LULU - Earnings call transcript Q2 2023 | Lululemon Athletica Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the lululemon athletica inc.

Second Quarter 2022 Conference Call. [Operator Instructions] and the conference is being recorded. will opportunity there ask presentation, the be to an questions. After Instructions] [Operator

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

Howard Tubin

afternoon. Welcome Thank you, and to second conference quarter lululemon's call. earnings good

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

These that management's get will future. changes. include today dynamic started, take are current and Before of rapid remarks of statements like we aspects this even opportunity nature subject and current we statements reflecting on our to I'd to forecast certain abrupt to by is remind information, you assessed, have based forward-looking which lululemon's which its but

due XX-Q. that or statements undertaking including materially with of result those implied may or annual to reports the we in expressly information a obligation those today, and differ and results Form any Any as Actual our events. new including uncertainties with disclosed report recent our quarterly any filings future of disclaim from on revise most associated forward-looking XX-K or in forward-looking and assumptions of SEC, on our Form we business, this contained or risks have statements by these to are on statements as on we based call these make update our

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

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

and investors our scheduled infographic. like as statistics Instructions] call you'll we operating hour. our well for to site I'd financial quarterly for of summary remind call, where Before our second the X as to key [Operator the quarter visit our find a Today's investor begin is

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

Calvin McDonald

continued I experiencing second Thank lululemon. today be highlight Howard. momentum we're excited am to here to the at our you, and results quarter

around are allows the activations exceed product we challenging, to environment omni model, their which innovations, meet our external respond While to expectations. us and guests been our our operating community us and strongly has our seeing

will the few broad-based that the factors next During minutes, strength. I driving discuss our are

Next, I'll discuss with environment, our conclude our innovation, I'll an growth the then within update current on of business. international supply pipeline chain the and product

XX% share in in from As you've Revenue seen high increased momentum from X. our basis XX% second a an a representing we And on Adjusted strong and acceleration CAGR the continue to anticipate press our level our in quarter X. on remained XX% basis. performance per quarter earnings quarter. on the of guidance, increased XX% the release, X-year year last based and business versus same

These considering difficult which results are in the compelling macroeconomic are we environment more even operating.

Our to like of globe. guests will I'd performance their results. specifically agility enable was what's you and Their the you perspective us driving financial guest which consistently our give strength our share the to metrics teams performance shortly, Meghan with across above-plan detailed the enthusiasm these and engagement. my for only possible brand, but on because their for report to our deliver and dedication, speak

track And looking the in we show spending in closely metrics area guest to behaviors pleased that metrics shifts date, we current backdrop, business. seeing the have patterns, not variation meaningful cohort any behavior we macro been to or to and any this of are Given habits. identify at data the I'm in our or

teens. increased Transactions the New in high in by existing guest strong by acquisition XX% with increasing remains guests transactions X. over guests first-time quarter

lululemon plans remains traffic and have cadence do traffic remains we this are have no through over increasing price or full-price traffic strategy a promotional and And XX%. XX% up channels over not we predominantly with promotions. across markdown business, to e-commerce our creating Traffic robust not importantly, so. store markdowns we and changed or

to While guest our closely, the seen any we agile behavior how we and haven't anything remain plan in on continue changes, dashboards we to internal monitor business. our suggest we

currently the Shifting the topics, production in That time. base. yet had China, further throughout we like continue we take signs chain. others pleased of across We will to normalization no up. chain vendor in see slow said, industry, some promising supply X the challenges And to navigate to to are close catch to COVID-XX recognize due vendors are in closures some who within our improvement quarter have beginning their supply

although times of And are down. delivery product help while centers, strategically distribution rates compared we leverage our begin seeing to come continue period. significantly to to elevated remain ensure are timely into they improving, to delivery Ocean we the these pre-COVID airfreight

inventory, terms and for our positioned are well season. In the of and we we with comfortable both remain quality quantity, fall

to fully in shop maximize are to we As last our better This and business. us. under-inventoried wherever you much they were recall, innovation a however for our able and year, of with position deliver not product year, to we much guests

our early categories. of levers play quarter continue pull we and can product. and momentum, We at to core the growth we in our X, our innings when In particularly that remain multiple new drove expansion we looking have across

innovations. of some me recent Let highlights share and our product upcoming now

fabric and core we technology product men. and our new ABC runners commission proprietary SenseKnit, for compression define success and in great and offering women In scuba for our saw franchises for in zone categories, core franchises our we launched our

to now play Switching our categories.

