lululemon athletica inc. (LULU) Q4 2024 Earnings Conference Call March 27, 2025 04:30 PM ET Company Participants Jeff Walker - Vice President at the Howard GroupRandy Boomhauer - CEO and President of SimatrixMJ Kent - CFO of Simatrix Jeff Walker Looks like everyone's coming in. So first, thank you everybody for joining us today. I'm Jeff Walker, Vice President at the Howard Group. We're speaking with Randy Boomhauer, CEO and President, and MJ Kent, who is CFO of Simatrix. We'll go through the presentation d ...

Lululemon (LULU) Q4 2025 Earnings Call March 27, 2025 04:30 PM ET Company Participants Howard Tubin - Vice President of Investor RelationsCalvin McDonald - CEOMeghan Frank - Chief Financial OfficerAlexandra Straton - Equity Research Managing DirectorBrooke Roach - Vice President - Equity ResearchDana Telsey - CEO and Chief Research OfficerLorraine Hutchinson - Managing DirectorMichael Binetti - Senior Managing DirectorJohn Kernan - Managing DirectorPaul Lejuez - Managing DirectorJay Sole - Managing Director ...

Lululemon store in Manhattan, New York City, U.S., on July 15, 2024.Lululemon beat Wall Street expectations for fiscal fourth-quarter earnings and revenue, but issued 2025 guidance that disappointed analysts.Shares of the apparel company fell about 6% in extended trading.Here's how the company did compared with what Wall Street was expecting for the quarter ended Feb. 2, based on a survey of analysts by LSEG:Earnings per share: $6.14 vs. $5.85 expectedRevenue: $3.61 billion vs. $3.57 billion expectedFourth- ...

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Financial Performance - In 2024, lululemon's net revenue reached $7,928,156, representing a growth of 3.9% compared to $7,631,647 in 2023[28]. - Net revenue from China Mainland increased by 41.3% to $1,361,337 in 2024, up from $963,760 in 2023[32]. - Net revenue increased by 10% to $10.6 billion in 2024, with a constant dollar increase of 11%[199]. - Comparable sales increased by 4%, with a 25% increase in China Mainland and a 19% increase in the Rest of World, while Americas comparable sales decreased by 1%[199]. - Gross profit rose by 12% to $6.3 billion, with a gross margin increase of 90 basis points to 59.2%[199]. - Income from operations increased by 17% to $2.5 billion, with an operating margin increase of 150 basis points to 23.7%[199]. - Net income for 2024 was $1.81 billion, reflecting a 17.1% increase compared to 2023[205]. - Selling, general and administrative expenses increased by 10.7% to $3.76 billion, representing 35.5% of net revenue[209]. - The effective tax rate for 2024 was 29.6%, up from 28.8% in 2023, with income tax expense increasing by 22% to $761.5 million[205]. Revenue Sources - Women's products accounted for 63% of net revenue, while men's products contributed 24%, indicating a growing interest in the men's line[20]. - The Americas generated 75% of total net revenue in 2024, highlighting its importance to lululemon's overall business strategy[27]. - The Rest of World segment, which includes APAC and EMEA, saw net revenue growth of 26.8% to $1,298,633 in 2024[35]. - Company-operated store net revenue increased by 14%, and e-commerce net revenue increased by 6%[192]. - Revenue growth in the Americas was driven by a 4% increase, primarily from strength in Canada[190]. Expansion and Retail Strategy - The company plans to continue expanding its physical retail locations, with a total of 767 company-operated stores as of February 2, 2025, up from 711 in 2024[39]. - The company plans to continue expanding its physical retail locations to support growth objectives, despite the risks associated with shifting consumer preferences towards e-commerce[87]. - The company added 56 net new company-operated stores, contributing to a 14% increase in square footage[190]. - On September 10, 2024, lululemon acquired retail locations and operations in Mexico, previously operated by a third party[30]. Supply Chain and Manufacturing - The company sources 40% of its products from Vietnam, with the largest manufacturer producing 15% of total products[46]. - Approximately 40% of the company's products are manufactured in Vietnam, with significant contributions from Cambodia (17%), Sri Lanka (11%), Indonesia (11%), and Bangladesh (7%)[102]. - The company relies heavily on international suppliers, with potential supply chain disruptions due to geopolitical events, public health crises, and inflationary pressures[101]. - The company worked with approximately 52 vendors for product manufacturing and 67 suppliers for fabric supply in 2024[105]. Sustainability and Social Impact - Lululemon's re-commerce program, "Like New," allows guests to exchange gently used products for merchandise credit, promoting sustainability[40]. - As of February 2, 2025, the company has invested a total of $71.0 million towards its goal of advancing equity in well-being, with a target of $75.0 million by the end of 2025[54]. - The company has contributed $71.0 million to lululemon's Centre for Social Impact, with $45.5 million directed to social impact organizations[57]. - Approximately 55% of the board of directors and 60% of the senior executive leadership team are women, while 75% of the overall workforce are women as of February 2, 2025[55]. Risks and Challenges - The athletic apparel market is highly competitive, with increasing competition from established companies and new entrants[52]. - The company faces significant pressure on costs and pricing due to intense competition and inflationary pressures[79]. - The company faces risks in accurately forecasting guest demand, which could lead to excess inventory or product shortages, adversely affecting financial performance[80]. - Economic and political conditions, including trade restrictions and tariffs, could negatively affect the company's results of operations and cash flows[120]. - Global economic uncertainty may adversely impact consumer discretionary spending and demand for the company's products[118]. - The company is subject to scrutiny regarding its environmental, social, and governance (ESG) practices, which could affect its reputation and operational costs[115]. Technology and Cybersecurity - The company’s technology systems are critical for e-commerce operations, and any disruptions could lead to lost sales and harm to reputation[98]. - The board of directors oversees cybersecurity risks, with a dedicated sub-committee managing assessments and responses to incidents[159]. - The company has identified cybersecurity as a risk management priority, with regular reports provided to the board regarding the state of its information security program[160]. Financial Instruments and Currency Risks - Fluctuations in foreign currency exchange rates have historically affected the company's net revenue and expenses, with international operations primarily reported in U.S. dollars[137]. - The company has implemented financial instruments to hedge against foreign currency risks, but these measures may not fully offset negative impacts from currency fluctuations[139]. Product Development and Innovation - The company expanded its product offerings, including new styles in footwear and accessories, and launched the Daydrift trouser for women[198]. - The company has discontinued selling hardware for MIRROR, rebranded as lululemon Studio, indicating challenges in managing new product categories[83].

