LULU - Earnings call transcript Q3 2025 | Lululemon Athletica Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc Third Quarter 2024 Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Howard Tubin, Vice President, Investor Relations for Lululemon. ahead. go Please

Howard Tubin

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

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

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

Actual the XX-Q. results have due we in these including on report SEC, Form our may and to differ implied statements those with contained including disclosed materially our quarterly annual in with from forward-looking reports XX-K associated on business or Form those our risks most our uncertainties and filings by recent

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

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

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

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

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

Calvin McDonald

as our results, Thanksgiving well for the quarter call, start with beginning in America be will fourth highlights Howard. holiday discuss business, today guidance Thanks, I'll I'll will I'll as our very Megan progress on the our outlook, exceeded today's strong. Next, and U.S. season and insights weekend. share where I'm to outlook taking questions. making here which some On I'll discuss your and expectations with we X our happy to speak Friday international business, to are we our then overall. momentum performance, financials quarter our X the Black quarter review North remains and and close by Then our product, from

started. let's get So

with the extended saw channels. business store pleased the e-commerce weekend our our are Thanksgiving and over We we across traffic and trends both

entire Black our the others through and fact, product Unlike we visits across forward we Shop not in app ever feature run leveraged full-price store. this e-commerce not to the increased do sale are to In We style. most had traffic over events and this on site. taking we our space, period to Friday, clear

price our including happy with guests how to of sales full We some driven both franchises, with are key responded Define. by the

holiday the be X season, still planning our in and weeks shorter thoughtful front season, us feel in we quarter of shopping about of to the continue good large we holiday start overall. we for have While the volume given

currency. increased margin X%. Adjusted by The accessories operating XX% both increased increased XX% revenue currency. Total increased Mainland and women's and merchandise and points XX%. at the constant Americas X% to increased X%. XX.X% grew XX% increased basis XX per increased category, share adjusted or world rest Now China region, or mens X% and earnings -- XX% looking The quarter X. currency, constant in constant or in By of X% in

$XXX repurchase program. million demonstrating recently shares. of a in authorization, we repurchased authorized our Board $X the have $X.X Including brings repurchase our quarter confidence billion available additional $X.X our increase billion which business, billion we addition, to continued stock, our us share to In X, the year-to-date. in In

now the Americas, the continued was increased basis. our I'll turn X, a revenue and Canada, with the on consistent expectations. X% in U.S., was X%. beginning performance quarter X both currency reported In revenue to region. details constant quarter in with line which by in In increased Positive performance our about our momentum flat, where revenue our with and

implementing laid with a our Last quarter X year. team, half of colors, penetration more into drive prints seasonal patterns chasing in improvement options of structure U.S. within XXXX plans These in plans our to quarter, product to new increasing within assortments out and I the our business. updated and the this by reporting newness guests our include provide second

reporting share expanded role at and me new in team, to Officer. the and When Director our Merchandising as looking we anticipated the to we our Chief Officer let Global are beginning her are seeing. Neuberger me and product of our reporting our Activation to with Creative Chief Nikki Product progress see efficiencies So Brand structure reporting benefits

success. progress teams life. Our how and of to leads faster drive to we brand leaders and our this how we I'm creating coordination regarding organization push merchandising proud and product and how better our forward which our bring teams more fully integrated, made are in quarter decision-making future have now innovation the meaningful to

track spring. positioned feel be are of with the quality the penetration XXXX. of are and I the and good on assortment, newness the to planned, with and quantity quarter X newness line our in When in believe levels looking seasonal have for historical increase expect efforts composition teams well at about we we of our to I

Finally, colors, assortment to you've within chasing key efforts These sure year. examples several seasonal franchises. prints and seen our the into have half been across of I'm been patterns. in improvement back contributed our in have newness teams the the and sequential agile have our

see significant in for We U.S. the to growth continue potential

in high, Our drive remains higher assortment. an more guest revenue and the we guest with retention see to opportunity per newness

program, we and strong. membership are our now members grow million to continue XX We

members-only partner continue launch we remains Our to variety awareness And early XX%, and our perks and resonating campaigns which open significant opportunity and well. for are brand a U.S. unaided in stores the new activations. optimize and provides of as benefits, growth at including low brand events access,

our I'm summary, well, back benefiting and far level our growth to as action with the In new return for our X progress addition, XXXX. levels performing in our efficiencies pleased seeing feel are and strategies our from of in historical from within leadership structure plans -- the quarter in XXXX. of we teams the to newness regions team confident rest are so with our I product The in

