It’s not unusual to hear modern chief executives talking up their love of exercise. But Calvin McDonald takes things to a new level, subjecting himself to four “Half Ironman” triathlons a year — that’s a 2km swim, 90km on a bike and a 21km run — and aiming to complete them in under five hours. To prepare his body for these ordeals, as well as the other, less brutal triathlons he competes in, McDonald, 53, works out twice a day every day.
So in 2018, when he was offered the chance to become chief executive of Lululemon, the world’s third-largest athleisure brand after Nike and Adidas, the fitness fanatic realised he was stepping into his dream job.
“I grew up in retail and brand building — I’m passionate about it. [But] I’m equally passionate about fitness and health,” he says.
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Lululemon’s bespoke fabrics and meticulously produced workout gear have earned it a loyal following since it opened its first store in Vancouver, Canada, in 2000. Under McDonald’s leadership, the brand has pushed beyond its yoga roots into producing sportswear for runners, golfers and tennis players. It wants to dominate in menswear and even sells chino-like trousers and shirts for the trendy executive. Today, Lululemon operates 767 stores in 22 countries.
But after years of stellar performance, the brand has run into a sticky patch. Last week, Lululemon disappointed Wall Street by forecasting that underlying sales will only grow by between 5 per cent and 7 per cent this year. The root of the slowdown is in the US, where cautious consumers are reining in spending against a backdrop of persistent inflation and the threat of a recession induced by Donald Trump’s sweeping tariffs.
“What we have seen coming out of the fourth quarter and into the first quarter is a much more cautious consumer in the US,” says McDonald. “Industry traffic numbers are down dramatically and we’ve seen our traffic change as well.”
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Lululemon’s boss says that customers — he calls them “guests” — are enthusiastic about the brand’s new product ranges. But Wall Street, apparently, does not want to listen. Despite reporting operating profit of $2.5 billion, a 17 per cent increase, Lululemon’s shares fell by 14 per cent last Friday to close the week at $293, valuing the company at $36 billion (£28 billion).
Neil Saunders, the US-based managing director of consultancy GlobalData Retail, says: “Lululemon is a tremendously successful brand. They have great customer loyalty and they are great at the technical side of things. But they are at a tipping point. Growth in North America is really quite weak now, there is a lot more competition and they are kind of saturated in that market.”
McDonald dismisses such talk and says Lululemon is winning market share. He reaffirmed his commitment to hitting a target, set in 2021, to double the company’s sales to $12.5 billion by 2026. The brand’s total sales rose by 10 per cent to $10.6 billion last year on the back of strong growth in China.
“Lululemon is in the early stages of its growth journey. I’ve doubled the business once, am about to double it again and see [the potential] to double it a third time,” says a defiant McDonald.
Lululemon was founded by Chip Wilson, who was inspired to make comfortable yoga clothing after attending his first class in 1998. The brand grew through partnerships with “ambassadors”, including fitness influencers and yoga studio owners, who work closely with the company in their local market to co-ordinate Lululemon-sponsored fitness events.
An obsession with exercise pervades the company. Its London office contains a fitness studio, where staff are encouraged to break up their day with a yoga class or HIIT (high intensity interval training) session. Employees are even given vouchers worth £200 each month to put towards their own exercise classes.
Lululemon expanded into the US in 2003, floated on the Nasdaq stock exchange in 2007 and arrived on these shores — with a store in London’s Covent Garden — in 2014.
By that time, Wilson had stepped down as chairman in the aftermath of a car-crash TV interview in which he argued that problems with Lululemon’s leggings becoming see-through were down to the size of some women’s thighs. He has regularly hurled rocks at the company from the sidelines ever since.
Last year, Wilson expressed his distaste for Lululemon’s “whole diversity and inclusion thing” and complained that the brand’s push into new product lines — such as its “appalling” men’s dress shirts — showed it was “trying to become like the Gap, everything to everybody”. McDonald is reluctant to get dragged into a war of words with the company’s outspoken founder but says he believes customers should choose brands, rather than brands choosing their customers.
And as for diversity policies, which are being rolled back across the corporate spectrum in the wake of Trump’s re-election, McDonald insists there will be no backtracking: “We believe in inclusion — that everyone inside Lululemon should be able to feel and bring a full version of themselves [to work].”
Despite last week’s wobble, Lululemon’s shares are still up by 125 per cent since McDonald took the reins in August 2018.
