LULU - Earnings call transcript Q1 2025 | Lululemon Athletica Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

First Quarter 2024 Results 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. first 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-Q GAAP During quarterly on in non-GAAP in included both financial today's measures our call, non-GAAP measures. A this will to press reconciliation of present we and GAAP 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 quarterly XX-Q press of constant Investors are the release comparable on website basis. given today's and on the

X the Investors first 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 here discuss results. to to X I'm Howard. you, our happy be quarter

our expectations, my you've EPS working modestly press was U.S. came perspective share release, our in from while our of On what today's I'll have our growth even been ahead on revenue quarter some in our our teams regarding As including X stronger. seen business and call, performance on. highlights

provide unlocks to departure Officer Chief Then us. I'll I'll activation. the on our the product and innovations for recent our of some Product new our and Next, details structure speak opportunities brand

by and addition, out will your In our close financials, time Meghan review today taking will our we questions.

X%, our XX% let's category, Mainland or increased saw the China revenue world In and XX%, business, in which constant total both Men's accessories up first in the is up region, positive remains U.S. XX% XX% X% Americas, quarter, up So performance increased started. In increased last up currency international given up XX%. strong in and with strong revenue merchandise get year. X%. in momentum currency. XX% By XX%, Canada constant exceptionally currency. we and impressive continued rest the in revenue with and By women's the increased the constant of

versus last $X.XX were share per $X.XX Earnings EPS X quarter of year. in

million billion. approximately billion, and shares of $X by repurchased $X.X increased our our thus in up in an addition, recently the stock quarter our In capacity Board $XXX X, far, second million to nearly $XXX to we quarter bringing additional repurchase authorization

and unique them new business drive and compelling the strong, our We're and As you to can business with see, activations brand world. our product continues with through around to brand and resonate guests we the remains innovations. campaigns, with our continue engaging

additional some share region. quarter details now me Let X by

strong remains regions every business our and in which geographies. brand guests As with market I across operate in international is our as resonating we mentioned,

in product includes styles so is approach technical any model implemented we've which America North and enable frequently and to building updated a e-commerce the our to with and guests brand which a assortment, sites; innovations follows omnichannel larger-scale and to to new offers productive choose; distribution sweat as growth brand they versatile way Our as successfully activations local awareness, campaigns. stores includes via in approach and compelling and unique well highly

opportunity. growth international and to Our a underpenetrated business represent remains continues significant

to For outside the long continue only I the business, of our America. Shifting XX% XX% full our as U.S. grow international see to run, and over North potential presence of it to was year the to expand the we XXXX, for now

we to several call, in due actively we to and opportunity start missed on year and last bags, seen our we've internal some slower which the are choppiness women's mentioned environment. As the including addressing, in ongoing consumer factors a

ABC maintained driven momentum, to lounge our business guest Our has our franchise. men's performance, its by and strong across innovations response

X, you've but choices. growth narrow. gains was you the addition, several the with significant. When assortment, roughly buy guests men's are for X-toned some enough responded missed we just our with the a unaided We Where we our fully capture women's, needed less of with our seen, we did revenue we quarter are we opportunity X later our the as the depth they response also growth of than in line our U.S., guidance are business styles Our expect at rate. guest in guidance saw grow to we of to result including and fantastic opportunities in our looking share of as maintaining the not a call, In in of business out in core will and X, of additional but strong this awareness palette in market for did in XX%, remains quarter to particularly in were demand. Meghan year. which in that And was X% as quarter And well. had with continue revenue XX% looking smaller to these the styles sizes. not leggings such newer stock tote U.S., bags our share color the more too brand to maximize color,

to for right guidance year in XX% the root understand the the revenue excluding and cause more of and the step-up second the are with modest of the XX%, continues direction optimal XXrd times, call growth week half half. In be and a issues; to in Our moving to in of in the the expect XXXX. summary, includes inventory full a for lead position we second we

innovation to shortly, reason another year, upcoming speak our addition, product back which of our optimism. launches half is which In the flows, and the skewed toward I'll are for

in U.S. compelling. the remain further, out opportunities Looking growth our

is runway brand activations the local and to XXs. in lululemon and introduce low guests to our Using campaigns, to approach, e-commerce stores a significant sites. which unaided only brand awareness combines drive them have new to continue Our larger-scale and we unique engagement, community our

has beginning the events, members offering value. which membership invitations our base long-term to to and product our XX early now approximately to leverage with North We of in engaging we and America. are By increasing spend both exclusive will ultimately and program, drive which member power just are million benefits like access them, powerfully

optimization with stores continue our new be performing program. with to highly Our we productive remain well, store and locations pleased

openings As XX new a X to XX reminder, store optimizations. calls XX to XXXX, in and plan for our

