LULU - Earnings call transcript Q4 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. Fourth Quarter 2022 Conference Call. [Operator Instructions] The conference is being recorded. now Vice turn lululemon President, would to conference athletica. I Tubin, Howard Investor Instructions] like the to over [Operator Relations for Please go ahead.

Howard Tubin

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

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

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

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

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

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

Calvin McDonald

Thank lululemon. strong be today strong here pleased for another year finish our I Howard. to you, to am to discuss

our far As you've X quarter None we to to of start January gratitude of without results our update, our would in incredible to this our solid Power have continued our adjusted X. see results strength employees, been plan. for press so the of excited very lululemon. to on business release, all want and you and guests, to lululemon from the that xX seen quarter your adjusted of momentum ongoing represent our behalf Three express senior to partners, my I'm ambassadors also I leaders our in of our are across came our around of world. growth full all year whom guidance integral possible collective, Thank our success. a teams our our continue ahead and the vendor commitment

beyond. On today's finally, and program; membership We update I and several recent our X international XXXX an future topics: call, share for our our brand pipeline results; gains; market quarter for across our are year the to for all our plan product holds ready business. our and XXXX; in cover full insights

So started. get let's

strength to holidays out and modest appeal up of that basis of price to our year we XXXX. that to our remains and transition forward markdowns the the environment the power of an normal guidance, a with of very in can our And are brand, well merchandise spring regular We and CAGR quarter business as were in quarter X, business continued returned This X, levels. revenue model. am highly speaks XX% promotional, good see basis. XX% sales X-year we began on and operating momentum versus looking new managed XXXX. as the XX you I in a points merchandise, only assortment increasing year and pleased Our to versus last the was progressed our strong our through from to our another

follows. channel Our be balanced up a across product well CAGR business continues to in basis XX%. region. on X-year quarter category, Revenue increased and X was as Women's

XX% e-commerce saw was business region, America And by XX%. accessories earnings XX% We and well, stores our gains XX%, full with we as increasing and at deliver year men's would a When Our in basis. I year share, also increased continue international a like and a up X-year spend XX%, on North and EPS adjusted quarter grew results. last XXXX CAGR our X per was company-operated versus moment grew to increase XX%. strong to on looking up XX%. XX%

revenue operating margin we new supply the XX% a plan assumes despite year As the to level, XXXX, growth And expansion were annually. In operating able points, growth modest we xX XX% operating At and Three goal exceed EPS increased Adjusted compared and a margin in last issues X- highest you XX% Power significantly our It in COVID-XX our and adjusted of CAGR our these know, X-year testament China. is that the revenue on increased CAGR XX% XX line and chain target. respectively. and backdrop, CAGR basis pressure X-year to this the plan launched XXXX, our strength our and revenue basis, for to X-year of full with adjusted the challenging basis. macro XXXX achieved brand increased deliver a of margin annual XX% we results spring. on while

a XXXX innovation. was newness Now to innovation. year and product strong for let's shift product

of our golf, and of footwear. to SenseKnit with categories fabric hike styles. entered tennis the technology our our We launch with a core category capsules, cold expand we run continue and play weather and the with new We categories grew launch

include of innovation of product by franchise the success by category Several upon collections. Looking pipeline forward some of growth, building be our expansions and year to continue developed the teams. into XXXX, launched recently this ideas I excited incredibly our

our and popular versatile It in launch Align will First, Get featuring weeks, the franchise. coming our we campaign Into

with began we from which collection #X Align recently, be a added the performing including styles, include bras. expanded mini away know, you style, bottom. we a our shorts, single leg More legging, grew to flare. tanks We to then body As and wide and

We with product an story will global support this marketing campaign. integrated

Updates Train the Vent this be tee continue guest modernized men's, which women's also to core will have year, to In and accessible We aesthetic of new we short. fit, innovate the and function Pace franchise. into activities these License within expanding Metal Men's complement Train, our franchise, will Wunder versions our our later to favorites. with Breaker

the And Blissfeel, shoe, footwear rollout. an kind and we learnings updated response. from media we'll which we to first In our the Chargefeel. reviews introduce have pleased this updated are seen footwear, introduced in of footwear, recently May, version launch, we we road-to-trail already version an guest receiving with and initial it's of positive and will same that throughout of our summer, performance Blissfeel launch Trail, Related incorporates our

and is the run of a do men's The not select of her future. discounts approach clear the or continue our in the will lululemon. needs Looking just for forward, to competitive full-price for our thing we're are advantages top line strategically our other markdowns have drive used growth One and guests. XXXX. These remain to our business We that and so. we through lineup do key seasonal in and examples to this promotions, intentions add is of unmet no to for assortment our we one solve how with also launch versatility of merchandise excited few a expanding product, our offerings we

