Earnings call transcript Q1 2023

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc.

First Quarter 2023 Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. be to there'll questions. presentation, the an ask opportunity After [Operator Instructions]

go like I Relations conference Please to over now for to Athletica. Investor the President, turn would Vice Howard Lululemon ahead. Tubin,

Howard Tubin

Welcome to you call. good Thank Lululemon's and quarter earnings first conference afternoon.

talk today results our Meghan to CEO; are CFO. Joining McDonald, and about me Calvin Frank,

to These that management's get will including future. recent filings include materially today disclosed reports dynamic started, abrupt those Annual take on are these current and Form or most contained Before risks Actual of those in Form rapid remarks of statements associated like we aspects our this SEC, opportunity nature in quarterly subject and the current due we Report statements by reflecting on and our to and our I'd with we to on forecast may certain to even by is remind XX-K uncertainties information you changes. assessed, have have based business, forward-looking differ our which including from Lululemon's implied which with statements it's results XX-Q. forward-looking but our

any update of statements this Any on or as based make expressly result of today a obligation as future or to disclaim forward-looking and or on call undertaking revise events. assumptions any we these statements we that are of information new

present XX-Q press and measures release. financial non-GAAP GAAP measures, and will earnings of on both in is included non-GAAP call, GAAP our reconciliation in we to During quarterly this a report today's Form

under Investors .com. accompanying XX-Q basis. at website comparable constant today's section The release addition, of quarterly call and the sales available our the are dollar on Form given on are report a In press metrics www.lululemon on

as a call, we quarter, of investors to statistics summary where I'd our find you'll to visit Before for our financial the key our operating investor site, and the remind begin like time limit at to well Today's one one hour, as please for a call questions to the addressed. have opportunity infographic. scheduled to give so yourself their our quarterly others question is

the Calvin. call now like And over turn to to I'd

Calvin McDonald

Thank to continued discuss you, strong one you to in XXXX, welcome the shows call the our to with and here our business. I'm share happy and which quarter momentum everyone start Howard today. to be

in we delivered top read press exceeded results our our you've that As bottom-line release, and guidance.

to continue drive products. the guests engage business new with We and across our technical globe with innovative and

membership our I'll Then we'll international highlights I'll provide share call, today's on for is turn performance, the quarter then which questions. one model, of as On new our over business, our financials product and program. it review to our guidance as also on updates powered your by well and Meghan update. community-based performance, I'll our our take a

So lots share, to started. let's get

XX%, by and men's Comparable and in was was our North-America grew as Revenue versus I top year, channel, business, across across XX% up increased XX%. region, mentioned, category, international region. XX% and business accessories both stores XX% grew balanced the bottom increased sales one in and quarter the e-commerce up and delivered In line. was XX%. and XX% strength Women's last up XX%

a all was driven was saw This acceleration XX%. revenue, with increasing than well, Greater revenue margin, strong by in China meaningful EPS gross $X.XX. strength in guidance. versus we international, XX% the and Within to year increasing our better SG&A, last as business coming

people. year, to start the great fueled our a by So product and

community-based spend incrementality increases to approach authentically it only of with our talk about our devote allows our guests as Not uniquely time drives like model. I'd today, our also engage and us and to connect does some brand. LTV guests, more For to with

brand at the and year of core celebrating our day-one. since are community We this been our XXth anniversary has

our program, we guests we model like our Through to on how with our on essentials and most are of this of deeper ago, meaningful membership months program. sweat embarked them. our eight to expansion what free-to-join aspects North-America, knowledge Within brand an gain

activations our to needs. develop the opportunities insights help to pipeline invite and around them and them inform product and can the data with most events We unmet leverage future relevant that to are

Our as technical they across local learn and assortment our allowing part ecosystem, and provide including needs are educators, within solve. many can our our to communities unmet of that be products, integral connection an this the they our within guests with stores interact purposes, serve world points found about the the to innovations

and will hubs their the educators studios. sweat studios as to looking ambassadors store in to Guests where best local Secondly, new our in Lululemon for our ways need enter point for the fitness them stores act our neighborhood, local only town.

the Thirdly, range launches parties and for provide events finally, to and launch Studio for including And some our other our of and such last celebrations. product Lululemon runs, community sweat fall. hosting point focal clubs sessions, activations, as stores local larger-scale from footwear, that are our our stores run XXK our support

styles pass were and cities and for guests Houston, Boston, same and increase across increase the members, our to hugely exclusively great last our And the levels. community brings of pre-pandemic of meaningful in event included celebrations back Chicago in oversubscribed. awareness the In essential to we a quarter in events, quarter ran the events campus hall a this one number which three we our with new period Align to six us Key younger success Align year. saw compared

per this a only hardware. new big May app, which us our needing been help Studio U.S. purchase our month in broaden offers month, earlier TAM, app recently, will Lululemon for Most the industry without activations. content our We went week. with access The to guests to for digital has $XX.XX live leading