And to opening our Looking include plans market where significant, continue program our strength beyond opportunities in in market optimization outsized store share, strategy. X. our the estate continuing quarter XXXX, we the new both and we with our in real outpaced U.S. and men's, gain of remain overall

within recently innovation announced Now of the our current organizational shifts product let me we some and speak structure. about

and take a As our planned speed new you and and I regularly know, plans, leadership industry. creativity, structure recently meaningful Chief about our product our to near increasing approach leave across term, product update Sun of elsewhere flows lululemon and and excited job step enhancing regular bring in in around allowed the This several team I'm innovation, Officer, teams. succession us curiosity will and new which assortment. had Sun in the long drive I conversations, Choe, so career leadership our seamlessly new Product will into decided stimulating been our her personal goals. We to understood benefits including to accountability the how structure. perspectives,

Director, guests. will consistently under And and across more the will continue leadership, ensure we markets. fully show for our the Cheung, product proven up and decision-making streamline Chief Merchandising Brand Creative who that all and to strong brand Nikki guests Jonathan, which Binder, Chief Officer, to Neuburger, Nikki's looks product drive by a needs role teams innovation, Activation design Liz merchant powerfully team have reports will our Global me as as We and to and product reports Jonathan Officer. expanded and led now dynamic entire now who her the the unmet she of and our Product and solve be team integrated, into our great steps technical Liz for

women's, is Scuba our ability speed this respond recent several including speed to our improve team's intended with well regard franchises, continue compelling upcoming X, to these our help and I very And the process that shifts will want innovation. product. In further continue to pipeline second to market. to Softstreme. guests create key launches to show All layer enhance our quarter and to maintain product storytelling Define, and of share now ideation and in to of product our

in and we bike led In styles. strength to addition, by shorts bottoms away-from-body see continue our

which the beginning second made leggings the workouts drying performance of most continue different into weight end fabric, track of how categories new and into a newness in leggings half a the is have we'll launches on we where our our into we're some bring lightest [ year. Within designed assortment. hot, innovation new innovation our The another into significant assortment. include one we upcoming of bring feel for our forward, quarter have Looking to strength. providing These ], a launch a exciting assortment and and newness already within planned of sense bring perfect the we new example our train core from new year, quickest women's, to versatile late X line innovation date. And innovation low-impact in state, significant completely type, to our and will

technical to offerings you new with continue to see excited Our teams product new I'm these expand for and solutions, styles. our

Steady Let's strong lounge offering, a we In Jersey. X, continued Soft at look men's. quarter see and now State to response take including to our

home after launched recently a provides Spacer piece we a a workout. cooling to recovery Hoodie, wear addition, In and sensation is Smooth great which the

We of plan expanding inventory and with for and all the fall. X variety We the by building of to performance of lounge in silhouettes our strength fuel collections offered are the these pleased levels our offerings.

highly just to appearance the on footwear, polos well, worn the which Breaker be now On footsteps the which sweat particularly our men's is In create. Shifting our continue to can see Pace style technical of side expectations. to for following golf where of Zeroed our Zeroed and These year. of franchises, will office to brand we men's, great expand in both And or the innovations continue outside known In this later we we will of exceeded response technology, in on styles becoming our also has ShowZero the train. I fabric demand many the of men's are is men These technical This we key want done construction other launched to examples in for in disruptive in cityverse latest and just extremely to shirts. of innovative has versatile the and performer are occasions. quickly uses new other to our mention the polo and hide are course shirt. top the a awareness. new

our every country except As Canada. you know, in we where brand our low market operate, unaided remains home awareness of

awareness activate bring guests We to will brand. to into lululemon grassroots increase and and continue our global platforms the new across

athletes share In men's York, X, footwear unveiling kit held including Palm just activations styles beyondfeel for will media earned ultramarathon we our me Springs, X, we several and New California, event quarter Toronto. our hosting while And our campaign. and examples. In Canadian successful spot Summer paralympic Building quarter series. Olympic year's our in Let focus some launching a strategically new our last members women's few year's with this this host further cityverse the again in and successful X, near in on Sweat on with high-profile event membership again of the in North a of feature test campaign, success quarter Games TV bringing to also in America China another men personalities. we'll and will Summer Essentials version our

