Lululemon Athletica (LULU) 10 Dec 212021 Q3 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc.

Third Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. will opportunity there ask presentation the be to an questions. After Instructions]. [Operator now I Vice the conference President to over turn Relations would Lululemon like for to Athletica. Investor Howard Tubin, Please go ahead.

earnings Welcome Lululemon's afternoon. good and you, third Thank quarter conference call. to

me McDonald, and Calvin Meghan results CEO talk our CFO. Joining to are about Frank,

are opportunity future. of will on on we statements include based Before this reflecting started, any These including certain most in business, forward-looking that you XX-Q. management's of this any including statements have like call I'd remind associated get forecast are aspects forward-looking Lululemon's of of our statements statements take current information to to remarks current we today which and assessed, and statements Form SEC, differ as forward-looking or future a or but the Actual even is Form we with recent or new with annual of quarterly make to we obligation in which those have our these may by expressly report subject our abrupt revise these due events. on nature to Any its materially results result that our XX-K, as update our and contained and disclosed by dynamic from we on today, filings or risks undertaking those to and rapid information based reports implied on changes. assumptions uncertainties disclaim

press our and report release. earnings will GAAP non-GAAP reconciliation present non-GAAP we and is GAAP During both XX-Q in on measures quarterly measures. call in financial to this of Form included today's A

and are quarterly dollars. today's the website on section available The of www.lululemon.com. report metrics on In press addition, comparable sales XX-Q call are the on at our Investors under Form constant accompanying release given

investors Before rack. quarterly as the our is the Today's to operating a scheduled you'll for where I'd as financial find we our our info one key well visit for third summary remind quarter, of call, Investor hour. to our and site, like begin statistics call

give others addressed. please one So yourself to questions to limit opportunity the a time have to their question at

Now, to over call I'd like to turn the Calvin.

you, highlights start conference call. Thank share performance here third and I'm at of and to our excited the be the our to discuss holiday results season. the everyone Howard, to of quarter welcome

Our reflecting potential momentum with the remains Lululemon in the term. near teams continued I both quarter am growth term strong the how for and revenue the to issues our long pleased continue especially Power leaders in X navigate a CAGR two the successfully on while growth grew XX% chain XX%. supply increased industry. the our execute last year basis, to against within we and year, plan, Relative and

to business, continues including every based strength activity, gender across geography. our and of Our facet and balanced category, channel, broad be

quarter details the Our three Thanksgiving and Thanksgiving, were three, inventory Before pleased we with over about current levels the on to Holiday, some performance I share performance highlights topics: holiday the weekend. would market. over discussing the more like labor recent with our Starting

last including in this and was sales, year made contributing have several the well. top we to year's For through last ever. years year. Day that our e-commerce highest performance. and record the we're acceleration the breaking growth metrics, conversion E-commerce excited several are The volume in channels outsized to our I'm the over day seeing enabling Cyber days both delivered digital mortar share investments on the traffic days of business thanksgiving Monday, digital brick and performed key Thanksgiving spanning and and five this

our am pleased factories much increased have associated In all of chain, see to costs was face and industry, with weeks continue up our off respond great to Vietnam, slowdowns share While we continue our of the of offering air our the to ahead freight. to Shifting and holiday have it the their several same we reopened still port merchandise to I us, kicked ramp large as supply issue guests well volume that as we capacity. season. including to

While up expectations some XX% the inventory slightly summer closures our cause was XX%, of delays, recent of most of to ahead XX%. end our at total the QX

current are As XX% our approximately this team mitigate with many allowing our of have decisions. of successfully extremely our season management comprised and the is inventory make chain helps is through risks. core us which vendors aware, continue us supply proud we dynamic to and environment. have you of of am inventory I flow coupled to with This, the our navigate partnerships listproduct, well-established

to business we're could supply the continue believe quantity inventory, even of have that comfortable the our our with and is supply for stronger challenges. been chain quality demand I brand outpacing While both our and without

labor meet we the holiday well Turning market, positioned to this demand. guest are to

know I'm X,XXX up employees within than you to that has the season, been holiday. As centers able DCs very competitive hiring lead to the guest and in pleased this the environment education been have we hire more and stores, our

pay-protection highlighted COVID program increases in to and enabled wage the our in employee environment. strong by through current Our offering, well minimum XX us has recent perform

some results. Let highlights from our me QX share now

XX% total CAGR year our $X.X basis. a of billion First, revenue on represents growth of two

continue the build above on with to levels strength we what we in in channel, achieved Second, XXXX. store our productivity

last to per expectations. XX%, adjusted quarter-after-quarter. consistent in a XXXX, continues $X.XX were up And XX%. Lululemon earnings a of Third, performance into was year brand level our share top demonstrate e-commerce for This of translates how versus positioned $X.XX on growth two XX% is of business year which CARG which our finally, comped the above