women Sachs product back takes men. performance, Endurance first and community we young approach and which women's support addressing women. existing go Gender component our activations, gap holistic typically a with This and data the a demonstrate can new innovations for to innovations, will they're in give to Further, scientific supported resources reserved far further product a initiative. how program, will when announced We include initiative research

only the needs, its ultra brand solving addition, multi-day At International Women's awareness. In culminate starting the on innovation, XXXX. driving a commitment Lululemon's supports this Day and initiative program marathon will core, for women's in to unmet

culture with we tapped event our addition, L.A. into In Dupe Legging in Swap Align dupe

team Leggings. ask our up set guests and the their leggings pair in of Align dupe Century iconic at to trade pop-up two-day City a a Our for Mall

us, For primary event guest purpose of the this brand the was increasing in being new for awareness and leggings. acquisition original

outlets ran in are and resounding new viral to covered media early started gamut Overall, XX success. under lines while XX% a it social addition guests to specifics, international was attended, creating traded a.m., guests as get was media who brand. our in earned old. were of points. in buzz. generated of X the dupes national billion than into It more whom the by media who as and half and of About X brands impressions waiting the in traded guests of the years And terms Approximately that price won't some leggings in I

of contributes physical relationships. and performance. creating in our We just advantages. and awareness, connections builds guests supports our transactional ways by deeper with community as engage financial in are model purchases With digital, more in brand to our competitive view This by our turn leadership and across holistic drives omni ecosystem our that position membership both one biggest powered developing more than strong the guest our relationships. We cultivating connection points and

our as innovation. compelling of spring and continued merchandise including activities in and across women's, responded many In we continue we saw SCBA, in our product well our to now Guests strength key Align. bring franchises, to innovation shift assortment play core footwear. Let's our DEFINE to

of women's specifically XX%. we at looking growth bottoms, saw When

new most our is needs. bottoms innovation new via teams to mature existing styles women's While enhance update create continue category, that and for technologies silhouettes fabric and and styles, solve bring our unmet

the pants, always currently Dance a a additions favorite been our one, our bottoms. in are has and experiencing quarter driven incredibly strength by and Leg; in which bottoms and resurgence In to the our Mini Flare smooth was is Wide franchise, soft women's Align and upstream popularity; guest newest iconic including Studio

and I'm continue strength franchises. In our men's, guests iconic with to across assortment. Commission respond our thrilled well In Pacebreaker continue accessories, the ABC, see to we to

do major of well categories, collection three backpacks is duffles. bags, is with quarter While one, of business as our fuel a In we it we women's men's. responded it growing merchandise that innovation, and across just of piece smallest the to our guests our and

assortment. Blissfeel running the off durability road. continue This and we newness into we the bring we who of shoe road-to-trail innovation guests run to for on week, traction And Trail. the launched last and to and one, quarter offer launched version footwear just In first love was our running And shoe. designed and enhanced trails updated Blissfeel shoe to our the an

sustainable Our our of XXXX are also end-of-use our solutions. of innovation product in Be Planted to XXX% make goal with driving materials and initiatives products support

space. the Australian viral collection a made capsule a debuted For in More Earth announced which in with in new plant-based scale cool recycling, April, textile-to-textile and a start-up, Day material very collaboration to recently, leader with partnership technology. Geno, is our first circularity Echo, we through Samsara we with nylon tech sustainable

example driving toward Like how a bringing Together This other with with closer sector to we our circularity. new and is in including and the partnership, one towards taking our by latest products, vision are back with a ecosystem us Samsara, New apparel leadership end-to-end into working of Geno, step of we're our position Be initiatives, collaboration our recycling along our XXXX. Planted circular

to now Turning our product pipeline.

collections continuing We're with out court. our styles look that worn a on can and at take to both versatile the Let's and golf tennis two. be build course and off quarter

of a into for brand how technology. our our for solve Get be new awareness. launched Sense using two offering technical shorts expanding needs bring styles share Dry on-the-move fabric and all installment her. grow men, tops areas featured our both of of of our It unmet guests, and for train just and we increase examples The we'll of our continue And styles wallet new to few him assortment, and second both campaign ago the Into with are innovation weeks our These

I'll Before I some Meghan you. financials, to moment geographical to share it discuss our highlights with take over turn a to

pillars the xX of is international. of plan one of key know, you As Power Three our three

have existing be XXXX to new as markets, but North This markets we'll We by business America target XXXX. will some predominantly outside a exciting our driven be between quadruple our entering and well.

represented about global growth. XXXX, only of of our optimistic our remain and runway In I international XX% revenue,

America a regions. earlier, revenue increased North stated one, remained our international. strong North international I in XX%, As we and America in XX% while business saw quarter across growth our In in

