LULU - Earnings call transcript Q4 2019 | Lululemon Athletica Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc. Fourth Quarter and End Year 2019 Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. will opportunity there ask presentation, the be to an questions. After Athletica to I President, conference Lululemon would Instructions] hand Investor now for Vice [Operator Tubin, like the Howard over Relations Inc. to go Please ahead.

Howard Tubin

afternoon. you Welcome Thank good to fourth conference quarter Lululemon’s call. earnings and

to today results our PJ about CEO are CFO. talk McDonald, and me Joining Calvin Guido,

These that management’s get our will future. include today started, take are on including current our that call Before of this remarks of Any statements our like we obligation or annual aspects on this events. we opportunity have current statements reflecting on our rapid information contained its which may we to nature any as these of revise I’d to and or is disclosed have forecast with certain filings the update or those new and result associated XX-K and Form remind to reports these even Form we business, due information disclaim assessed are any you today based implied or forward-looking which dynamic of by our SEC, and abrupt statements subject in and assumptions from risks make with forward-looking those quarterly future XX-Q. report as including results Actual recent most expressly undertaking changes. a we statements based uncertainties by differ materially to forward-looking to on statements Lululemon’s of on

XX-Q Investors today’s report XX-K non-GAAP press to measures. our measures our release available non-GAAP on press annual on at www.lululemon.com. this in of will During annual GAAP and under earnings are accompanying reconciliation A is call, we in GAAP the website of Form The both Form section financial release. and present included and report

our quarter summary quarterly to operating as fourth like to for statistics begin will a the our infographic. find where our would investors we the call, as our visit of key investor I site remind well you Before financial

We call in under are hour. today’s planning an to end

opportunity yourself their a addressed. one limit the to have question give others please at questions So to time to

like to now, over call would I And to the turn Calvin.

Calvin McDonald

you, of you Thank earnings with and for call. speak our quarter to good Howard fourth all it’s

We with $X performance fourth of in throughout revenue. XXXX the delivered and quarter both pleased we Lululemon in are as the billion strong very nearly

We health world while continue of core acquire to grow businesses, XXXX strategically strong we entered around our is and business The guests. strong expand we momentum. underlying our with the new and

COVID-XX. changed have given circumstances quarter dramatically of spread the know, you As one in

help our we We are the guests to our people across this business situation. of proud as and actions we our protect navigate have taken

will Officer, Financial our COVID-XX details more I provide begin and more it to will you PJ as provide Guido, take then our of my a four through and comments our discussing brief our recent quarter financials by overview relates performance. XXXX. on and business Chief

will then hour. and your normal We wrap to up take an call plan than under We questions. shorter keep in the

situation is of to except Our is in and China, current Europe, performance Broadly XX. closed America stores all are Wuhan March across out reduced and hearts and time, in our New this on we well-being since affected our by In our most clearly with The to people on our operating are and regular all while our dynamic. Australia in of of on our North regions COVID-XX. impact schedules. highest priority. similar remains the those have impacted peers, are at markets. our seeing open many location of our safety stores In Stores virus-related guests go The closed operating been Zealand hours. speaking

locations closed. two for where in our open remained Asian Our except other Malaysia, stores markets, are currently also

navigate are constant addition, contact as too our with in this they staying In and vendors we supply chain our situation. closely monitoring

manage have many include cash, we a strong which with decided Given this and the events, us our provides rapidly through These $XXX long-term is That million provide of the levers debt with no not of financial health business guidance to time. year untapped strong underlying at to this billion changing first, said nature We period. successfully $X.X our in ended balance the revolver. sheet. current

managing partnerships our Second, including levels. inventory RFID and technologies, our key in investments enable network our maximize across us strong vendors will with to overall while our

ways, round our as power our our multiple for strength our business, in use. guests store be held allows the in which seasonal of by e-commerce of assortment are flexibility And nature omni Third, relevant capabilities our shop of complemented compete. core formats. category the our and of which to many the is agile future less Fourth, year the sites, and styles in our is multi-channel we apps product, mobile can fifth,

