will continue to succeed.
Nicely done Lululemon! A CEO entering a strong, growing business has the huge advantage of looking at a range of known successes and continuing to build from there. I would even argue that Lululemon has taken a low-risk route to growth. They have been VERY protective of the brand DNA and their ability to sell product at the ticketed price with minimal promotions and end-of-season clearance. This gives the new CEO a little wiggle room in testing and experimenting with new ideas. If Lululemon were on the decline, the range of known successes wouldn’t be there. Answering the unknowns of WHY the business is under-performing would be assignment #1. So in Mr. Dimov’s example, what to “stop” becomes paramount. What is right about the brand promise? What’s wrong with the brand promise? Mr. McDonald won’t be saddled with any of this baggage. Good things ahead for Lululemon.
No retailer or brand, no matter how healthy, is beyond improvement and it appears that Mr. McDonald will bring some key strengths to the table. But it’s important for an outsider CEO to acculturate himself to the company and its people; Lululemon is in a position of strength that gives Mr. McDonald the luxury of time.
While the most recent results for Lululemon specifically are good, athleisure as a category has definitely had its ups and downs, with a continuing fear that yoga pants in general may have jumped the shark. So I guess I would re-frame the question: can a CEO who successfully led a company like Sephora through the rise of digital beauty brands and the pretty rapid globalization of beauty (beyond luxury beauty) convince another successful company that may be coming up on some rocky roads ahead to act ahead of any disruption, rather than wait until results tank?
It seems to me that McDonald has exactly the right level of credibility to be able to come in and protect what’s good while also keeping the company from getting complacent.
As the new CEO for a company that is on the rise, Calvin McDonald is in a prime position to add more accolades to his resume. Rather than focus on fixing the company, he can infuse some of the same innovative approaches he successfully implemented at Sephora and pioneer new ideas that continue to fuel Lululemon’s growth.
Calvin has been a shining star in an industry (retail) that has seen many CEOs lose their jobs in the past few years. It is a challenging industry and Calvin has found creative ways to improve the customer experience, often with technology, that have resulted in sales growth. At Sephora they leveraged an innovation lab and employee feedback and suggestions to identify and test new concepts. I suspect that he will instill similar innovation and employee participation efforts that he inspired at Sephora into the culture of Lululemon. It will be interesting to see what improvements he brings to Lululemon!
This looks to be a great move for Lululemon with the key attributes being a real understanding of this consumer since the Sephora consumer and the Lululemon shopper have a ton of crossover. Sephora is obviously a bit broader demo, but the digital innovation that Calvin McDonald brought to Sephora is a place where Lululemon should be better. Connecting the passion of the brand and the yoga/fashion space and community with better digital focused at the consumer are a great match.