markets in on great acceptance see turning the continue increased our all our globe. I to and business. Lululemon as currency international to we saw remains -- Momentum constant across basis. -- we the XX% a of revenue brand XX% or international strong of Overall,

highlights. are Here some

live Healthy This release global activation In and XXXX helps executed positioning with technical local X, China to enable offering the brand the focused our quarter them Mental healthy by annual report. In around Day, our government's aligns bring movement product to initiative. active Mainland, activations lifestyle and made feel of China on well-being. allows our gas compelling Health World of and largest to yet fourth that well team well-being centered with and to us connect an authentically life our

by cities our events in in Shanghai. hosted activation X We anchored

guests our Bund. guests, X sweat including across billion increase into sessions intended in in new success In along we For to we hosted had is and and West the our Mainland, guests increase from XX,XXX we excited October, and with scale of sessions in impressions. team guests. example brand a activation, China the which and the total, X the remains which participate engagement this Mainland, brand bring loyalty week are existing generated early low I'm and but variety of for many $X.X activations experiences of awareness, with growing,

North on remain of more APAC established program. markets, the EMEA is Rest optimization have Now and segment, key World America In the in focus through our our expansion international and store stages the markets comprised of which significant in footprint our let's opportunity these locations. We success we expand the and of openings regions. leveraging growth to of new are of early

Australia, in the these improved through additional in increase in brand. tourists merchandising online visual an men's help and are enhanced strategy, we premium an guests for attract both shopping into seeing experience the meaningful stores from our and more as sales square footage and our business increase an and example, For benefits including guests, local

on growth markets. store in in Australia more the store in opened shows of XX strategy. our this and even region terrific this Mall is new a At XX,XXX be Melbourne is is to our Our Emporium it track within terms effectiveness that #X the the in ago, our in revenue. and our is illustration possible APAC We of established feet, largest store square than of store years first the more in

in the regions, -- North continue store our America, drive we as while Berlin currently In is with continuing increased in a product EMEA, productivity. I'm portfolio deliver outerwear key and guests sales the key of including we stores better of drive response size allows the men's, thrilled optimization we happy from both. and in we're to footwear as us plans, our us our This success to for markets seeing accessories, shopping also strategy and store categories, as where position improved are experience with we store Oslo strategy operate. across to support all performance are against we executing to and overall it and growth including our best-in-class the recently

addition to significant Lululemon globe. countries bring to we existing new opportunity maximizing In to the have markets, across

in under a and new plans Czech opening the for XXXX Belgium, Denmark, Our market company-operated Italy and franchise Turkey a Republic include model. as in

focusing men's, shift driven in the this product. continued X, In strength well, women's, We skirts bags and by guests and performance to success seasonal past in on Let saw accessories, when pace our we this the and while during our York in tennis a spring in short In tennis, built colors, me by and continue to franchises. styles. opened and U.S. play key leggings club lounge perform our minutes cross-body dropped collection breaker upon In Zeroed spend to now category, quarter on in franchises we quarter. in well few respond Gulf Lululemon another backpacks New and

collections where we guest our throughout the with intend And evolve performance these to from Based opportunity and X strategy recently, year. an the consistently Disney. we introduced one partnerships the Hockey play launched in our to newness approach grow Fanatics on of the to have and to activities seasonal a strong National into pleased been strategic we continue League see we response

to aware, university targeted are bookstores. product partners, strategic fitness select you where business As including sell we we sales have studios a and

iconic most our option celebrate premium to to a Fanatics know sports there is favorite the partnership which teams through bring their NHL campus our them opportunity strategy. We of upon fans, styles. builds to Our success and allows an

combines apparel edition Disney limited with and our into the brands. both taps product appreciation Our best-in-class collaboration for with technical Disney iconic have imagery guests

with As our I back assortment, have excited step product and at entire we planned. newness the look I'm

is key us as product athletic brand competitive a from us Our advantage technical product a positioning and for truly differentiates premium offering others. high-style, high-performance our

to the we financials, opportunity to it today, plan. on inherent Megan new our which continued results of the revenue CAGR X-year of strength in and is updated our discuss XXXX for with to ahead brand committed of from Before over Lululemon billion through schedule. for the revenue we our of guidance our this turn show xX we our of delivering quarter target say target remain XXXX, our guests. XX%, me growth revenue XXXX, highlights around I remain existing XXXX CAGR Three ahead Using and that solid and the let world The XX% $XX.X in Power

over to you. Megan, now

Meghan Frank

expectations. in line In Thanks, benefited both Top . our by international continued gross also margin. our stronger-than-expected regions Calvin. driven while was momentum revenue EPS EPS QX, strength in exceeded from and Canada,