our in the some confident sweaty athletes we of people trend to reasons the over navigate to toward we situation the term. are lifestyle. problems opportunities the At working core, live we the are and not active our in believe near-term the for longer healthy and while solved change will These do current abilities to realize wanting

early from business back. show In have which bounce we China learnings will addition, our us that

yet volumes, not but the business are week. by to is stronger week back pre-closing We getting

on situation you I specifically streams. considerable to underway to of is business across update work to current would There work the two respond these and the like

we start will is will the teams, our I how our is support recovery our enable and second our with phase. ambassadors the and guests. first are phase we how The assisting currently phase support and initiatives

latest am even stores more our upon will the than regularly as resilience unknown when our navigate they by information. We of market as to connect before. and this and inspired possible ever open recovery our people soon as the the begins do consistently based approach will I by best the market

guests their our terms guests, for Similar our for we to own been with the our online yoga, we sweat have people, around of our and to meditation, classes. operate with have can In sites needs pilates, e-commerce what our dance fulfill so train continue continue to offering sessions we world, product. done

week lead thanks America where North China content closures the our Instagram, of store guests and our our new strength followed offerings, see finally, nearly of increased Our to and will us XXX,XXX to followers have closely the ambassadors remain On in people WeChat. for have as our way saw and teams we of first our on we we inspiring thousands It’s as our to continue this of gained during connected Europe of what’s come And stay live join mind together guests ahead. navigate top well. classes. in

in help constant engage are continuing are contact communities sweat our sessions. local they us We virtual with through these and to

these are Relief times. will Fund. doors, Global in business their local their ambassadors assist who launched Ambassador This the many small extraordinary own just communities our who forced our have ambassadors owners businesses fund been close their As sustain of we studios to during to

Let speak a current and situation about on will focused me is being remain right. the the and for pass are shift now and we about thinking to moment know when guests We time serve communities how we the our our ready phase. gears recovery support

us Our ahead manage the for look to balance allows if day-to-day. plan continue you business growth to sheet for as we

In year with our buys looking at terms full view. and are inventory, of managing the assortment flow our we

demand work to we reduction balance supply teams current are the with now Our in are in experiencing. the

our for have vendors flexibility We second year. we are regarding half in the communication constant and receipts with the of our

our practicing distancing, closely maintain people and well-being Our social of and monitoring the key our health e-commerce we DCs precautions function, are continue to operations. taking to

the expense last through made in help chain I to expenditures the confident network Over be to to current supply we investments that store are our capital we and evaluating and structure, these years, programs. in several and our navigate us will remodel opening Shifting expenditures, have investments leverage able am currently distribution we significant further situation.

ensure are few PJ say minutes. can our in a reaccelerate more We drivers are acting when now to we will we ready. growth

of terms not their products, and our our teams and space remains white design full In product stopped work. pipeline have

bring our guests. We development to continue leverage to to technical to new field our science innovations platforms

While events on are such as runs our XX-K XX, through continuing with communities. July we we connect paused our to have

online one recovery to online Community and and our Hub of We access you response our connect ambassadors new phases and Carries our support during place website a for community the our both planning. our content on of global This our best fitness gives resources. of scope have central and creating sense on the from our health on global breadth collected

and me details our results. let some share about quarter year full fourth Now,

We XXXX. are and pleased the with quarter momentum we throughout during the saw fourth

XX% quarter fourth the top compared of per increase for of earnings XX%, adjusted last per dollar to comp last total share share results revenue an constant a earnings of XX% of include increase year and Our year. growth the on increase XX%

results digital and men’s our well incredibly responded all holiday. comps comps comps in that this four quarter XX% with Our Growth our product guests accessory across women’s up XX%, demonstrate categories up to in comps Strong up up and stores was X% XX%, China regions channels and America our XX% with XX% across was North international XX%. XX%. within and up in was up

delivered XXXX, in an XX%. revenue share total growth XX% year constant XX%, increase top the operating For increase full of XX% comp of earnings of per of an margin dollar and increase XXXX, of on an XX.X% we a

in of laid pillars: executed product against innovation, of As Three you business. right plan. our XXXX XXXX Power recall, three markets. in experiences committed expand targets and We vision our them growth XXXX to as the we These our is well for comprised pillars our omni-guest out and remain are