[Lululemon Fiscal 2024 Earnings Release](index=1&type=section&id=lululemon%20athletica%20inc.%20Announces%20Fourth%20Quarter%20and%20Full%20Year%20Fiscal%202024%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Lululemon achieved record annual revenue exceeding $10 billion in fiscal 2024, driven by strong international growth and robust fourth-quarter performance Fiscal 2024 Key Financial Results | Metric | Fourth Quarter 2024 | Full Year 2024 | | :--- | :--- | :--- | | Net Revenue | $3.6 billion (+13% YoY) | $10.6 billion (+10% YoY) | | Diluted EPS | $6.14 | $14.64 | - The company's performance exceeded expectations, driven by new product introductions and innovation[2](index=2&type=chunk) [Fourth Quarter 2024 Performance](index=1&type=section&id=Fourth%20Quarter%202024%20Performance) Q4 2024 saw net revenue increase 13% to $3.6 billion, driven by strong international growth and improved margins Q4 2024 vs. Q4 2023 Performance | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $3.6 billion | $3.2 billion | +13% | | Gross Profit | $2.2 billion | $1.9 billion | +15% | | Gross Margin | 60.4% | 59.4% | +100 bps | | Income from Operations | $1.0 billion | $0.9 billion | +14% | | Diluted EPS | $6.14 | $5.29 | +16.1% | - **Americas Net Revenue:** Increased by **7%**[3](index=3&type=chunk) - **International Net Revenue:** Increased by **38%**[3](index=3&type=chunk) - **Comparable Sales:** Increased by **3%** (excluding the 53rd week)[3](index=3&type=chunk) - **Share Repurchases:** **0.9 million** shares for **$332.2 million**[3](index=3&type=chunk) - **Store Openings:** **18** net new company-operated stores[3](index=3&type=chunk) [Full Year 2024 Performance](index=1&type=section&id=Full%20Year%202024%20Performance) Full fiscal year 2024 net revenue grew 10% to $10.6 billion, driven by strong international performance and margin expansion Full Year 2024 vs. 2023 Performance | Metric | Fiscal Year 2024 | Fiscal Year 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $10.6 billion | $9.6 billion | +10% | | Gross Profit | $6.3 billion | $5.6 billion | +12% | | Gross Margin | 59.2% | 58.3% | +90 bps | | Income from Operations | $2.5 billion | $2.1 billion | +17% | | Diluted EPS | $14.64 | $12.20 | +20.0% | - **Americas Net Revenue:** Increased by **4%**[3](index=3&type=chunk)[11](index=11&type=chunk) - **International Net Revenue:** Increased by **34%**[3](index=3&type=chunk)[11](index=11&type=chunk) - **Comparable Sales:** Increased by **4%** (excluding the 53rd week)[3](index=3&type=chunk)[11](index=11&type=chunk) - **Share Repurchases:** **5.1 million** shares for **$1.6 billion**[3](index=3&type=chunk)[11](index=11&type=chunk) - **Store Additions:** **56** net new stores, including 14 from the Mexico acquisition[3](index=3&type=chunk)[11](index=11&type=chunk) [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Management expressed satisfaction with 2024 results, reaffirming the 'Power of Three ×2' plan and providing 2025 growth outlook - The CEO stated that Q4 results exceeded expectations, attributing the success to newness and innovation in the product assortment[2](index=2&type=chunk) - The CFO highlighted surpassing **$10 billion** in annual revenue for the first time and emphasized remaining agile amid macro uncertainties[5](index=5&type=chunk) - The company is executing its "Power of Three ×2" growth plan, which targets doubling 2021 net revenue of **$6.25 billion** to **$12.5 billion** by 2026[10](index=10&type=chunk) [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) Lululemon maintained strong liquidity with $2.0 billion cash and $393.9 million available credit, with inventories up 9% Key Balance Sheet Items (End of FY 2024) | Item | Value | | :--- | :--- | | Cash and cash equivalents | $2.0 billion | | Available Credit Facility | $393.9 million | | Inventories | $1.4 billion (+9% YoY) | [Fiscal 2025 