I'd guidance hand the share like of rest to I discuss over financials our Meghan to and thoughts year. additional the outlook, it Before about some to

and particularly remains our is sizing, in industry. Our U.S., and store awareness for in inventory growing, innovation color is of our strong. XXXX the the second been cadence and have launch brand appropriate in among low but the pipeline adjustments making of closing our best the In the productivity our terms half teams the of gaps remains

and differentiated in continue our the beyond in to inspire product goal year engage compelling the I'm them half We revenue xX with optimistic as second our of ways to continue Three against and innovations. Power execute our unique our in X regards with you. with of well performance of and our to we over to doubling years. Meghan, guests

Meghan Frank

Calvin. Thanks,

Our areas by QX expectations, across driven results exceeded performance key above-planned our P&L. our of the

in international remains in slower the our the strong U.S., seen our expectations. business to we've and and line Our Canada, start year regions in with a

you've seen press about. increasing and reflects guidance speak our of many revenue This As guidance. strategies just our maintaining for Calvin release, while in XXXX, heard optimism in we're our which the our our EPS year for plans you

protect to we against In and for to our downside. business scenarios addition, plan continue multiple manage

on guidance outlook, with our me acquire operations the Mexico their May, operations. In to XX Mexico franchise lululemon provide update we partners of retail the signed operate. our currently quick sharing let Before our a an and performance they agreement locations our QX and details

Our incredible partner an community the brand has and experience. foundation Mexico, efficiently grow built allow and us more expand, acquisition enhance to our to our in continue will our guest for

next cash, our the business closing acquiring XXXX. for close transaction financial customary From an fiscal we to approximately is the deal have P&L year $XXX to results a and are to million expected standpoint, expect the the on weeks, immaterial in conditions. subject We for impact in the several

QX Let details me performance. now share of the our

sales on Within basis revenue our constant with basis XX% results reported sales constant the with revenue XXX or X% comparable the increased since or the XX%. with flat; currency the new segment, rose sales a as XX% and constant globe. XX For currency, last XX% comparable Americas were across stores of increased in increased basis in by a of world sales by year, store increasing in follows: our regions, and driven revenue stores total or increased of reported in comparable XX%. In QX, We our ended rest sales XX% increasing increased to XX%; net X%. QX a Mainland billion by on lululemon $X.X total China grew currency net XX% on X% XXXX. reported XX% channel, footage with Square comparable quarter revenue versus addition

XX.X% category, increased contributed XX% compared increased the by last a QX total of accessories net digital on $XXX of channel, the and revenue grew X% in In year. was Men's X% XXXX. XX%, of During or women's of optimizations. quarter quarter, to billion top top revenue we first by strong for revenue net or versus increased last completed year. Gross XX.X% $X.XX line X our million XX% of and XX% revenue. revenue profit By

lower basis driven by margin XX points a basis fixed margin was increase costs, in and offset basis basis increased XX product driven following: and point markdowns. airfreight and XX deleverage on costs basis points XXX exchange. points point the relative provisions, gross by foreign offset of last increase primarily product on to increase overall costs margin in Our year inventory by basis a was lower partially lower XXX The XX deleverage in somewhat by of point product primarily

SG&A. Moving to

year. management deleverage top same for was and guidance points XX better of Our net approach by slightly prudently to XXX period net XX.X% basis long-term in to managing were to points SG&A of line also be revenue continues XXX our driven the timing, or while was million of opportunities. basis last strategically $XXX grounded expenses SG&A our XX.X% approximately The to expenses. than and growth compared prudent invest of expenses of in better continuing our revenue

or diluted jurisdiction. Net XXXX. in $XXX expenditures quarter store with per including and or QX was rate margin quarter of compared XX.X% for ago. was per earnings quarter effective $XXX primarily is pretax diluted million benefits compared relative investments $XXX.X approximately The primarily support investments. last a million $X.XX first for operating to growth, tax income for decrease quarter. Operating Foreign tax QX the nondeductible stock-based compared Capital exchange share relates of and of million expense in revenue to project, a spend associated million expenses million for year of to share income year versus distribution locations, capital QX flat to $XXX of for to $XXX the quarter the $X.XX the Tax compensation international year. earnings in technology relocations or net our XX.X% XX.X% in increase business center and an due to to in for XXXX. last were the was an multiyear of new XX.X% increase quarter in renovations, the was

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

year. pleased to revenue with which inventory expectations, XX% our declined We higher are exchange the Relative levels, last decrease. versus and our foreign contributed to

happy our increased Board our of During quarter, have to price million repurchased approximately continue to I'm remain approximately buy preferred has $XXX cash $X we've our of stock. $XXX. we we return repurchased to capacity our now at Share by average approximately of to shares. recently new an Year-to-date, billion. authorization shares With XXX,XXX $X.X that the shareholders, authorization, repurchases and back this method billion

with our XXXX. for Let our me pipeline brand activations outlook. marketing remain guidance speak now to of We excited and plans innovation,

year environment which invest both while will medium map, and to long it remains strategic consumer be and the in early to in road us continuing As continue set also for prudent is our we U.S. planning the the term. well the in up dynamic, our in