XXXX. momentum strategies to quarter In how in Lululemon summary, full deliver and of and we continued gain are proud of our year the against

in While filled this we future. lives certain are our is Lululemon, period our at uncertainty, with about

investing category connection sustain we We strength keep community, the to our initiatives well have right and sheet, the of balance our into future. us our to while growth the the

we know the week, do each is We building. will will do stores situation exactly initially that lower will be business but when was our know the and it that current we will each keep pre-COVID-XX, pass, than we not Although it day reopen. what know believe that

that know keep We any pillars but unique and is multiple brand that are has for one our these momentum of our forward. strength we planning scenarios, driving will of strong in

PJ ask four to I and about performance business. details current on provide update will now our an further quarter

PJ Guido

offer performance. are first balance into of our our in on strength I and the relative will provide our we the financial although which our I of position. providing health on qualitative And sheet will to are challenging discuss the Calvin. insight details operating. not Thanks, business specifics guidance, quantitative environment also we QX I overall will some

execution XX% strong driven a X% delivered business. since of X% continued In increased rose dollar across XX% For top the by our increase of QX, channel, store all net XX in total billion net stores driven $X.X we last year. comp store the Square of to constant Lululemon of of QX parts on QX by sales revenue XXXX. footage versus last new year increase addition the

increase XX% During the dollar we the In comp XX% our digital last stores and on optimizations. quarter, we five year. constant completed new a opened XX top increase channel, net posted of

approximately total the contributed XX% revenue. For traffic with line comps increases both in Increased store online the QX XX% of or single-digits to quarter, drive e-comm top $XXX high in and respectively. and over in to million continued

primarily by favorability an quarter. and cost profit was mix. minimal increase revenue XX product XX% in aggregate, rate Gross resulting the in for versus the fourth point the The QX XXXX. margin margin the basis $XXX had overall depreciation, in compared XX points of net supply year. chain to profit or In revenue which product in in last product XX.X% increased following, costs and product basis occupancy, QX of lower gross gross net quarter driven impact million from

revenue compared to approximately revenue the million year. of the XX.X% expenses same for SG&A $XXX period were down P&L, or Moving net last net of XX.X%

in de-leverage expense Operating or tax adjusted XX.X% our Foreign ago. revenue XX.X% quarter. quarter to compared a the income compared Tax that in contributed relates was legislation to in The primarily revaluation, $XXX last of to for adjusted of XXXX. approximately exchange, effective both XXXX expense of effective which in in year reduced rate pre-tax earnings tax million our of to of tax for basis in tax tax of change rate QX an XX.X% XX million rate the points XX.X% the the fourth was revenue quarter a effective net translation increase compared $XXX year net quarter and quarter. or

of was the diluted million earnings or XXXX. million for per approximately diluted quarter $XXX were per income of compared expenditures quarter share $X.XX Capital $XX to relocations spend year. for and to compared chain relates Net share fourth for adjusted $X.XX investments. in the approximately quarter million supply fourth the locations, primarily last new IT for capital QX to quarter renovations, and store and $XX the

shares $XXX.X to and quarter sheet was credit a remaining cash end X,XXX $XXX $XXX under QX. highlights, million we on $X.X balance we repurchased with million at $XXX,XXX. of the QX, Turning current We plan. our XX% quarter over grew with the billion and in cost end At of million our ended facility. Inventory million approximately repurchase at have available $XXX of our just the capacity revolving of