Outlook](index=3&type=section&id=Fiscal%2025%20Outlook) The company provided fiscal 2025 guidance, projecting Q1 revenue of $2.335-$2.355 billion and full-year revenue of $11.15-$11.30 billion Q1 Fiscal 2025 Guidance | Metric | Expected Range | | :--- | :--- | | Net Revenue | $2.335 billion - $2.355 billion | | Revenue Growth | 6% - 7% | | Diluted EPS | $2.53 - $2.58 | Full Year Fiscal 2025 Guidance | Metric | Expected Range | | :--- | :--- | | Net Revenue | $11.150 billion - $11.300 billion | | Revenue Growth | 5% - 7% | | Revenue Growth (ex. 53rd week) | 7% - 8% | | Diluted EPS | $14.95 - $15.15 | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements detail Lululemon's performance, showing revenue and net income growth, increased assets, and strong operating cash flow [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Fiscal 2024 net revenue increased to $10.59 billion, with gross profit rising to $6.27 billion and diluted EPS reaching $14.64 Fiscal Year Performance (in thousands) | Account | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Net revenue | $10,588,126 | $9,619,278 | | Gross profit | $6,270,811 | $5,609,405 | | Income from operations | $2,505,697 | $2,132,676 | | Net income | $1,814,616 | $1,550,190 | | Diluted earnings per share | $14.64 | $12.20 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of February 2, 2025, total assets reached $7.60 billion, with cash decreasing to $1.98 billion and inventories increasing to $1.44 billion Balance Sheet Summary (in thousands) | Account | Feb 2, 2025 | Jan 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,984,336 | $2,243,971 | | Inventories | $1,442,081 | $1,323,602 | | Total assets | $7,603,292 | $7,091,941 | | Total liabilities | $3,279,245 | $2,859,860 | | Total stockholders' equity | $4,324,047 | $4,232,081 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Fiscal 2024 operating cash flow was $2.27 billion, with significant cash used in financing activities, leading to a net cash decrease of $260 million Cash Flow Summary (in thousands) | Activity | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,272,713 | $2,296,164 | | Net cash used in investing activities | ($798,174) | ($654,132) | | Net cash used in financing activities | ($1,652,508) | ($548,828) | | Net (decrease) increase in cash | ($259,635) | $1,089,104 | [Supplemental Financial Information](index=10&type=section&id=Supplemental%20Financial%20Information) Supplemental information includes non-GAAP reconciliations, detailing constant dollar revenue, 53rd week impact, and store network expansion [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP measures, adjusting for currency, 53rd week impact, and lululemon Studio charges for clearer trend analysis FY 2024 Revenue Growth Reconciliation | Metric | Reported Change | Constant Dollar Change | Change ex. 53rd Week (non-GAAP) | | :--- | :--- | :--- | :--- | | Total Revenue | 10% | 11% | 8% | - For fiscal 2023, results were adjusted to exclude charges related to lululemon Studio, which included inventory provisions, asset impairments, and restructuring costs[16](index=16&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - This adjustment increased FY2023 diluted EPS from **$12.20** (GAAP) to **$12.77** (Adjusted)[16](index=16&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) [Store Network Expansion](index=13&type=section&id=Store%20Network%20Expansion) Lululemon expanded its physical retail footprint in fiscal 2024, adding a net of 56 stores to reach 767 company-operated locations Store Count Change in FY 2024 | Quarter | Stores Opened | Stores Closed | Net Change | | :--- | :--- | :--- | :--- | | Q1 2024 | 5 | 5 | 0 | | Q2 2024 | 11 | 1 | +10 | | Q3 2024 | 28 | 0 | +28 | | Q4 2024 | 21 | 3 | +18 | | **Total** | **65** | **9** | **+56** | - The company ended fiscal 2024 with **767** stores, up from 711 at the start of the year[46](index=46&type=chunk)

