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How Lululemon’s CEO Plans to Double the Business Despite Mounting Competition

Athletes go for a jog in Lululemon gear.
Image courtesy Lululemon

Since taking the helm at Lululemon in 2018, Calvin McDonald has overseen a period of massive growth. The activewear brand’s stock has more than tripled since he became CEO and revenues have exploded — from approximately $3 billion a year when he started to nearly $10.5 billion in 2024. And McDonald isn’t stopping there.

Lululemon CEO Calvin McDonald spoke to CNBC’s Sara Eisen at the NRF Big Show in January, decked out head-to-toe in Lululemon gear.
Lululemon CEO Calvin McDonald spoke to CNBC’s Sara Eisen at the NRF Big Show in January, decked out head-to-toe in Lululemon gear. (Image courtesy NRF/Jason Dixson Photography)

Speaking with CNBC’s Sara Eisen at the NRF Big Show in January, McDonald said he plans to double the business again through a combination of product innovation, entrance into new categories, global expansion and store growth. It’s a bold ambition, especially given the fact that Lululemon currently faces more competition than ever before from upstart athleisure brands like Vuori and Alo Yoga.

“I believe the brand and its opportunity for growth and innovation is significant,” said McDonald at the event. “I talk a lot about being in the early innings of our opportunity in categories and the way in which the guest is looking for solutions.”

Here’s how he plans to do it.

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An Ever-Moving Growth Goal

In 2019, McDonald unveiled the “Power of Three” growth plan, which aimed to “double men’s, double digital and quadruple international revenues” over five years. As McDonald proudly pointed out, the company arrived early at all of those targets, so just four years later it released an update — the “Power of Three x2” strategy. This new plan aims to double the company’s revenue (from 2022 numbers) to $12.5 billion by 2026 — a milestone McDonald said the company is also on track to reach early.

Slowing down clearly isn’t in McDonald’s repertoire, which makes sense since he’s a proud Ironman participant. In fact, that alignment of personal and professional passions was part of what lured him away from his position as President and CEO of Sephora, where McDonald said he was very happy.

“[Being CEO of Lululemon], it’s a bit my dream job,” he said. “Health and exercise and fitness have always been important to me, and this was the opportunity to bring my personal passion together with my professional passion. Now I get to travel around the world, see our stores, activate our community, and do [Ironman] races in China and Korea and Australia and Europe.”

There’s ‘Room in the Wardrobe’ for Everyone

Despite his celebration-worthy track record so far at Lululemon, McDonald clearly feels the race is far from won — hence the continued moving of the finish line. But he’s not wasting time worrying about his other competitors in this race: “We’ve never had 100% of our guests’ wardrobe,” McDonald said. “I’d love to have that, but the reality is there’s always been room in the wardrobe for competitors, and there’s a lot of share [we can take] from the global incumbents [like Adidas and Nike] out there that I think all of us are benefiting from. I still think Lululemon is uniquely positioned in the marketplace against them.”

As Eisen pointed out, Lululemon’s new target of $12.5 billion in annual revenue is equivalent to what Nike brings in in a single quarter, so it makes sense that those are the champions McDonald wants to topple rather than the newer entrants in the more niche athleisure sector.

“We grew our market share in the Q3 period in the premium athletic category,” McDonald pointed out. “There’s a lot of share [in that category] that Lululemon doesn’t have, and we continue to see an opportunity to get a piece of. So their [Vuori, Alo Yoga, etc.] growth and success isn’t coming at the expense of our success and our growth. I believe the brands are differentiated enough.”

One Path to the Prize: Global Expansion

McDonald sees two wide-open paths for Lululemon’s continued expansion: new categories and new global markets. Lululemon is currently present in 26 countries, with a single-digit market share in many of them. Even in the U.S., where Lululemon is a market leader, McDonald said he thinks the country is “far from conquered.”

“Our men’s business is 25% of our sales in the U.S. and awareness [of the men’s offering] is in the mid-30s. As the brand grows, as the assortment grows, we’re growing away from a yoga brand for her, so in the U.S. the opportunity is to continue to drive awareness as a brand for him. We still see a tremendous amount of growth opportunity in the U.S., through our stores, through our product innovation and category expansion.”

China also is a major growth opportunity, and one that McDonald has doubled down on. When he joined, the company had less than 10 stores in that market. That number is now at 140, and China has become Lululemon’s second-biggest market after the U.S. Despite its growth, though, “we have single-digit market share [in China] and low teens in awareness, so I’m super excited about the opportunities. There’s a growing culture there of mindfulness and health and our brand, through community, supports that with differentiated products.”

