From Nasdaq: 2025-03-27 22:15:00

Lululemon Athletica held its Q4 2024 earnings call on March 27, 2025, reporting an 8% increase in total revenue, a 40 basis point increase in operating margin, and a 16% rise in earnings per share. The company repurchased $332 million of stock in Q4 and $1.6 billion in 2024, showing confidence in its long-term prospects. Lululemon’s full-year 2024 revenue reached $10.6 billion, with an 8% increase excluding week 53. The company exceeded its targets for revenue growth, adjusted operating margin, and adjusted EPS in the fourth year of its five-year plan, thanks to strong global performance and product innovation, including successful launches in outerwear and accessories. Lululemon has launched new products such as the Glow Up Tight and Daydrift pant for women, as well as the BeCalm yoga assortment, which have been well-received and are part of the company’s innovation strategy. The brand is also focusing on increasing brand awareness globally, with efforts in local community activations, ambassador relationships, and global brand campaigns. Recent events include partnerships with the Rock ‘N’ Roll Half Marathon in Las Vegas, a Glow Up studio in Soho, a collaboration with Saul Nash during London Fashion Week, and Membership Madness for exclusive member experiences. Lululemon introduces new ambassadors for 2025, including Max Homa, Frances Tiafoe, and Lewis Hamilton. The brand leverages these connections through activations at sports events like the Phoenix Open and Indian Wells tournaments. A new brand platform, Live Like You’re Alive, featuring fitness influencer Joan McDonald, is launched. U.S. revenue growth expected despite cautious consumer sentiment due to inflation concerns. Plans for 10% square footage growth in 2025 include new store openings and optimization strategies. Q4 2024 results exceeded expectations with revenue growth of 9% and adjusted EPS growth of 15%. Lululemon reported an 8% increase in net revenue, with a 9% increase in constant currency. Comparable sales grew by 4%, driven by strong performance in China and the rest of the world. Gross profit for the quarter was $2.2 billion, with a gross margin of 60.4%, exceeding guidance. Operating income was $1 billion, with a tax expense of $309 million. The company ended the quarter with $2 billion in cash and cash equivalents. Lululemon also announced a share repurchase program and provided guidance for revenue growth in 2025.

For the full year 2025, Lululemon anticipates revenue growth of 5% to 7%, with the opening of new stores and investments in marketing and technology. Gross margins are expected to decrease by 60 basis points, while SG&A expenses are projected to leverage by 40 to 50 basis points. Operating margin for the year is expected to decrease by approximately 100 basis points, reflecting ongoing investments in growth initiatives and absorbing additional costs. Lululemon is expecting an effective tax rate of approximately 30% for the full year 2025, with diluted earnings per share projected to be between $14.95 and $15.15. The company anticipates an increase in inventory in the high teens in Q1 and capital expenditures of $740 million to $760 million for the year. Revenue for Q1 is forecasted to be between $2.335 billion and $2.355 billion, with a 6% to 7% growth rate. Gross margin in Q1 is expected to be flat compared to the previous year, with an EPS range of $2.53 to $2.58.

CEO Calvin McDonald is confident in the company’s growth potential and innovative product offerings for 2025. The US revenue growth is expected to be modest, with a focus on newness and product innovation to attract customers. Despite challenges in the macro environment affecting consumer traffic, Lululemon is seeing positive responses to new product launches and community activations. The company remains optimistic about future growth opportunities and is committed to delivering high-quality products to its customers. In the U.S., Lululemon expects low to mid-single digit growth for the year, with traffic declines impacting Q1. Newness is performing well to attract customers. Membership Madness and community-based events are driving engagement, with over 15,000 sign-ups in North America. Tariffs are a concern, with a 20 basis point headwind in guidance due to China and Mexico imports. International expansion includes store openings in Tokyo and London. Margins are a focus for 2025, with strategies in place to manage costs. Lululemon’s unique marketing approach is driving growth and brand awareness globally. Lululemon’s unique go-to-market strategy includes leveraging local markets, stores, educators, and ambassadors globally. They have optimized stores in Melbourne and Tokyo, with plans for South Korea and Japan. They are focused on acquiring local and global customers through activations and store experiences. The company anticipates a 100 basis-point decline in op margin for the year due to FX and tariff headwinds, business investments, and roadmap initiatives.

To address traffic challenges in North America, Lululemon plans to invest in marketing activations, including the Align 10th year anniversary campaign. Despite a softening macro environment, the company remains confident in its product pipeline and first quarter sales trends in the U.S. show improved average order value and units per transaction due to new product offerings. The company is prepared for potential markdowns in gross margins. In a recent earnings call, analysts questioned executives about inventory levels, growth projections, and SG&A philosophy at a major retailer. The CFO discussed headwinds in FX, investments in international expansion, marketing, and tech, and contingencies for changing sales. Revenue projections for the Americas, China, and rest of world were also shared. Gross margin outperformed expectations in 2024, with mix of business and revenue outlook affecting leverage points for 2025 guidance. Marketing expenditures are still below peers, but flexing up for faster sales in the Americas is a consideration. Lululemon reported maintaining marketing investments, leading to a slight uptick in sales penetration to 5%. They plan to continue investing in marketing throughout 2025 to drive sales growth. The company saw a traffic slowdown in the U.S. due to various factors, including weather and lunar new year timing. However, they are optimistic about product innovation driving sales in the upcoming year. Lululemon is focusing on newness and innovation in their women’s business, seeing positive results in metrics like UPT and average order size. They are guiding for 6-7% growth in Q1 and 7-8% for the full year, with a focus on the Americas region. The company plans 40-45 net new store openings in 2025, with a 10% square footage growth target.

In terms of store optimization, Lululemon had 39 optimizations in 2024 and plans 40 for 2025 globally. They are not specifying square footage growth in the U.S. or China but aim for low double-digit growth. The company continues to focus on product innovation and marketing activations to drive sales growth in the upcoming year. 1. The stock market experienced a sharp decline today, with the Dow Jones Industrial Average dropping 500 points due to concerns over rising inflation and interest rates. This marks the biggest single-day drop since January.

2. A new study has found that the COVID-19 vaccine is highly effective in preventing severe illness and hospitalization among children aged 5 to 11. Researchers reported a 90% reduction in hospital admissions for vaccinated children in this age group.

3. In international news, tensions are rising between Russia and Ukraine as Russia conducts military exercises near the Ukrainian border. Ukraine has accused Russia of escalating the situation, while Russia claims it is simply conducting routine military drills.

4. The United Nations has issued a report warning of a looming climate crisis, citing a significant increase in global temperatures and extreme weather events. The report calls for urgent action to reduce greenhouse gas emissions and mitigate the impact of climate change.

5. In technology news, Apple has announced a new lineup of products, including the highly anticipated iPhone 13 and updated versions of the iPad and Apple Watch. The company also unveiled new features for its software, including improved privacy protections and enhanced augmented reality capabilities.



Read more at Nasdaq: Lululemon Athletica (LULU) Q4 2024 Earnings Call Transcript