China, and experienced four Greater to In increased subsided. the XX% in of one acceleration just more ahead business our sequential in of China Greater effects revenue as expectations market. this COVID-XX total, one, a the we of within the potential relative sign quarter quarter In significant in

neighborhoods the mid-April visit much to are in great serve, has community. to bringing our was chance a and city. it was we and We years, by walked to first for had through grown the I see the three impressed Shanghai in brand experiences in incredible we the local I how time our visited stores, new the brand

our as parts culture In is of our market. addition, time guests my and in being bring they with engage always with spending favorite to one educators life of

know that for and a the market the experiences product that now with XXth their traveling Tel franchise in and In Aviv recently to our fall. help great with with EMEA, community while been in we'll bring Lululemon. Israeli engaging able to market. market guest globally first them we we our in we're start be guest a innovation regions, our and has directly entered partner, last home becoming We store to Spain, a off to other brand of And opened the Israel

In APAC, enter first business Thailand well. that as with I'm in in will pleased store we the our months, And Bangkok. coming robust remains

Our America. brand North success revenue awareness our approach the and direct-to-consumer rooted brand same in fueled model, is This community-based increasing as growing tenets the approach xX has includes assortment to building, excited multichannel our deep innovative continue business our our connections in the global our the what of internationally to Power with Three direct to I'm what we future growth holds guests. plan. product execute have as for we and and for our

over it that, with turn to I'll now And Meghan.

Meghan Frank

QX you today with recent happy I'm provide outlook Calvin. performance for our to the and be for our year. our discuss financial updated guidance here Thanks, to and

saw margin, sales, gross accelerate QX, quarter. a we and assortment, in came start. trends guidance, inventory to connected off continue we we throughout is based guests China, our sales spring guidance. Guests in In responded our Greater And the better and SG&A, EPS solid momentum all in well than our QX. activations see via our to to with strong on multiple XXXX merchandise

store store Comparable the the now performance. In business. channel, revenue details execution our QX comparable sales $X sales versus of increased by XX%. of XX of to stores parts of Let me year a globe. increased addition with XX% by continued driven Total new across rose driven net all share Lululemon XX%. of total net increased our XX% strong last billion Square across the quarter We the ended footage QX stores XXX XXXX. since the

During net and stores the seven we optimizations. opened completed new quarter, three

line and In saw Within channel, increased year XX% XX%. accessories we a our XX%. top last and versus XX% men's increased North increased revenue women's America, within And or comps category, revenue with increasing revenue. of versus versus increase year. nearly by grew last digital And $XXX of million total year, XX% increased XX%, international, Greater XX% China contributed XX% last

we channels, engage to great in traffic guests convenient to and the see also It's XX%. operating of In our them. omni stores most increased across to strength channels. strength our both in digital ways with speaks ongoing This as both traffic model approximately

last was $X.XX the following: revenue basis XXXX. or in XX.X% from in rate first primarily driven product line were Gross profit and with XX.X% increased lower predominantly profit increase year revenue, a for Markdowns of in billion airfreight The year. net QX in regional of XXX points the was to as basis versus as net quarter mix. resulting last QX well gross compared by XXX margin, point

Occupancy increase points development chain were These in and in depreciation partially point offset the leveraged ongoing product basis supply costs supply investment a by and by in XX driven and XX product quarter. chain. basis improvements

a predominantly deleveraged FX XX points, FX within by offset basis benefit addition, SG&A. which In point basis XX by was

to SG&A. Moving

better-than-expected shift of came to higher-than-planned investments. revenue expenses in managing leverage or SG&A of while continuing expenses sales XX.X% revenue also prudently in SG&A compared timing XX.X% approximately the on for a to in long-term of in extent, invest grounded our be period net to our strategically year. same opportunities. to to a continues due and, last certain were approach $XXX growth Our million lesser net

a in quarter expense adjusted XX.X% of was XX.X% to Tax related of income effective was tax net or Operating XX.X% QX of an on Canada last for compared or for rate to to due The unremitted stock-based to accruing in million primarily quarter compensation. of and for earnings the increase the decrease million earnings our XX% revenue $XXX a is year compared in withholding revenue deductions net XXXX. ago. to pretax relative tax year tax $XXX

first primarily compared XXXX. per million million XX% million of $XXX $X.XX to Capital year. to quarter also to or expenditures last supply income renovations store locations, The the relocations for increased capital Net technology quarter for and and chain $XXX the were $X.XX in quarter diluted compared for increase share the for investments. new to quarter and relates $XXX the first

revolving available line the and $X.XX Inventory cash to our cash the highlights. was and now and ended We QX. equivalents capacity end under with sheet $XXX balance Turning sales billion quarter of our million growth in of million nearly in XX%, at credit $XXX grew facility. with

continue with second the to approximately At XX%. the XXX,XXX QX, of $XXX. fulfill line repurchase an repurchased had well our end to we At with growth approximately the expect we shares relatively of at XXXX. million and growth guest comfortable $X on be positioned price growth in remaining our $XXX to we billion average And sales half in We of program. expect end inventory QX, to of continue we're remain We inventory inventories, demand. of

to our now shift me Let guidance outlook.

of experienced business and opportunity with to We as strength remain on us the uncertainties a in being we're relates financial pillars be to our our while planning growth environment, the of as xX to That seen continue out said, business. to QX across in mindful we the it the laid result, plan. the Three commitments The Power strategic in we prudent macro in our invest delivering we've strength also and also affords we've the growth QX. the start pleased