$XX.X XXXX. revenue to This to of expect range be XX% growth relative to XXXX, the to For year range to in of billion. represents XX% full $XX.X continue billion we the

XXXX, in week revenue to that to expect have XXrd of we the XX%. quarter Excluding fourth grow we XX% the

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

store openings the in of our with rest will new primarily include Americas, China stores to Our the Mainland. XX in XXXX international markets, in X

markdowns For year. adjusted expect the full with Within margin, to gross margin be with year, XXXX. we approximately to flat gross airfreight be in last flat both gross we margin continue forecast relatively to and

Turning now to for year. full SG&A the

market continuing forecast in prudently approximately We expenses while continue at and road versus strategically and increasing aimed international to capabilities. When growth and map analytics Power expect XXX expanded versus investments XX We're xX XXXX, expansion, operating an and basis our XXXX, in managing at margin with our for points technology basis new full of building leverage we points approximately increase continue marketing and brand looking infrastructure advance guests, data adjusted operating our acquiring basis to of versus points to XX of Three XXXX. awareness which margin XXXX. year

rate tax in full increase XX%, adjustments the relates last we adjusted For and our effective compensation tax stock-based increase the expect effective realized of rate lower we XXXX, filing be approximately deduction XXXX XXXX. the to to year returns year XX.X%. The when an our to favorable over primarily relative

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

the year share of the as and the the repurchases impact decline. of EPS then and repurchases. mid-teens we in anniversary to second higher we guidance in expect dollar any in does looking inventory Our the our inventory, excludes of at last impact also half income. When year-to-date increase decline QX share year's interest future forecasted include It

locations, to expenditures to spend to and investments. Shifting project, now for for center store expect investments of our We to including $XXX growth, technology to million a continue the approximately QX. capital business be $XXX relocations and support relates XXXX. million distribution renovations, This continuation capital new multiyear to

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

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

our on to expect in predominantly will costs gross The project. QX to fixed and relative decrease QX We investment in decrease center to ongoing XXX margin multiyear distribution our be by basis XXX points driven deleverage XXXX.

year. line increase margin will basis from favorable year to relatively regional QX last expense but markdowns SG&A on rate driven to XXXX. and last of by expect management. And saw margin product be spend shift approximately QX, by timing expect we in We year. inclusive of This year, prudent brand decrease penetration, relative a at basis our year in predominantly relative for In ongoing with XX smaller this QX related certain leverage QX than QX, expect campaigns a XX to be to looking a and QX increase to operating of to to in XX we we this flat leverage XX to an last top points of points

year. continue full expect expansion margin However, to XX basis of we the points operating for

Turning to EPS.

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

effective approximately our expect rate We turn to it with will in I QX back over that, XX%. And tax be Calvin. to

Calvin McDonald

In Thanks, holds energized markets and how the resonates I Meghan. I want am in our excited the traveling and what brand for in geographies. was us for opportunities in lululemon. by and cultures world, to I see around I'm closing, China when week I across future last the say powerfully front of

world for look that in your the brands amazing to we make is we long-term and to passion as ourselves team and some U.S., our Operator? taking the questions our high as strategic our know continues navigate leaders While we and forward the It's to for market that of exist. In creating us asking the build unyielding closing, want focus our how now. to for by lululemon will every thank teams the around our senior challenge on mentality I lululemon opportunities towards in that enable experiences guests. I term for as teams your near products high. well leadership adjustments

Operator

Instructions]. [Operator

Brooke today Sachs. question Goldman with comes first Roach Our from

Brooke Roach

saw adjustments in that the as and lululemon that adjustments about in the quarter. that business you forward in throughout as going and perhaps see the timing Can move you're and your you the strategic making? trends you strategic U.S. Calvin, some U.S. those spoke to traffic you trajectory the as growth magnitude making your brand speak then of conversion well contextualize in some the the you of confidence U.S. And

Calvin McDonald

Great. Thanks, Brooke.

for in our market every remains excitement as today terms coming this the optimism it off at and growth we that was strong very U.S., for that not was us. In as the XXXX, continuing In see year number year in it acquire beginning particular, of still obviously are of of guests. strong growth of there and have including a a areas changed, which of to the U.S.