over QX, macro Looking the X/X holiday start us remains in environment Thanksgiving with mentioned, pleased of as the dynamic. and and mind Calvin of also I season. we're that in the remains nearly quarter would the results keep the at of weekend front

to our QX the shortly. continue and prudently, plan we such, guidance share I'll business As detailed

the franchise. had and immaterial on The closed -- financials. me our transaction of mention closed and also Let XX we on our on September Mexico purchase that QX impact an

growth related to additive. However, will count see stores or square store These they're footage an hence of guidance the you XX in for were not opening in plans year, included increase stores new Mexico. store our our company-operated

the share performance. QX now of me our Let details

currency billion $X.X sales total comparable or increasing sales increasing QX, increased Americas XX% a revenue World constant For and XX% in XX% and to regions, rose Within X%. or comparable our XX%. X% XX% XX% comparable increased of with the Rest sales currency were X% net segment, our results revenue by currency constant grew as Mainland China in X%. sales in or dollar constant -- follows: X% decline comparable revenue with and of constant increased with revenue by in

increased driven during XX XX by In globally. net our -- with the ended XXXX. Square new store QX channel, stores increased XX% XX% the and footage last total year, stores quarter, sales XX quarter XXX we net the -- Lululemon and new and versus opened We completed addition since of we stores optimizations. of

X% last In of addition, accessories new revenue. And total $XXX footage as stores in versus and line mentioned, our revenue stores category, the women's digital in while by increased XX% XX million are we both XX growth and In contributed which I X%. men's metrics. increased increased Mexico, net year, of square channel, and or X% added $X.XX top revenue included

third provision net gross margin XX of QX XXXX. our net Markdowns adjusted were impact the $X.X points and ahead year XX product basis in A of was by offset profit increase basis by the basis of driven year-over-year. points, fixed XX.X% point XX increased and compared rate in costs. versus from by and following: billion gross expense margin, freight foreign The adjusted costs was Gross primarily for IMU flat favorable or higher basis of to last lower XX exchange. XX.X% quarter favorable of driven QX revenue profit guidance inventory in deleverage on points

real a the decline was to related expenses of operating of better gross costs margin, store driven fixed by expenses guidance, which upside margin XX points, predominantly Relative timing to IMU, basis management our XX within gross estate the prudent lower for was DC in and projects. to of certain

SG&A. to Moving

to revenue were to prudently our and XX% continues in managing expenses long-term to while for million or be of our of approximately opportunities. approximately approach Our guidance XX.X% points than of foreign SG&A exchange. growth strategically the $XXX of also from last XX compared net our SG&A expenses year. invest net revenue negative to to of leverage due points period granted continuing basis XX same worse slightly was basis XX impact

operating XXXX. Operating quarter XX.X% rate adjusted or an adjusted for revenue compared compared XX.X% was of effective to income approximately margin million net was ago. to QX million XX.X% expense or of XX.X% the the tax a of for Tax of earnings $XXX $XXX quarter in pretax year

or share $XXX of for were $X.XX for the Net EPS year. compared the quarter third quarter $X.XX the in to last diluted income of quarter approximately to adjusted was Capital million for per the third $XXX XXXX. expenditures quarter million million approximately compared $XXX

QX support renovations center spend relocations distribution store our capital locations, investments technology new in business relates and and multiyear including primarily for investments. growth to project,

we've X.XX increase price approximately and of repurchased stock. highlights. Turning Inventory We repurchased our billion ended the Year-to-date, We with equivalents. in lower million shares X%, increased billion $XXX. cash sheet an to quarter cash for in than guidance an balance average $X.X of at the our QX mid-teens. in $X.X

we repurchases recent program, to preferred in on increase have return and our method $X including billion approximately shareholders, currently our repurchase the remain billion remaining $X.X Share cash to authorization.

guidance share the our Let of year. remainder me for the detailed now outlook

revenue expect the This with to relative As we I at holiday of an million. of X% Starting and growth season, to are Thanksgiving mentioned, we prudently. days we but environment, start billion represents range to between $XX.XXX macro $XX.XXX shopping to with performance Christmas be continue business uncertain full our XXXX, the given and XXXX. now the the fewer pleased of year plan in range

I'd incremental expect million we $XX We Excluding now in grow we have related to of foreign impact rates. -- exchange revenue fluctuations the revenue that recent to an range fourth note also that includes our negative X%. the in XXrd week quarter,