Let with me begin QX.

revenue representing expect XX%. the of to billion, in $X.XX billion to range $X.XX We of growth XX%

We expect company-operated in to new QX. stores open X net

XXX strategic centers QX distribution teams driven chain, will and to in including of by expense, margin modest to growth, future be product on support basis gross investments airfreight and relative to depreciation. increase offset by deleverage occupancy well lower as This supply as points XXXX. expect We to QX XXX somewhat

rate to XXX expect QX SG&A we relative QX, to to points of In our by basis XXX XXXX. deleverage

relates activations. invest of While also timing deleverage the a to our investments, initial this strategic more awareness and in reflects of shift top-of-funnel to to it portion to initiatives building community decision brand grow These expectations. certain our initiatives brand include relative

points our expect XX operating into certain expansion, we at QX, basis inclusive looking our When of approximately initiatives. of margin decision for increase strategic to of investment

EPS. to Turning

to the earnings EPS per of in We range be year the versus quarter second ago. a $X.XX of share to $X.XX adjusted $X.XX expect in

to XX% now to year growth $X.XX expect of be in to to xX We represents Power of This XXXX. XXXX growth full better $X.XX XX% Three the our and now to plan. range range relative is billion revenue Shifting billion. the than of

net open growth overall will company-operated and low We new approximately This contribute the remodels. complete XXXX expect co-located footage to XX in stores teens. square approximately to in XX

openings Our majority XX markets stores new with being of these will in stores XX international XXXX our in to planned the for store include China.

to For full-year, to increase forecast by driven now to versus predominantly between XXXX. basis lower gross airfreight the expansion XXX year XXX we expense. points last is The relative margin

looking full-year, basis at For down last to with in line in expect relatively points versus airfreight to be approximately be for expect them we year continue markdowns full-year, we now XXXX. the XXX XXXX. the When to

the to XXXX. for of XXX basis Turning now full We XXX points to year. versus deleverage SG&A forecast

sales has been prudently, strong. we While business continue to the plan trend our

goal this margin this earlier, to As while Power annually. xX Three I our our us also invest modest expansion of mentioned year pillars behind ahead opportunity operating the for gives of delivering growth

XX expect basis full points we at year. XXXX, of looking to by versus to now increase year XX the last When it margin operating for

year tax expect full our over tax as we to the Three rate our longer-term approximately reflects rate XX.X%. a tax of withholding is taxes. XX%, line This in be an the adjusted expect and plan as provided part XXXX xX increase For of Canadian our effective with XXXX, Power rate accruing we of we the increase effective of expectations result for

For QX, our XX%. effective be tax to approximately rate we expect

diluted year $XX.XX $XX.XX we range versus share now $XX.XX to EPS of adjusted the the in XXXX. For XXXX, in of expect fiscal per earnings

guidance EPS any repurchases. Our the excludes of share impact future

renovations approximately support $XXX expenditures center continuation XXXX for investments continue for million line multiyear store new $XXX be and is a increase of growth, million including X% relocations business locations, to Three to to investments. X%. and of to X% of million range $XXX our We expect with Power million to our $XXX XXXX. technology of reflects versus capital revenue, of capital project, A The approximately target xX current to in distribution

I'll over to the back that, turn With Calvin. call

Calvin McDonald

you, Across us. Thank about Lululemon, ahead Meghan. we excited of opportunity are the

XXXX continue is and strong the We our environment a quarter pleased to trends we've as to off but with us, monitor entered start, around we're two.

our our brand Given deliver we on unique pipeline, xX forth our will the and that building prospects the to to strength of Power grow plan. growth growth approach continue in our international Three I'm optimistic awareness, communities, product initiatives our to of goal set

these closing, to my Operator? who our forward across teams in the gratitude questions and now. Lululemon life. to culture And to I look to to deliver express deep leaders I want and taking your bring results continue

Operator

you. Thank

comes first Raymond Please question-and-answer with begin Patel from the The now [Operator ahead. will question James. Instructions] We session. Rick go

Rick Patel

dig which you rest Can of afternoon, as the versus year? most the Good geographies ahead, your rather. you in you good And revenue the sources expectations? about a we look confidence have morning, little and into and the the Thank do think categories deeper you as everyone. beat of

Calvin McDonald

begin and the of level, high our on Great. see the to drivers how model. some quickly with business of omni is At versus Rick. the different sort Thanks, I perform about operating talk of business chat with rest the our continue our overall competitive DXC key regions model year. then I'll advantages, our uniquely which different peers a