Now holiday many program I how and North with season, brand. our we and gained update membership. learnings like insights X-tier America new regarding the on in past guests would this We throughout October, to our you engage launched our membership

cost. start guess me is Essentials with to no which Let offered program, our at

regularly. While share program. we have wanted this to not million is expectations. sign-ups release our intend do potential months, enrolled In members. X metric first number already than we of more the the significantly this X demonstrates to significant the This behind exceeding that I

benefits guests, offers increases the discounts results with engaging involved. us. the guests show to several frequency to the Essentials program content, membership access our While the rapid The and and sign-up tier speaks of early incredible our compelling of rate of are no loyalty

example, members more gained participated this in program, we and forward. Related steps. to than that least to tier the insights valuable our program, next of have have benefits of already also retention XX% we expect the For and the Studio are at of drive behavior one membership engagement going of our informing lululemon purchasing incremental

with a details press an goodwill As are we with we Meghan and to mentioned release, in related MIRROR. impairment assets charge our moment. associated share more will in you taking

eager enjoy prior sweat we our lululemon for way paid XXXX. The has America an experience, we these new to engagement, acquisition saw but a Through launch in acquisition tested we program. spend. the membership basis to acquisition us in we paid a guests saw some Studio you a did how options through to benefits, and program know, member membership only increase engage new guest learnings increased of These also to the were city-based recent of of member North in were members Not provided with scale participants. MIRROR. that our provided As

lululemon helps of our purchases them our and deepens content drives product. community best-in-class connection with of Our engaged guests, build incremental on

increases initial analysis suggests and of their In this is on X%, fact, after product incremental. behavior studying approximately our that the lululemon members, spend X%

you However, since as our challenging. has know, been fitness the at-home space acquisition,

has hardware of match our CAC has investment. it improve, even love to current though not did continued the While level our content, maintain to improved enough members our not and sales expectations,

Essentials us expand way The solution rate market As members. allow to and We through we model will We same with this Studio lululemon this we in launch view more focused We from only addressable offering at continue lower and the learn, necessary. we well. new app-based a monthly for in members and we our efficient on to evolving when growing total summer will evolve test. view as digital being as our innovation. potential a invest subscription million content combined any model are and prudently X the app-based to business, hardware

gains has fully market result. Shifting acquisition a our the in program gears, as the brand membership a originally much as Although in share. are I the in of position to better materialized we're to not new we lululemon speak understanding of seeing want community and strength the intended, the and our

Let be balanced by looking growth across quarter In increase than me existing with guests. a XX% XX% When and more nearly new in transactions a delivered increase we you. transactions and guests. at by transactions, X, new continues our guests share existing few metrics well to in

high full a contributed these For to XX% the mid- year, increase to results both metrics. for

by And in year. since U.S., revenue is numbers gain recent the and highest in Group's growth the touch market in year adult opportunity Day, U.S. caps the according we gain market the in share. began grow continued will of America our X% fiscal market awareness active tracking same gained grew over markets XXXX, America. to detailed share North as we every at we've In to X.X in the and this compared key decreased on significant have this which these speaks and our we lululemon apparel time we And a market our period to I industry brand Analyst XXXX, X, points around market our quarter it within quarterly Next, last any world. consumer the North to service. share quarter. brand NPD tracking This of achieved in most This period, U.S., market share the in its a

X we Just key from to in China in growth the our from in awareness awareness the since points X have and our U.K., to XX% us points taking points in seen XX% increases X unaided some regions. Australia of market. April, X% XX%, in added to We X% to last in

can currently in meaningful you are, to these unaware of compared opportunity. brand are which more from consumers our numbers, As highlights this see those regions who significantly these

XX% X remained earlier, quarter would revenue be and while and growth mentioned continues in to year X our increased I in significant. and business turn full markets. China the As in to XXXX, well. I both North full year results as strong generated America America quarter business international In international our to where our in our like our North for XX%, potential

been the have have stores infrastructure, in foundational in people fueled growth We in investing market. considerable that

