9b14ea0d2e8abf24cf892ccd0d329e75f9ff0aab6d86b95c466697dc8c361411

| Metric [Unit: $ Thousand] | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Company-operated stores** | 958,100  **[0001397187-23-000027_lulu-20230430.htm:22]**  | 1,096,939  **[0001397187-23-000044_lulu-20230730.htm:17]**  | 1,073,973  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-23-000052_lulu-20231029.htm:24]**  | N/A | N/A | N/A | N/A | N/A |
| **Direct to consumer** | 834,900  **[0001397187-23-000027_lulu-20230430.htm:22]**  | 893,673  **[0001397187-23-000044_lulu-20230730.htm:17]**  | 908,127  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-23-000052_lulu-20231029.htm:24]**  | N/A | N/A | N/A | N/A | N/A |
| **Other** | 207,800  **[0001397187-23-000027_lulu-20230430.htm:22]**  | 218,553  **[0001397187-23-000044_lulu-20230730.htm:17]**  | 222,118  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-23-000052_lulu-20231029.htm:24]**  | N/A | N/A | N/A | N/A | N/A |
| **Women's product** | 1,308,800  **[LULU_3391913_5]**  | 1,396,327  **[0001397187-23-000044_lulu-20230730.htm:17]**  | 1,433,927  **[0001397187-23-000052_lulu-20231029.htm:17]**  | N/A | 1,435,241  **[0001397187-24-000024_lulu-20240428.htm:16]**  | N/A | N/A | N/A |
| **Men's product** | 438,200  **[LULU_3391913_5]**  | 530,723  **[0001397187-23-000044_lulu-20230730.htm:17]**  | 504,828  **[0001397187-23-000052_lulu-20231029.htm:17]**  | N/A | 505,698  **[0001397187-24-000024_lulu-20240428.htm:16]**  | N/A | N/A | N/A |
| **Other categories** | 253,800  **[LULU_3391913_5]**  | 282,115  **[0001397187-23-000044_lulu-20230730.htm:17]**  | 265,463  **[0001397187-23-000052_lulu-20231029.htm:17]**  | N/A | 267,952  **[0001397187-24-000024_lulu-20240428.htm:16]**  | N/A | N/A | N/A |

fb719b4c3fcc7c6f346f9cae007ad301d07e1d909bdbf35b88a694b99dcc03cb

Products Manufactured by Top Vendors (%)

Fabrics Produced by Top Suppliers (%)

26837312313b6aacd26ba8b8aeb01ddf2d8d8e9c5c5e2b15f208f5aecadb762a

Adjustments for Non-Cash Items [USD]

Stock-Based Compensation [USD]

Changes in Working Capital [USD]

Capital Expenditures (CapEx) [USD]

Proceeds from / Repayments of Debt [USD]

Share Repurchases [USD]

Dividend Payments [USD]

Net Change in Cash [USD]

a8a8c779afe388e50645803dfe0256340620117a0f04eb002aa44c3283beb54f

25e8e650d7006ed96831db5f0cb5686d87de5f9bbaa6973b1ddf5708294ea13a

| Metric / Quarter                                      | Q3 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 |
|-------------------------------------------------------|---------|---------|---------|---------|---------|---------|---------|
| Products Manufactured by Top Vendors (%)              | **57%** **[0001397187-22-000049_lulu-20221030.htm:56]** | **56%** **[0001397187-23-000027_lulu-20230430.htm:44]** | **56%** **[0001397187-23-000044_lulu-20230730.htm:52]** | **56%** **[0001397187-23-000052_lulu-20231029.htm:58]** | **55%** **[0001397187-24-000010_lulu-20240128.htm:21]** | **55%** **[0001397187-24-000024_lulu-20240428.htm:43]** | **55%** **[0001397187-24-000034_lulu-20240728.htm:50]** |
| Fabrics Produced by Top Suppliers (%)                 | **56%** **[0001397187-22-000049_lulu-20221030.htm:56]** | **56%** **[0001397187-23-000027_lulu-20230430.htm:44]** | **56%** **[0001397187-23-000044_lulu-20230730.htm:52]** | **56%** **[0001397187-23-000052_lulu-20231029.htm:58]** | N/A     | **52%** **[0001397187-24-000024_lulu-20240428.htm:43]** | **52%** **[0001397187-24-000034_lulu-20240728.htm:50]** |

eb36008407a174d0325b2fd823a5bac4a4e7f89f62446c874d47011d50ff2cc3

Lululemon Athletica Inc. is a company engaged in the design, distribution, and retail of technical athletic apparel, footwear, and accessories. They sell performance apparel such as pants, shorts, tops, and jackets designed for activities like yoga, running, and training, as well as fitness-inspired accessories **[0001397187-24-000010_lulu-20240128.htm:5]** **[0001397187-24-000024_lulu-20240428.htm:21]**. The company markets these products under the lululemon brand and employs a vertical retail approach to gather customer feedback and incorporate it into product design, differentiating them from competitors **[0001397187-24-000010_lulu-20240128.htm:5]**. Lululemon operates through various channels, including company-operated stores, e-commerce, outlets, and wholesale arrangements, with a significant portion of its revenue generated from physical retail locations **[0001397187-24-000024_lulu-20240428.htm:5]** **[0001397187-24-000024_lulu-20240428.htm:37]**.