now events. shift to me current Let

during our we As the provide are Due of sales week this event, accurate the stated, to Calvin impact trend of when guidance March COVID-XX the not time. XXXX of changed dynamic at to this able dramatically accelerated. second nature

since been plans for All to until of our and current call Europe North March closed stores closed our and these America in remain X. April have XX stores

a Our DCs are been closure number fulfill DC orders of The local exception and restrictions. temporary our of running close our had improved and Washington, each of majority e-commerce and with This currently Sumner, has impact of material remained does in our not vast our March, strong in teams. since with up by line Asia the China with facility North on week business. not which operating QX has significant American week showing performance and line second driven traffic the and in trend by stores store and consistent our store of in execution comps great are Through reopening. most the

on and strong. negative that our did said addition, by and both margins The driven we is That brand traffic this business online remains closure EPS. early comps our throughout in In dramatic we in a have has and our made conjunction see of have our and a business the a remained investments reinforces expect QX in slowdown in that result store strong conversion platform. with impact our to direct business digital digital of strength in-store our QX improving we

cash of key hold have sheet in position, the currently liquidity advantages current on is debt. and One our our the of balance strong. long-term no extremely $X is environment We which billion over

We X also credit have years facility left has which a in maturity. $XXX million revolving

an option facility upsize addition, this $XXX has by million. In to

capital and also renovations. openings currently actively store are expense structure, We managing and investment our

believe We the impact on reprioritizing and the our are have and impact scenario business expenses non-essential scenarios our we several COVID flexibility we modeled operating to adapt related mitigate and are travel, nimbleness hires, capital business landlords and to different each to To gauge the manage openings several opportunities, upcoming our marketing we group have have remodel spend we reducing critical new curtailed accordingly. business slowed reduction other new of are pace with our our to Among expense towards store projects. and spend rationalized the select working projects. and of defer seeing

anticipated merchant terms supply and teams upcoming the chain of the evaluating lens In management, all our through are inventory deliveries demand. of current and

XXXX can debt strong flexibility have liquidity. fall our with and receipts and We or additional out a given We winter and no orders. to our in where long-term cash we of cash position are appropriate strong push regard high balance, believe to sources reduce our access buy flow,

to a our an sheet address capital us financial In model working further economy. balance enhance addition, expense we position and our will SG&A within the position puts of of in global managing operating situation our The and by capital, strength flexibility expenditures. unprecedented

prudently to a live and for the the potential as into global In our it optionality will brand. allow invest still addition, us future

to closing remarks. Calvin back now, for And some

Calvin McDonald

confidence Thank I you, position brand’s want of which effectively PJ. will strong navigate the team my these enable us and unexpected to Lululemon in times. to express leadership our

open this through is are teams impressed hearts go everyone up and for for and for in the I them see to and it commitment can another they our for team continue the to are community. of Lululemon everyday. questions. Operator, each closing, Lululemon members who personally I they one who that we perseverance guests how time leading want I Our for XXXX for to continually for results now and COVID-XX and by our being from our impacted am In to out their our brand by and thank delivered

Operator

McClintock Instructions] Thank you. Please Matthew Your question first [Operator go Raymond from ahead. today comes with James.

Matthew McClintock

statement, growth day Hi, just family an made you and survive. for would are not they Calvin, yes safe companies day, everyone’s for it’s for while are first plans continuing I like seems be but is the to planning interesting everyone. me the and trying question right because to manage hope to guess a lot statement healthy. now I growth the the of it

some of So, the end can get comes confidence when plan we to ability return to on into from are feel maybe insight you for That’s kind your grow of you growth, going amount this? is to experience, give your where that just you time us your seeing in continue back And what Thanks. question. are way? that China what first my to that of a you in is makes reasonable that China