brand occasions well in lounge our our guests across men's We have which in low just as better accessories environment know, wear optimizing and business moved early very of unaided into you as expanding product the tested our an shop. and for store, not awareness and our still even well we've in social, our is terms opportunities as categories creating opportunity as deeper into to as and and performance as and

launches around at in where launched. of in in categories golf has business, in and color has terms the our lounge XXXX, our palette, profile, saw year responded Pace U.S., that. is we the we I changed enough train well the key outside we was we as we we this in opportunity He the us that such into And our business new of newness we well smaller the where missed is some resonating but some was success chose look some the to, responding and opportunity categories to identified, number years the with color new And more. color, that incredibly our in and one the from we well U.S., franchises continuing globe because business, our year. into with the last as in the the well U.S., as came missed didn't well on in for are was performance really, and limited for the we the category looking opportunity some when looking from what men's QX, incredibly in of of well and had key the So very our sizes. of saw first The of as for that Breaker, in that to, our saw The run, responding more our last share performance gains changes particular across she nothing just quarter women's she the innovative In a palette into than in legging few Zeroed that into in the newness. he's of into we size some performance success as she men's. In year have have, particularly of did

All of this is control. within our

All been the this the as and well innovation of of be back year. the have of addressed business in expect of to this, newness half of much we the chasing, lot for was for women's year we year a have and scheduled half teams that as second our in to did planned mid more this

in leggings called a Early be launching a innovation have innovation July, with in some We few weeks. hydrogen yarn exciting new coming in leggings, new Breeze our particular, in Through. next the we'll

missed in has opportunities terms were the the Traffic growth, of in So women's, brand, health of there in strength I the did attribute to, but conversion, changed. relates to the business. mentioned, as and as the U.S. We the missed opportunity in the potential nothing some it some the in missed positive opportunities in opportunity women's of our in that and we quarter known see the was color

Operator

The next Alex with Morgan question Stanley. Straton is from

Alexandra Straton

feel one in and Meghan. for got picture, I we history. Calvin, lulu's like Maybe, a really maybe Calvin assortment hear for bigger one I've missteps

what you this year? of that changed kind provokes or maybe what think So do

potential Can you competitive the that and different about talk or a key in bigger market then think area the revenue then obviously lulu for for picture over China, how all. similar for about Meghan. growth landscape is And you time? maybe how you

Calvin McDonald

record more of a terms year just across this than, was higher we looking this have dynamic quarter talented interest -- team in that consumer design color the the think, track know for. We where both I narrow into a was and coming consumer was inflation, remains of the Thanks, agree, in rates. product palette chosen the environment Alex. very with On merchandising. And team, the organization the I

broadening also in profile know we sizes The the we styles on both opportunity they're go-forward they and had -- well, being lounge So palette, performance, with guest and different and And consumer, selective. where because social. success I in the and base it's mind been incredibly with growing sizes. responded we chasing combined had color our across it across will the to our weighing we've seen she spend, but into determine of think it, the the teams that have size the

and newness confident So control look confident, learning we able just and that opportunities how innovation I of of addressed, a been has those forward, identified. when lot to been and bring that half we're the core the back address have that in the to I'm to pipeline it and year I'm well it. then as this as

Meghan Frank

we're And market. China that business From with our thanks, very a in pleased Alex. standpoint,

see point monitoring We from at see journey to we so concerns no strong really continue strong constant environment. XX% on plus there, in definitely say growth early and competitive currency continue that would time. this trends in business China Mainland. I QX, to very we're our in closely a our side, landscape, still But

Operator

The is next from Matthew question with JPMorgan. Boss

Matthew Boss

best cadence that on support anything date higher the back has as I then you've horizon? about the U.S. already the do And you're well anything sizing just from or about of the as just color? picture the level, then believe progression pipeline a product those to mean level we're structurally Calvin, as larger in you just that the of would changed excited to how think if just business. and thinking really each half year, maybe, improvement maybe here, year progresses? about So as the on with about we that longer-term stock And a progress think sequential within made,