1. **Women's Product Range** - Offers a wide variety of performance apparel tailored for women, including yoga pants, running shorts, and training tops.
2. **Men's Product Range** - Provides performance apparel for men, featuring items like athletic shorts, tops, and jackets designed for various physical activities.
3. **Other Product Categories** - Includes fitness-inspired accessories and footwear, expanding the brand's offerings beyond apparel.

7cdc790a7c15cda08ae0040281b8d531839822e1ca5e454721da34827899c76c

1. Given that U.S. revenue was flat in Q3, consistent with Q2, what specific strategies are you implementing to drive growth in the U.S. market, and when do you anticipate seeing meaningful improvements?
2. With inventory expected to grow in the mid-teens percentage in Q4, how are you managing the risk of elevated inventory levels impacting margins, especially considering the dynamic macro environment?
3. Can you elaborate on the efficiencies and benefits you're seeing from the new reporting structure within your product team, and how it's contributing to the increase in seasonal newness by Q1 2025?
4. Your unaided brand awareness in the U.S. remains low at 36%; what key initiatives are you pursuing to improve brand recognition, and how do you expect this to influence your revenue per guest?
5. As you increase your marketing spend closer to 5.5% of sales, how are you evaluating the return on investment from these initiatives, particularly in re-engaging lapsed customers in the U.S.?

03fb5e4972f7db9c1b22a3131510d17d8cd1c8555de53ed6d09585b228bd9adf

Women's Product

Men's Product

Other Categories

Company-operated Stores

Direct to Consumer

Other

E-commerce

Other Channels

Total Revenue

724d63104a20771158c8541c9a2790253a43c471df522c68c386d6bba205ff66

**Quarterly guidance for Q4 2024:**
- **Revenue**: $3.475B to $3.51B  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)  
- **Gross Margin**: Decrease by 20 to 30 basis points  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)  
- **SG&A**: Deleverage by 90 to 100 basis points  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)  
- **Operating Margin**: Deleverage by 110 to 130 basis points  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)  
- **EPS**: $5.56 to $5.64  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)  
- **Effective Tax Rate**: ~29.5%  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)  
- **Store Openings**: 18 net new stores  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Revenue**: $10.452B to $10.487B  **[LULU_3410966_6]** **[LULU_3410966_7]**  (raised from $10.375B to $10.475B  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **Gross Margin**: Increase by 10 to 20 basis points  **[LULU_3410966_6]** **[LULU_3410966_7]**  (raised from ~20 basis points below 2023  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **SG&A**: Increase by 20 to 30 basis points  **[LULU_3410966_6]** **[LULU_3410966_7]**  (raised from ~flat vs 2023  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **Operating Margin**: Decrease by 10 to 20 basis points  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no change from prior guidance  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **Effective Tax Rate**: ~30%  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no change from prior guidance  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **EPS**: $14.08 to $14.16  **[LULU_3410966_6]** **[LULU_3410966_7]**  (raised from $13.95 to $14.15  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **Capital Expenditures**: $670M to $690M  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no change from prior guidance  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **Store Openings**: ~40 net new stores  **[LULU_3410966_6]** **[LULU_3410966_7]**  (raised from 35 to 40 net new stores  **[LULU_3400217_6]** **[LULU_3400217_7]** )  
- **Inventory**: Increase in the mid-teens in Q4  **[LULU_3410966_6]** **[LULU_3410966_7]**  (no prior guidance)

f5191d6f9000533ff8573c3d4763969bda2cace4c093b03ad3b5e344512a8e79

### Q3 2025 Earnings Call
- **Issued Period**: Q3 2025
- **Guided Period**: Q4 2025 and FY 2024
- **Guidance**:
  - **Full Year 2024 Guidance**:
    - **Revenue**: $10.452 billion to $10.487 billion, growth of 9% relative to 2023.
    - **Gross Margin**: Increase by 10 to 20 basis points.
    - **SG&A**: Increase by 20 to 30 basis points.
    - **Operating Margin**: Decrease by 10 to 20 basis points.
    - **Effective Tax Rate**: Approximately 30%.
    - **Diluted EPS**: $14.08 to $14.16.
    - **Capital Expenditures**: $670 million to $690 million.
    - **Inventory**: Increase in the mid-teens in Q4.
    - **Store Openings**: Approximately 40 net new stores.
  - **Q4 2024 Guidance**:
    - **Revenue**: $3.475 billion to $3.51 billion, growth of 8% to 10%.
    - **Gross Margin**: Decrease by 20 to 30 basis points.
    - **SG&A**: Deleverage by 90 to 100 basis points.
    - **Operating Margin**: Deleverage by 110 to 130 basis points.
    - **EPS**: $5.56 to $5.64.
    - **Effective Tax Rate**: Approximately 29.5%.
    - **Store Openings**: 18 net new stores, including 2 in Mexico  **[LULU_3410966_6]** **[LULU_3410966_7]** .

### Q2 2025 Earnings Call
- **Issued Period**: Q2 2025
- **Guided Period**: Q3 2024 and FY 2024
- **Guidance**:
  - **Revenue**: $10.375 billion to $10.475 billion, growth of 8% to 9%.
  - **Store Openings**: 35 to 40 net new stores.
  - **Gross Margin**: Approximately 20 basis points below 2023.
  - **SG&A**: Approximately flat versus 2023.
  - **Operating Margin**: Decrease by 10 to 20 basis points.
  - **Effective Tax Rate**: Approximately 30%.
  - **EPS**: $13.95 to $14.15.
  - **Inventory**: Increase in the mid-teens in Q3.
  - **Capital Expenditures**: $670 million to $690 million  **[LULU_3400217_6]** **[LULU_3400217_7]** .