Calvin McDonald

is think reinforced change with of leveraging the how part around is strategy, the regain our back I and Lululemon facing believe with I vision of We we share position. first towards Thanks, we they category that get to with the guests. shop. bit a recognizing our that in the future. the our that or us know about into into situation know will if And we and balance and our the back power from three I and current degree once healthy. we else, I is, very balance the That equally and brand I a come had that striking is are omni-channel the into building around are believe community, that current have nothing sheet China. We and our Okay. situation. we momentum Matthew. trade nothing we even think that to to are thinking allows are opportunities stated healthy of then the we guests tackle their mean, And how learnings coming fantastic is there reopened, will fundamentally the in that normalness will some the life, momentum once ability little

do vision our we continue degree omni believe appropriate is need actions we investing to while help I the and others some back part building it America think had form technology our those the investing under into stores are in have reshuffled we vision have digital the on X and different is China. make weeks an are we but as investing So I strong opportunity to we even We taking when the but but period look some at capability in that country a do looked of are scenario uncertainty of security stop sixth Europe to trading, that there and and omni the for some that at when now do is on of pause more there think that come time future to we initiatives have were to reopened. the because still so was X sort will a Level a we our of in quick social reopening strategic China closing for PJ what we in maintain is North recognizing we how short-term delayed then week we slightly Lululemon and that order alluded and we are X-week rebalanced the and traded since there community so will alert. not our and

So of every everyday it’s I is building in pace week, is back better and business but back North Europe. it America think getting rebuilding

I from close or There now would and obviously evolving. economy the planning in on are pace have equally once We which coming we are changed which see to back other factors a then. period the guest stores accelerate into the reopen we in longer that think

vision in to scenarios in to strike believe abilities invest continuing against in the continue are own we both, I are balance to and that. but and monitor doing So future we that the our do

Matthew McClintock

the about manage you is more just manner how talk experience? business vertical then allows Lululemon of Calvin, can where historical color. maybe business is Thanks. wholesale worked model and us question or background in potentially in what before, have you your inventory appropriate quicker your to important. than integrated demand in second retail too you given faster that your that you or model seen to to both or appropriate appreciate And I it PJ’s my

Calvin McDonald

vertically right initiatives The integrated of Great. benefits our benefits. have very and product absolutely And in just is vertically vendors quantities to equally. through guest are we sell our our choose gives our have in year. of inventory. us support in I we on managing ton integrated we believe our we the how manage phase are buying to the opinion have on do of differently of that we of before the the being through present and outside a And Thanks benefits around commented my product own of benefit that that being other the how vertically the with one again in the us equally half are allows we relationship relationship as brought integrated. been in we we that there which are inventory first being in we to

and buys our is on We are our time. there hold sell product the longer slightly are much of period business high are fall to to we continue influence a is by able but that in percentage our we a and of to work now seasonal for able winter core QX which and less means is

We inventory. to the flush are need dependent less on out

across our with RFID stores the well as can from at of network ship but access from Second, product point store. we our at just technology not DCs any use our

online. seeing regulate to just us So it demand today that are we allows

Our store plan our from ship the from on in to next stores. week is turn

be a operating the to manage a public they locations in that inventory, will open and allow up although of store going us we staff that effectively. from to already will small ship be very that’s not continue number to from the some have to is opening So network that perspective

number a the inventory much And levels. a that combined very I we manage think in our with put that the so fact the us end-to-end better position we own relationships levers have unique to of vendors those with are and our

Matthew McClintock

for Best the color. of Thank you luck. very much

Operator

you. Thank

Baird question ahead. Please with comes Mark from Your Co. go Altschwager next &

Mark Altschwager

you the move the ran that product thanks you are and for planning up? are crisis, launches changes, there strategy any that Good afternoon thinking are of you ask operations and through newness, you my question. about back to the as taking you until flow about to store delay have are product I looking how wanted

Calvin McDonald

Thanks Mark.

can our the we We to environment sweat the that currently blocks we yoga that in are imagine. in that we way as items around that in in guests appropriate to isn’t that are general are in bound not and benefit product deaf But of planning we or or to the solving have are needs and home. guests’ is it accessories to think are make time need with and present with favor that categories our sure an cadence timing plans some change that you is yoga not demand our really what’s But unmet that the in I is the Much seeing tone seasonality is our any at more and situations more guest is rooted to how and fulfilling are that as mats that the some of to in of us. happening are we fashion. more relevant our are of our at launch rather ensure still shifts looking launches

