Executive Summary
Lululemon Athletica Inc (NASDAQ: LULU) reported robust financial results for the third quarter of 2024, showing a 9% increase in total revenue year-over-year to $2.4 billion. This growth was driven primarily by the company's strong international performance, particularly in China where revenues surged 39%. The Americas experienced modest growth, driven by a particularly strong presence in Canada, while U.S. revenues stabilized but remained flat. Total net income for the quarter reached $352 million, representing a net income margin of 14.6%. Management expressed optimism about upcoming product launches and seasonal strategies, focusing on maintaining brand strength and engagement through an enhanced product assortment as part of their ongoing growth strategy. With a strong cash position of $1.2 billion, the company continues to prioritize share repurchase programs as a return of capital to shareholders.
Key Performance Indicators
QoQ: -10.45% | YoY:41.48%
Key Insights
**Total Revenue:** $2.4 billion (up 9% YoY, flat QoQ).
**Gross Profit:** $1.4 billion; gross margin ratio at 58.5%, up 40 basis points YoY.
**Operating Income:** $491 million with a 20.5% operating margin, representing a 70 basis point increase from the previous year.
**Net Income:** $352 million, translating to $2.87 EPS, compared to $2.53 in Q3 2023 (up 45.7% YoY).
**Cash Position:** $1.2 billion, with inventory growth of 8% vs forecast growth of mid-teens.
**Global Store Count:** 74...
Financial Highlights
Total Revenue: $2.4 billion (up 9% YoY, flat QoQ).
Gross Profit: $1.4 billion; gross margin ratio at 58.5%, up 40 basis points YoY.
Operating Income: $491 million with a 20.5% operating margin, representing a 70 basis point increase from the previous year.
Net Income: $352 million, translating to $2.87 EPS, compared to $2.53 in Q3 2023 (up 45.7% YoY).
Cash Position: $1.2 billion, with inventory growth of 8% vs forecast growth of mid-teens.
Global Store Count: 749 stores, with plans for significant new openings in 2025.
Management emphasized the acquisitions of unconventional product lines like the 'Tennis Club Collection' and aggressive marketing strategies to uplift brand engagement.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.40B |
8.73% |
1.08% |
| Gross Profit |
1.40B |
11.53% |
-0.75% |
| Operating Income |
490.66M |
45.12% |
-9.17% |
| Net Income |
351.87M |
41.48% |
-10.45% |
| EPS |
2.87 |
45.69% |
-8.89% |
Key Financial Ratios
operatingProfitMargin
20.5%
operatingCashFlowPerShare
$2.45
Management Commentary
Key Themes:
- International Growth: "Our international revenue increased 33%, or 30% on a constant currency basis," noted CEO Calvin McDonald.
- U.S. Market Positioning: McDonald stated, "In the U.S., revenue was flat, which was consistent with our performance in quarter two and in line with our expectations."
- Product Strategy: The introduction of new assortments and category optimizations is key, as indicated by McDonald, "We expect to see more seasonal newness to boost our sales figures."
- Financial Prudence: CFO Meghan Frank emphasized, "Our approach continues to be grounded and prudently managing our expenses. We're poised for new growth opportunities while maintaining strategic investments."
"We are pleased with our business over the extended Thanksgiving weekend. We leverage the increased traffic to clear through product we are not taking forward and to feature full-price styles," - Calvin McDonald, CEO.
â Calvin McDonald
"In quarter three, total revenue increased 9%, adjusting our expectations for Q4 and looking ahead into 2025 with greater newness in product assortments," - Meghan Frank, CFO.
â Meghan Frank
Forward Guidance
Lululemon expects revenue growth to continue, projecting Q4 revenue between $3.475 billion and $3.51 billion, growing at 8-10% YoY. Management noted careful planning for the holiday season amid macroeconomic uncertainties, reiterating their commitment to the Power of Three x2 revenue target of $12.5 billion by 2026. The focus on enhancing product assortments with more seasonal newness is expected to boost traffic and sales performance moving into 2025, with a strong emphasis on customer engagement and retention.