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2024
- **Guidance**:
  - **Diluted EPS**: $14.27 to $14.47.
  - **Revenue**: $10.7 billion to $10.8 billion, growth of 11% to 12%.
  - **Gross Margin**: Flat with 2023.
  - **SG&A Rate**: Leverage by 10 basis points.
  - **Operating Margin**: Increase by 10 basis points.
  - **Effective Tax Rate**: Approximately 30%.
  - **Capital Expenditures**: $670 million to $690 million.
  - **Inventory**: Decline in mid-teens in Q2, increase in second half.
  - **Store Openings**: 35 to 40 net new stores.
  - **Markdowns**: Relatively flat for the year  **[LULU_3391700_7]** **[LULU_3391700_6]** **[LULU_3391700_12]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: Q1 2024 and FY 2024
- **Guidance**:
  - **Revenue**: $10.7 billion to $10.8 billion, growth of 11% to 12%.
  - **EPS**: $14 to $14.20.
  - **Operating Margin**: Increase by 10 basis points.
  - **Gross Margin**: Flat with 2023.
  - **SG&A**: Leverage by 10 basis points.
  - **Effective Tax Rate**: Approximately 30%.
  - **Capital Expenditures**: $670 million to $690 million.
  - **Store Openings**: 35 to 40 net new stores.
  - **Inventory**: Decline in high single to low double-digit percent in first half, increase in second half  **[LULU_3378721_7]** **[LULU_3378721_6]** .

5d0d38ed0f2f286a127c72becf0ef4472f9e15d2d96f5b4abbe35debd553cbd9

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

| Name                  | Position                                        | Start Date       | Short Bio                                                                                                                                                                                                                                                                                                                                 |
|-----------------------|-------------------------------------------------|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Calvin McDonald       | Chief Executive Officer                         | August 2018      | Calvin McDonald has been the CEO of Lululemon since August 2018. Previously, he was the president and CEO of Sephora Americas and Sears Canada. He spent 17 years at Loblaw Companies Limited. He holds an MBA from the University of Toronto and a Bachelor of Science degree from the University of Western Ontario  **[0001397187-24-000013_lulu-20240424.htm:11]** **[0001397187-23-000017_lulu-20230427.htm:12]** .                |
| Meghan Frank          | Chief Financial Officer                         | November 2020    | Meghan Frank has served as the CFO of Lululemon since November 2020. She joined the company in 2016 and held senior finance roles at Ross Stores and J. Crew. She earned her Bachelor of Arts degree from Colgate University  **[0001397187-24-000013_lulu-20240424.htm:11]** **[0001397187-23-000017_lulu-20230427.htm:12]** .                                                                                                      |
| Celeste Burgoyne      | President, Americas and Global Guest Innovation | October 2020     | Celeste Burgoyne has been with Lululemon since 2006 and was appointed as President, Americas and Global Guest Innovation in October 2020. She led the U.S. expansion and oversees guest-facing aspects of the North America business. She holds a B.A. from the University of San Diego  **[0001397187-24-000013_lulu-20240424.htm:12]** **[0001397187-23-000017_lulu-20230427.htm:12]** .                                          |
| Michelle (Sun) Choe   | Chief Product Officer                           | September 2018   | Michelle (Sun) Choe has served as the Chief Product Officer since September 2018. She joined Lululemon in 2016 and previously worked at Marc Jacobs, West Elm, Madewell, and Urban Outfitters. She holds a B.A. from the University of Maryland College Park  **[0001397187-24-000013_lulu-20240424.htm:12]** **[0001397187-23-000017_lulu-20230427.htm:12]** .                                                                     |
| André Maestrini       | Executive Vice President, International         | January 2021     | André Maestrini has served as the EVP, International since January 2021. He leads international expansion efforts and previously worked at Adidas, The Coca-Cola Company, Danone, and Kraft Jacobs Suchard. He holds a master’s degree in Marketing from ESSEC Business School in Paris, France  **[0001397187-24-000013_lulu-20240424.htm:13]** **[0001397187-23-000017_lulu-20230427.htm:13]** .                                  |
| Nicole (Nikki) Neuburger | Chief Brand Officer                          | January 2020     | Nikki Neuburger has served as the Chief Brand Officer since January 2020. She leads marketing, sustainable business, and social impact teams globally. Previously, she was the global head of marketing at Uber Eats and spent 14 years at Nike. She holds a Bachelor of Science in Business Administration from Oregon State University  **[0001397187-24-000013_lulu-20240424.htm:13]** **[0001397187-23-000017_lulu-20230427.htm:13]** . |
| Elizabeth Binder      | Chief Merchandising Officer                     | N/A              | The documents do not provide specific information about Elizabeth Binder's start date or a detailed biography. She is the Chief Merchandising Officer and reports to Nikki Neuburger  **[LULU_3391700_3]** **[0001397187-24-000016_lulu-20240515xex991.htm:0]** .                                                                                                                                            |