China are opportunities momentum X, region COVID-XX increased the for of beyond. In normalize, accelerate, in we seeing and versus XX% CAGR impacts we year are in and than our and over XX% excited in last XXXX quarter the the on X-year a more revenue basis. As

momentum to COVID-XX impacted December, have While a quarter quarter had seen X. and in strong revenue accelerate we finish in the

the brings in to in opened brand, we across we Pacific, to Asia remain journey foundation market, continue commitment across in We locations. incredible our nearly the Meghan. on our turn in build. count I'll It's and Shanghai. largest our reflecting markets. With Kerry region a talent strategies have supported are to XXX by to growth channels brick-and-mortar an is and store recently We solid track, expression and our our and which digital It's China exceptional clear of our it over early international now our in it our that, on store now Center

Meghan Frank

behavior our product. Thanks, relative We strong adjusted markdown along provided updated note trend, excited enabled in finished was discuss sales the Calvin. exceeding with in here with to to mid-January. to our results This be results. normalization I'm our and price XXXX by a today guidance on purchasing acceleration full the QX an of we

business Looking our at QX, robust. be to continues

continue significant lower air driven will and moderate, inventory realize to margin we by Our growth expect expansion freight. to gross

per associated now you of sheet, provide shortly. information metrics release I the me GAAP Adjusted I earnings the XXXX XXXX for and to of position. will share details share the related the to to QX discuss our to our XXXX, QX refer impairment reconciliations XXXX charges share Please will for Form QX comparing with our metrics. more QX charge And QX on expense per performance. earnings cash impairment our more with when expense including earnings MIRROR QX on for $X.XX related and detail our exclude of exclude and specifics acquisition XXXX $X.XX MIRROR. inventory Let the financial adjusted note also XX-K can that of business. for balance

of X-year with X-year the net quarter sales In driven X-year total increased year, the channel, across in stores since with XX%. a XX% increased and Productivity QX a on basis stores last a XX% XX% on For XX% XXX a increased XX addition $X.X store CAGR net remains of above basis, a total footage globe. XXXX. QX, the Square We of lululemon a versus total revenue CAGR to rose basis. On ended Comparable billion. and increase increase in increased XXXX XX% levels. stores by XX% new sales our revenue XX% digital.

somewhat XX%; basis on versus basis. XX% XX% of America, XX% year basis. X-year and revenue. total the During XX% Women's net new contributed versus and CAGR a we in to at revenues and a increase X-year looking increased XX on freight markdowns mix. When international, XX% a driven our basis of line on margin. XX% of basis $X.X point contributing and margin, XX% to or X-year we increased quarter, point stores points increase revenue increased the by exchange year men's X-year occupancy digital XX.X% by optimizations. In offset and Within basis our XX billion was versus QX, channel, category, points expense, CAGR last a basis. And points, higher basis a teams saw on offset and were and On relative were XX% completed driven flat opened apps XX XX merchandise increase points of a top revenue factors: omni-operating digital last see up XX This costs. business, and primarily is markdowns revenue primarily by increased XX offset they X% last last being CAGR traffic year to CAGR on North XX% year FX partially markdowns within This by a lower increased XX last by and the in And was partially SG&A for from deleverage XXXX, guests revenues over Adjusted of full e-commerce was relatively foreign on air globally which XX% This and on basis and favorability a increased decline $X.XX versus XX% markdowns of margin Within on stores CAGR year. traffic up in as X-year basis. was to year leverage fourth gross to to sales. XX% our traffic benefit These both gross offset in relative updated was compared favorable predominantly in and we to deleverage This QX over of grew strength to driven within a model XX% higher-than-planned from following engage channels. basis a convenient which of X-year In XXX XXXX. to depreciation. Adjusted margin by to XXXX. our leverage gross billion speaks most in and to great or CAGR basis, guidance, the versus was e-commerce. due fixed also product ways gross them. Adjusted quarter for in the XX for in was profit our net with and primarily investments XX%. by sites same basis freight ongoing and our in XX.X% accessories in traffic across by basis. It's strength air stores, XX net decreased to DC, the our addition points product

Moving to SG&A.

XXXX. Capital approach from strategically quarter period XX.X% for was to in the from increased XX.X% prudently compared offset The QX revenue pretax of rate revenue or million to for primarily year tax compared Adjusted of diluted for income XXXX net an leverage quarter returns. we also last earnings quarter while of in amortization. Adjusted adjusted Adjusted FX the is XX.X% income or year million same revenue fiscal effective Canadian income XXXX. in The the increase ago. the taxes upon had or $XXX.X expense to a to withholding invest that leverage our $X.XX on share the increase of $XXX to to a $XXX relocations in depreciation to quarter relates mentioned and fourth $XXX.X continuing approximately some net project, investments $X.XX the of were for of operating and locations, per renovations of I QX spend by multiyear tax net compared business corporate quarter of in accruing benefit for was of revenue was center filing quarter expenditures the technology earlier. tax net XX.X% opportunities. SG&A This our relative somewhat a growth, portion versus a compared to operating year. QX per million modest Canadian grounded diluted benefit the approximately and million Our in distribution channels earnings compared managing for investments. due capital year. of in net were continues store expenses to new for our $XXX last last million XX.X% long-term year was adjusted SG&A QX or earnings our XX% expenses and approximately to XXXX approximately and resulted last support growth $XXX for share primarily be million and of including