Calvin McDonald

nothing has changed not markets with start internationally of the in across all but I'll U.S. in terms growth potential Matt. Thanks, absolutely this just of brand, Great. the

have As in the and QX. you market that less know, as we the strong team have Belt business us. well accessories, cycling of quarter identified opportunities share. In which some last We possible was incredible. the new our have the just We in saw depth brand pleased headwind sold growth color, of had have almost of market member we the that Everywhere of satisfy bring out example quite early validates some an very the XXXX bags was very demand teams outsized of and bring incredibly sold better continues we It Quarter didn't success that but what's a with where It to Bag, relative as the to X incredibly chase, guests Essentials to success gains very number did we know us to. and inventory offset really men's the of chase The for that. accessories has well access. able the styles newness, although we're bag growth and of in, responded could size to that chasing over and the expect well, that the of bags. in bag we And is well, a status half. newness the that be good on offer Everywhere Bag. did resonating, the impact innovation, the and control. that, and U.S. in Everywhere that Belt for and We an a introduced missed year. That some to shows the saw we year, in in in the And to a and position for last strong an in perform the not levels and particular, is our business, just the guest can again continue Belt know been immediately. We of it Bag in-stock is something into moving success a into back we to in were X-toned as opportunity, have is is beyond

rest seen as in number a business innovation opportunity to color the in perform to And choice based where am new than new really fantastic optimistic quarter to newness. will as contribute a fundamentally that about year, as of and we women's our uniqueness don't contribute positioning more linked how continuing as positive. our in nothing -- this the has well to have I as and in in we I business, on. incredibly strength. We She China, the brand successful exciting, markets. And run from yoga to to last of we've in the missed She acquire in a see the really and and in handful growth attribute Tennis, our potential less opportunity the was palette, product. an activities lean I've a U.S. categories, in a well and year, particular, golf this position brought. changed. and is in mentioned, strong as about So the in excited and us of narrow for how the our consumer to continuing with excited well grow, in Mainland engagement and we all have the see resonate, And are and we very remain was traffic a continued where continued to leggings from growth the And which on to accessory engaged the growth. And with chasing in was but our some I our bags I of perspective. then in opportunity we that shifted continue product that color had in anybody train that the unaided is can to missed from guests and of some inventory growth international performance world, brand brand, comparable positive the see of the awareness. Engagement very mentioned, brand of grow,

are as year. the this differentiation believe control, I teams opportunities and the can what we'll get on. what definitely do And the brand the stronger what So and trade same, we that's and know the is of are we we through focused

Matthew Boss

half Meghan, year? about back just first second in to drivers think great the Calvin. And current of color, inventory? could how just quarter, quarter markdowns That's markdowns of you best the then health maybe and in to the the speak of

Meghan Frank

Yes, sure.

down So the XX% at end the we of inventory, quarter. were

the the was the time, we decline. provided inventory half year-over-year, at double-digit composition this of range of outside grow second will some lower of line that I We our point of low in mentioned. say, and pleased that in the So single-digit inventory currency relatively end with sales. with the on expect we're very would opportunity areas do of Calvin high that to

So positioned perspective. there from well overall an

will that, were year markdowns be than QX last some we color and opportunity still basis markdowns, QX, expecting well, slightly terms points of towards In in sizing, we areas the terms the are as are teed believe will above of that we described We of for continuing Calvin less as to essentially year-over-year. XX flat our assortment are full year. other drive with for of year, that chase though And innovation the up up for second that we've well the component of got into half items price some some markdowns and working and year. the believe the the gas for and us and as

Operator

from is The next Evercore. Michael with question Binetti

Michael Binetti

cohorts you bit that all? results on Bigger the a then, the COVID, -- behaviors U.S. quarter to can your little some a confidence notable COVID, between And guys. pre-COVID, the could little in key gap I the differences I speak margins question. the out? across UPT, AUR you of curious sustainability nice acquired as U.S.? Calvin. consumer change bit the that the difference be purchase look of the frequency, in a understanding point if you A picture, customer are Congrats little the just U.S. any there has during are at last Look continue maybe dynamics, think and just Maybe after you Meghan, in driving help changed then KPIs or of guess, there. And Canada how to what I'd product in

Meghan Frank

Michael. Thanks,

margin, the in over business. run U.S. We highly a see long products don't of So changing term. I full-priced terms that

U.S. markdowns change then plans strategy current temporary. And there, a Canada, have Everywhere challenges the well to with was color, drivers view from in more slightly as last Bag higher were assortment popular U.S. We as the prominent perspective, some I more would outlined a in Calvin well. so the no of Belt our U.S. that the areas as and opportunity terms item sizing of as year in