116df35049ec97f891ef0664ef2ce931f9164af5ae136516c4c056f92a03356e

| Program Details          | Program 1                  | Program 2                  |
|--------------------------|----------------------------|----------------------------|
| Approval Date            | March 23, 2022  **[0001397187-24-000041_lulu-20241027.htm:17]**          | November 29, 2023  **[0001397187-24-000041_lulu-20241027.htm:17]**       |
| End Date/Duration        | Completed in Q1 2024  **[0001397187-24-000041_lulu-20241027.htm:17]**    | No time limit  **[0001397187-24-000041_lulu-20241027.htm:17]**           |
| Total additional amount  | $1.0 billion  **[0001397187-24-000041_lulu-20241027.htm:17]**            | $1.0 billion  **[0001397187-24-000041_lulu-20241027.htm:17]**            |
| Remaining authorization  | N/A (Program completed)    | **$900.1 million**  **[0001397187-24-000041_lulu-20241027.htm:17]**      |
| Details                  | Program completed  **[0001397187-24-000041_lulu-20241027.htm:17]**       | $1.0 billion increase on May 29, 2024  **[0001397187-24-000041_lulu-20241027.htm:17]**  |

0a58fa1a64ef85e8943f1002e2c0344c94765e03b7218618f5e1446a92427774

Americas

- United States

- Canada

China Mainland

- Hong Kong SAR, Taiwan, and Macau SAR

Rest of World

- Other geographic areas

People's Republic of China

Outside of North America

78d0a929fb91ef5b1aebe06ce2fcf97ec7f325113b5d2bc31d5e1124641939ad

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP   | 2006  **[0001397187-24-000010_lulu-20240128.htm:76]**    | Present  | Current auditor   |

03ade51b9e98d83594604a955be2a41e48a43a90566cb026bb124c7679210bd4

7160fa6e88aaac0f68c5e48fd2191a35c2b8fd2a7beb233648366f91ef4f2ba5

- Total Revenue: $2,396.66M (+9% YoY vs. $2,204.22M)  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:20]**   
- Women’s Product: $1,555.69M (+8% YoY vs. $1,433.93M)  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:20]**   
- Men’s Product: $551.43M (+9% YoY vs. $504.83M)  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:20]**   
- Other Categories: $289.54M (+9% YoY vs. $265.46M)  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:20]**   
- Canada: $335.50M (+9% YoY vs. $308.82M)  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:20]**   
- Rest of World: **$307.90M (+50% YoY vs. $204.93M)**  **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:19]** **[0001397187-24-000041_lulu-20241027.htm:20]**   
- Operating Income (EBIT): $490.66M (+45% YoY vs. $338.12M)  **[0001397187-23-000052_lulu-20231029.htm:2]** **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:2]**   
- Net Income: **$351.87M (+42% YoY vs. $248.71M)**  **[0001397187-23-000052_lulu-20231029.htm:2]** **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:2]**   
- Diluted EPS: **$2.86 (+46% YoY vs. $1.96)**  **[0001397187-23-000052_lulu-20231029.htm:2]** **[0001397187-23-000052_lulu-20231029.htm:17]** **[0001397187-24-000041_lulu-20241027.htm:2]**   

d3d14f0d19e5175e27935b21c500b67d635d9c0b5a4beed77d40db204359ca96

f45287b172b1d7b33ed578f54af2e58c37849eb30617e3f1669f1f4819bd5b36

cd99e2bc8b116352a476e35b3b8f73548f03b9a36324a3690efd4da590066901

| Year       | Amount Due (Millions) | Debt Type                     | Interest Rate (%)           | % of Total Debt            |
|------------|------------------------|-------------------------------|-----------------------------|----------------------------|
| 2024       | $6.5                  | Letters of Credit (Americas)  | N/A                         | 50.0% = (6.5 / 12.7) * 100 **[0001397187-24-000041_lulu-20241027.htm:10]** **[0001397187-24-000041_lulu-20241027.htm:44]** |
| 2024       | $6.2                  | Letters of Credit (China)     | N/A                         | 48.8% = (6.2 / 12.7) * 100 **[0001397187-24-000041_lulu-20241027.htm:10]** **[0001397187-24-000041_lulu-20241027.htm:44]** |
| 2026       | $0.0                  | Revolving Credit Facility     | Variable: 1.000%-1.375% **[0001397187-24-000041_lulu-20241027.htm:10]** | 0.0% = (0.0 / 12.7) * 100 **[0001397187-24-000041_lulu-20241027.htm:10]** **[0001397187-24-000041_lulu-20241027.htm:44]** |

f60fdff8fff9d8bb9f1f308e75b0a37792800f8a238233ac98e2540e8396f44a

7b13da2b6afe64bbe2d5719b90a2d1d397acf56f29e2421ccc0f883c2a65fe31

1. **U.S. Sales Outlook**  
   **Q:** When will U.S. comps turn positive?  
   **A:** Management is confident that U.S. comparable sales will inflect positively by Q1 2025, driven by increased "newness" in product offerings returning to historical levels.  **[LULU_3410966_11]**  Guests remain engaged and loyal, responding well to new products despite current negative comps.  **[LULU_3410966_11]** 

2. **Gross Margin Expectations**  
   **Q:** How sustainable are gross margin drivers into Q4?  
   **A:** Gross margin benefited by **50 basis points** in Q3 from lower inventory provisions and higher initial markups.  **[LULU_3410966_13]**  For Q4, they're expecting a **50–60 basis point** product margin benefit, partially offset by fixed cost deleverage due to store growth amid lower revenue trends.  **[LULU_3410966_13]** 