For Lululemon, global expansion is tied directly to store expansion, said McDonald: “We’ll always be a brand rooted in physical retail; it’s a big part of what differentiates us,” he said. “We talk about community and our DTC model, and one of the advantages is [having] that human relationship with guests. It allows us to really understand what their needs are, be agile, shift and adjust and service them. So physical retail will always be a huge part of this brand.”

With more than 700 stores globally and plans to double the business, McDonald said that means the world can expect many more Lululemon stores to crop up — perhaps not double the current number, but certainly a significant amount.

And key to making those stores a success is actually seeing them in person, said McDonald: “I’m on the road usually half of every month in markets,” he said. “I don’t believe you can lead a global organization without physically being in the market. You definitely can’t lead a global retail organization without investing in and talking to your frontline employees, hearing what’s working, what’s not, seeing what the potential is. And you definitely can’t lead an authentic brand based on relationships, if you’re not out there with employees as well as your local ambassadors.”

Another Path to the Prize: Category Expansion

The Lululemon men's ABC pant.
The Lululemon men’s ABC pant. (Image courtesy Lululemon)

Lululemon’s core value prop always has been rooted in its product. From the start, the quality and feel of Lululemon gear has been central to propelling its popularity (and justifying its high price point).

During McDonald’s tenure, the company has brought those core tenets to a range of new categories. “Our men’s ‘ABC’ pant was originally innovated and designed for trainers,” said McDonald, but it’s grown beyond that into everyday wear. “It’s one of the most versatile pair of pants that our male guests are wearing to and from the office. I think it’s endless, the opportunity for us to keep innovating and creating product for our guests.

Lululemon has ‘Permission’ Across Multiple Wear Occasions

The brand’s expansion into men’s already has been a boon for the business, and McDonald believes other new additions, such as footwear, will be equally successful.

“What’s really unique about the brand is it has permission across so many wear occasions, just on the performance side of the business,” McDonald said. “Think of the brand when it began — it was a women’s yoga brand. Now, today, we serve both genders and many activities — tennis, hiking, trail and running. It’s a really exciting journey of where product is leading us. It’s still early innings of growth, development and opportunity led by our unique approach to serving the community through differentiated product.”

One of Lululemon's latest category expansions is footwear.
Image courtesy of Lululemon

Another example is the brand’s entrance into the footwear category, which McDonald said was prompted by the discovery that most women’s athletic shoe designs are based on a man’s foot. “[Other shoemakers] assume that the feet are the same,” recounted McDonald. “Because we’re obsessed with science and feel, and the feet are not the same — there are significant differences between the width and forefront of the foot, the heel, pitch and angle, the narrowness of the back heel — we delayed the launch of men’s so that we could launch and be the first lineup of women’s performance footwear designed on her foot.

“My point is, there is still white space and opportunity to create and innovate,” he added. “When we do that, we see success. The only limitations are our ability to create, dream and see what the guests need, and then come up with real, meaningful solutions.”

Calvin’s Do’s and Don’ts for Category Expansion

But that’s not to say that every new category Lululemon has tried to enter has been a runaway success — attempts at childrenswear and self-care products such as deodorant fell flat. Both pre-dated McDonald’s time at the company — the self-care products were launched two weeks after he joined but planning had begun well before that, and the kids’ brand, Ivivva, launched in 2009. McDonald eventually shut both down.

“One of the exciting challenges when you’re leading a growth organization is the power of saying ‘no’ and the power of rediverting to the bigger opportunities,” he said. “That means testing and learning, failing and moving on. It also means looking at the ideas and rationalizing them. Most ideas in a growth organization are great ideas, but the job of the leadership team is to put the resources behind the ones that have the largest opportunity. I always think through three factors — size of the prize, right to win, difficulty to die. Those are the filters that I put to most of our new categories, markets that we enter and opportunities that we see.

“[Self-care] was not a category from my experience that I would have gone after, and we subsequently moved away from it,” McDonald added. “In the case of kids, it’s just that right now there are initiatives and ideas that are greater than kids. If I were to do it again, I would not launch under a different brand, because a kid wants Lululemon; they don’t want a Lululemon version of a different brand. My observation so far is that when we deliver on an unmet need in an innovative solution, we have permission. When we fall short of that is where the limitation is more constrained.”

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