cas. How did you get to Lululemon?  Calvin McDonald: I didn’t choose to be in retail. I started working part-time in retail through university, and I just fell in love with it and wanted to make it a career. I love building brands, and I love retail because I love to innovate, I love working with people, and I love product. The Sephora role was incredible. My family was happy, and I remember Glenn Murphy [then-chair of the board of Lululemon] called me up and said, ‘I just want to ask some questions.’ And I was like, ‘Glenn I’m happy.’ And he was like, ‘I just want to get a general sense,’ and that conversation continued and it’s been my dream job. I’m a weekend warrior – health and exercise and fitness are really important to me – and it was an opportunity to bring my personal passion together with my professional passion.  SE: You do Ironman, right? Was that post-Lululemon CEO? Does [working at Lululemon] make you more athletic? CM: No, but it definitely bruises the ego sometimes. Before, nobody at work cared that I was doing Ironman races. Now, everybody knows that I am, and they follow me during race days, so if I’m having a bad event, it definitely bruises the ego.  It’s part of the company culture. We do community activations, so now I get to travel around the world, see our stores, activate our community and do races in China and Korea and Australia and Europe. We get a bunch of us out there, so it’s a ton of fun.  SE: You do it with employees?  CM: Yes, and our ambassadors, and they do relays if people can’t do the entire event. We did an activation in September here in North America, and we did one in June in Korea. We had over 30 athletes from our ambassadors and our SSC, that’s our store support centre, doing the race with us.  SE: The stock has tripled since you came over, and the sales have also ballooned. Annual sales when you came over were less than $3 billion, now you’re aiming for $10.5 billion?  CM: In [FY]24. $12.5 billion is our [FY]26 plan, which we are currently ahead of schedule, with the intent to remain ahead of schedule. We arrived early on our Power of Three strategy, so I’ve been fortunate to be able to double the business and we’re on path to double it again. SE: How do you do that?  CM: Obviously I think the brand and its opportunity for growth and innovation are significant.
I talk a lot about being in the early innings of our opportunity, categories and activities, and the way in which the guest is looking for solutions. What’s really unique about the brand is it has permission across so many wear occasions, not just on the performance side of the business. Think of the brand when it began, it was a women’s yoga brand. And today, it’s serving both genders, it’s serving many activities – golf, tennis, hiking, but also training and running.  So it’s a really exciting journey of where product is leading us. And then globally, we’re now in over 26 markets with single-digit market share, and we have a unique position in almost every market we compete in.  SE: What is that special sauce of your product that keeps people like me coming back for more leggings or more performance bras? How do you do that?  CM: It’s interesting because I find those who are Lululemon guests ‘get it’. Our opportunity is always to get more guests into the product because we feel once they’re in it, once they try it on, they understand [what we’re talking about] when we talk about ‘science of feel’ and the quality of the raw materials.  It really is rooted in how we think and look to innovate.
So it begins with: what is the activity the guest is doing, how do they want to feel, and what is the unmet need? And that can be through the fabric, it can be through the functionality, but those are the basic ingredients that our teams look to innovate and create. And then we have a unique blend, I think, of high-performance and high-style with very versatile apparel that you can wear to the gym, to and from, and then outdoors.  Our ABC pant was originally innovated and designed for trainers, and it’s one of the most versatile pairs of pants our male guests are wearing to the office, and it has evolved post the initial concept. So I think it’s endless, the opportunity for us to keep innovating and creating product for our guests. 
 SE: But how do you know how to expand without overdoing it, and what you have permission for? I remember when we were talking a few years ago, you had some visions of getting into all sorts of categories. You dabbled with skincare and sneakers – how do you know what works and what doesn’t when it comes to where the brand can go? CM: My observation so far is the limitation is when we deliver on an unmet need with an innovative solution, we have permission. When we fall short of that, the limitation is more constrained. So it’s our ability to truly create.  With footwear, we saw white space. We’re early in our development there. We’re ahead of what we would expect to be at this point in time, but we know it’s a long-term growth category for us.  It’s hard to believe, but women’s performance footwear is designed on a man’s foot. I remember the meeting I had with the team going back now over four years, and it was like – time out, did I hear that correctly?  [Some brands] have single styles created on a woman’s last based on a woman’s foot, but in general, 95 per cent of women’s performance footwear is designed on a man’s foot.  SE: So what does that mean? Why is that bad? CM: Well, because you assume the feet are the same, but because we’re obsessed with the science of feel, they’re not the same. There are significant differences between the width of the forefront of the foot, the heel pitch and angle, and the narrowness of the back heel.