3. **China Growth and Margins**  
   **Q:** How is China performing financially?  
   **A:** China Mainland achieved **36%** growth in Q3 on a constant currency basis.  **[LULU_3410966_14]**  Healthy operating margin expansion is reported, with expectations of over **30%** growth again in Q4.  **[LULU_3410966_14]**  Management sees long-term opportunity despite not currently optimizing margins.  **[LULU_3410966_14]** 

4. **Product Newness Strategy**  
   **Q:** How will product "newness" change in 2025?  
   **A:** By Q1 2025, product "newness" will return to historical levels, enhancing guest engagement.  **[LULU_3410966_20]**  This includes more colors, patterns, and innovative items within core franchises.  **[LULU_3410966_20]**  Recent new products are performing well, boosting confidence in this strategy.  **[LULU_3410966_20]** 

5. **Inventory Management**  
   **Q:** What's driving mid-teens inventory growth in Q4?  
   **A:** Inventory is expected to grow in the mid-teens in Q4, up from **+8%** in Q3, due to chasing seasonal newness and setting up for H1 2025.  **[LULU_3410966_10]**  Inventory turns are slightly slower than history but align with sales growth plans.  **[LULU_3410966_10]** 

6. **Potential Tariff Impact**  
   **Q:** How could tariffs affect costs next year?  
   **A:** Exposure to potential tariffs is limited, as only **3%** of goods are sourced from China.  **[LULU_3410966_19]**  Sourcing from Mexico is less than half a percent, and none from Canada.  **[LULU_3410966_19]**  Widespread tariffs on all imports would have a more significant cost impact.  **[LULU_3410966_19]** 

7. **Marketing Spend**  
   **Q:** How is marketing investment changing?  
   **A:** Marketing spend is increasing to **5.5%** of sales this year, up from the usual 4.5–5%.  **[LULU_3410966_22]**  Investments focus on community events, ambassador relationships, and top-of-funnel initiatives, driving unaided brand awareness in the U.S. to **36%**.  **[LULU_3410966_22]** 

8. **International Expansion Plans**  
   **Q:** What are the plans for new markets?  
   **A:** In 2025, Lululemon plans to open owned stores in Italy and franchise stores in Denmark, Belgium, Turkey, and the Czech Republic.  **[LULU_3410966_15]**  This expansion is driven by strong brand momentum globally and demand in new markets.  **[LULU_3410966_15]** 

9. **Traffic Trends and Customer Acquisition**  
   **Q:** How are traffic and customer acquisition progressing?  
   **A:** Global traffic is positive across both channels.  **[LULU_3410966_16]**  In the U.S., e-commerce traffic remains positive while stores are slightly lower.  **[LULU_3410966_16]**  The membership base in North America has grown to over **24 million**, enhancing guest engagement and retention.  **[LULU_3410966_16]** 

10. **Competitive Landscape and Promotions**  
    **Q:** How is the promotional environment affecting you?  
    **A:** Despite a heavily promotional period, Lululemon maintains a non-promotional, regular price business, unlike others in the space.  **[LULU_3410966_18]**  Management is pleased with results, indicating strong brand resonance and guest response to products during the holiday season.  **[LULU_3410966_18]** 

bf32af52b9b53dcf9cdbc2141db12e1517b7beb50cbd86b27fad20f6ebd0eb4b

- **Continued investment in international markets**, which are performing well and are key to long-term strategy; for example, in China Mainland, revenue increased **34%** (or **37%** in constant currency).  **[LULU_3400217_14]**
- **Reorganization of product teams** to balance design and merchandising is expected to lead to more creative products and better alignment, driving future growth; the company achieved a **24% CAGR over the last 5 years**, growing to **$10 billion in revenue**.  **[LULU_3400217_14]**
- **Strong operating margin**, which remains **100 basis points above** 2020 results; the company is focused on optimizing the bottom line and is committed to their **Power of Three x2** plan for modest operating margin expansion over the 5-year period.  **[LULU_3400217_21]**

452425b1b1fabc7c33519cee9706b01c1607043dc69f91acb4c4e5cba825081f

- **Lululemon is experiencing a slowdown in its U.S. women's business due to a significant reduction in product newness**, which has impacted conversion rates as guests lacked new options to purchase. This issue stems from earlier product decisions, and the company anticipates returning to historical levels of newness **no later than spring 2025**.  **[LULU_3400217_2]**
- **Analysts are concerned that Lululemon's gross margin rate may have peaked and SG&A expenses may need to increase**, potentially pressuring operating margins. While management reiterates commitment to modest operating margin expansion over their five-year plan, they acknowledge it's **too soon to provide a fine point on the outer years**.  **[LULU_3400217_21]**
- **Inventory levels are expected to increase by mid-teens in Q3 and slightly above that in Q4**, which may raise the risk of overstocking and potential markdowns if demand does not improve, especially in the women's segment where sales have slowed.  **[LULU_3400217_17]**

11ad4ed7f6957795d36c05553d6c92b93afe11d67281cda8de4a0bc55c29cb3a

1. **China Sales and Growth Outlook**  
   **Q:** How did China perform, and what's the growth outlook?  
   **A:** In Q4, revenue in Mainland China increased by **78%**  **[LULU_3378721_11]** ; for the full year, business grew **67%**.  **[LULU_3378721_11]**  Despite macro uncertainties, we expect China's growth rate to be significantly above our guide of **10% to 11%** for 2024.  **[LULU_3378721_11]** 