So of that's driving in trends. difference the terms

Calvin McDonald

of that being monitoring we're dynamic. it where more know choose. the with But obviously they do guest the And will we consumer, mentioned I spend remains but the sort that selective and is environment,

that responded the So of product key her in social and he it well was element we the incredibly really is for which either of QX, opportunities, I through not and/or loyalty guests in and the marketplace, correct course off this missed positions. as the But of multiple see that and Obviously, our that guests overall either unique No and In over in of as which the be fundamental changes lounge, and there. teams in change. wear as quality they terms the shifts I and product product provide engagement we an of and/or no stands didn't nothing positive UPT out the as not these color out. we mix, looking how have a believe on cases opportunity as terms the And she we in a call think used in with what at really of are just she Really, saw acquiring some that these been continued was continued coming the is a and performance necessarily quarter, and much activities is AUR, believe we've we differentiated traffic worn we and it with which the I across certain mentioned. years, to did occasions look the our -- can versatility, work. adjust multiple product. opportunity short coming assortment areas. well is and very where in was conversion as transition to. When did,

nothing concerned long ability. terms term about So in our that I'm of

guest. have We a very sticky

back the have been that year. love half and of of We product. this is, where we have opportunity the a for a And know teams brand and there's chasing that differentiated lot the for

and not not I've shifts in guest -- the not brand. I'm not loyalty retention any I'm this or fundamental So guest with concerned with seen anything, have or the

Operator

Fargo. from Ike Wells The next with Boruchow is question

Irwin Boruchow

the markdowns. question to quick Matt's about to A question circle back

make to Meghan. I understand, want sure just I So

the and then So was, in down believe, I XX in X you QX guided flat markdown it for came ago months bps.

QX was happened? And quarter, the but kind kind be you're maintaining I'm then you're line that? off what drive and transpired margin will down, that number of curious, you're But exactly So flat, year the the full in of item, again. saying gross then QX Obviously coming one, line. you beat down what the exactly

needed ramp-up wasn't. So it back now there there's -- and like the markdown like versus just before feels half

margin well. I'm the full the guess of like just for line the to trying I as So gross progress understand year

Meghan Frank

Yes.

for sizing color first did assortment with and would challenges we and proportion in that, in to markdown of assortment. towards So addition say the we of terms the and more gravitate markdowns so environment, the quarter, our guests saw I the see

points a We still portion small believe basis So will than increase year our year. we increase. lower a the -- be last for is lower than markdowns of XX QX to but QX relatively saw up QX.

us the that would of the also chasing essentially spoke about assortment portions those sizing innovation today. markdown the into as maintaining as exciting some are full for in that year, for opportunity that assortment pieces flat we we the but terms we're of we second some other the then are correct think in when see year, to half rate given actions well working of Calvin full So some of to that color, the and we're taking the just

So headed the into feel year. positioned the second of half well

Irwin Boruchow

Okay.

the markdown that rate. of for a the isn't mainly impactful function This year it's QX. So on

Meghan Frank

yes. Yes,

Operator

with Paul next Citi. from is question The Lejuez

Paul Lejuez

also sales reiterated but cadence the market, more in in in curious attention to? how in And guidance you any competitive your you the outlook paying being you if that the versus relative differences landscape year, curious of competitors promotional your were thinking to not talked near XQ term you how about in structural 'XX. there Any what the you'd second of changed year. beginning at but any U.S. regions You amongst the there out of for the you're the saw characterize half changes

Meghan Frank

Thanks, a Paul. -- of bit level from would regional feedback. country say a little and I

about that. Sorry

the we primarily say and would for perspective, balance from the a country-specific international of materially slight would I region have China. year. regional outlook our from not have and performance over the So changed come

Calvin McDonald

first. in is of to few over means ago, from increase heightened second it's as quarter. different back. the I product. drive this competitors dramatically I their that sort quarter, promotional use seen from wouldn't landscape, for either of the this terms dramatic There competitive years would say Yes, that a level nothing pulled in anything say, promo but the years. We've It's or Paul, part, same, But demand last the seen a the which deeper space a few not gone perspective. I'll in in remains a address Have intensity

shifted And to in performance competition the on X And our into has intense, been business. our where always in in being our from compete. we've and quarter been always and continue nothing XXXX, it QX. been competitive be missed space has very able point to And to had there saw perform I the impact strong and It that really, will therefore, U.S. opportunities versus a we we

-- we It was color very saw business the performed pleased depth there and shared competitors men's chasing demand in the Our I and that that control and opportunity resonated palette behind men's been really, newness the the -- success It's with share well, business. the accessories we which space and women's, has the in newness in the momentum missed and we've within the to our and it. are where innovation, is, continued of the lack but control, because there. satisfy that. very the product outsized gains the excitement

to had missed dramatically always haven't I competition we So seen anything has a very been change and QX, strong from we that really I and there. quarter point where shift definitely therefore, not have. QX the to And in do quarter. opportunities