So there don’t and It to into at continues is immediate exceeded plans place. launch launch forward year, positioning changes look have field of Everlux rest incredibly and strong no in sell the our far for we online. I And guest any are it. launched the was as first expectations point to ‘XX this we in to well have look of our to this real under this year resonated the we February, which as science product at plans or our XXXX just time,

network soon We to of what know have online to markets and enhance the believe stores. our in. back as operating have the we the will we guests where have and we only innovation still We come entice other will we we I into And be sell. said open are

Mark Altschwager

you could it recent And business seeing that hypothesis things rates quarter and negative have was you you said closures, capture weeks? you. I some the turn has have real you your I quickly, to growth I digital demand saying of that in if given the Thank just incremental slowed store seen on you were know are Thanks. recently digital fourth from clarify digital follow-up hoping the the growth actually in here or demand slowed could will is

Calvin McDonald

Mark closures in Great. and saw store into Thanks and momentum both channels. strong our We clarify retail very want definitely the digital that. coming to

As PJ an was quarter us. alluded comps the in year incredible had for very was of which XXXX fourth strong total a strongest all to, which we XX%, of

type recovering saw So to being that digital. networks have Since the end our it the or our store this We great terms demand. stores our start closed, with volume and business momentum. continue year we from not both but into physical it’s picked that it’s the of momentum obviously digital across up has of growth, seen loss but all online pickup of but obviously store in accelerate entire our business cannot closing,

back cost strategic to bit. a in marketing doing initiatives in we a leaned again So balancing of expenditures, the it bit it is our notion we responding well and adjusted there digital leaned we have but

seeing new the responding a manner. up, are good is but are positive picking volume it’s other We to of covering store good but that, categories in products response to still response completely some not loss

Mark Altschwager

of best and again luck. Thanks helpful. Very

Calvin McDonald

Thank you.

Operator

Thank you.

Your with Please Boruchow Fargo comes Securities. Ike Wells from go ahead. next question

Ike Boruchow

Good you. everyone. thank afternoon, Hi,

little build, on helpful guess some have you that understand you weeks exactly gradual going volumes over So, are that date reopening year-over-year, I which – build, ago, mind to Could or a Can is you at on to China a maybe of again you where is in ever I still in trending what’s mind bit about China. pre-COVID details in in there it what a when start said grow maybe X kind your a levels. comps think negative based the you seen on for now? from helpful target the bigger gave you have comp assume color? can comps aren’t but talk Is is give you or maybe on see more for since X there Calvin there? progression really us perspective a think I like

bit that to understand trying little better? Just a

Calvin McDonald

Great. Thanks, Ike.

important we are an in the open of interesting moving sort sixth up, weeks, to I alert. week, closed was two I Level for the been have what’s think on emergency element still X, They that with we we our As teed are very of X and Level online remember that in In in other X stores. a just a Level to for of region immediate this is China the in weekend strong country moved week Shanghai, a of uptick and an and our total a the one business Yesterday, Beijing. collective in earlier we our stores performance did had X from China day. see regions, the to

we in have that I we we it think really are come X is it X emergency positive early. have although negative changes seeing more assess we that the are been we go. impacted in see tip weeks than and And X-week negative a So believe back as early but that Level to as we it’s period rate what will and is was alert. at more over the And learning into stores. our too will we day-to-day business and over quicker comp when by and I the improving comp comp

But quicker have to positive. to getting important of I the seeing seen as am But believe of entire America, in Our with we reason very just similar last drop last North we has offset sort and alerts it well these our volume inflection I few to trending a in cannot see in days have that the loss been physical X back the that online stores. business weeks than emergency point positive comps. to will what pace

Ike Boruchow

Super helpful. luck. Good thanks. Okay,

Operator

Thank you.