Lululemon the multiple as portion of our is the Essential with Second of recently, product guests sweat that is and frequency launch the Science to; wait we and well the both wear community through initiatives innovation and of a nonseasonal; finally, of drive which large that versatility memberships and is platform our come that, Studio. product connection accustomed of innovative occasions, drops by which then our Feel. as supported a then within social; clearly driven new our lot cross our our assortment program and for have and And

and today, physical, and which if in strength zoom healthy of model it living relevant in we've versatility finally, And are relates And by fuel an mental pandemic those post years; our an investing as the the brand all really lifestyle; well-being omni that been to product importance from apparel; guests and out drivers drivers positioning. we still the our and on active that be to during and pre, that guests, is speaks business to many supporting and operating very of continue others convenience social separate expected then our for focus the us both performance. the our

changing. as performance, product growth growth. at with expect regional that at with see look balanced all in I market international, gender, see as we when across I North continue that every pipeline, in internationally category And America, I to don't we've the shared, activity. double-digit and growth And And strong

think still ahead. healthy I very growth balanced So and

Rick Patel

Calvin. you, Thank

Operator

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

Adrienne Yih

the year. able you. those pricing a wanted how at a to think long-term markets those to China, of price Great, And talk Spain. to into new of Calvin, in you on the entry-level Congratulations onset? raise as start markets, strategy price those over you thank I about about sort How you time? then kind on great do being building markets do basis, enter

be kind Thank us guess, I to primary America, very should would relativity North EMEA. the Meghan, and between segment think could relative there, of much. then margin, about you we talk the And about driver how the you if just APAC/China,

Calvin McDonald

with shifts and the order parity elements. a we with fuel markets in to markdowns only enter we pricing, intent means our promotional in We in of full to go and being price having On parity as with range exit -- product and the demand. to at leverage create Adrienne. of similar Thanks, used with the of premium close brand sell not a discounting seasonal intent through import operating could may And shift be But it result a adjustments a always because markdowns And the there cost a with strategically. around discounting, intent markets. selling with or taxes be leveraging and tight within slight competition either band local course the typical of full then of make price to as of of market, other as moderate a exit. positioning

very So similar positioning supporting of a in policy price. full

Meghan Frank

Great. how terms last about we highest, profitable, both we saw and regional to meaningful profitability, And for margin And of would the China expansion relative that have operating our region, rates and in America our APAC, North Adrienne, of and margin in EMEA. then quarter our regions. channels followed experienced in year most that by within then terms is by our the the is relative think across

Adrienne Yih

much. again. very you Thank Congrats Great.

Meghan Frank

Thanks.

Operator

Altschwager with go Mark Please ahead. comes from question Baird. next The

Mark Altschwager

just my as question. been over in think of ago in nice from year, to taking the versus you acceleration your business. if America quarters? obviously, overall for relative revenue for guess, remaining the there but you the today, about international Thank three we changes I months have Really thinking contribution any terms curious the to the North raised guidance international

data versus anecdotes what or how product Any markets in China, newer in brand the on-the-move of have drilling had learnings on mix the some past you months. And like kind then any newer perceived activation down of your being in consumers? some unique just few and I'm is trend events the you've or over there. And of entered? the curious you've fast differences markets in these looks sweat versus some core in newer

Meghan Frank

Thanks, Mark.

the of which We top did terms and in coming to to strong of the guide XX% a off XX% obviously Power both above at year, the quarter, we're to our very expectations of full-year, then growth. for so balance for XX% targets. QX Three XX% our of xX XX% So for line exceeded

of balance well the year. So positioned for feeling the

outsized, still mentioned, performance, regional but strength obviously, a region. in the America meaningful out see, both particularly breaking China given opportunity and across not and to continue see Calvin the international bit international North We're we experience being our our regions, as

Calvin McDonald

We've the ambassadors with China activations China. on locally, both referenced, activations you and is you -- then level store And well a connection number the through and that in is our community that know, at done relationships guests. of events. building working our go-to-market local I'll about incredibly either strategy as well into level, as strategy and as in larger

We a awareness, I've fall. before summer everyone And into driving the have think for digit. the planned single and in few shared is this I the those with which brand are

a keep huge So we to have awareness opportunity brand building and consideration.

enter we driving As are brand new as we well consideration. is that markets, way one and that awareness

performing stores building We Tier as ahead to X are keep -- have plan. good cases, of stores are those ability cities in And all well success in our and stores performing as Tier X. in of each

the being moving into with new driving now stores to built upon and XXX community year markets pleased that and we plans we're continue model very the momentum then have forward. with is that all way received, enter. So brand next to this open We in

mix, there. the that overall and our at considering the I'd business look almost is North of women's which I similar of age to good is men's When say the America, brand

as that So we're becoming our and still that balance in it's performance market. occasions strength earlier, across a is both quicker, wear the between and The and with the brand, social dual-gender America sweat. premium lounge brand. playing to OTM seeing versatility it's rooted and we're of pleased North brand And

is it the how pleased built received upon you product very So to. really being and momentum, is and with community alluded activations as

Mark Altschwager

Thank you.

Operator

of Please Lorraine with from Hutchinson ahead. question Bank America. go next The comes

Lorraine Hutchinson

that of outside you. investments talk on some to maybe Thank the of plans Thank can they a awareness to? do about detail opening And just What increase then stores. Good you. afternoon. more bit China Meghan, little you in pulling you're brand forward? just pertain

Meghan Frank

Lorraine. Thanks, Great.

