Lululemon Athletica Inc. is entering early 2026 with momentum from a strong holiday selling season, even as the company navigates leadership change and an intensifying governance dispute involving its founder and activist investors.
The Vancouver based athleticwear retailer said Monday that it expects both net revenue and diluted earnings per share for its fourth quarter to land at the high end of previously issued guidance, signalling resilience during one of the most closely watched periods of the retail calendar.
Lululemon chief financial officer Meghan Frank said the updated outlook reflects the company’s performance over the holiday season, which spans some of the busiest shopping periods of the year, including Black Friday, the week leading up to Christmas, and Boxing Day.
The fourth quarter began in early November, and the company had earlier forecast revenue in a range of US$3.5 billion to US$3.56 billion, with diluted earnings per share between US$4.66 and US$4.76. Lululemon said it is now tracking toward the high end of both ranges.
The company did not revise its outlook for gross margin, selling, general and administrative expenses, or its effective tax rate, suggesting that operating assumptions remain intact despite a volatile external environment.
Strong Results Arrive Amid Leadership Transition
The positive holiday update comes at a pivotal moment for Lululemon, which is preparing for a major leadership transition. On December 11, the company announced that chief executive officer Calvin McDonald will step down at the end of January.
McDonald, who assumed the role in 2018, oversaw a period of significant expansion that included deeper penetration into menswear, major sports league partnerships, and meaningful international growth. At the same time, the brand has faced growing scrutiny around innovation cadence and competitive positioning.
Rivals such as Alo and Vuori have gained traction in the premium athleisure space, while analysts and investors have raised concerns that Lululemon has struggled to deliver sufficient product newness, particularly in colourways, fabrics, and silhouettes that resonate with repeat customers.
Activist Pressure and Founder Criticism Intensify
Lululemon’s strong holiday quarter performance is unfolding against the backdrop of renewed criticism from founder Chip Wilson, who left the board in 2015 but has remained an outspoken critic of management and governance decisions.
Wilson has accused the company’s board of eroding the brand’s premium positioning and destroying shareholder value, and has argued that the search for McDonald’s successor should be led by new, independent directors. In late 2025, he escalated his campaign by indicating his intention to nominate three candidates to Lululemon’s board at the 2026 annual meeting.
Those nominees include Marc Maurer, former co chief executive of Swiss performance footwear brand On Holding, Laura Gentile, former chief marketing officer at ESPN, and Eric Hirshberg, former chief executive of Activision. Wilson has framed the slate as a necessary reset to restore creativity, brand relevance, and long term value creation.
Elliott Management Adds Another Layer of Complexity
Adding to the governance pressure, activist investor Elliott Management has built a stake of more than US$1 billion in Lululemon. Elliott is reportedly advocating for Jane Nielsen, a former Ralph Lauren executive, to be named the company’s next chief executive.
The presence of both Wilson and Elliott has heightened the stakes around the CEO search and board composition, increasing the risk of a prolonged and distracting proxy contest at a time when the company is also addressing slowing growth in North America.
Board Defends Strategy and Governance Record
Lululemon has pushed back against claims that its board lacks independence or experience. The company has noted that more than a third of its directors have joined in the past four years and that the board has overseen nearly US$9 billion in revenue growth and roughly sixfold growth in operating income over the past decade.
In a December 29 press release, the company said, “The Lululemon board of directors will continue to take actions that we believe are in the best interests of all the company’s shareholders.”
The retailer has said it engaged with Wilson to better understand his concerns and sought information about his proposed nominees. At the same time, it has warned that installing his slate and moving to annual board elections could significantly increase his influence and result in a costly proxy fight.