XX We expect to and approximately company-operated open excluding XXXX, complete net Mexico, optimizations. approximately new stores in colocated XX

footage square double low overall footage expect in including we we teens. the in Mexico, grow Mexico, expect digits low the Excluding square to growth and

stores our in with in will XXXX stores Mainland. in our approximately include QX China in X primarily Americas, store international of of openings markets, openings the Mexico rest inclusive in in new XX Our company-operated the planned

XX margin gross we XXXX. year, increase gross points our in now For expect XX the basis adjusted to full margin versus approximately to

relatively We be markdowns to expect flat continue to year. last with

for year. SG&A to the Turning full

be to points it versus XX XX expect XXXX. We to basis higher

investment managing growth prudently expansion invest continued Power technology and our and and awareness to aims continuing road investments into expenses new including analytics xX in data our of while map are investments and our our in We brand international infrastructure support building strategically increasing Three and acquiring marketing to market capabilities. at guests,

XX XXXX, to adjusted basis full to operating continue versus in versus When we points the XXXX, decrease looking expanded points at for operating XX basis a margin XXX expect XXXX. of year which margin

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

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

Our share EPS impact year-to-date. repurchases of include future any our of guidance excludes the does repurchases the impact but

looking expect inventory mid-teens to increase inventory, When dollar in we QX. the in continue at to

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

Shifting now QX. to

expect XXrd to previously representing I've foreign X% $XX billion, in incremental growth X% million week. to includes billion the the excluding $X.XX XX% range exchange $X.XXX from of We the revenue This to mentioned. or impact negative of range X%,

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

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

approximately higher basis to product basis XX expect freight margin XX points increase points, XX of of to inclusive We costs.

be QX XXXX. slightly markdowns versus expect to to improved continue We

including to SG&A we and foundational growth. build When looking XXX deleverage to XXX by QX, our rate relative will investments, this awareness predominantly QX and to operating driven margin basis we -- expect XX deleverage basis at We increased to depreciation approximately in of be We strategic those points XXXX. also points. brand investments to by expect QX, related for support future to XXX --

EPS. to Turning

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

We expect XX.X%. be approximately our tax QX in to effective rate

And with Calvin. it to that, I turn over will back

Calvin McDonald

Megan. Thanks,

continues the results, to America. markets, with start As you can North holiday in season are see to our international business the from across our deliver and pleased our we

Looking we the work organization brand pipeline about expect us, in the as across opportunities of awareness excited and term, ahead, create and the from to in are strategically underway guests us globally, long front significant. product our we of newness our to both and continue expand that build are near the

As be the retail. Megan the forward questions our of one our want to I all results why the enduring to taking teams these into look and Operator? we is of now. for year, you made who weeks growth to Lululemon final impressed I head of world the and resilience agility possible. I joining continue by who demonstrate thank teams your the Thank us. stories within around

Operator

Instructions]. [Operator

Alex Our first is question from with Morgan Stanley. Straton

Alexandra Straton

looks just U.S. on quarter-over-quarter I Congrats sales. quarter. It on they wanted on stabilized a like a great Perfect. focus to basis.

view growth curious, business? rate just the longer-term this should that I'm bottom as for a you improve it of from that kind thoughts here? And on maybe do And geography? of So

Calvin McDonald

Thanks, Alex.

what was newness regular Thanksgiving as weekend. our is you on was holiday and X, sequentially In off mentioned, quarter expected with QX, of start, the equally stronger. over to price the performance our expectations. had as good our we're our our plan terms newness happy performance on mentioned, we getting a And In in

number when I'm guests, to and continue quarter guests, hit to response that on look absolute with see we're newness X. historical by the And to happy number. I our good growth plan our at We from

very past related Our strong, guest remains opportunity retention I've with the remains, as to per our in to the guests and newness. spoken revenue

in what we and view of it's within guidance product know and team the see growth in terms nothing that our and that's of focused at has on. And our still North and category opportunities expansion, I decisions, when of focused is our on market Power Three our the And America, look U.S. growth awareness brand changed. control xX numbers and the of

Operator

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

Lorraine Maikis

versus quarter? can on Meghan, mid-teens much and moving How chasing the pattern? you the for 'XX? you color the the half about how planning seasonal holding of growth in inventory fourth first inventory And the talk is this are reasons for slower core of

Meghan Frank

Thanks, Lorraine.