So line, terms SG&A experiencing obviously and the balance expense year. airfreight top of some investments, the strong in seen we're of we've in for our recovery

pillars. growth map into an into So push Power see to our opportunity our investments road xX Three behind we of

push would important guest specifically, regions, as these opportunities say, where across our awareness of also on in those business. expansion omni support enhancing, would year be we the higher then the terms So investments also digital brand I expenditure. guest and as prior for capabilities, then in in experience, depreciation international would to capital And and of there well investments the current continue in and include year balance market foundational and

then you me part And of the your remind question, can second Lorraine?

Lorraine Hutchinson

to The awareness brand China. build in plans

Calvin McDonald

take I'll that, Lorraine.

one consideration, achieve the awareness as and So do are a we of you and which brand campaigns mentioned, addition do stores, locally. top so of also and number to to in activate our vehicles

By may which live and locally, where Worn and ambassadors they campaign and the that are it also highlighting upon all life. telling globally, a favorite in Into will celebrating market-specific their build did a take leggings relationships activation they have inspiration with Us, which it. well-being example right all we're It story our how Get now that campaign of They of campaign, women's create That's the around products the called a we they is fantastic a and then campaign their was which So activate initiative. global we

more And of those plans. we many have

digital, and expanded brand leveraging traditional part a So We the achieve business. we campaign of consideration that big in definitely which And and awareness is market in to our marketing invest channels. opportunity.

We we Tmall, have have .cn, JD. added we

our of innovate plugging one-to-many and and a and to leveraging initiatives WeCom lot the variety community. of across WeChat, platform one-to-one continue into for We our initiatives do a

there a of are things. lot So exciting

in China as that is a we leader in Shanghai. you in based Sanan know, Mainland And have

have We business and resources specifically initiatives talent China Mainland the specific focused SSE and in have driving a where and on these that we Greater China. office are building

but executed just been a that's business. the -- ground executing, a build the empowered have to initiatives those that we team have on So that of are few

Lorraine Hutchinson

Thank you.

Operator

Telsey go next Telsey with Dana The from comes question Please Group. ahead.

Dana Telsey

Goof the And congratulations afternoon. on results.

terms consumer planning innovation in year, regionally, product extensive think you Thank AUR? benefit level any this how products the As the new AUR? you And that you. to the with of the And globally, of seeing even basis I are and difference and freight in differentiation? we seeing are are think of what of year? reception of in points, reduction, should And the believe, you terms about of through XXX margin you how

Meghan Frank

Dana. Thanks,

be so down In for are terms airfreight, year. points now expecting we basis the XXX to it of

above that points now basis XX So is levels. XXXX

basis made We headway great driven airfreight. XXX expansion margin points did we by product which was primarily in some experience there. QX, So

part. will year to to of comparison And being we're moderate into flat terms of We close AUR, let strategy push material say we'll with change last the assortment. to the take then to the in and terms expecting our any I'll year, AUR QX in last continue Calvin year-over-year and throughout there. the I'd see not opportunities monitor

Calvin McDonald

of our region. benefits Dana, there's Dana. differ and And Hi, and the how market design drives business global And a we to momentum across market newness huge benefits and a product it one of of globally, of strategy nuances obviously, number may that. some by the is every in Yes. predominantly are terms there into. that assortment a that few

and our for markets. for one leggings, years is really particular fit introduced those those And it categories we our classification fit, in the bras that bottoms. whole driving men's in for APAC helped in ago, inseams has we and few on So in where a different a have

you know, markets. as few we've a Footwear, out only rolled in international

though Seasonality asking factor. -- as it's and for even and Mainland for an that now, of the it, category China, it's demand in in U.K. North in guests is So we see in obvious America.

media I other the do call is we out can differences see only see then that the certain difference would and in on power of based globally platforms. And social

items. we I voice, a than influencers overall, see these have lot which social the the of which fit, message main not influence, Everywhere in the there don't in And media across quite every of same we see see markets more the where So markets are type in momentum a don't jacket. similar is outside is social distortion U.S.-based in assortment Belt But and a the the we is the Bag, U.S.-based defined of think large strategy trends, drives that similar design, and other by market. global trends,

Dana Telsey

you. Thank

Operator

Please Lejuez ahead. Paul with from Citigroup. next comes go The question

Tracy Kogan

Kogan in It's Tracy Thanks. Paul. filling for

U.S. First, and as was could at Thanks. saw in the give the falloff then others and by seen. backdrop. on could the us secondly, in whether And if all the any tell current in your I month wondering just the quarter was competitive hoping us views you U.S. the have you some you landscape progression I business macro

Meghan Frank

Thanks, Tracy.

what we're year. and the In share positioned. as monthly planning for to sales followed of we of our the terms to XX% QX would the scenarios specifically. able month multiple year then be month we February in that break well then increases full double-digit strongest growth, we performance of XX% the balance to XX% I was out March. is feel to of Obviously, months, But each saw move into but don't comp XX% and the so April guide quarter. by coming And pleased XX% to off