and roll within effectively sales to the our guests' the but activity, assortment. versatility builds unmet This allows not is leveraging of innovations to golf, targeted our us credibility also We managing for our it also strategy while solve core overall their SKUs. activities only sweat across needs out secondary tennis as drive Our such hike. while

pandemic, guests serve of they we quarter guests the that we well. popularity now example our the are in we to activity hike launched collection, during strategy as is trails. and X, which executing in hit excited is our play able are Our another an Hike to be grew how with

We the are hike both collection by reaction response to the guests from media. with thrilled early our strong and

seeing on we update to footwear. at the our Blissfeel, perform quarter our shoe. March, X, launched technical me we continued running styles: you And finally, We women. we're position launch, well. response improved around X In and guest style and our hybrid first our strong launched excitement inventory in slide; Chargefeel, continues footwear next shoe this the gender for Restfeel, dual training after let

for specifically Blissfeel, Chargefeel designed to Similar was women.

to a a our and range teams dynamic developed both from workout and the response training Our media initial activities, used wide be about of we're the excited across shoe guests.

heat teams I'm and half second what including new season apparel innovation for the expansion as of the the in reflective forward, retention of shift. and and for have Looking outdoor to developed the enable excited our with styles pipeline low cooler conditions robust, of year, detailing with runs further remains light run offering a

we've our guests. of a styles and accessories, assortment solve out and had great for to expansion is solutions new few for of a runs. provide exception [ the the categories our outerwear ongoing ] opportunity our example With weather build never cold upcoming a of The core

elements styles category expand our weather will to continue cold against include heavier to during hike to we protect the outings. new Next,

strategy tears we're the thrilled back most This one guests, limited it select with throwback available print also XXXX by be and not been relaunch and for has has styles. requested our popular print of the to in will since continue We of bringing our a our unicorn been time.

we'll And training designed the keep footwear anchored during style, fourth multidirectional shoe Strongfeel, workouts. launch and technical finally, our to a secured foot training

provides us model also is key of differentiation, point product with clearly a competitive direct-to-consumer compelling our our While advantage. a

our with in Our transaction. and connect foster and many own relationships with digital, just channels, both us directly engage brick-and-mortar beyond a guests, purchase to deeper ways allow them

developed to digitally guests During and communities. our the with pandemic, new we approach evolved our connect ways and

moving ways Now also to connecting again as once person into post-COVID we're our engage in guests to with new we're continuing leverage world, while digitally.

example be we'll to which our shortly, ability program, in launching guests of perfect membership X-tier new ways. is with new connect a Our

which discussed the we ecosystem, free be of will represent we that Analyst we members program. tier our into benefits lululemon studio, will program evolving offer will As the at be across out paid rolling will lululemon MIRROR and Day, the a

is of connection Community the core lululemon. at

Our the studio particularly guests also purchases. only us connection program and ongoing in to of membership front our with our drive deepen our enhance our community outreach our with new across to have I'm not activate lululemon physical in we and guests our engagement excited the opportunity with both relationship, platforms. but and digital

a XX% Overall of in discuss versus in In last leveraging me year grew our Before Revenue region. revenue saw outlook, year turning to slower COVID-XX-related over the in We CAGR our guests. strong, insights international grow last Meghan in attract CAGR we constraints, X-year rebound X-year a guidance and given international remain into approach basis. DXC markets, brand our nearly the other growth new and and momentum capacity and XX% a our it our business China, start and seen our on we innings closures quarter early XX% to model XX% a business. a are share on basis. increasing and year, have with in we after X all with over financials consistent versus to increase China to some let the remains

see brick-and-mortar Tier X Tier continue XX now We in this our XX Tier channel, X X cities, in entire operate and in X, quarter across XX cities strength opened and in portfolio. In Mainland. stores in we China to stores X stores stores cities

digital the to a on launched we compelling for flagship continue in online and JD.com, China. towards brand base a a region. us represents store guest recently retailer men skews we channel, in e-commerce our heavily more acquisition JD's tool In our leading as grow customer new

summer across this and how relationship XXXX. illustration China awareness to yoga, with than thrilled continue with surfing the saw and local community, our guests I'm experiences. in the of included our Mainland. participate over guests. Activities more also event have games outdoor X,XXX great our is A deepen XX in increase cities XX dancing our teams events This brand we sweat build

sessions In XXX,XXX in than by participated sweat more our China. a in ambassadors leading addition, Keep, offered app on fitness guests

basis, revenue XX% where X-year Europe, now XX% also Shifting a is increased our momentum on to and X- and strong, CAGR respectively.

is all lululemon first X in entering Spain, that in market our excited We the region years. new are