 We delayed our launch of men’s footwear so that we could be the first to launch a full lineup of women’s performance footwear designed on ‘her’ foot. My point is there is still white space and opportunity to create and innovate, and when we do that, we see success.  SE: So when you think about the future, obviously you are still thinking about expansion in categories and locations. What does Lulu look like in 10 years? How big can it get?  CM: When I think of the future, we look at the markets we’re in, and the market share and awareness and relevance of the brand. Even in North America, there is nothing stopping this brand from doubling again. When I think of the longer-term goals, we want to be a dominant global brand. [Global sales are] 25 per cent of our business today, there’s no reason why 50 per cent of our sales can’t come from outside North America. We want to be athletes’ number one choice of an athletic brand.  I’m very passionate about textile recycling and circularity in the apparel industry, and we’ve taken a leadership position investing in some companies and technology that will allow us to continue to lead that. I want to be one of the main leaders in that space. 
 And I want Lululemon to be the best place to work. I want to prove that you can have a balance between high performance and high care inside an organization.  SE: How do you recruit and how do you get the best designers and the best salespeople and the brand ambassadors? What’s your philosophy there?  CM: We seek the best talent from diverse backgrounds and experiences, and I think the individuals that have the greatest impact are those who choose to be at Lululemon for the culture, for the purpose, for the vision, the intent of what we’re trying to create.  When I travel, not only do I spend time with educators, listening, learning, and understanding, but we collectively get out, we sweat. We do Ironman races on weekends. We look for people who share similar values and see the impact that we can create, have success as an organization, have fun creating cool shit, which is a big part. You want to be able to innovate and deal with ambiguity and all that sort of chaos that can come with having a startup mentality inside an organization that’s getting bigger.  SE: While we’re talking about expansion, how often are you traveling these days?  CM: Usually half of every month I’m on the road in markets. 
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 building them with employees as well as your local ambassadors.  SE: How’s China going?
You’ve seen something pretty strong growth there, even as the economy has faced some headwinds. What are you learning about that market? CM: We celebrated 10 years in the market last year. But we’ve definitely accelerated our store expansion plan in the last five years. When I joined in 2018, we had less than 10 stores. I saw it as a huge opportunity. We now have over 140. It’s well over US$1.5 billion. It’s our second largest market outside of the US. Quarter three results were 39 per cent growth, and we have single-digit market share, so I’m super excited about that opportunity in mainland China.  SE: How do you think about the potential versus the US, where it feels like you’ve conquered the US market?  CM: Well, we feel far from conquered in the US. Our men’s business is 25 per cent of our sales; awareness is in the mid-30s for ‘him’ in the US, so we still have an opportunity. I think it’s because of the journey of growth and consideration. In our more mature markets, Canada and the US, as the brand grows, as assortment grows, we’re growing away from a brand for ‘her’ or a yoga brand for ‘her’. So I think in the US, the opportunity is to continue to drive awareness that it’s a brand for ‘him’, which is why we’re building products as well as partnerships with [Australian professional golfer] Min Woo Lee or [American tennis player] Frances Tiafoe that we just announced. But we still see a tremendous amount of growth opportunity in the US through our stores, our product, innovation, category expansion and our men’s business. SE: Globally, you have a little over 700 stores?
How many more should there be?  CM: If we’re going to double the business, we won’t double the stores, but easily over 1000. There are markets with a single store today. Our balance is probably around 45 [per cent in-store sales], 55 [per cent online sales] globally. When I look forward, maybe 50-50 sales to dot-com will be our right ratio.  Stores are still very important to us. Connecting with guests, educating them on the product, building that community piece – so we’ll always be a brand rooted in physical retail space. SE: What about kids? Do you ever think about going into kids?  CM: We had a brand for ‘her’ called the Ivivva, which I closed a few years after I joined. I never say never, but we don’t see it as a huge opportunity for us at this point in time. 
 One of the challenges when you’re leading a growth organization is both the power of saying no and the power of rediverting the resources to the bigger opportunities. And that means testing and learning, failing and moving on, and I’ve done my fair share of that. But it also means looking at the ideas and rationalizing. 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 prize, right to win, difficulty of the dive. Those are the filters I put to most of the new categories we’ve expanded into, markets we’ve entered into, or opportunities we see. In the case of kids, it’s just that right now, there are initiatives and ideas that are greater than kids when I put it to those three filters.  Sara Eisen is co-anchor of CNBC’s “Squawk on the Street” & “Money Movers”. She interviewed Calvin McDonald at Retail’s Big Show, the National Retail Federation’s annual conference and expo in New York on January 14.