Lululemon Looks to Sephora Veteran to Maintain Rapid Growth

(Bloomberg) -- Lululemon Athletica Inc. has named Calvin McDonald to lead the surging yogawear brand as it looks to rehabilitate its culture and expand its international presence.

McDonald, a 46-year-old native of Canada who most recently served as a top executive at makeup chain Sephora, steps into the chief executive officer role vacated by Laurent Potdevin, Lululemon said in a statement. Potdevin departed abruptly in February due to improper conduct, which was said to include a relationship with a subordinate. McDonald begins the post on Aug. 20.

“Calvin McDonald has an impressive track record leading organizations through periods of significant growth and innovation,” said Glenn Murphy, chairman of Vancouver-based Lululemon. “He is the ideal match for the Lululemon brand and culture.”

Despite its recent success, Lululemon has had other tumultuous periods in its history. In 2013, founder Chip Wilson made insensitive remarks after the company was found to be selling see-through pants. He stepped down from the board in 2015 after sparring with the company over strategy.

Through it all, investors and analysts have consistently placed great value on the brand, even though execution might have been lacking. Potdevin, who took over in 2014 and led the company for about four years, brought more discipline and expanded overseas. In the past year, the company emerged as one of the few bright spots in apparel with sales gaining 17 percent through April and the stock almost doubling in the last 12 months.

Investors React

Shares were little changed in late trading after McDonald's hiring was announced.

The new CEO is expected to bring more discipline and operational expertise to the company as he keeps pushing what used to be a women's brand into men's apparel and grows further into foreign markets. The company still gets about 72 percent of its revenue in the U.S.

McDonald spent about five years at Sephora, which is owned by luxury conglomerate LVMH -- long considered one of the best operators in the industry. At Sephora, he ran its business in the Americas, which has posted double-digit growth rates. It's a unit that included $15 billion in sales and more than 40,000 employees. By comparison, Lululemon had $2.6 billion in revenue last year. Before that, he served as CEO of Sears Canada and was a top executive at Canadian retailer Loblaw Co.

After the company's public-relations snafus, many observers thought the female-dominated brand would hire a woman. But that didn't happen.

“Everybody wants diversity, everybody wants more women, but let's face it: There's a lot of people looking for that same talent,” said Bob Phibbs, head of retail consulting firm the Retail Doctor. “I don't think this is a choice of man over a woman, but it does put to bed the idea that the company is rudderless.”

--With assistance from Lindsey Rupp.

To contact the reporters on this story: Matt Townsend in New York at mtownsend9@bloomberg.net;Hema Parmar in New York at hparmar6@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

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