turning Before moment me to balance charges the to spend on we our let highlights, a business. related MIRROR sheet the took

million, stand-alone or evaluation a of per on an a basis. approximately These in fitness valuations As certain test impairment MIRROR of in are charges based therefore, challenged. hardware assets this we sales season the $X.XX charges space impairment our the for an below came during expectations, MIRROR at the tax, long-lived MIRROR ran goodwill related on you used Based $XXX took test, the and hardware. The provision upon and at-home the share. net we calculation impairment remains know, of holiday of to overall QX. end totaled

focus We to model. are the away a more also business that pivoting efficient app-based we from hardware-centric acquired on

which the stand-alone reflect as Studio our we MIRROR revenue. While incremental the help fully of key strategy, incremental revenue, of see membership valuation will component drive a doesn't

membership remain program. Looking our we forward, excited about

X Calvin increase incremental to Essentials opportunity we we in already continue to community, spend. members our program, build our million drive engagement and As have see over shared, and

We now would X full modestly like also facility. This provision the capacity $X.X to up million MIRROR seasonless end our growth levels. pleased We was product make with approximately relative to continues maintain nearly inventory will to credit quarter while at reflects that a XXXX, increase inventory growth QX, to and in on excluding positioned hardware. I we billion, billion inventory XX% dollar cash Turning we of year for QX available In revolving our remain our Inventory under we and continue for X-year XX%, to ended balance price guest or the of equivalents to well XX% our cash of expect dollar note of under remain selling XX% moderate, the XX% to $X.X with sheet fulfill approximately core At expectations of our basis, XX% highlights. model, our demand. to and our last year. growth. the $XXX inventory. end

line inventory half to Looking further with relatively be out, growth in the growth sales second XXXX. in we expect of

During million $XXX. program. the the average At we quarter, billion on $X of had QX, at shares end of XXX,XXX $XXX our approximately we repurchased remaining approximately an repurchase price

me now Let to shift our outlook. guidance

mindful the and macro sales our our model. also are freight XXXX trends uncertainties lululemon While ongoing to we from Studio in business the in of expect realize air benefits we and with plan excited we we're lower the prudently, to QX new continue and

We billion of line expect slightly slightly $X.X XXXX and Three XXXX, goal represents our to operating than we invest This Power growth for xX in ahead have xX expansion our XX% $X.XX revenue to Power be of into billion. annually. In opportunity growth range also modest while the is of plan. our to to range pillars in XX% better growth the of Three XXXX, to delivering margin relative in of to

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

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

to year, to basis margin XXX expansion driven lower The predominantly year XXX expense. gross air the points increase freight forecast For last to between XXXX. we by was full relative versus

versus expect be year XXXX. XXXX. last year, them basis we full When in year, be for line we the the to with full XXX looking in markdowns For freight points expect air to approximately at down

this some near in on began share Tilbury our project. Vancouver. me project new opening the distribution of additional center also with DC We multiyear our XXXX Let detail

impact a growth. year the For the our include DC Projects to and network Included on DCs overall, we our in investing of a our year margin. XXXX, new associated existing Greater point building for this In Los gross XX support initiatives. Columbus of with negative in will future area basis continue Toronto. in project had Angeles margin in is and expanding points these gross X deleverage basis also guidance distribution the XX

SG&A to investments points the experience full XXX continuing make to foundational investments capabilities by now basis for Turning to year. improve We omni growth. our increased forecast deleverage support driven support XXX future our expansion, by XXXX, to predominantly market and of to guest versus enhancing

xX In depreciation XX full This the addition, expect current long-term expansion Power for prior target versus we Three looking of our to to basis XX of a would last we year expect of at ahead points to slightly it XXXX, operating year investments. When and be by higher increase modest due margin year. annually.