2. **U.S. Sales Slowdown**  
   **Q:** Are you seeing a slowdown in the U.S. market?  
   **A:** Yes, we're experiencing a **soft start** in the U.S. with a **slowdown in traffic** and slight decrease in conversion.  **[LULU_3378721_9]** **[LULU_3378721_19]**  The slowdown is **fairly broad-based**, but we're addressing product opportunities in color and women's sizing (sizes **0 to 4**).  **[LULU_3378721_9]** **[LULU_3378721_19]** 

3. **International vs. North America Growth**  
   **Q:** How does international growth compare to North America?  
   **A:** North America is expected to be **below** our guided growth range, while international is **significantly above**.  **[LULU_3378721_21]**  All international markets, including Canada, are showing **strong momentum**.  **[LULU_3378721_9]** **[LULU_3378721_21]** 

4. **Guidance and Margin Outlook**  
   **Q:** What is the operating margin outlook for 2024?  
   **A:** We guided for a **10 basis points** operating margin expansion in 2024  **[LULU_3378721_15]** , following a **110 basis points** expansion in 2023.  **[LULU_3378721_15]**  We continue to invest in market expansion and brand awareness while managing expenses.  **[LULU_3378721_15]** 

5. **Inventory Levels and Markdown Expectations**  
   **Q:** What's the status of inventory and markdowns?  
   **A:** Inventory came in at **negative 9%** on a dollar basis and **plus 1%** on a unit basis.  **[LULU_3378721_12]**  We're pleased with inventory levels and expect markdown rates to remain **flat** in 2024 compared to prior years.  **[LULU_3378721_12]** 

6. **Men's Business Growth**  
   **Q:** How is the men's business performing?  
   **A:** Our men's business grew **15%** in 2023  **[LULU_3378721_10]**  and achieved a **21%** CAGR over two years, ahead of our **Power of Three x2** goal.  **[LULU_3378721_10]**  Innovation in men's products is driving renewed momentum.  **[LULU_3378721_10]** 

7. **Product Innovation**  
   **Q:** What new products are expected to drive growth?  
   **A:** We're launching innovations like the **hydrogen yarn legging** for yoga this summer and the **support code bra** in Q3.  **[LULU_3378721_20]**  Expanded offerings in color and sizing are also expected to boost sales starting in Q2.  **[LULU_3378721_20]** 

8. **Marketing Investment and Membership Program**  
   **Q:** What's the plan for marketing investment and membership growth?  
   **A:** Marketing spend was **4.5%** of sales in 2023  **[LULU_3378721_16]** , expected to be **4.5% to 5%** in 2024.  **[LULU_3378721_16]**  Our membership program has reached **17 million active members** within a year of launch, enhancing customer engagement and spend.  **[LULU_3378721_16]** 

9. **Competitive Advantages**  
   **Q:** How does Lululemon maintain its competitive edge?  
   **A:** Our advantage lies in **innovation** in performance-level products, strong **community engagement**, and a unique **direct-to-consumer** model.  **[LULU_3378721_17]**  We offer a dual-gender brand appealing across age groups and occasions.  **[LULU_3378721_17]** 

10. **E-commerce and Store Sales Growth**  
    **Q:** How are e-commerce and store channels performing?  
    **A:** In 2023, e-commerce grew **17%**  **[LULU_3378721_18]** , and stores grew **21%**  **[LULU_3378721_18]** , with e-commerce comps at **17%** and store comps at **9%**.  **[LULU_3378721_18]**  We see opportunities across both channels leveraging our omnichannel ecosystem.  **[LULU_3378721_18]** 

cbe28055550653e9ec81685e7ef0f2cdccd6559ec035d40e9d5e453b194eb543

- **Revenues are lower than expected, and operating margin is being maintained primarily through expense management rather than revenue growth.**  **[LULU_3410966_17]**
- **U.S. store traffic was slightly lower than last year, indicating weakness in brick-and-mortar performance in the U.S. market.**  **[LULU_3410966_16]**
- **Marketing expenses are expected to increase to approximately 5.5% of sales due to top-line pressure, suggesting higher costs to drive sales.**  **[LULU_3410966_22]**

233d7c4a0202a26f4c14ef5c8d7e221aa9da3be90a6ab272b3b281217ed8e713

- **Assortment missteps in the U.S. women's business**, such as a **narrow color palette** and **lack of smaller sizes**, led to missed sales opportunities and negatively impacted conversion rates, despite positive traffic.  **[LULU_3391700_16]** ,  **[LULU_3391700_10]** ,  **[LULU_3391700_9]**
- **Markdowns increased by 50 basis points year-over-year** in Q1, with expectations of slightly elevated markdowns continuing into Q2, potentially pressuring margins and indicating slower demand for full-priced items.  **[LULU_3391700_12]**
- **U.S. revenue growth was only 2% in constant currency**, significantly lagging behind international markets, and the women's market share was **flat due to missed opportunities**, suggesting potential headwinds in the U.S. market.  **[LULU_3391700_16]** ,  **[LULU_3391700_13]** ,  **[LULU_3391700_9]**