Our site and our going expect and Madrid Spain and be gearing strong first us open market up shortly, is and we to in forward. up running, stores e-commerce are local X a for to Barcelona

and calls in one is our X XX great of are XXXX for now the Power our and websites a start. In levels we growth stores of plan, Europe. a we off end of Three of xX expansion International key business to of are the from operating pillars quadrupling XXXX, by total, which

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

Meghan Frank

last the to inventory our which I'll is at strong channels broad-based And digital are position stores take the our Thanks, that relative business. I'm well and to Traffic looking the to we guidance to better through product and pleased you fall in season, shortly. line Calvin. strength. to see strength continue our innovations. both We're updated guests a our helping across QX, also top reflected year, to happy is which we're with drive start in is responding

also details will operating $X.XX share acquisition sheet, the QX our XXXX to now position. of of me QX XXXX for adjusted and exclude the discuss the adjusted excludes with office for metrics building, note Let an XXXX, of related our QX $X.XX the I comparing specifics MIRROR. performance. inventory financial a related cash on our the operating Please results to gain and results while expense disposition of QX QX that you the including for when XXXX balance

more metrics. can refer to and GAAP reconciliations You for release earnings to our information our

all ahead Comparable increase stores in increased sales store digital. For in to the with CAGR of continues the sales we X-year revenue our total stores extremely an basis increased had above on increased average, quarter total revenue a XX% and increased On levels. we currently we QX. XXXX milestone trend XX% across a QX, have a opened On our QX, XX%, basis, XX% open. XX% of proud In X-year billion, X-year an channel, to throughout of total a We XX% with in a $X.XX XX% and acceleration a XX% our on globe, from increase are stores basis. net CAGR ended of. and XXX XX% our XX% X-year guidance. Productivity CAGR

the by QX Square net driven stores new XXXX. of since footage increased year, XX XX% versus last of addition

or a the our XX% on basis. optimizations. XX million of stores net channel, revenue. line X increased During $XXX digital new co-located XX% completed We we quarter, and revenues CAGR contributed total In X-year opened of top

CAGR basis. same in traffic within we in in America, grew globally And the on and North XX% international, stores both up And increased increased And basis, Within last traffic also accessories to XX% across XXX% XX% ways to sites And our over increase, XX%. a XX% stores the over X-year increased year. continue category, speaks most and the apps women's This them. strength X% in revenue men's e-commerce a business, both and over a X-year experienced traffic we strength in I'm in a engage saw see excited increased model top omni as on is On of on XX% CAGR on channels. revenue that XX% e-commerce. guests increased operating our basis, by we XX%. with traffic to traffic increase our our to X-year we convenient digital of CAGR basis.

$X.XX XX.X% revenue second billion compared of quarter QX net the XXXX. for XX.X% to profit was in Gross revenue or net of

product chain challenges, basis to of are guidance flat. better in QX which than in included XX points to last XXX an slightly macro XXXX, XXX year. was low point QX XXX relative last stocks decrease increase primarily gross to a given basis of Markdowns basis Our was of Relative points supply points basis related margin our and were airfreight by out margin. year levels decrease higher driven than inventory markdowns basis margin XXXX, product of approximately XXX points.

fixed basis XX occupancy foreign We by XX leverage basis also of exchange. experienced was costs, This offset and deleverage on points of points depreciation. by primarily driven from partially

Moving to SG&A.

in revenue to opportunities. XX.X% XX.X% expenses continuing compared grounded strategically modest corporate depreciation. revenue were in managing Our net in leverage of and also quarter while million invest Leverage store be expenses to prudently resulted in digital approach continues exchange, net or versus channels QX SG&A foreign QX in from XXXX. our our our offset somewhat long-term on the and and of increased $XXX in XXXX growth SG&A leverage investments by to

basis operating $XXX was expense expense. an of of tax quarter revenue adjusted for XX.X% was pretax quarter XX.X% the for and or income in of of XXX QX points the operating or XX.X% additional compared inclusive airfreight net margin Adjusted million to XXXX approximately in million $XXX Adjusted of taxes and compensation effective to related is an of of stock-based to a to fiscal The year a relative Canadian XXXX XX.X% portion tax increase due tax earnings earnings. adjusted withholding accrual year our deductions primarily rate compared to ago. on a last decrease for

to $XXX $XX multiyear per compared locations, store earnings to QX diluted quarter to our share year. million quarter $XXX Capital support the million investments. technology investments of were compared second Adjusted including diluted in new net last million XXXX. capital income and to the and growth, or quarter center was project, QX spend for in $X.XX of for renovations adjusted share per relates the for distribution primarily $X.XX business relocations expenditures