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

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

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

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

continuation approximately locations, The support to expenditures to for technology capital versus XXXX be new million investments. and distribution $XXX our investments center a renovations, increase capital XXXX. $XXX expect store million of expansion, and including to We relocations growth business reflects for multiyear

revenue, $XXX Our target $XXX X% to xX million X%. Shifting with Three QX. of of Power in to range line our to million is approximately of of current X% now

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

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

to by will margin air We basis supply freight XXXX. relative well expect gross as QX, of to offset to driven XXX rate we investments deleverage somewhat expect relative in basis the of In centers be XXX strategic investments to and to QX expect just related exchange. lower This approximately points our to I chain operating expense basis increase QX, points margin by QX XXXX, QX XX distribution XXX foreign points. we by at described. When in SG&A expansion looking for XX as to

the in $X.XX per of to $X.XX range We ago. With first and back expect up quarter to that, earnings in $X a be remarks I to turn adjusted of Calvin. versus the it wrap share EPS year my will over

Calvin McDonald

XXXX, and growth across In time revenue first Meghan. balanced for categories, by $X billion passed in you, Thank driven the markets. channels we

drive the pipeline is More strengthen for product strengthens first Our membership which driven relationship months, long-term innovation to opportunity the Essentials program up by million guests our keep very and building signed value. strong. than further X X in our community, our guest

in to expand we And remains yet the every where and share which is and in runway front in our into guests, operate, and unaided momentum about front questions our just expand seeing Our awareness years. I XXXX market attract new of now. in I'm we're look over taking brand both new some forward that's and we continue strong to These successfully all low, able of Operator? show gains us. demonstrates coming excited reasons to us, market the your the geographies. of are

Operator

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

Adrienne Yih-Tennant

the I expand of awareness. help coming brand if and into stellar unaided quarter. can that notion was Calvin, first Congratulations, momentum everybody, upon for great you wondering year

I said maybe, And just think, understand to kind bit trying that X we a into promotions you notion then XXXX, the sales percent brand And I if year? the your are advertising of awareness. And think Meghan, quickly, when more using from you really of nice a little to year. as backdrop kind avenues to was powerful and ICR a is think really upon there. what promotional What a think, last can in going of you expand a improvement, I of I expand spend of concept sort last were that those be just year flat that's comparisons. coming notion promos, of of to or

Calvin McDonald

Thanks, Adrienne.

terms In as but it's to highlighted, have. in also both you runway growth see brand our it, and improvements of the potential unaided we awareness, of exciting

we it's markets, fuel ability going as and So the know across that in U.S. overall continue the as our is well approach business to to to including we America working momentum know guests our and that drive all North the acquire

great examples in current more and the our deploy what to our opening the way our drive product the in finally, ambassadors of Our we It's through activations you contributions the of success How see the campaigns, Into add world, is that vehicle will consistent. relationships for awareness like at you which 'XX. into then And some local that. planning excited well seen point, for It with of the athletes with we're as it? in is in combination spend I'm both and X% which and this brand campaign, our lead excited our continue Get we the as and most deliberate coordinated maintain make a just a investing executing collective; relatively and to acquire which Those range. and communities to of activate guests, which we have wonderful stores, sales messaging first we've are planned relationships; we to our around around connecting in guests with that community see and brand these and global and percentage expanding

Meghan Frank

be full came QX, relatively offset opportunity We expecting in year XXXX we're somewhat in a flat end at with biggest the we'll the basis. line we growth to In full have of for do XXXX XX% in coming which XXXX. And terms through be markdowns XXXX view, of QX by year XXXX. in QX in, on will level then markdowns, then sales also waterline, line we markdowns. is see of in a to us. second as XX% our But that the half inventory, QX healthy with and mentioned, And

Operator

next The from of America. from question Lorraine comes Bank Hutchinson

Lorraine Maikis

cadence give to last growth a profitability minute. And you wanted region? about I about on you on of X% thinking are was year. focus How there? for the update an China sales us of the It for can

Meghan Frank

put we China, of terms a China in point in Lorraine, on haven't XXXX. fine

both in a degree we QX a year and full still is of what we growth disruption However, rate. 'XX, I'd had when COVID were XX% say at

out seen that particularly accelerate and moved QX of XXXX, as trend QX. we have We into

above we we profitability, of growth. China. are XX% in in profitable And then So are that terms

a put beyond on it fine haven't that. We point

Operator

next The from question Brian from Oppenheimer. comes Nagel

Brian Nagel

Congratulations. quarter. Great

Meghan Frank

you. Thank

Brian Nagel

to topic my I inventories to I well So that been focus because just question -- has I a big as want sector. -- the just know on as lululemon want for

So you looking I'm quarter. fourth at here results math the in you. had the fantastic