Calvin McDonald

we taking actions always are terms landscape. to, in both the the place have, we and continue of macro, competitive that competitive in as And monitor

think going to others pricing. allowed the price That support to particular very adjust. in promotional activity, to full-price that. was selling, had I to minimal and decision that year continue before lever course-correct we're our And last when to talked about strategic to most us pull manage I've continue a take to and

inventory seeing are positioning. come We better in levels

period. I'm number. So of I as our that it saw, will marketplace, revenue in has heavily been, to quarter don't promoted well guidance although further inventory has worse perform during business you in got and And the anticipating line our expect than we ahead it and discounting this our continued be with

the year, of guest. to I'm business. and So innovative of we're our pipeline from male half and positioned and with an female what's always back coming have our guest and for think I product both see exciting, And that a for I fuels perspective, this competitive come the excited what well

plan monitor as X uncertainty, the done to the we're with macro, it. scenarios, for continue we've going past business years, the for to multiple On

both guest were QX acquisition, we'll metrics we new in transaction guest terms and Our in and to. continuing need healthy traffic of monitor to adjust as we're but

Tracy Kogan

Great. Thank you.

Operator

question with Boss go comes ahead. Please from next JPMorgan. Matthew The

Matthew Boss

quarter. Congrats on great Great. another

strength on overall Can elaborate any on consumer? just here momentum North you global the America of in any seeing? the that change the store have seen comps with core Calvin, you've you change brand, So you're in that broad-based seen drivers May? global of And outside the

to the selling does trends, quarter, your on back points the the ago? the then Meghan, a elaborate full-price markdowns first you better-than-planned create about year I of in basis guess, favorable year XXXX as And think half this and we markdowns inventory? And XX with potential terms in just opportunity of can opportunity in

Calvin McDonald

I'll take part. first the

In or in they engagement. of terms frequency guest behavior of remain metrics, cohort of no very our strong. We've our purchase terms change in seen

our guests in approximately increased by quarter both up across XX%. and increased guests over e-comm stores addition, by transactions was XX%. existing transactions with one, XX% XX% traffic new In also strong And channels up and

every region, when new engagement both look healthy as that acquisition, specifically, share to the globally the and transaction guests And healthy very across with traffic but general of don't as guest numbers we behavior, existing continue. well I channels very behavior

brand Some as product, this is of represents business all and was innovative to driving. awareness going our growth fuel for as I will forward we the as feed alluded what's a represents differences, mean of opportunity international continue and XX% low as to, significant our significant I've runway know, and to for brand. that we One, doors, And new build helping a consideration continue opportunity our and exciting, us, is and for revenue of business. to. incredible, we

online And to relationship have getting the flow. supported guests the the DXC versus with very links fluid our we're by any And really to not a the allows strength guest of and to set, that channels then obviously choose able have. performance we us both do equally continue to immaterial and coming a way channels that peer and and of interacting where we they frictionless speaks for in a And store and both technology from It's have intermediary while our to together to the strategies. business grow our model shop, brand accordingly. relationships that's into them other omni

to think drivers. brand our few across opportunity strong But very, shared I are a forward. very business those guest with So awareness the moving of regions building with the metrics keep

Meghan Frank

markdowns, in then were And our we pleased terms in Great. performance so with QX. of

and you slightly as XXXX under mentioned, markdowns flat So to then XXXX.

flat markdowns year-over-year, now continue right in expectation in that pleased full-price generally will as And guidance in to top was to slot trend closely And we'll also embedded really to be embedded our QX, in that. levels. expect with well to as make which is Our a the performance line that we our continue XXXX monitor.

Matthew Boss

of Great. luck. Best

Operator

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

Ike Boruchow

just for flat said had XQ. in expected Matt's ago, model through two XQ. you of were months kind Three XQ thank year-over-year Hey, you. follow me just Meghan, to quick on ones the They up markdowns higher in question. you

it should the the that saying flat rest of kind of you're Now be year.

the like curious into additional -- three comment up point? So to that just of if that on the dynamics give just that fiscal that recaptured you kind airfreight months kind of could I'm at XXX, now 'XX? any fully ago. where you would did improvement freight upside And Thanks. thought versus you then airfreight is potential with there Or

Meghan Frank

on top Yes, the full-price sales. through line say really Thanks. Great. outperformance came change in came of through I'd performance and markdown that the the that, portion

expecting is line there at in balance we're year, in but the QX. year, generally the So outperformance for the an look when we of full

expect XX above do year, now recouping points And down points basis We XXXX over then term into to continue XXX are to all levels. to for longer push airfreight, basis we that airfreight still last of the amount.

a too item, think continue and fine continue line on to soon to optimize. to for we XXXX, I good So point opportunities progress look to on put we'll but make that

Ike Boruchow

Thanks.