I additional on product will with some starting provide Next, our details results innovation.

women's up men's all CAGR basis. our two Our year a major XX%, on and XX%, with momentum increasing revenue accessories across strong growing XX% of remains all categories

to announced guest. several the to to newness Paralympic I'm of and and the particularly recently of with We Committee is bring us continue leverage proud ways. Olympic to our Canadian innovation Committee. partnership our important product This in field science multi-year

stage. on the world brand First, us the expertise it allows Lemon to technical within our showcase and apparel

consideration that and finally Canada. new awareness compelling market, increase mature a with our leverage offers grow in and and platform a is we to Canada, brand men, continue and learn exciting it most both to opportunity of inside to presence our outside it test and can Next, brand our

Our product for each more during worked and member and help team their XX developed the teams feel games. months athletes best XX to styles perform with than

the to and a games, want share to play fan lifelong Canadian a through people of sport. and are As to of I honored helping unite Lululemon that at role all in us inspire

to on move now MIRROR. me Let

This Lululemon growth MIRROR examples. growth and core of Our invest our our demonstrate enable primary be and core strong, in ongoing initiatives. continues new allows and one us the future our driving those to innovation to our is focus to in effectiveness success opportunities of remains results business

vision evolution Lululemon is helping to and building us our community Our drive and core It's an to for our in propel MIRROR business retention program Lululemon membership spend. of assist at for extending both our Lululemon. and

that MIRROR We out we with to initiatives goal. have only journey continue our will on and begun roll deliver this just

you have has year that entire on increasing impacting As mentioned for seen call, pressures industry. our as earnings challenging on XXXX been know, Cack and we a last digital fitness I are the

many bring we One build to of the for unique can awareness advantages brand the ways space is MIRROR. we the

million to Lululemon these unlock the than As the guests path live with a clear engage synergies, XX we see more Sweatlife. we who

owned we guidance to bring unique all our off connected don't crowded that’s through we innovative at MIRROR in marketing any $XXX million proposition to introduction both for to We space chase to cost, with weights, start. are which but the will leverage year revenue a Canada to are not out MIRROR in recent and the and this market great we demonstrated With to million. growth can about to, need of channels. a context, our will and our this simply and of invest for stand will lowering $XXX Lululemon. define We We our launch unique our

line Given their business, of seasonality is timing performance. the have appropriate this heavily its four, on given which skews sight to we of revision of quarter the the

represents X% maintaining a Importantly, will than we revenue estimate of XX% and MIRROR upon. we less year. our our our subscribers X% that to pleased with are by said, to XXXX year-over-year With end build X%. of this base have subscription grown meaningful I'm will this dilution

do new our as engage see evolve to we will to time. continue Although we X to MIRROR goals, in we opportunity over with Power require that it refine deliver not ways, and guest our an

the basis. XX% the our stores a on be holiday engaging and CAGR last educators still year of versus our increased community are vision guests us of two pleased last loyalty sprint person. a with year. maintain not over and XX% to we that in with season is early total This our Lululemon. in to a realizes a revenue creating for forward will our Switching of that captures We store We're the channel, XX% Traffic now pace the in increased and thrilled best start are steady versus vision. year

pickup help and and in-store continue enhance capabilities, to speed our guests, personal stores. our app providing our experience shopping omni including facilitate more for store We enhancing leverage curbside units make to mobile make at hand and educator it for our digital held intuitive for online who to our through continue guests in a guests our educators into offer transactions, no cost, service can’t to

business, year. comps top on increase remain in the total with in of same quarter up robust QX. e-commerce digital sales trends last comes Turning This the to result our XX% XX%

the of and apps, we months XX last the our our and direct is to off experience over websites the continue the We paying for enhance for guests made on result is us. investments it have which

is our over when each realizing and their of to [ph]. across focus with a us This orders we inventory are expectations. and omni, vision our impressive store through doing enabled and example, Thanksgiving an in For was network, the by It's how which visibility both I allows of weekend, stores demand great DBR meet potential. our to have example guest exceed we volume

to IT quarter, to increased investments based traffic significant about the in fourth education produce guest our the all ability center made to continue our DCs, the we several years, volume we've results. infrastructure, forward on last the handle and good which technology, feel of Looking over