We And to we in in say, at end growth inventory. expecting So the QX term, to actually with our rate. to QX manage over in We're sales hasn't the mid-teens would at X% came mid-teens plus the . I view QX. line of aim on inventory end our for changed. the longer we guided growth.

into We newness. are chasing seasonal

the move goal the say, the year end definitely year. So would and rate reflecting business first U.S. our the of for us is I into impacting, the as growth our to of up at we specifically next set of half

in you As actually. bit if little much turns, pretty with look -- inventory they're at slower history history than our you line a

positioned as as well. well move into 'XX So QX then and into we feel we

Operator

The with Wells from Ike is next Boruchow Fargo. question

Irwin Boruchow

Let of not me the the building. tone Calvin, going sounds congrats. trajectory better. to are negative, and comps piggyback sounds ideal, confidence question, confidence in your is It what's on maybe on just Alex's like your obviously just but still which region on is my the add

the the So whatever spring. is negative that some maybe should comp you fact, just that be it why will, inflect KPIs of understand of come can us you we unpack help next at kind or can confident in trend look maybe exactly

Calvin McDonald

It below newness the Ike. mix have and rooted of newness in historical overall that we is percentage our I'll few shared. brand our that, who of the to engaged to the that a with well guest very teams are as reacting And very a data point know our is Thanks, that Okay. points is still key confidence I delivering. remain levels. -- a are and loyal very assortment the

we're QX get historical doing, the historical the those mix a the guest and that as still where for has levels. and quite of the that much quantity us been that of responding through heading in is back our a that's he into we work pattern. quality see to it. the hit we seeing is the core when And engaged very newness year newness, is seeing frankly, assortment she the of and So through their next at and we're XXXX team have brand waiting I and, to confidence spending levels, that well

strong. we're recently acquired to but to Our growth younger been guests. her that pleased central over us members it. is now And continuing much in guests and core XX see who's of membership newness very team guest collection. plan overall on for We with can to so program, our has I'm the add our have then that Lululemon million it's the very good matriculation focused waiting responding, to our she bring per continue

our heading gives with I structure, feel team confidence. made truly the good believe new and addressing 'XX. the it's with me and are the product, and talent what it what with the see That's into I we decisions the new talent,

Operator

The next question is with BTIG. Janine from Stichter

Janine Hoffman Stichter

bit to I on progress. ask It little more the business. women's about Maybe a on bit what's up nicely Congrats QX. a wanted picked going on there? more from the

think And that out first as in is you heard positive while. callout we've a the a leggings, then I called time which

into going lagging for love more expect just would we with year? business QX what's can what around and on So some color next the

Calvin McDonald

Thanks, Janine.

growth see business, international our all business. globally, women's really our And balanced well, men's growth as we and performing our is very markets, globally of accessories across as all continue in I'll is to as in Our leggings bottoms our globally. business the including categories, start well our

that we good In when look North the at where bottom historical color, responds When in very print and America, we business, has in the and U.S., pattern, we missed strong saw growth. we well. newness, we very and responded the she business levels Canada, to how again, because the newness particularly opportunity. see the at through saw newness growth women's It's business, look legging of she

category. the did both men's U.S. well And we the activewear premium share as in globally gain and in in as women's

are she responding newness, focused that what So we know well the But those to bring. that's continue seeing across team that is on and categories. growth we to to is

he when our newness as is just percentage bring newness, that lot a is the core of unproven unseen, silhouette and that that's and prints of not overall items adding trims bringing that newness the lower colors our core of to and business But been it and good colors of she historical what drives and other we want we a remind it I which And than do newness. we've different our to and driving. the and loves. on always our hero talk to guest on and a levels, those top the that in through at franchises, been and driver in in are ways franchises. focused colors assortment. team We responds what have But It's is

Operator

Next question is from Michael Binetti with Evercore.

Michael Binetti

drivers provisions. third Could The of lower quarter? model. a like X in quarter fourth could margin the inventory -- remind the us just key how the you gross one the of in that be looks on quick Just it influential was

margin, a margin. stepping bit the little just And then gross back on maybe product under more. what's Maybe unpacking the bit surface a little the on

said the on -- in that the bigger guidance you is there, I'm product fixed pieces the think cost Is Megan, was the with side. the how base curious fixed cost upside good was I of big North to the sustainable and that high of Or -- quarter America that let was to a one be Is is something the the market. that there market? you that's that remain in negative for as while third fourth that that in comps lever comps biggest quarter? in negative something your unique controllable control

Meghan Frank

Great. Thanks, Michael.