Operator

next with The Sharon is question William Blair. from Zackfia

Sharon Zackfia

you if predictable. U.S. in clear segment. bit trends was you've whole quarter share to more or you And within the of market whether the me stabilize think business, a I'm seen become the and lost guess the maybe softer U.S. within kind curious it whether women's the I for wasn't

Meghan Frank

would I it QX. of terms in come we expected Sharon. in say as U.S. did performance, in Thanks,

our was So expectations. it I from would that that with standpoint, to say -- in line

Calvin McDonald

overall we we industry And in in well in We terms market U.S. apparel where activewear of the as the gains women's, gain saw flattish opportunities missed as identified. on men's, the and share, in adult based share were outperformed did outside market, industry. U.S. both QX, the significantly adult we that I

Operator

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

Dana Telsey

you changing North And how and all you it of Calvin how new about in levels the store as as think terms overseas think from strongly, about any men's before? America, is that lastly, versus difference of stores then productivity and stores the very Meghan, in And North about what in business? growing you seems are seeing for at opening? be you're new thought men's which business, America to

Meghan Frank

all the which per runway see Thanks, new of Dana. above $X,XXX very across I of sales foot. We X-year foot openings, and our in continue is geographies. see into per opportunity over a region. would U.S. would at runway we're new stores sales look as volume full square we both in to ramping U.S. see square to our productive average, well X- specifically, as, The -- continuing around importantly, we mature store ample say that, as I our their to see we international tend say terms period. and to

Calvin McDonald

Dana, [ I'll with Matt chat ].

world doors the percentage Just that's I'll the available APAC space. is of still in creating the And additional innovative have be Australia within we that categories the to that the into U.S. portfolio just with that including very add in optimized. terms opportunities of product optimization for the excited of markets from we the our U.S., to around results pipeline the these And obviously, see,

and showcase fashion. to an So continue in about very product innovation excited stronger how even we invest, our optimize will

a number seeing our markets of took North is years the Interestingly, get to performing us terms men's a strong. of America, globally lot In and get the it quicker. business we're of international penetration men's, there men's in to very

on, really responding when our of a Interestingly, and dual-gender are Zeroed in globe of men around franchises. earlier or the we strength in strength new the expansion franchise is our In we the the in Breaker, markets, the newness see and product the fashion, of it see markets. of resonating the are see of launches, the Pace brand ABC, the performance we when to innovation these So -- lululemon the similar globally. In the success all

see the growth well the as men's excited So in to in as globally U.S.

Operator

is Cowen. And that John question Kernan from TD with

John Kernan

of sales. complexion How you and of look that say Calvin, nice an on quarter. XX% Congrats reach on I the the geography to basis? think heard omnichannel international basis does potential has a I

Calvin McDonald

of terms haven't the the early we unaided a in every online, obviously of from low at in still store it the look it the I awareness continues well we And geography potential as we locations, perspective, to as China, have, our internationally think number broken potential mainland business when we're out, of which perform is in. we're us. being doors success of for market

systemic channel Three is international, and of growth aspiration So where build performance adoption that fundamentally really, of the in of majority brand the and digital at xX a some EMEA, a we out see again Power come achieving plus degree have are to and growth that -- when But our we're to going in different on quadrupling business where the that's a of are competitive in that we across it. so new are China, markets. and North store their that that addition not the bulk in network at the that the the opportunity. Obviously, future. then other of our store in where nothing right that and APAC we look drive and in from preventing Mainland opportunity, the goal the early XX% is potential channel. the markets possibility of where America growth current growth and just I our But all in on support that and quadruple and be digital where penetration I of there the brands digital, reception our we as on our unaided we the driver markets hitting awareness, are stores, to of look where top XX% brand, penetration as penetration is of think is, our is XX% But and years ratio the and can

John Kernan

investments You've big It's we outstanding. Americas? think should business stores. in about omnichannel I some guess in the how the colocated made

we think of growing a in do square balance platform should tremendous scale. the America? North tremendous United in and scale, e-commerce e-commerce How going we Canada and footage stores think about States. there's guess DTC with forward with about still I how -- You're

Meghan Frank

Yes.

we e-comm we put our e-comm. of to in fine is a and across omnichannel agile our really on expected remaining slightly we and you shop versus haven't plan X-year wants the going As slightly shared current below. ahead store stores So a But to we CAGR, where is XX% it mentioned, grow point at and are as with capabilities both. look we've to in experience seamless guest us invested What

in term, longer the opportunity in remain we approach over more how slightly see So e-commerce the we'll but business. agile

Operator

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

Lululemon Athletica (LULU) 5 Jun 242025 Q1 Earnings call transcript