Yih Adrienne go Your next question Barclays. from with ahead. comes Please

Adrienne Yih

my the spread the and question Good on afternoon. the momentum million ‘XX stores was for million million $XXX topics, fiscal holiday the year. about into about is the $XXX Congratulations you and on was coming for for PJ, it corporate. $XXX and for

into are and number wondering thinking we looking CapEx investment we about we as it. was of hearing should the think their of seems is when like So million up we it it’s and CapEx reduction, growth to XX%. XXXX piece off this about I $XXX cut aspect And people it That to are XX% how are store grow? continuing of

there? much. if wondering us very can Thank give you color just So you some

PJ Guido

Yes. Sure, Adrienne.

closer because the in is actively. our CapEx $XXX roughly giving we would of answer to of in it for we are and XXXX question, And To it a million your said was you third CapEx in our So comes it in form first with being our the growth. say, also of fact maintenance for are off, not form I managing platforms, balance XXXX guidance CapEx stores growth supply as chain, investing the our comes and IP.

the business, So actively things will are are that, we throttle the see where will budget things going we that reviewing but do do can huge to don’t CapEx impact back still absolutely we growth. we we and need that a for having the on we – on long-term we

number now. to will a specific we on you hard So pullback right give CapEx,

Adrienne Yih

doing XX% quick open Calvin, all enough. one Fair or a you. are or quintile top materially you, XX% within and stores quintile the comping tight – if of of And them, you than better say different the open are markets is of across really them Thank or certain for ones you that the the are did NIM of within buckets opened, others? pretty spread

Calvin McDonald

Alright, thanks.

XX% that you specific hoping China? to confirm, to is Just are referencing

Adrienne Yih

yes. China, to Specific

Calvin McDonald

opening our stores week. will which actually now in received in notification be open one Okay. China it next are for All except that we just Wuhan,

So these sort will there and and markets are I place the happening of is with alerts distributed. of next change is week stores they market well are when broadly some all that differences COVID-XX performing in positive open level by and trend have we we in terms that’s in it is as China how as which emergency both doors seen think of aren't the have continue positive

scatter the difference the are some week to trending bottom stores or similar and positive are is closer trend point comp improvement. is that which others the they cities better to every a getting change and but markets we emergency between take really position a closer quartile quartile that the by but the massive comp to market inflection are performance to the top some then of than isn't overall to started and moving seeing to every their that take the status sort see on where in a we left a as store is week So in all continue positive these momentum

Adrienne Yih

Best you very thank luck. much. Great, of

Calvin McDonald

you. Thank

Operator

you. Thank

comes next from with ahead. Piper go Murphy question Your Please Sandler. Erinn

Erinn Murphy

second bring in in adequate you then Calvin, kind be question expenses can recessionary with good to of back connect and much you for to specifically the during period flexibility about period Europe? of efforts regarding you customer of done Lulu have China virtual PJ more consumer this so don’t just And guess afternoon. really going bit Thank talk about new meditations workouts then during acquisition period just to manage and Great, has some you here I we thank America this model? of talked North to may little you the time community history you some former looking the the online and your and that as seen the a at first what

Calvin McDonald

you. first shared of And whenever relationship are called or we platform where Keep that app type had brand platforms number is these a and around and wonderful partnerships in an be online innovated then around activate of of sweat China with acquisitions. initiatives do type sort numbers In which the of we and I WeChat. guest of a some partnership in be day it there activations some of sort new we Tmall our our wonderful continued we they these with introduce innovation on are of proving seeing guests to new market, some to

see that but loyal sweat in way actively degree America time we in to unavailable them I as this or see so events increase and more point in satisfying studio we or are guests think doing a of guests events time this ambassadors some but the participate that acquisition anticipate seeing early are this physical that absolutely is events of of local we events of vision. that the an having and acquire just guests new the would together respond power the to and vision than equally it not on would both North results this the it I social new just So really we think option those well is it an Its of but and are combination for into a our but service to at will not in some launch at one providing where we and into is China of are goals our the as the quite our market our reinforcing or we our closed to to community think that be physical and it together has community our lean pushed and it physical activations building through this digital I as opportunities or which will host the our how as to membership physical relates is as space come it’s it and stores digital come innovation one our the digital as inspiring see point guests and to of