a for also some comparison released we provisions. bit last product drove through provision did QX. offset our that's the we quarter to mentioned. then basis on favorable decrease a basis sold we costs, XX and little deleverage when some XX growth we of from benefit points in in provided fixed offset to of year-over-year product of QX we last points flat. margin year. was to in store look specifically QX, to and basis If costs expecting by XX We're not fixed by freight to points we've the points lower lower little bit expecting at points favorability basis movement some deleverage provisions, so down a higher inventory in guided in on markdowns revenue as on inventory fixed We're some on margin, provisions, IMU, of of trend. a big move at FX, it of a on was little was slightly And year from were benefit terms have see XX are look bit in costs a DC, In partially and inventory XX partially marked what deleverage and higher the with -- XX under . We that, higher margin about XX on a you and We lapping when saw we then specifically FX. basis

Operator

with from Cowen. Kernan is question John TD Next

John Kernan

were from was on the Congrats solid there the planning China just We're half quarter. China line the you're in year. over in margin over line on I was a in perspective? and the how you're year, all most with a talk us or top both of in what to ground Can you seeing back I think the of you out for contribution wondering margin back the half of first with in America. China October. segment

Meghan Frank

Thanks, John. Yes.

to performance. So continue we've be China our with been really and pleased pleased

QX, from a a are is margin Mainland operating XX% positive China And healthy our QX. a XX% a we impact with saw exceeding in seeing line on bottom degree. our we really expansion perspective, revenue constant currency So to in growth expectations basis

to long-term I regions the there before, we optimize I've focused over think March point see opportunity we'll longer certainly but I finer on where see a region we're a really get term. as then And looking right put out and margin, our not how it's on think now driving playing as we trend, mentioned XXXX. operating the into

to guidance then specific to into quarter. continue rate be China And would pleased do we the above move growth And XX% region, offering we again expect trends I not by in share we're QX. that China with be we our as

John Kernan

in those openings confident the talk like maybe there more you And confidence some quick follow-up and the to The store of in Maybe Got Rest you're sounds markets. making a World. new it. on just of have you're markets. investments It the in some

Calvin McDonald

Turkey as On an be our then Belgium, in will franchise model model, of And franchise have plan the Republic Italy. it the in success globally. partnerships. be of own every our markets mentioned, in year, through we'll momentum brand market the And on we're for really opening with next and market and Yes. some in is -- Denmark, Czech confidence we I the which

power, but interest monitor terms to within expand. the that opportunities And We into. obviously, look look in we for continue and play also spending for to we activities readiness of, markets

share, we're a continue on have that markets want and definitely seeing. are to our to for add portfolio momentum we've these nice in that readiness terms market drive we sort -- So seen readiness in progression that business build and our these to our and and and markets But those. And we're want markets. sweat in, awareness of we're and both in continue of we fuel know early the to in international to brand

ourselves representing international As you know, mix and business in it's overall performing pulled growth pushing We're and and low of 'XX we're our of drive just much well see still to percentage the overall incredibly in excited into market. into, is that the it to grow every to momentum company. revenue, it, and that markets a versus of getting percentage continuing coming And spoken these greater of beyond. we see I've our it about are revenue a market addition

Operator

JPMorgan. question with The next is Boss Matthew from

Matthew Boss

traffic the maybe elaborate also And acquisition of you maybe progressed customer as quarter holiday new North cadence the could and third to in just Calvin, holiday? into the to start speak So on internationally. and America

Meghan Frank

for traffic QX. quarter, than But Matt. throughout remains globally traffic. in stores pleased the expectations were I'd monthly actually We slightly both and the year, but of e-com of with there, did don't say in And line the terms disclose were last overall, trends with we overall channel traffic across specifically, come our U.S. terms U.S. In positive lower channels. our in

and mentioned remains the holiday retention continues for with earlier, as we've guest strong. card. guests been to pleased as And as be revenue The well in opportunity conversion Calvin

Calvin McDonald

just And you that just Yes. a America. base, XX And shared since North that is add. membership calls million few know I'll the number. I'll membership I been it's remind we

some guest retention. terms studio partners that in of engagement added our excited a of players. really we're using third-party membership We've number and and driver as of that So initiative it to recently perks

still retention us, growth excited shortened quarter good that the mix of a pleased engagement, very So been this and start, additional period, loyalty to North we're for with pleased guest factor. the and with to we're It's and But build an between ahead, about pleased early. out There's general America year, in and regular pleased we're the U.S. and but holiday internationally continuing being we're the drive lot with on a holiday or price. in markdowns the has that. and start. with internationally, And obviously,

results we end but always price Markdowns our really pleased you business with of regular drive means use the know, season. through we'll and period. arguably we through as a and a out and promotional newness clear innovation. drive As to

brand build think newness I and continue the a how start product. shows around and it holiday. pleased resonating and guests the that's our brand way the we're resonates And unique just to premium we the resonates, the the to with way world, differentiated allow with our