I You just ended is guess, year, the XX%. up, around inventory

it -- you primarily context course about we essentially as the And inventory of really to expect guidance excess gave, 'XX, how to So saying just should the going that the you're of through is are any we work promotions? you for without think within that moderate? business normal

Meghan Frank

Yes.

chain navigating of we've a historically. earlier to we in dynamic obviously proportion We manage inventory, supply freight the So buys core XX% number of terms try a in higher to inventory our been XX% environment. air expense. place did versus And of do our core, have

we shipping then And cost later impacting historically our freight also than pivot balances. increased saw more inventory vendors were shipping We who on saw time. to also air

is to So say, I adjusting growth, of XX% moderate year. come end navigating we're second QX, we that in line the it inventory the of at would expect to new and going and to team reality. And towards the XX% half the to see to still

believe Our inventory over to goal growth overall with there our revenue time. line we'll and is be in manage our

Operator

from comes question from next Citi. Lejuez The Paul

Paul Lejuez

And a just a if piggyback take where more get certain time you're to the I versus and Can to looking product at inventory share half, if little in second side. what question? anticipating to cost you you're then be perspective it's Curious versus from on little first you're geographies. separately, want a this AUC others on bit in the what if and geographies bit heavier curious you can year, just going to clear half certain

Meghan Frank

year. I We're of the we overall in balances. with terms healthy as we Yes. notable we the and a geography say penetration content move to, plan would as price have pleased nothing throughout mentioned, by inventory composition, full

costs, experienced relatively and changes XXXX, we any significant any product significant throughout expect of we haven't increases, as stable. terms we In move don't

Operator

from comes Fargo. Wells Ike Boruchow question next from The

Irwin Boruchow

made first several what Two-part and MIRROR that guess, through holiday, past on revenue quarters there saw the the that are your just ultimately losses Maybe informed quantify you the kind the I eliminate you decision Congrats, piece guys more decision. in of everyone. to eliminating anything What bit walk a piece question. little Calvin kind the you Can for being that can then, hardware in you us P&L? of by Meghan, or of the business? is year? And the operating of this hardware removed about business

Calvin McDonald

we purchase I that the and acts to to having pay allow monthly sign a eliminating clarify, hardware. lower fee hardware, as are a up just Thanks, same content subscription to but guest and we're Ike. want feature app adding MIRROR, without the will a not the On

this cost not more will migrate want entry, we So clarify launch Essential members And attract being build, we've lower the will continue allow that guests into it that. built to think I restricted it. and us just million with and later hardware to and summer. that X to to easily And will the

enough our Studio shared, performance we see with not the it we appeal our October. CACs they're meet an the prudent expectations. and to fast collective. improving, this lululemon -- a felt didn't audience proving But still that are in And broader within just didn't TAM open did in We to pivot we improvement it launch although our of as to up that make

Meghan Frank

portion very don't program. also terms was is of small of it's portion In share our a X-year I very that out a what break embedded But membership now P&L, it's year MIRROR separately our and we given plan. in this our small revenue the of will

improving. continue We have and to do dilution see we'll to moderated so investment continue and levels,

Operator

Straton Morgan from question Stanley. next The comes from Alex

Alexandra Straton

quick good quarter. another Two on from ones Congrats me.

guests. the is first on you in increase The new mentioned just big

XX% level I can share rates similar that's to represent a then Could split those And they have have and learnings how the rest to or any guess, you give the you of of they price full guests guests? newer the sell-through us I what business core, XX% the you existing the of the on think compare on whether categories and business, insight any to that new so. business? legacy secondly, XX% on

Calvin McDonald

Thanks, Alex.

In we across the see -- success demographics. we across have is benefits one the guests age guests, terms the of brand good new of all of

acquisition healthy, So both as engagement. well as very that remains

seeing, in past and have overall We a a and XX But terms through frequent a seen continued. very and and younger wait very overall, we migrating would guest that up but very that the healthy little our I in basis numbers the we shopping younger XX have. offering growth over bit indicated, months, healthy of engagement base, of particular, on category cohorts the existing those as engaging how guests, guests, on and in new are healthy the

Meghan Frank

inventory XX% And xX balance the of to I'd of of seasonal share Three nature of of terms inventory. we're to the positioned of category and with product terms pleased be outside in of the XX% in relative aging terms of by growth. that And in our breakdown Power core, plan the category, of our category it'd

Operator

comes question Rick James. from next from Raymond The Patel

Rakesh Patel

the Congrats you for on North all growth the America in for your hoping could progress. I year. about was talk expectations new

already market. progress lot the made You've of in a

growth the and what curious product levers think as about channels see you strongest I'm So as we segments.