PJ Guido

Erinn on redeploy a spend. further. down is good come into is though discretionary managing so come a do There There drill about expenses buckets. your our will SG&A naturally the we way in it can we have flexibility example. can that also about is down again we have marketing variable then into which do We question a think bit as Marketing And sales built significant is component is few but to things little a dollars. there

store we to we For events into marketing can but performance. redeploy now, not e-com digital doing drive example are

whether prepared do find can where levers are there we travel, but we and expense it are actively then things is buckets about of a and are is across I piece in. a depending slowing we can little which several we we there talked managing growth, So overhead the can scenario control organization on what remarks, there in it’s savings number there pull curtailing to the headcount the

we good the feel pretty about P&L. we have flex in So the

Erinn Murphy

you. Thank

Operator

Thank go Kate ahead. Capital next Please Markets. you. The with from question comes RBC Fitzsimons

Kate Fitzsimons

alluded just seasons, be less there understand can portion headlines guess the future later about have associated have decent certainly occupancy assortments guess I are first on give with thinking repurposed for renegotiations the the of excess a be then deferring guys rents ask can’t Yes, we that conversations the an it. fashion is is of I that But of – maybe believe would when seasons rent should help getting write-downs to the us you just on are about projects, you. kind going about hi. in just Thank you of for inventory, helpful. having newer with landlords? reused you Thank the – there? on with maybe warehouse rid secondly sales, about us be of excess, it seen on the some of heard are some taking active we just That want just you to we think thinking how front, I my And contextualize questions. just I update the landlord. but on

PJ Guido

It’s Yes. Thanks, PJ. Kate.

it’s obviously fluid piece occupancy very real-time the situation. on So, a

hard might with we will great have it’s What we relationships relief So, I rent to comment our see. is on say landlords.

conversations them. are We active in with

So we are for hoping anticipate some and flexibility some.

more is but solidified to So on that, nothing this there come at point.

Calvin McDonald

is been reduce if is those and do orders have can forward is of options and those relative replacing And pull But core we on it’s on large position, And inventory, take hand now it of levers that action to future no down. been a that on of your core. we the to to us well that we that There one, with percentage won’t. on on right for when would we to that’s of there obviously some core us basic and immediate short-term accordingly to through. and placed portion we we order knowing want inventory we to be are that traditional in inventory a need clear a our the our look and want get help are buy will will colors, in different orders our it had as have vendors you the based work to as want inventory those work our ahead because activating adjust

important positioning positioning, in price any to are on making nor the going brand, our our think thing is we our any there decisions don’t long-term. I short-term need plans hurt the to that’s

now, any And see strategies. change have need had right to we don’t clearance them. We from

markdowns, use are markdowns. going to in-store online continue as to We as

show use we to didn’t have at and and may it, our power puts disposal outlets. anything traditionally typically and our we we run is did And last we those need to positioning, do we combined nor always with further XXXX, won’t everyone brand need not, initiatives, that see year but price need decisions is it are to but in warehouse we ones the up we I the had have risk that used of And other run our at all to sales. managing take the anything that activate know online that, the warehouse have sales that see have to. one no that levers. price so we We we our and

Kate Fitzsimons

spectacular. Great. Thanks really the and was much momentum pretty very It XXXX. in on congratulations

Calvin McDonald

you. Thank

PJ Guido

Thank you.

Operator

all time participating. today. That’s we Q&A Thank you. Thank the for have for you

disconnect your lines. now may You

Lululemon Athletica (LULU) 26 Mar 202019 Q4 Earnings call transcript