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

strategically impact with supply costs basis. issues industry-wide momentum, these airfreight a when higher on on to to at continue looked chain having our support top dollar and use an line We mitigate inventory help

chain We given also comparison XXXX the believe of since is relevant that point challenges the most the pandemic. beginning supply

unit approximately a CAGR X-year of In-transit on we On out which the inventory were I'd at table to also of assortment, to contributing to percentage left is inventory. to supply last is chain points relative our we point our core and increased due guest approximately unit under leverage the basis, continue that we as XX% XX% to the likely and inventory issues, of up demand comprises year XXXX CAGR X-year inventory X end relative XXXX XX%. QX.

inventory the we the be expect growth higher at the QX the of to Looking rate XX% saw the at growth to rate XX% a before we on QX. X-year at than end of levels end QX basis, forward, to slightly dollar the of end moderates

airfreight expected. full driven performance we of is basis, QX XXXX last a sooner initially basis prior being on-time receive line, XX products to expectation X-year This the ending under less us basis year. above on at our last when us points year better our use which XX expectation to of is allowing Our high-water expect is year now being also now versus for at to vendors, as airfreight inventory than we looked the allowing be points by

of unit $X X-year to price billion end CAGR At in the in on recently an of expect approximately our On QX, somewhat repurchase we authorized the basis, levels million shares we moderate quarter, remain remaining we at growth a with consistent average program. QX had QX $XXX. approximately $XXX QX. and In repurchased XXX,XXX

by despite strong the I'm current excited presented our performance environment. the challenges continued with macro

the at level. high across teams a executing Our business are

did the we pandemic, should the so business for ready as change guest see plan in throughout we behavior. to we any scenarios, are However, continue we multiple

to multiple our have are Calvin we very levers capital adjustments. as discretionary to to expenses expenditures. when monitoring to We make if and it pull comes closely guest any And need determine said, metrics we

me now the Let full outlook for and our XXXX. year to QX shift

range $X.XX representing XX% QX, For in XX. of and a X we revenue of XX% to $X.XX growth X-year CAGR expect the of billion, year to billion approximately

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

relative QX We expect in be XXXX. basis to of XX gross XX margin to points QX down to

airfreight our offset last the year, to markdowns timing more While last as this be normalized supply to experienced as relative expense well related leverage by we relative levels see of will year. expect to to chain of low the level a on initiatives we expenses

to be we would year of Based to flat SG&A QX relatively with QX, relatively flat QX with investments, XXXX. well. we expect be in last In SG&A timing our our expect rate the as on

Turning to EPS.

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

the range year This $X.XX billion. the mid-XXs grows be now of billion full low- expect business to revenue in in assumes to XXXX, we the $X.XX our relative to to XXXX. e-commerce range For

xX CAGR at higher higher continues looking set of up of of Three prior in which approximately target the we of to XX% to stores than new be total plan. revenue, than growth guidance new our net company-operated XX% When from in XX. our approximately implies a our leading modestly X-year now to XX%, XX growth guidance forth CAGR up revenue XXXX, Power and our We approximately XXXX of approximately expect X-year open

international total. our square stores low new range include a openings and will increase in approximately store Our XX% XXXX in in represents in XX the markets footage

gross to below points of between The XXX decrease a markdowns year year, XXXX. experienced to the low by we forecasting to more while we the level XXXX to relative in are normalized relative margin still For driven year investment XXX reduction predominantly network, levels. full increased and our DC basis versus last is levels last

Turning to for full the SG&A year.

for to last forecasting the to flat approximately versus full looking XXXX, increased operating adjusted points are basis And We of now leverage XXXX, predominantly slightly XXX be year up year. expect to it margin we driven XXX when by sales. at versus

For XX.X%. year, effective be the to to we rate full XX% expect tax our

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

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

realized of and EPS impact the the the estate sale we gain any on repurchases excludes in Our real guidance share QX. future

million for and to X% year. to Notably, and this to increase of new to renovations capabilities our store other square $XXX multiyear $XXX footage last growth digital corporate capabilities, revenue, of target support be reflects X% XXXX million infrastructure new our million expect increased our in xX project range now technology investment of growth with increase approximately includes Power as versus our relative million openings and X%. in to well future of is as and current capital supply XXXX. distribution expenditures A chain, $XXX our The approximately projects. We to $XXX to line volume Three increased general

that, with I'll back turn And for you. over Calvin to closing remarks. it Thank some