Operator

The next Straton ahead. Stanley. with Alex from Morgan go question comes Please

Alex Straton

question. another thanks Great, on quarter. for taking the great Congrats

levels. did basis above then zooming just guys income And of by Just behavior out, It's really purchase secondly, quarter? household points level deviation you in across amazing. sit pre-COVID the margins firstly, observe any hundreds

you lot. helpful. a Is can of just sales takes and -- would there be just through walk the Thanks leverage that? other So puts or us it pieces moving pieces

Meghan Frank

Great.

pleased, quarter. We of were metrics, guest say, gas above trends, remind of second overall I me terms by income. material would metric new In then and household And guest metrics, sort the can for nothing your XX% you question? the part of existing both

Alex Straton

takes margin sitting pre-COVID higher there? much the puts levels, yes, Just so than key and

Meghan Frank

gross speaking specifically And you sorry, are margins? to

Alex Straton

gross Both operating. and

Meghan Frank

digital in say well then composition terms is back pulled I'd XXXX flat be given And of to in business revenue operating The margin. obviously, big our and new invested through portions we've of so we cost gross of levels. of more shifted And the It's margin, then, our above to behind pretty scale within our piece SG&A. margin is openings. business. on has outperformance. somewhat we're deeply that then store -- the Yes, gross And a

Alex Straton

Perfect. you. Thank

Operator

The from Goldman Brooke next go ahead. Roach Sachs. with question comes Please

Brooke Roach

the the success taking platforms could I Calvin, about you've upon afternoon. far. innovation platforms hoping How out opportunity on product thinking built are that in new new within the you question. of the Good Align you build the can building platform versus like key future? for so to was you to be that Thank speak balancing strategy built the

about And you then turn your thinking time inventory inventory to replacing you. the that can improve from Meghan, elaborate And should pre-pandemic we line to here? inventory the be path What on outlook? turnover Thank is rate? how

Calvin McDonald

Brooke. Hi,

strategy and of lens strategy, of could as newness we a of product, terms franchise. item either new the and/or hero-item franchise In definitely it that show think through up expansion a a then

back that, that have short, where Pace well for been instance, updating for we a for quarter, So bringing And in with and item instance, a only we equally as like we've changes received as took single in franchise incredibly this hero our lineup. him then it but of in not the fantastic Breaker well our number did newness that's business. on fueling going been what has innovated

which strongest We're can unmet the and/or our one through positioning this at ways incredibly we Align The additional extended strengths was fabric Align either in quarter, fit, the dress guest. always for functionality well looking in the be of that, received. of into needs introduced franchises, which being versatility

to either into a learn positive success which new excited and year did footwear, very test with the forward we we've we're us. able general. and build a But like declared last franchises, introduction building business for as results the that equally with in in initial being And through

there be really And excited that that additional into about. we're this later launching year ones category are really, that franchise we'll really that fit

create update franchise, and strategy from expand, obviously ways hero-item to for build a ways ways then take definitely we look look activity, to category that. to So new and and across for then --

Meghan Frank

at XX% inventory second-half year. terms Great. we'll and of QX of the in And sales in inventory, end line so our then be the is the then with in expectation of approximately

still levels. opportunities, back you historical as have mentioned, will our get inventory turns to We to

have material chain some back positioning. improvements lead the to supply in historical and times way not seen but We all

be So too the when levels, that we'll the say but move soon to longer would term. those over goal back to

Brooke Roach

much. very you Thank

Calvin McDonald

Operator, we’ll take one more question.

Operator

The from next Sandler. ahead. question Please comes go with Abbie Piper Zvejnieks

Abbie Zvejnieks

for question. my thanks taking Great,

versus segment, by can you Just the And components? you on break subscriptions numbers? on that on the what Other I learnings you. Thank Lululemon is other driven growth comment give then or Studio of early numbers out, loyalty can or or of guess, just any

Meghan Frank

Yes.

the of segment, a and stores would in out revenue which driver of the terms sales, Other early then terms statistics? also contains But as in we material In that aren't of bucket. seasonal component strategic outlets, that breaking that. Lululemon larger be And bucket and Studio portion a

Calvin McDonald

We're hardware the the into which a launched things our couple few of $XX.XX offer in program. We the without TAM that you access that. ago just will get days of guests to we Lululemon so introduce purchase. content -- think expand We to excited allow membership that. digital app a but the same just and gives to offering is it a terms Studio, month launched that can for Well, that us

of number that not after quarterly, and over to a share talked to grow. I I quarter, real but going six was start, momentum strong million. it's continue number Last continued strong will to indicate We're Essentials, very months the which X membership

memberships, about excited incrementality. grow. excited both with move with our as and we benefit that these into support we'll to as to share Essential the other sweat program, of how in supporting Lululemon base fit LTV early all And see and strength guests going Studios, having our to it's But tools membership continue we're the interact Essential more drive membership forward. community, and So means we

Operator

for the we and a have Thank time nice questions day. joining today. call, you That's have all the for

Lululemon Athletica (LULU) 1 Jun 232023 Q1 Earnings call transcript