Meghan Frank

part looking of low as expectation of double-digit our Power of in that xX. So shared we our terms we're at Three America, achieving North

of can sorry, second me you the And question? your remind half

Rakesh Patel

Yes.

think product growth Just what channels we and strongest about the as are levers segments.

Meghan Frank

Yes. say context. frame in that I also that would I'd

of international our as as business, our men's that low as double double our rate that have double-digit store of XX% part women's plan, also with growth. e-commerce growth and growth included low Xx double-digit we So annually and average North the well business, a goal America business,

Operator

comes The next from Telsey Group. Dana Telsey from Advisory question

Dana Telsey

Congratulations on the results.

we do or year? through cadence the As think that and markdowns the any which you that should the be normalized puts product are go for XXXX we margin mindful see Is there shape how do about about them XXXX, you how think and takes you with of? levels, as evolving

Meghan Frank

Thanks, Dana.

we're XXX that we gross in basis So color XXX points. air driven year, freight and the a benefit increase margin shared by of be full for basis really point to down -- XXX from would

to have little XXXX strategy really We to center flat be also that's demand are we markdowns levels. at pressure, distribution bit servicing of as expecting a our time. mentioned, our flat And over in year-over-year, aimed we

earlier, opportunity we QX. points. quarter, had cadence biggest our range basis mentioned in And by terms the of have XXX air markdowns biggest opportunity of by the then XXX in I QX be will terms freight, through of to QX QX in In offset in

time, in in at QX in higher be line we have year -- and last we'll will We will we're and opportunity QX, be the relative in then point QX. to expecting, this

Dana Telsey

opportunity are category challenged product category the that an to it. overall a new a Got little the that And Calvin, given year, just, influence coming that's on where gaining you see this you're do most now? have the in rollouts then more on share

Calvin McDonald

shared growth bit It's like Breaker The recent men's well excited franchises to and as product, In a innovate one excited fantastic the I've continuing what campaign of styles short energized really to Metal about. and and men's on is then across on and business in that our terms anticipating a women's, of then successes proven Align of I'm seeing, the launches is is and what what new continue it guests Vent activities. way we've similar which adding like men's little to categories of update like styles franchises balanced the Train been women's innovation, License to to our as the across a powerhouses balance of the Pace core a as and additional into bringing I'm expression use building new with assortment. to to to our and footwear recruit our and

across activities identified expressed it's women's. is very both with men's had So expression and the still, early I evolution across and the strategy, balanced which we categories of think product through another we've franchises our

North very growth still for us 'XX is beyond. around America, anticipation for my and product So the globe both in balanced in

Operator

The next from comes question from Brooke Sachs. Roach Goldman

Brooke Roach

discounted that the seeing of with and with wondering product course income year. may engagement expectation over region, engagement Calvin, could age the to have rate engagement the by differ your customer last of demographic? for that combined you're I for months, how if Does that rest you contemplate few that the the customer price relative or full was changed

Meghan Frank

balance the moved and through we QX. that price and of normalize we see as then January of terms in did Brooke, markdown into penetration, full

seen customer flat flat also price on the and that's segment, markdowns of reflected any do relationship a that expect line differences as full in provided with by us. maintain history in we for waterline being XXXX, we to year-over-year, We material we'll haven't which that healthy color healthy we view

Operator

from comes from Michael next Binetti The Credit Suisse. question

Michael Binetti

ICR, had I'll of think I nice add X think kind you a you've my in since congrats years, quarter lot haven't Meghan. nice normal those operating you've done over much pre-COVID, capacity. update and and -- stores a of China, a any guess you since the stores time over on built past -- on there I there I

just Calvin, you they about averages recent at you then -- thoughts on X% the the of there global already for urgent if be reason to of closer normal the Just I'm XXXX, China anything any count, you operating lever or opportunity -- on was should pull XX% in above us to quarters. sales but sales per or your store most it's per productivity, those know think sales flow? think global assets was that been Or mix. this think pricing below do for stores curious, to store China way if store I revenues So would on trend any to have? And hasn't with XX% in

to You about talked for that. that Any change XXXX?