Calvin McDonald

Thanks, Meghan.

new am the needs ability our see impressed and teams perform can of from meet significant our categories, eager As guests. growth forward. that our by the which consistently lululemon a we're level, potential guests for high seeing speaks welcome going exceed continues to styles And us and you and to across of at to markets, anticipate, lululemon the I our into business, to the are results,

Power the embark a xX We to are company. very our growth on the and upon focus good Three work underway a as start plan, clarity we of across and there's off

everyone us And passion continues my the at in for our work the and and want all hard closing, I to your of express to lululemon Operator? company. show to people that power gratitude of

Operator

Yih Adrienne [Operator Instructions] The first question with is from Barclays.

Adrienne Yih-Tennant

wanted method I and a that more how rather of a chatter in another kind Calvin, quarter. space across remarkable you're obviously of is retailer. about sort of the promotions You promotions lulu of talk on kind slowing intra-quarter what to I going guess just the to about of you? the a warehouse Congratulations, address a lot -- was brand about using are there is But no that than of I athleisure. some We've talked are around sales. longer really understand want the do what to

as You're an even that just of out but doing calling online sale. sort you're warehouse clearance, online the not

So what that you the through inventory the to you're using are aged the keep allowing brand move to methods equities? that's up just

Calvin McDonald

Thanks, Adrienne.

markdowns. no terms on methods, there's our approach of change In to been

range As you modest on -- product. increases of a our we percentage know, we price of small took were

And markdown with is product. penetrations is of our past XXXX -- closely line We through continue the driven that. pillars our our really of and activity innovation in is And monitor growth to momentum it pre-pandemic.

our resonating the driven the markdown positioning change plans changed behavior innovative full unique core price no and prices. around quarter's So were has our and our by is with with products selling guests not through to results

Operator

Altschwager question from Baird. is Mark with next The

Mark Altschwager

hear So you seen encouraging to any behavior. haven't shifts in major really consumer

have called you're to others what more speak maybe business versus half little outlook? the implied that months Given out, raise macro you to the actually choppier in the seeing a few ago giving confidence your back backdrop bit a just many growth that's

Calvin McDonald

Thanks, Alex.

the initiatives. and the in growth all our continue And that them across growth, the through levers I'll we're early this they the it really to business to the xX of are Power innovating multiple momentum and pillars because that growth our quickly us into back have we're year half does strategies, areas balanced seeing of our the and of heading grow of the resonating. that momentum Three One break is fuel in and and our that we are down pull confidence that into narrative fact give support to of we innings

So accessories product up XX%. activities when We and you from business business activities, through a driving in across was categories where XX%, gender, perspective, men's all our was balanced our up at was growth those our business and up XX%, innovation. look women's were seeing very of

the XX%, our key guests Traffic XX%; at was On omni guest up business, with again, at guest increase comps our strong up incredibly were the up in-store America, e-com We're rate. balanced. side, then initiatives, XX%. up sales North level, the and strong new existing. XX% XX regional very across XX% e-com And a stores both transacting up international

resonating, of the innings on are execution, across early contributing but business very back keep plan in the working the membership program half, gives and launch that innovation expansion innovation the confidence regions strong it's of at all across levers shared. that's we momentum with growing been into the and and the momentum. I us guidance In can achieve working we've guest these look hence, we when way a the our and our that business allowing balanced the the So our we've product is the to it's results, us is the of in that the

Mark Altschwager

strong team results. the to and the And you Great. on congrats

Operator

question is Alex from with next Stanley. The Straton Morgan

Alexandra Straton

another there? great of or more Can Great. quarter. I you into about becomes it bigger were can And at would what revenue you implications amazing And time, international specific the broad-based? part just the to If there as be? geographies congrats wanted margin lululemon's a dig also, about year-over-year. just over XX% the key on talk drivers result, talk

Calvin McDonald

our business. absolutely. Well, international with pleased Very

tomorrow. know, in, dot-com few We about is We're rolling And out for As way in strong And a across our across have We're the the we to in opened We it. investment weeks. to in countries. seeing site excited good the the quadruple Spain. market Barcelona market. resonating a in it's -- across plan we continue you later Europe. our X-year this results growth store we're opened in actually our Madrid see Champs-Elysees brand, opened strategies very in year. first in opening all We every

So we've be in with operational some the to saw continues that ongoing quarter, in about with working excited acceleration Europe. opened. in Asia Australia see which an we new the stores about challenges, one of And to stores excited that resonate, opportunities guest big the China, way XX%. our continue Across market, of even new growing the the the And to we communities. the new continues opportunities with way are Pacific, acquisition through product activating in China and market

each of markets. early opportunities that we So in in in balanced these market we're every are and in, where we're seeing very see a contribution growth to our the