c79595116f440e96ae2558ba0f1ec032ef07df41cab78ea2878211a851a1fda1

- **Significant growth potential in international markets, particularly China, where revenue grew 78% in Q4 and is expected to significantly exceed company revenue growth guidance in 2024.**  **[LULU_3378721_11]**
- **Lululemon maintains durable competitive advantages through its focus on performance-level innovation, direct-to-consumer model, and unique brand positioning that appeals to a broad demographic.**  **[LULU_3378721_17]**
- **Ongoing product innovation and marketing investments are expected to drive growth in the U.S., with new product launches and positive guest response anticipated to accelerate sales starting in Q2.**  **[LULU_3378721_20]**

f630cff958b9052f13c5cc12b4d76c914898829d0174863d237ab3d5d4c127c4

- **Lululemon's China Mainland revenue grew 36% in Q3 on a constant currency basis**, with **healthy operating margin expansion**, and the company expects **above 30% growth in Q4**, highlighting strong performance and long-term growth potential in the region.  **[LULU_3410966_14]**
- **The company plans to expand into new international markets**, including opening an **own market in Italy** and franchising in **Denmark, Belgium, Turkey, and the Czech Republic**, reflecting confidence in the **brand's global momentum** and **strong performance in every international market**.  **[LULU_3410966_15]**
- **Strong guest retention with a membership base of 24 million in North America**, providing opportunities to **increase revenue per guest through product newness**, and **unaided brand awareness in the U.S. has increased to 36%**, indicating significant potential for growth in the U.S. market.  **[LULU_3410966_16]** **[LULU_3410966_22]**

485bc8333a037f811ea5dbbdbf45f8065fffb7488bf99689ad2619ffb0892946

- **Strong International Growth Potential:** Lululemon's international revenue is growing rapidly, with **China Mainland revenue increasing by 52% in constant currency in Q1**.  **[LULU_3391700_10]**  The company sees significant opportunity in international markets, aiming for **international sales to reach 50% of total revenue in the future**.  **[LULU_3391700_18]**  This growth is driven by low unaided brand awareness internationally, providing a long runway for expansion.
- **Exceptional Performance in Men's Category:** Lululemon is experiencing strong gains in the men's segment, **significantly outperforming the overall market and gaining market share in men's apparel**.  **[LULU_3391700_16]**  The success is driven by innovative products like the **Zeroed In franchise and expansion of Pace Breaker**, resonating globally across all markets.  **[LULU_3391700_17]**  The men's business is becoming an increasingly important driver of growth.
- **Investments in Omnichannel Capabilities:** The company continues to invest in both stores and e-commerce, providing a seamless omnichannel experience. They expect **e-commerce to grow slightly ahead of their 15% CAGR target**, with stores growing slightly below.  **[LULU_3391700_19]**  Lululemon sees ample opportunity to expand and optimize their store footprint, with **new stores showing sales per square foot above the average of $1,600**.  **[LULU_3391700_17]**

6ad6263bfccec458f71d66180fb5433af22bd2a28f4f482c68cdbef0de90822c

1. **U.S. Growth Challenges**  
   **Q:** Any structural changes affecting U.S. growth?  
   **A:** Calvin McDonald emphasized that there is **"absolutely nothing has changed"** in terms of growth potential in the U.S., attributing missed opportunities in Q1 to a narrow color palette and inventory issues in women's categories. He remains **"as optimistic and excited"** about their U.S. growth potential and noted that traffic was positive, but conversion suffered due to assortment gaps.  **[LULU_3391700_11]** ,  **[LULU_3391700_9]** ,  **[LULU_3391700_12]** 

2. **China Growth Potential**  
   **Q:** Can you discuss China's performance and outlook?  
   **A:** Management is **"very pleased"** with the business in China, reporting **+52% constant currency growth** in Mainland China. They see significant runway and no concerns with the competitive landscape, highlighting that they are **"still early in our growth journey there."**  **[LULU_3391700_10]** ,  **[LULU_3391700_15]** ,  **[LULU_3391700_18]** 

3. **Inventory Levels and Markdowns**  
   **Q:** How are inventory and markdowns impacting margins?  
   **A:** Inventory was down **15%** at the end of the quarter, aligning with expectations. Markdowns increased **50 basis points** year-over-year in Q1 due to assortment challenges, but they expect markdowns to be **"essentially flat"** for the full year. Actions are underway to correct assortment issues in the second half.  **[LULU_3391700_12]** ,  **[LULU_3391700_14]** 

4. **Competitive Landscape**  
   **Q:** Has the competitive landscape changed recently?  
   **A:** Calvin McDonald stated they haven't seen any significant changes in promotional intensity or competition. He believes missed opportunities were due to internal factors rather than competitive pressures, noting that **"competition has always been there"** and they continue to outperform where they execute well.  **[LULU_3391700_15]** ,  **[LULU_3391700_13]** 

5. **Store Productivity and Expansion**  
   **Q:** Any changes to store expansion plans in North America?  
   **A:** Management continues to see **"ample runway"** for new stores, with productive sales per square foot above the average of **$1,600**. New stores ramp to mature volumes over 2–4 years, and they see opportunities for growth in both the U.S. and international markets.  **[LULU_3391700_17]** 

6. **Consumer Behavior Trends**  
   **Q:** Any changes in consumer purchase behavior?  
   **A:** They have not observed fundamental shifts in guest behavior, with no changes in UPT or AUR. The guest remains engaged but is being more selective due to the dynamic environment. Traffic was positive, but conversion was impacted by assortment gaps.  **[LULU_3391700_13]** ,  **[LULU_3391700_11]** 