CAGR by guest to CAGR Regarding basis. in America. saw region region. two as performance we Pacific beyond each online expand the is QX as our strength the China, see borders our sales clear which each we compelling with we excited across we of Lululemon into stores. continue of a Asia In the for that in our two digit significantly vast opportunity international, across In It's merchandise XX% year to outpaced shows a year and there and generating more brand continue in region, North level to how translates our saw growth our growth across every in we performance response than double international on strong overall major business, assortment China and be EMEA, well further

revenue CAGR to the continues market. year the based was United of a steady broad growth also And with business most over prolonged in following key COVID-XX pace XX% team of in by across and openings mortar coupled improving Our Kingdom, strength maintain very of our an Europe in driven closures. our related store markets, new brick two

We runway for this significant are are stores to XX in track America. growth of across markets open XX to year, outside excited North our and international key the regions by on our

it specific structured industry help healthier QX over on and financials goals handing and to impact agenda, guidance each It and provide our and your be Meghan, is three details to bring our strategies. details to planned, with Before vision our impact who interconnected One we strategy of want well, published human, report will pillars, be create and year be world. additional our transform ago a our our I to a set attention. into inaugural which outlook,

to will the annually achieve We visit to section recognize and more. the We continuous that learn take will on of sustainability towards these progress you goals I dedication take to hope will our website time report learning our sustained goals. our it and

healthier firmly a accountability, We to turn to doing to I'll that, work and Meghan. build and the world. And help are necessary it with over committed transparency safer

Thanks, Calvin.

conservative outlook to the to with QX. for business you over it growth year. But while important continues that strength the it's stores our globe experienced view the in this year trend know our with comp share impressive are minutes. a Our business to and enable guidance around e-commerce improve in This strong teams I think revenue few the to to despite air a raising freight from testament increase underlying we performance. MIRROR. we remained will in productivity in our business The who our guidance costs last core a more of our investors positively XXXX, on continue is for and about

that of cash associated exclude results me Let position, balance specifics liquidity inventories. our QX, associated million $X.X related operating effect with share I the and our XXXX. the the but will financial on and note of now costs million share, QX, include I QX Please of related costs and XXXX, in you adjusted tax also details on including performance. and $XX acquisition will their sheet, in our metrics tax their acquisition effect MIRROR, approximately discuss

refer to our to earnings reconciliations information and can more You our release GAAP for metrics.

throughout increase, basis. increased XX% and up This increase on QX, $X.XX CAGR of revenue to America to throughout growth versus quarter. the XX% of the year, year our the digital a business. exceeded increase CAGR average, For XX% top XXXX and CAGR our to net $X.X within year billion, at basis on On In and In CAGR year total year XX% a revenue Within two expectation channel million revenue year XX% $XXX CAGR and year. in two of of footage two or XX% expectations both XX% we two America, total international last Productivity increased million increased increased contributed XX% the XX% the outpace two and revenue. improving of by XX% new increased net we North productivity above levels than our XX year to XX% increased opened XXXX. based. a a sales line, revenues XX% our of included open On basis of a a leading in and XX% continues billion. stores saw QX XX% three continues This store in trend had international since North to seen pandemic. the of stores we've our in our CAGR XX%. channel, of $X.XX driven of stores is addition better end total Square QX

During XXXX revenue in or third QX, XXXX. the Gross net net million new in compared quarter XX.X% quarter was QX, to the of profit $XXX of stores. for of net revenue, we opened XX.X% and revenue XX.X% net XX

of XXXX costs, depreciation XXX and team decrease by Our occupancy, points gross basis by increase of point in driven relative basis XXX margin margin. partially was favorability a foreign in which was product offset on XX exchange, to basis basis of leverage product XX points and points

to Excluding to would industry XXX challenges, XXXX. a point increase basis versus note declined margin relative related XXXX. chain in I markdowns supply increased have also airfreight would product that

and million XXXX, in net in QX, results is growth relative also initiatives, growth to in our compared of of de-leverage amount XX.X% $XXX to and of coupled revenue long-term depreciation, compared of diluted in tax earnings were quarter effective million on deleverage share year investment amortization filing last revenue XX.X% quarter not to pre-tax deleverage a Adjusted an The in be opportunities. people net leverage and XXXX. in revenues XX.X% adjustments support last exchanging. net with XXXX. in increased XX.X% XXXX of continuing million renovations, $XXX returns. per result in compared was prudently The quarter versus to SG&A a compensation XX.X% third increase XX.X% Moving to supply our to to business $XXX tax $XX continues to quarter or related brand SG&A, approach was the locations, Capital due to quarter net certain million $XXX was of QX, of and relocations of building income million chain $X.XX net an grounded XXXX for from our the $X.XX spend stock exchange. for spend reduction growth. for QX in the of or in fee in deductions QX QX, in adjusted QX international XXXX diluted store the is per year. Adjusted and to support QX, in to or upon primarily and expenses quarter of the reduction and share, managing for XXXX expenses, consolidation resulted MIRROR’s non-deductible expenses primarily adjusted relative to of of technology in the or Adjusted while foreign rate to invest QX, strategically reduction new compared jurisdictions, based QX, tax our $XX year, compared tax revenue, the net to on but earnings The this of revenue ago. to in a of for XX.X% relates XXXX and revenue primarily $X.XX the million income and XX.X% expense were foreign XXXX. of year our operating net expenditures capital investments