Operator

Matthew The Boss from JPMorgan. is question with next

Matthew Boss

nice Congrats really on a quarter.

of in combination think high then so remainder a to then TAM, that this you the account have you a in company-specific market acquisition share in CAGR on I also the Meghan, you far the or more So and the Calvin, cited, is taking metrics revenue that the so momentum August? relative gains? you're any of you new digital And into that posted seen term, but seeing stores near XXs market, performance the in customer half first larger notable guess either do change

Calvin McDonald

the at take X.X the points. seen according to in NPD. gainer are we I'll gain quarter -- the Matthew. share share first half. We've largest We've market Thanks, definitely

the that reactivating core well. guest guest events, both our very in earned engaged driving and well it expansion, driving and half that's to a as core is acquisition our sales. awareness expansion product collective existing year hike, us of a peer pleased category continuing performance of our our So as relative we're opportunities through really consistent this media our resonating They're investment and in sets. community those activities, play great very narrative continues and with to the of lifting an first are some performance, And think our tennis, I new be be number golf, new of

combination So levers market towards, working the into of been translated quarter. it's has gain it that share we've a in and the

Meghan Frank

our And the metrics we dynamic. the the And we of quarter. with -- And say obviously, happy Calvin Matt, XX%. there, CAGR comfortable I'd macro about. guidance asked so add on as I'm guest with which that, provided, are the and I'd to continued behavior we And is closely. you and QX within monitor the stores with of in start was we're a of X-year mentioned, environment seeing digital that revenue continue which pleased strength performance

We business multiple scenarios positioned based continue well to plan we and on enter QX. the feel as

Matthew Boss

of Congrats again. Best luck.

Operator

Goldman is with The Brooke question next Sachs. from Roach

Brooke Roach

driving Calvin, wondering strong very I that could detail the speak specifically to if that on historical guest is quarter. reflect are customer your customer you these new in you've new Are categories acquisition seeing that or more guests? acquisition? demographics Can trends changing of engagement? select new the accessory what And on this you driving new important items product that versus been in was how

Calvin McDonald

Thanks, Brooke.

bottoms I healthy men. in traditional strong and numbers XX%. have categories consistent in women's And the would we're been very majority of new plus very that guest very at seeing, indicated, very you've their say guest and strong purchases business As acquisition first our new with

to So the everywhere balance. has The the success added very belt guest acquisition. bag of pleased with new

So way we're a our into as that excited collective to and with even more bring our see guests. to

core it we majority at increasing new healthy. play, part existing expand saw When traditional. of positioning really growth which with us transactions our through driver the XX%, is that guests, of a the and we the resonates expand strategy, with of our big existing and is the plus into very bulk we deeper as guests is our as categories it sales the and But into with

So increase the new migrate is up them and bring And the in spend. of of up guests, and And doing obviously, as is, very them levers. them in innovation expand in strategy balance in, their we're migrating all both those share across healthy new as a seeing wallet. pulling well guests

Operator

of The next from is question Bank with Lorraine Hutchinson America.

Lorraine Maikis

continue along a the half bit any far limited to 'XX taken of into year? so talk price for the then back you've you the little path to increases? the reaction price or this Can expectations increases And about

Meghan Frank

modest taking as we Lorraine, or increases we've we modest the approximately of XX% throughout assortment. the of on were mentioned, taken increases year --

price We any date, experienced haven't, to resistance.

high, and price markdown We as we monitor the move closely our don't very healthy any continue plans still year, sell-throughs. change have to cadence to full throughout

Operator

is question Group. with Dana Advisory Telsey from next The Telsey

Dana Telsey

the on impressive results. Congratulations

in coming percent The going product, is and As the driving How quarter. just the see freight, -- you How moderated a you obviously, you the on to are it's take quarter as And the see of year? are balance as that -- Calvin, collections like a core categories? forward solid look do core interest. certainly receptivity XX% do at second see the new of to the it from conversion sales. the new going seems next then through given business freight of first thing you

Meghan Frank

Thanks, Dana.

airfreight, So in terms yes, of see we've it to moderate. started

we As I our from mentioned, as deliveries some lead are vendors as well to on-time starting shorter times. higher see

points compares under basis year. basis previously airfreight on that the that full we we be for XX XX color to to. the guided have points last we above year So to And then that amended provided

the an for opportunity sits we'll the of the wherever to that through well half fees still there. It above second term. opportunities over continue But be see airfreight as longer team XXXX. is the We looking efficient moderate basis see as XXX year, to as and still possible points

