00:00Let's start with the departure of McDonald. He's been there since 2018. We had a chance to see what
00:04he can do. The last couple of years haven't pleased investors. Do you think this could
00:09potentially be a good change for the company? I think it's a positive change. Look, I think
00:14Calvin did a great job in scaling the business into a global leader for a period of time. But
00:20I don't think he was the right leader at the right time for this business. And what we've seen is
00:24throughout the past year, year and a half, there have been constant promises of having diagnosed
00:29the problem, trying to figure out exactly what's not working, and then making small changes towards
00:34fixing that goal. And none of it has really served to reaccelerate the Americas. You can see in the
00:38report today, Americas was essentially in line with what we expected, but it was down year over
00:42year. And we just haven't really seen any of the product changes really make a difference. So I
00:47think what we need here is a harder reset, an outside perspective, maybe some larger scale changes
00:51that might take some more time to work out. And I think you just need a shakeup at this point
00:54to get some fresh ideas into the company. Well, talk about sort of the performance of the company,
00:59both in terms of what we learned out of the earnings report today, but even in the quarters
01:02leading up to today, what is the state right now of Lululemon?
01:07I think there's two sides of it. And the international side of it, things are growing,
01:11they have a lot of growth in China, a lot of opportunity there. But in the US, it's really
01:14been stagnant. And some of that might be a natural maturity. At a certain point, you do hit a revenue
01:18level where it just becomes harder to grow. But I do think there have been self-inflicted execution
01:22in the steps. You can see it with some of the products that just aren't resonating. And it seems like
01:26they've tried a lot of different things, but nothing has really served to reignite that
01:30business. So I think we're at a point where you just need something different from a merchandise
01:34standpoint, and maybe something from a marketing and merchandising standpoint, too. I think there
01:38just needs to be some fresh ideas, because the US business has essentially been stagnant for the
01:42better part of the last two years.
01:43How much of this is Lululemon specific? And how much of this is just kind of the idea that
01:48a category that it effectively established, athleisure, is now being done by everybody,
01:53whether you're Nike or whether you're an off-brand company? Everybody's got an athleisure
01:58lineup in one way or another.
02:01The category is certainly a lot more mature than it's ever been. And if you think about what
02:05consumers are buying right now, I think there's also some fashion headwinds. Denim and jeans are
02:10making a comeback. Dressing up is making a comeback. We're not in that post-COVID world
02:14where everyone was wearing their leggings all day long, and that was kind of the fashion
02:18statement to make. So there's certainly some category challenges that everyone has to deal
02:21with. There's also more competition, as you mentioned. But I think that just goes to show
02:25companies like Ollo in particular are doing fairly well right now. So even in a more mature
02:31category, there is opportunity if you can excite the consumer, if you can merchandise properly
02:35to still gain wallet share.
02:37So I am curious. I know it's going to be probably some time before we learn who the
02:40permanent CEOs are going to be. But when you get to the conference call and you hear management
02:44have to explain why McDonald's leaving and sort of what the strategy is going forward,
02:49what do you think they can say today that might actually provide a little bit more hope for
02:54investors?
02:55I think it's going to be an admission that there were bigger picture challenges than just needing
03:00more core franchises or more color or more of a certain size.
03:05We need a fresh look at this business from an outside perspective. And I think they're
03:10hoping that by making this change now, we can have that sooner rather than later. So I think
03:14this is just kind of a hard reset. And that's what we've been hearing from investors, that
03:17they just want a hard reset of this business.
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