Meghan Frank

Yes.

impacted were move definitely, throughout In stores, terms by we XXXX. as China COVID of we

So say smaller we our over there. They to I of would North opportunity than the expect tend be America, highly our percentage fleet, productive that are in as I view higher. and be balance to that would an time. stores particularly

a of store pipeline openings We to continue there. have long

sales expansion market. foot North and the We in early capitalize square strong we've also see and strategy, of on where opportunities store per to in America expand very to are terms which healthy very employed we

Calvin McDonald

small margins, up the business. year, the is knowing team on allowed And to of prices continue took, lean and But shared pricing, on pricing promo our to many pricing and Michael, pricing. other last the a that pull price with with lever. What similar to price back that continue we in and full with our going that on approach. We're to what down. full on saw markdowns only. it in And the was And focus with rely a I'll we're be heading that we on of year. full seasonal we only price increased to percentage planning so and significant not have industry any I'm is assortment this We heavily proud manage approach full and I'll to throughout us which start moves 'XX, approach exiting selling price product then a discount to players similar manage a as not into it's in selective drastic means start

Operator

Evercore. from comes question from Saad Omar next The

Omar Saad

couple new strategy a something footwear, some be cetera, helpful. media And Calvin, quick you're quick would maybe a how the you The Just of follow-ups. and efficacy, maybe use paid update guys. to hike, going is you the on markets golf, as of well? in et that that's on could China for categories, touch using like other

Calvin McDonald

Right. Thanks, Omar.

back use In the innovation, terms I playing earned. approach in some us, of few a really on years gains think of balance and those heavily and media is we've with to paid last always story. And made which leveraging our continue of earned between very, for great in the very we'll and media, compelling to both

Get Nikki local working campaign. And getting that. to through markets digital executed the and specific. to lot around more that and to in we of the and through of in and into are going team regions those, campaign, And through direct we're paid also with right do a do, and when Align amplifying continue job in wonderful I expression So digital It Into think to leverage both in doing stores leaning and in expressed a you'll the see the

it So expression, across guests omni execution a store, the the like out just fits very for applications. digital really and in-store feels and of

of expressed. And the for campaign that excited see you part to So for your second was? question

Omar Saad

new Just footwear, on an of some the golf. hike, update categories,

Calvin McDonald

Perfect.

and them. that and the relationship and guests and in for there, start We they've And golf, designed. our product how with tennis sweat very well have offering us our to excited, the responded shared with On guests extend how the I'll offering share you, them. is I'm on play I've they're also activities, as know wallet -- of that, strengthen them helps particular, and

tennis two, and to off wrapped assortment. the golf we're selectively tennis core about sell well back or around innovate we we do in execution. do then to leverage year that. to our then as And those core those really and strategy kicked then continue more a seeing We're lot designed well when on they're that year And golf, brought through very to we've spring of really going a execute recently and into as last where so into when in executions both

SKU these point, at us it allows the additions, into to and same manage and while drive So assortment activities. productivity credibility

guest our it's it of cycled with category the indicated, our over to I Very and Chargefeel, industry We've Blissfeel of is year. introduction recognition response. very continuing our a new business. for positive Very on footwear Blissfeel excited Trail year to on later, test we'll as be men's in our test-and-learn create first just and pleased within and to footwear, launching us. guest, X.X, as pleased for early learn. 'XX, And footwear updated with as industry innovate sort with disrupt a update and and women. We've the the something just well next an then and about And both

and continue to category. and with the into excited response innovate we're and So test the learn

Operator

UBS. comes from question Sole Last from Jay

Jay Sole

the like growth range looks by around mid-teens end like for it QX year. about implies of the curious goes rate And high then it's seems Just sales the year. the teens. the the guidance cadence the into

into just there's the accessories. was algo? And Just long-term you that part about wondering just curious that go of then driver assume at forecast that's time, a the or specific if like back same

You brand a bags Calvin, Within feel and category plan to bags belt how with what strategy mentioned belt into about is the QX. forward. fits worried just overall it's you that, assume XX% I going that in you big driver. up do I'm

Meghan Frank

Jay. Thanks,

headed cadence we're really So also are pleased into macroeconomic in And with QX. the uncertainty. throughout the year, mindful we terms of our trends of

full -- rate Three our direction sorry, guidance feel of XX% slightly year the our be we So this time. above average reflects XX%. to Power of for growth XX%, xX to The XX% at what to is the appropriate

into So well year. positioned headed the feel we

Calvin McDonald

compelling Everywhere bag the and it's accessories Bag, very team is business accessories on And That a wonder. item. Belt one-hit great particular one just healthy, that has a job done It's building our not balanced business, well. total not a very and in as

We're But the results. continue not we're as been assortment with bags, of business that categories, have guest Love driver we pleased in new brand its our It's well the just an item. one all mix as moving grow, accessories that opportunity excited of and awareness across our guests. great to forward acquisition. a about contribute for and

Operator

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

Lululemon Athletica (LULU) 28 Mar 232023 Q4 Earnings call transcript