Calvin McDonald

of I be core, that to our depth the train And question core, and as our credibility innovation into opportunity a we have of used goal percentage tennis core core and continue in results, items. should. of we And to are we bring it still shift a activities, we our play not developing the strength such on product some launched can as activities activities keep sweat that own those as in increase and yoga to core these of have awareness, designed as And within run, of to unique achieved we versatility business. activities. create in ultimately shared, Dana, overall across using the core suggest strategy but and absolutely to and could golf, anything, in of interest, as around hike material strategy much drive the our seen the the the the does and the nor to in If success

in. first of lean worked strategy the continue to has the and half innovate And as the year in we

of and as activities, SKUs, in very at if So XX%. some we core, niche expect not opportunities leveraging to hold, expand small core of number And I the improve. that which holds number

Operator

with Company. from question & John is next Cowen Kernan The

John Kernan

Congrats on you phenomenal growth results. Maybe a obviously huge it's if you that. when go back to international, of future portion quadruple your

recent to in what to China in you Just outperform your an such is the enabling peers most extent of quarter? curious all

Calvin McDonald

Thanks, John.

the no opportunity are market -- America, put the it's where North still think grow. early have us different of most we the share outperform on and market and our in ability being to market I than to mature

resonating. in We awareness. innovation product by The are early is led brand

X, and Our shared number tier the in seeing games relationships, [indiscernible] and X share digitally, the guests X keep Tier well. about And now participate in a sweat I exciting over our investment that cities. us. both success, physical all investment the as online to in that the We're in and XXX,XXX well bit Tier guest the with as of little Tier resonating, responding

our our versus the great and that business differentiated in rooted It's and unique model our that we built the relationships, unique how is and community, in building So has brands in product innovative market. is marketplace. peers other which DXC

It So it [ San an resonating leading team culture. in and and ] and is strong have incredible our by a very Yan it that, stores formula. the we led across is

and that's the but excited, we're delivering it results. formula lululemon resonating really is the So

Operator

The next Binetti from with question Credit Michael Suisse. is

Michael Binetti

versus the with you here how before. second the you half here us was pretty But we then I just less locked range great change have fixed Any half. are to trying offset we're half. variable quarter. the there? a the on the airfreight half you back pressure, as do in track the airfreight given Meghan, on callouts -- spot to XX in that a on a in the you're lately? the gave on And what how moving in versus there little of rates gave think just been margin around Congrats It can like looks the bit giving guidance to margin, gross much math gross the for could us in overall back about basis pressure that have close you it is on you points build basis along so back kind of X-year

Meghan Frank

Yes. Thanks, Michael.

we the that So year airfreight basis on points higher in XX last call. under we guided experienced last had versus to we the points XX than basis shared

So see team for the the as early look down, we and of are to there. as opportunities to deliveries continues well rates both the the impact coming starting

We are we to will that business as look move the pulling next continue our road our at expands forward trajectory. part of as investments to map X-year

margin to the have XXX we points XXX XXX So from XXX. for down guide to year-over-year to year our basis improved

So basis airfreight levels. the over feel direction, big us XXXX moving opportunity points continue in to the like a for still longer and right above we're represents term, XXX

Operator

The next with from William Blair. question is Sharon Zackfia

Sharon Zackfia

guess, I the first on SG&A.

Meghan, idea think, launches? fall. talked leverage SG&A what you Is the about kind pulling the I us at conjunct see heard we'll to in And accelerating campaign investments? or of originally, wondering can then Analyst a had of if know of when I say now. that. And that any a an flattish that give fourth marketing quarter. just you you I Day, you kind on expected you're forward coordinated I'm tap? still this

Meghan Frank

Yes.

looking full look map trajectory. some of part look at haven't of are we got in timing, previously our X-year We've some QX as our that as would again, we I year to we next investments towards road provided So our say, on SG&A, outlook, terms guidance. investments. pull forward And

we -- to at going here on the now yes. versus to And to in Calvin year chime basis then XXX guiding points for XXX XXX. full So of guide our XX We prior to are is leverage marketing. the

Calvin McDonald

Yes.

to back planned our exciting that a the we're launch membership is focus, program of but excited at of referencing, shortly. of coordinated some to Nikki X-tier our our of look And ways was American we couple holiday a as year around there's marketing, this more that initiatives key global One in our guests. half. the is to a North message, On categories. approach bring in to just And continue bringing

globe. effective around community-led message and material deliver so gains the a but continue on continue we'll moving change in forward. spend, ways There's we a not do find making in half strong, product, that. half, We're powerful second the first the and to to in Helped to