Fourth quarter results from Lululemon (LULU)  will highlight this week’s earnings lineup with the apparel retailer set to release its Q4 report after-market hours on Thursday, March 27.At times, the yoga-inspired athletic gear provider has etched out wonderful gains for investors, but LULU shares have fallen 11% year to date and have performed virtually flat over the last three years. Although Lululemon has taken market share from historic athletic apparel leaders such as Nike (NKE) , investors have been sk ...

Core Insights - Lululemon is set to announce its Q4 earnings on March 27th, with analysts projecting an EPS of $5.87 and revenue of $3.59 billion, reflecting an approximate year-over-year increase of 11% for both metrics [1] Financial Performance - Expected EPS: $5.87, up around 11% year-over-year [1] - Expected revenue: $3.59 billion, also up around 11% year-over-year [1]

Core Insights - lululemon athletica inc. is expected to report growth in both sales and earnings for the fourth quarter of fiscal 2024, with sales estimated at $3.6 billion, reflecting an 11.7% increase year-over-year [1] - The consensus estimate for earnings per share is $5.85, indicating a 10.6% growth from the previous year [2] Financial Performance - The company has shown consistent earnings outcomes, with a trailing four-quarter earnings surprise of 6.7% on average [3] - lululemon has an Earnings ESP of +2.00% and a Zacks Rank of 3, indicating a stable outlook for earnings [4] Business Momentum - Continued business momentum is anticipated in Q4, driven by positive consumer response, increased in-store traffic, and strong online performance [5] - The company raised its revenue guidance for Q4 to $3.56-$3.58 billion, up from the previous forecast of $3.48-$3.51 billion, indicating a year-over-year growth of 11-12% [7] Margin Expectations - Management expects earnings per share to be between $5.81 and $5.85, with a projected increase of 30 basis points in gross margin compared to Q4 of fiscal 2023 [8] - The adjusted gross margin is predicted to expand to 59.7%, with a 10-basis point increase in the adjusted operating margin to 23.3% [9] International Growth - lululemon is poised to benefit from strong business momentum in international markets, particularly in Mainland China, with international revenues expected to increase by 35.9% year-over-year for fiscal 2024 [10][11] Challenges - The company faces challenges from inflation and higher interest rates, which have led to soft discretionary spending, particularly affecting the women's category in the Americas [12] - A slowdown in the women's business is attributed to fewer updates in core and seasonal styles, negatively impacting conversion rates [13][14] Stock Performance - lululemon's shares have declined by 16.3% over the past three months, underperforming the industry and broader market indices [15] - The stock currently trades at a forward P/E multiple of 20.64X, which is above the industry average of 11.66X, indicating a premium valuation [19] Long-term Strategy - The company is focused on its Power of Three x2 growth strategy, aiming to double net revenues to $12.5 billion by 2026, with significant emphasis on international market expansion and growth in the men's category [22][23] - lululemon's long-term investment potential remains strong due to its robust fundamentals and global presence [24]

Apparel retailer Lululemon Athletica Inc (NASDAQ:LULU) is slated to report fourth-quarter earnings after the market closes on Thursday, March 27. Over the last two years, LULU has moved higher following all but one of its last eight earnings reports, including a 16% post-earnings pop in December. The stock has averaged a next-day swing of 9%, regardless of direction, though this time around, the options pits are pricing in a slightly larger move of 13.9%.Shares were last seen 3.7% higher at $334.57, though ...