Matthew Boss

relative And a to confidence margin your what's your scenarios? is expansion expense just way in of Meghan, about Or operating annual different target areas there multiyear? think flexibility Great. to revenue modest then,

Meghan Frank

X-year dependent. and operating come inflection our put horizon. the back mean on revenue the And for modest on into and obviously Yes. March still in driving and I is in share energized to target team more 'XX. really We'll remain over is we're the point would deep We time focused I planning committed certainly say fine a early Too 'XX. that. to margin

despite revenues think year. year managed line expected. bit of last pleased and our expenses pretty this And we We've than quite being of I in done we're lower and -- a management much with results operating margin with

with ending Yes. we're up. where pleased So

Operator

is from question Lejuez with Paul Research. Citi Next

Paul Lejuez

stores store talk was other your about mentioned dynamic -- I e-commerce still e-com regions? the Can think in U.S. in you key you were lower. that positive.

And you then XQ? second, what out can and you there also talk about expect the competitive landscape, what the you saw for promotions in third quarter during terms of

Meghan Frank

Yes.

of terms my rest in that So was e-common overall, in I say to positive color. specific trends, of U.S., the stores. in of world both the traffic traffic, terms would

Calvin McDonald

. From more and are of terms year. we think in And pockets it's certain intense overall intense. promotional others a don't the intensity, are I -- and more Paul. than a There's less. promotional very where retailers brands the throughout know I any more think the Yes, perspective, overall year-over-year promotional period, it's where market is

they've in of coming chosen play business that. it momentum obviously I depends to their in on think how the

results look off a athletic we've play only But when markdown product. guest the this and holiday others the the way within I the space, unlike at to premium our space responds reg continued the see to to kick non-promotional pleased business price to and

Paul Lejuez

stores, can explain the . major in what on outperforming just your Meghan, you're just e-commerce regions? you

Meghan Frank

in and We haven't by terms broken traffic down e-comm the specific of stores. regions

Operator

The William Zackfia next question . is Sharon with from Blair.

Sharon Zackfia

I I'm paradigm peers dynamic. election next the you're positioned thinking the than in you're if think And or curious, it a worse relates guess any tariff your you potential U.S., how as given about better the on to year? impact

Meghan Frank

Sharon. Thanks,

approximately in I say it's So we will exposure fruition. approximately -- we've goods of obviously China. what very have from we China, to early been share, sourced closely But can and X% to monitoring come limited

relatively So exposure is there small.

than Our we of percentage, Canada. sourcing from Mexico half less is and source from don't anything

there a exposure small well. also So very as

those obviously, into our [indiscernible] from were would would done countries imports tariffs the more under are probably some obviously competitive the have on a I So expect if that of significant then U.S. costs. landscape. And impact all

and monitoring, that at well. we'll P&L closely are manage to opportunities our as look across through We

Operator

question Brian . is with Next from Nagel Oppenheimer.

Brian Nagel

newness, congratulations look as question I going like to it's 'XX. on We're a you to a add quarter. particularly know repetitive, talking The early towards apologize. I be too little my have, a I I nice bit so about lot

to with the going newness -- better you a is I be like how is as particularly the mean think product, than early just there quantify I maybe So dynamic. you've going in look what to quantify way historically? about is to had what domestically, mean So 'XX. different this product

sales where then introduced And versus already, say, a been you quantify those have much the could along same better there new products you have how baseline? lines, sort

Calvin McDonald

of Thanks, that don't in Brian. indicated the had we number, terms We I look views but the internal share at. absolute

sprinkle our So to introduced a that overall to that merchandising unpredictable. print. could items name the plan on season to when I that hero combination It in we reference we've carry Or forward. colors, in sort be be a Jersey In, Soft could core a of percentage provide few. items different Good that examples different new just mix, patterns it Zeroed we just of be newness, with as franchises, that could of

and And some learn for of be test can seasons. future those

newness well core. pattern The print extensions franchises bulk as still of is as of items hero in new innovative color that or

look that building So we're -- when do continue reasons from consumer a to the them to our is and something we that's to is management giving purchase. at ways, it items other because why able through but silhouettes, upon markdown the this knows,