7. **Market Share Dynamics**  
   **Q:** Did you gain or lose market share in women's?  
   **A:** Lululemon gained market share in both the U.S. adult apparel and activewear industries. They saw **outsized gains in men's**, while women's was **"flattish"** due to missed opportunities in certain categories.  **[LULU_3391700_16]** 

8. **Omnichannel Strategy**  
   **Q:** How do you view the balance of stores and e-commerce?  
   **A:** They anticipate e-commerce to grow slightly ahead of the **15% CAGR**, with stores slightly below. They remain agile, focusing on a seamless experience across channels, and will go where the guest wants to shop.  **[LULU_3391700_19]** 

b59d7e6cd0b4f5a7d3a8fd5d2da1d443719d04772720ff88243e1d17bd349021

- **Lululemon is experiencing a slowdown in the U.S. market, with a "slower start to Q1" and the U.S. consumer environment described as "somewhat challenging", leading to the Americas revenue growth being "below the guided growth range".**  **[LULU_3378721_7]** ,  **[LULU_3378721_21]** ,  **[LULU_3378721_2]** ,  **[LULU_3378721_20]**
- **Gross margins are expected to be flat in both Q1 and the full year 2024, despite previous expansions, and SG&A expenses are expected to deleverage in Q1 due to increased investments, causing operating margin to decline by 130 to 140 basis points in Q1.**  **[LULU_3378721_6]** ,  **[LULU_3378721_7]** ,  **[LULU_3378721_20]**
- **The company's growth is heavily reliant on international markets, particularly China Mainland, which grew by 78% in Q4, while the U.S. market is slowing, potentially exposing Lululemon to geopolitical and market risks.**  **[LULU_3378721_1]** ,  **[LULU_3378721_7]** ,  **[LULU_3378721_11]**

a73fb38a1afc6a064cf9c011b5d451baf8576256e83002e28315d82b648cbe39

1. **Revenue Guidance**  
   **Q:** Is revised guidance mostly impacting Q4?  
   **A:** Meghan Frank explained that the relationship between Q3 and Q4 guidance hasn't changed. They are guiding the second half in line with Q2 trends. Adjustments in Q4 account for a shorter holiday selling period, estimated at about a **3-point impact**, as well as macroeconomic factors and the upcoming election. Overall, they have lowered their outlook for the second half.  **[LULU_3400217_11]** 

2. **Revenue Shortfall Causes**  
   **Q:** Is revenue miss due to internal issues or macro?  
   **A:** Calvin McDonald attributed the shortfall to decisions within their control, specifically gaps in newness in women's products. Traffic was positive, but they missed opportunities in conversion due to a lack of product newness. He sees this as an opportunity for improvement.  **[LULU_3400217_12]** 

3. **Margin Outlook**  
   **Q:** Are gross margins peaking; will SG&A rise?  
   **A:** Meghan Frank stated they are delivering gross margin relatively in line with 2023 and approximately flat SG&A, despite revenue growth guidance of **6–7%** excluding the 53rd week. Operating margin remains strong, **100 basis points above 2020** results after two years. They remain committed to modest operating margin expansion over their five-year plan.  **[LULU_3400217_21]** 

4. **China Growth**  
   **Q:** How is China performing; any macro impact?  
   **A:** Meghan Frank reported very strong growth in China, with sales up **37%** on a constant currency basis in Q2. The growth variance from Q1 was due to the shift in Chinese New Year. Calvin McDonald remains excited about the potential in China, noting their small store base of **132** and no material macro impact observed.  **[LULU_3400217_19]** 

5. **Inventory Levels**  
   **Q:** Are you comfortable with inventory levels?  
   **A:** Meghan Frank said inventory was down **14%**, in line with expectations. While overall levels are comfortable, there's an opportunity to adjust the composition to increase newness. Markdown levels came in favorable, flat year-over-year in Q2.  **[LULU_3400217_10]** 

6. **Product Innovation**  
   **Q:** Timing for new Breathe Through products?  
   **A:** Calvin McDonald stated that while the Breathe Through fabric resonated well with consumers, new fits won't return until **2025**. They are excited about upcoming product launches in training and seasonal updates to core styles, expecting newness to ramp up through Q3 and Q4, returning to historical levels by spring **2025**.  **[LULU_3400217_15]** 

7. **U.S. Women's Trends**  
   **Q:** Any change in U.S. women's customer behavior?  
   **A:** Calvin McDonald observed no significant change in guest profile. The opportunity was with existing guests; conversion issues stemmed from gaps in product newness, particularly in colors, prints, and silhouettes. Guests were visiting and ready to spend, but the lack of newness affected sales.  **[LULU_3400217_18]** 

8. **Accessories Performance**  
   **Q:** How are accessories performing?  
   **A:** Calvin McDonald reported that accessories grew **7%** in the quarter. The Everywhere Belt Bag remains a strong driver, and they continue to introduce new styles. Accessories represent **10%** of their overall mix, with significant growth potential as they currently hold about **1%** market share.  **[LULU_3400217_20]** 

6bccd2cbff1217f2f7f1e41ba5874e62225363f154299916e95aba11eed0f180

Lululemon Athletica Inc (LULU)

Financials