Operator

question next Tom from Nikic Wedbush. The is with

Tom Nikic

like maybe do inventory kind more of when I that do the think just structurally, carry guess, And a on want that of turnover at get would would of sales think forward, improve? takes going level? we one to and here. of you normalize I a bit, we see the of a When relative the Or sheet slower inventory of to things increased to balance times end I there's rate you look to beyond kind growth. this mean, things inventory, relative you is lot kind little ask Meghan, beyond you're year, year the grow transit going things that. sales inventory this know of the about I like kind and you and at puts and

Meghan Frank

Yes. Tom. Thanks,

you impacting we're as look experience comparisons deliveries, as last I airfreight then well And higher of also starting then and earlier out when year, our vendor stocks it of to this readiness inventory So at AUC both times. X-year includes lead as usage on a mentioned, basis year. to

sales these that us bit quite manage in do inventory X-year as then at which why term some is a And for the So dynamic below to our nature aim inventory point, longer sales. a our looking opportunity of over trends to I -- with normalize. over term, there unit some specifically of on manage been when see line trend we longer is CAGR. we've the really X-year on a basis, focused

Operator

Sole with The next question UBS. Jay is from

Jay Sole

want last want to to -- up Meghan, the I point. on Great. follow I

what Just of how taking time long the talking was going amount it it you an normal long give receive be What goods? taking of peak? sort idea would receive us how to normal about and inventory be And it's Can goods receiving a forward? of to to sooner. now would

Meghan Frank

seeing vendor Yes. There's improve. be dynamics metrics we readiness would on. a of One going couple are

So that's times. other then would I is impact, one lead ocean impact. And say, the

disruption. approximately of days. on during We've to So XX kind we average XX These typically have drop peak days seen XX have the them days. plus to seen, and gone this is up about

back not to where what to So but definitely seen. were, we've they improvement

vendor readiness guidance. our you reflected that, some to So coupled provides modes, switch for earlier which us the with opportunities see in

Jay Sole

you maybe, if And it. accessories. question Calvin, about one asked Got can I just

like selling above what $XXX of bag, category price accessories, a talk the just you you're Can to segment kind to that's just bags and of versus lot adding new about to the to You tool mentioned the there lower opportunity of the that? now, is out in that and and points competition sort bags which belt of continue what's things maybe success the relative like categories. offering overall price backpacks offer company

Calvin McDonald

Everywhere acquisition. great lower across excited We're in business well the plans number a have opportunity guests a No. point as We're accessories of belt across and guest driver price categories. definitely about bag existing the our it being seeing item. Yes. as is a

in think role. played like I accessories, general, role stronger could a and that continue play has to a

is have we great growing done innovation to job in the to more continue into and has where out agree wonderful last we strong of the sock few being category. sock innovative do a Bags, the category bringing very team for are years, a the in we pipeline great product dropping business, the The line one in develop have incrementally foreseeable opportunity and even and the can that a opportunities, all across. innovating biggest we future

sport, backpacks, said, that of lot but also you into. a we of are needs have the for innovating teams on-the-move unmet variety bags a As

our road accessories bag, So the bags of general but to and growing, definitely on map great acquisition. belt contributing is a on building guest in pipeline, product is keep everywhere opportunity

Howard Tubin

take we'll one Operator, more.

Operator

from Paul is Citi. question next with The Lejuez

Paul Lejuez

but you square sales up XX%. think looking I and of XXX a reported got Just is your about at around comps, footage basis the points, spread numbers

isn't understand store you're some international new opening sales total there a for feeling growth what bigger about why and in and the in how performance comps wanted as of there, difference accounts So to tie maybe markets. between just the these you're

Meghan Frank

existing said, base. there e-commerce I'd business. really size levels. we're at of perspective XXXX -- omni is our our with nuance store Thanks, the the what looking with I'd Paul. there's both Yes, our We've above That say a pleased share productivity an of and from it gotten

for We see term. expansion further opportunity over the continue to longer

America XX store year expansion our some our new I'm really XX international guidance did to in We raise both of exciting North regions. opportunity in for from and front us, new with full the strategy. stores pleased with our

would in business I the remain a the including high and our XXs the into productive of important stores, model, which So very say, quarter. operating margin, we've part seen get

Operator

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

Lululemon Athletica (LULU) 1 Sep 222023 Q2 Earnings call transcript