QX below through levels. historical and of been of much our of percentage come at We year, as a historical sequentially stronger getting numbers it's those year. this those mix have be next we'll back

would what the the previous historically in you, assortment will sharing 'XX what when because I I say, not mix with would years a that's as more to see a the if feel the 'XX, I'm store, I come to number say working Although is ratio. into it's team of

breadth and color Obviously, those. of mentioned, I as across

and just quarter and is of out newness across season. of described you but to and versus color other look the our that think our in So, what should into of newer the truly color, how those that in for you expect are internally, store store the back we I historical mixture see. also that's you today into items When think the I've parameters at that to go go when we

Brian Nagel

happen That's you're next of just early How Because shift newness is but bigger now? the now. then to you you've think just you that that had And said, very like what performing? I product going helpful, clearly, product year, new Calvin. mentioned seeing is have some

Calvin McDonald

across and our I the Waffle-Knit where the and bring mentioned, our with and pleased franchise, we Yes. good the defined guest detailing that Restless collection, But we footwear below levels. the items or as on newness aligned look some long the response Tight and Fast as if Rulu sleeve historical Running to seeing the styles we is that silhouettes, jackets talks holiday and into today performance our collection in our the bring we very & China examples that a in Satin the are you as well jogger our Free still were is and go that or and put in well. well No, the Swiftly, of most our guest the Short Wonder tops Shine very in. Velvet on and line responding It to to in, as the online franchises building are stores

time. our And the on a So of those Thanksgiving our for And similar -- and on lots pleased very responding weekend, with is are period women's growth we're saw newness very our I we heavily as then to and well of and it. in mentioned guest men's, business. the there we regular the promoted have is business

addressing in the year, structure, which I chasing all the you with talent initiatives opportunity, has the we've and be in response, of in responded and the and focus guest QX. newness. we've had, team. been throughout historical, this where good has terms still changes below the still shared always So the that below we'll been of level But It's been to the

in women's seeing the focused and control confident team we But to on inflection U.S. our to drive QX in that's as well is I'm what where I the in the in what what business confident get metrics the as as in

Howard Tubin

we'll question. Operator, take X more

Operator

is Roach question Goldman from Brook last Sachs. with The

Brooke Roach

about Kevin, can that forward of percent spend look sales thinking brand investment marketing this as you and we on increased marketing your a learnings as expand you year? How be awareness? to to should going in speak the advertising

strategies as targeted talk related the follow-up, a customers that wondering to you in reengage can lapsed U.S. of the implementing perhaps if then you're the to results And

Meghan Frank

marketing Brook, I'll just take the quickly. spend

of long a the navigated with in X.X% as to given our really we're top this we into because closer expect campaigns intact do pressure there. sales. we tick focused we will line just X% So to term the have line X.X% marketing -- we've given been managing essentially held on have marketing, driving little bit year, up

And then I'll have Calvin add some here. color

Calvin McDonald

Yes.

driven the the is markets, lot that the initiatives is we In in all that it brand across a and of overall deploy terms and that including in incremental grown and levers America, to of into really and our more community relationships mid there have new this pool in keep acquire North events it's and local the level look as guests. with ambassador initiatives top-of-funnel but acquiring we at investments

on a well acquisition, unaided most all We now continue why and our as against to use and ROAs with our markets that's new not pleased, the movement we've we pleased spends, top but in the all as measurement of and as awareness, those lean in in with guest funnel, is which and XX% we're of brand U.S. we're percent. just seen

So we've continued to move that needle in way. a meaningful

with to of top leading and So hook. acquiring, initiatives and funnel of those learn playing ultimate product is leading across that with and test to with at continue initiatives, play keep sort our we're community, to going knowing relationship

with always in campaigns So product these message. a leading

levels when our lapsed initiatives. the is is teams an What get always continue or QX a about direct of I'm terms opportunity excited those guests, in would growth to historical In tell I back bring on to lapsed variety not newness and working you are we of our incremental where guests.

our bed strong have loyal high guest bring We because is The high her. had retention. revenue we've very per gas, to in opportunity to newness less

encouraged Play, way and into are historical brand. is bit and opportunity. the way performance not tennis had, our historical newness a yoga, we newness her we that the the that respond and to what knowing trying we across bring in of back have quite Because by we're to that she get this train, the the of So to we to the level. to engage She's to that continue she the activities having remained, guests year more ability has with newness having and doing when have more continued run leveraging to back to newness team's have her I'm and has, at the bring spend

be feel planning the to is that what we'll is able about and excited So team where I do.

Operator

of for That's your for call, all and you the day. rest Thank the time today. the we joining enjoy questions have

Lululemon Athletica (LULU) 5 Dec 242025 Q3 Earnings call transcript