The chief executive says that his company’s technical expertise in fabrics has been at the heart of its success. Its creations include a new range of “Glow Up” leggings for women, produced in a new version of its nylon-derived “Nulu” fabric and priced at £108 a pair, which were in development for four years.
“Almost every garment we have is rooted in a fabric that’s been engineered and designed to provide a solution to … an unmet need of the athlete. And then we obsess over its creation,” says McDonald, adding that premium prices are justified by premium materials.
For men, McDonald calls out Lululemon’s ABC trousers, which contain an “ergonomic gusset” that removes tension from the crotch area. (ABC, by the way, stands for “anti-ball crushing”.) He explains that the trousers, which sell for £118, are made in Lululemon’s “anti-stink” fabric, which has silver ions woven into it to stop the spread of odour-causing bacteria.
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McDonald wants menswear to contribute between 35 per cent and 40 per cent of total sales, up from about a quarter today. The brand is crossing the gender divide with the help of endorsements from tennis player Frances Tiafoe and Formula 1 driver Sir Lewis Hamilton. McDonald, who is no slouch himself, professes to be in awe of Hamilton’s dedication. “His fitness and recovery programme is among the most intense I have ever seen … it’s incredible,” he gushes.
Lululemon’s super-healthy boss grew up in London, Ontario. Initially, he wanted to be a vet and then, in a sharp change of tack, toyed with the idea of becoming a homicide detective. McDonald was drawn to forensics as a way of indulging his problem-solving inclinations but found, eventually, that a career in business offered that opportunity in an altogether less grisly environment.
McDonald won a graduate job at the head office of Loblaws, the Canadian supermarket chain owned by the Weston family, and ended up staying for 17 years. He started out in merchandising and went on to lead divisions including buying and product development.
Eventually he craved a change and agreed to become chief executive of Sears Canada, a struggling department store chain, in 2011. A little over two years later, McDonald moved south of the border to San Francisco for a more prosperous time at Sephora, the LVMH-backed beauty retailing giant, where he ran its Americas business.
McDonald is trying to revitalise Lululemon’s US business against a tumultuous backdrop. Trump’s tariffs will squeeze profit margins on the “small proportion” of products it produces in China. The president’s talk of turning Canada into America’s 51st state won’t help, either. Prince William donned a green Lululemon puffer jacket during his visit to Estonia last week, in what was interpreted as a subtle show of support for Canada.
“As a Canadian, [the tensions are] concerning because the US and Canada have shared such a wonderful and long friendship,” says McDonald, adding that he does not foresee any business problems as a result.
While much of McDonald’s focus is on reinvigorating demand in the US, and sustaining growth in China, where sales grew by 41 per cent last year, Lululemon is also nurturing its UK business, its largest market in Europe, with 21 stores. In February, the company opened a two-storey flagship store on London’s Regent Street, its largest outlet in Europe, and another store will open in the autumn down the road in Soho.
McDonald wants overseas markets — which collectively contribute a quarter of Lululemon’s sales — to eventually make up 50 per cent of the total.
“We are definitely not hitting a ceiling of growth,” he vows. “We want to be the number one choice of athletes in the world.”
The life of Calvin McDonald
Born: November 1971
Status: married. He has three boys, aged 23, 21 and 18, and a girl, 14
School: Sir Wilfrid Laurier in London, Ontario
University: studied for a biology degree at Western University, Ontario, and an MBA at the University of Toronto
First job: delivering Sears catalogues at the age of 12
Pay: $16.5 million last year
Home: West Vancouver
Car: Range Rover Sport
Favourite book: The Founder’s Mentality by James Allen and Chris Zook
Film: Gladiator
Music: U2
Watch: Garmin Forerunner 965
Drink: Californian Cabernet Sauvignon
Gadget: Wahoo KickR exercise bike, which links to his Zwift app
Last holiday: sailing around the British Virgin Islands
Charity: Juvenile Diabetes Research Association
Working day
Calvin McDonald spends about a third of his time travelling overseas, but when in Vancouver he arrives at Lululemon’s head office between 8am and 8.30am, after either a bike ride or a swim. He fits in a workout at lunch and might squeeze one in when he gets home, too.
The chief executive of Lululemon spends most of his working day in one-to-ones or team meetings — he says his leadership philosophy is to “co-create”, rather than present or dictate to his team — and allocates a “disproportionate” amount of time to meeting with his product teams. McDonald typically leaves the office between 5.30pm and 6pm.
Downtime
McDonald and his wife love to finish the day watching a boxset. Broadchurch is a personal favourite.
