Lululemon Athletica Inc. Q2 2024 Results

Lululemon Athletica Inc. (ticker: NASDAQ:LULU) disclosed its second-quarter results for 2024, revealing a 7% increase in total revenue, amounting to $2.4 billion. The company’s performance was particularly strong in the international segment, with a 29% revenue increase, led by a 34% surge in China.

Despite challenges in the women’s category in the Americas, Lululemon is implementing new design strategies to reinvigorate its product line. The brand’s accessories business, including new backpacks and belt bags, has also experienced healthy growth.

Lululemon is optimistic about its long-term growth, supported by international expansion, product innovation, and marketing initiatives. The company’s full-year revenue guidance stands at $10.375 billion to $10.475 billion, with diluted earnings per share expected to be between $13.95 and $14.15.

Key Takeaways

• Total revenue increased by 7%, with international revenue up by 29%.
• Revenue in the Americas saw modest growth, with a flat performance in the US.
• Lululemon plans to boost the women’s product line with new designs.
• The company repurchased $584 million of stock in Q2.
• Gross profit reached $1.4 billion, or 59.6% of net revenue.
• SG&A expenses were at $872 million, or 36.8% of net revenue.
• Full-year revenue guidance is set between $10.375 billion and $10.475 billion.
• Diluted EPS for 2024 is projected to be $13.95 to $14.15.
• The company is investing in marketing, international growth, and technology infrastructure.

Company Outlook

• Revenue growth of 6% to 7% expected for Q3 and the full year.
• Plans to open 35 to 40 new stores in 2024.
• Gross margin to be approximately 20 basis points below 2023.
• Operating margin expected to decrease for the full year 2024.
• Inventory expected to increase in Q3.
• Capital expenditures estimated to be $670 million to $690 million for 2024.

Bearish Highlights

• Slowdown in women’s business in the US due to reduced newness.
• Gross margin expected to decrease.
• Operating margin to decline compared to 2023.

Bullish Highlights

• Strong performance in China and other international markets.
• Accessories business grew by 7% in the quarter.
• Company committed to expanding operating margins over the next five years.

Misses

• Missed opportunity in conversion from existing guests due to a gap in newness.

Q&A Highlights

• CEO Calvin McDonald emphasized a balanced approach in design and merchandising teams.
• Focus on newness in product assortment to drive growth.
• Strong growth in China, particularly in Tier 1, 2, and 3 cities.
• The company is monitoring the macro environment but has not seen any material impact.

Lululemon Athletica Inc. continues to adapt its strategy to maintain momentum in a competitive market. Focusing on international performance and brand building, the company is determined to overcome current challenges and capitalize on emerging opportunities.

Lululemon’s commitment to innovation, customer satisfaction, and strategic market expansion underpins its confidence in achieving long-term growth for shareholders, employees, and guests.

Full transcript – Lululemon Athletica Inc (LULU) Q2 2024

Operator:

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc. Second Quarter 2024 Results Conference Call. As a reminder, all participants are in listen-only mode. The conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Howard Tubin:

Thank you, and good afternoon. Welcome to Lululemon’s second quarter earnings conference call. Joining me today to talk about our results are Calvin McDonald, CEO; and Meghan Frank, CFO. Before we get started, I’d like to take this opportunity to remind you that our remarks today will include forward-looking statements reflecting management’s current forecast of certain aspects of lululemon’s future…

[Here the article continues with detailed commentary from Lululemon executives during the conference call.]

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