• Q4 Revenue: $3.6 billion, a 13% increase or 14% in constant currency.
• Q4 Operating Margin: Increased 40 basis points to 28.9%.
• Q4 Earnings Per Share (EPS): Increased 16% to $6.14.
• Full-Year 2024 Revenue: $10.6 billion, an 8% increase or 9% in constant currency.
• Full-Year 2024 Adjusted Operating Margin: Increased 50 basis points to 23.7%.
• Full-Year 2024 Adjusted EPS: Increased 15%.
• Q4 Gross Margin: 60.4%, a 100 basis point increase from Q4 2023.
• Q4 Net Income: $748 million.
• Q4 Capital Expenditures: $235 million.
• Q4 Inventory Increase: 9%.
• Q4 Share Repurchases: $332 million, totaling $1.6 billion for 2024.
• Store Count: Ended Q4 with 767 stores globally, with 56 net new stores since Q4 2023.
• 2025 Revenue Guidance: $11.15 billion to $11.3 billion, a 5% to 7% growth.
• 2025 EPS Guidance: $14.95 to $15.15.
• 2025 Capital Expenditures Guidance: $740 million to $760 million.

• Warning! GuruFocus has detected 4 Warning Signs with BSP:FHER3.

Release Date: March 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lululemon Athletica Inc (NASDAQ:LULU) exceeded its revised guidance for Q4 2024, with total revenue increasing by 8% or 9% on a constant currency basis.
• The company achieved a 16% increase in earnings per share for Q4 2024.
• Lululemon Athletica Inc (NASDAQ:LULU) repurchased $332 million of stock in Q4, demonstrating confidence in its long-term prospects.
• The company introduced several new product innovations, such as the Glow Up tight and Daydrift trouser, which have been well-received by customers.
• Lululemon Athletica Inc (NASDAQ:LULU) plans to grow square footage by approximately 10% in 2025, including new store openings in existing and new international markets.

Negative Points

• The company is facing a dynamic macroeconomic environment, contributing to a more cautious consumer and slower traffic in the US.
• Lululemon Athletica Inc (NASDAQ:LULU) expects a decrease in operating margin by approximately 100 basis points in 2025 due to FX headwinds and increased tariffs.
• The company anticipates a 60 basis point decrease in gross margins for the full year 2025, driven by deleverage on fixed costs and FX headwinds.
• Lululemon Athletica Inc (NASDAQ:LULU) is experiencing a negative impact on Q1 2025 revenue growth due to foreign exchange, with a 1 percentage point drag.
• The company acknowledges uncertainty in the retail environment and is planning cautiously for both top- and bottom-line growth in 2025.

Q & A Highlights

Q: Can you elaborate on the modest US revenue growth expected for the year? A: Calvin McDonald, CEO, explained that the modest growth is due to a cautious consumer environment impacting traffic. However, guests are responding well to new product launches, which is a positive indicator. Meghan Frank, CFO, added that North America is expected to grow in the low- to mid-single-digit range, with the US on the lower end and Canada higher.

Q: How is Lululemon's marketing strategy evolving, particularly in the US? A: Calvin McDonald highlighted the success of community-based activations and events like Membership Madness, which have driven strong engagement and new guest acquisition. The strategy focuses on both acquiring new guests and retaining existing ones through unique brand experiences.

Q: What is the impact of tariffs on Lululemon's financials, and how are you mitigating these effects? A: Meghan Frank stated that approximately 20 basis points of headwind from tariffs on China and Mexico imports are included in the guidance. The company is monitoring the situation and will consider cost structure adjustments and pricing strategies if necessary.

Q: How is Lululemon planning its international expansion, and what role do activations play? A: Calvin McDonald emphasized that international growth is supported by local community activations and store optimizations. The strategy includes expanding in key markets like Japan and South Korea, with activations tailored to each market's maturity.

Q: Can you discuss the SG&A philosophy and how it might change with sales fluctuations? A: Meghan Frank explained that SG&A includes investments in international growth, marketing, and technology. The company has contingency plans to adjust SG&A based on sales performance and business dynamics, ensuring flexibility in response to market conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.