our the in average of approved end of Directors Board billion ensure key equivalents $XXX the $XXX At chain freight. XX% to to repurchase capacity Turning facility. increasing the was to strategically than $XXX. with approximately million million for current which at QX. of XX% of chain $XXX mitigate of highlights. to end We QX of XX% includes our share of In and the first grow wide teams cash year million revolving had we early at available quarter increase XXX,XXX inventory of and and credit produced risk liquidity. shares QX production the air our QX our we and repurchased remaining styles quarter of an in XX% authorization, use levels relative higher increase increase, price $X Inventory industry reflecting and we recent approximately ended to to under on At approximately XXXX. expect or approximately are slightly October. is availability total prioritizing million our the the of billion end versus expectations cash balance last $XXX had efforts We $X.X by our of nearly This sheet supply XX% supply product our

full outlook shift for XXXX. year to QX our me and the now Let

to remains acknowledge our the are several us. macro performance While pleased industry that important large supply and as we volume uncertain the of also it's that environment we weeks ahead over have with consumers note I’d Thanksgiving, holiday have the plan multiple their continue to variables we period, shopping scenarios. early for this year. as COVID have for we account been have wide chain business these issues throughout started done the well may publicized, To

in For of year $X.XXX $X.XXX QX billion, XX% two we XX%. to to representing range CAGR expect the of billion a revenue

We be XXXX. QX QX in of to margin expect flat with gross

constraints. reflects an expect This of port relative we from QX In in increase Our pressure costs, basis an our points of and QX approximately points XXX support to SG&A Drivers guidance to the deleverage XXX deleverage approximately in of to represents XXXX this guidance. freight prior air due freight not of air versus capacity XXX expense impact basis MIRROR’s results XXXX. but due to to relative e-commerce business our XXXX, XXXX. to higher investments accelerated include and of XXXX and year, depreciation consolidation congestion in

we a related to share excludes but MIRROR, be fourth versus This quarter in $X.XX adjusted EPS, in to earnings $X.XX Turning year EPS expect per and for of acquisition costs. range the results operating includes adjusted the of ago. $X.XX to the integration

As we $X.XX XXXX. a of reported QX reminder, EPS in of

our we in increase total approximately revenue, mid-teens looking the at also an billion includes million. billion. strength the the CAGR to two Power XXXX. For MIRROR XXXX. to contemplated the When on year low and CAGR than to the from our year XX% our This million and our well to our CAGR up XXXX, grows to and increase teens ahead to in conservative We This stores of for operated year net percentage company our XX revenue XX includes year approximately to of represents a plan. range guidance XXXX, outside the expect assumes range $X.XX stores in we implies revenue our $XXX to $XXX of in XX which relative is e-commerce open in Growth low-teens. XX% approximately billion is revenue leading X in experienced business markets range XX%, the view range full of billion a of This $X.XX in represents $X.XX $X.XX footage new be international prior expect of to more square three higher XX now guidance to

continue basis modest between The XXX increase gross For basis forecasting driven of of prior increase basis compared to in reduction saw XXX an year. we relative to the XXXX. we rate to to tax full increase points Despite margin margin anticipate XX which to margin Plan, year by for the our in of points looking to growth in expansion XXX forecasting an basis expand for adjusted airfreight is year, SG&A to gross XXX points increase to XXX are expense be the of the X Power XXX now we airfreight are guidance versus to the to Growth points expect our leverage our assumes in We expense year-over-year, XXXX. the expansion XX%. for excess we XXX year at annually. effective approximately modest When full

our earnings For share versus for range per $X.XX $X.XX. our the to $X.XX of to XXXX, fiscal is diluted year $X.XX revised prior range adjusted

digital dilution X% EPS are year. to Despite to continues range the the to is percentage we to on Our us guidance modest in excluding expenditures, costs. related guiding marketing, range, view acquisition and from MIRROR MIRROR this revenue, in dilution to maintain being been all assume our prudent the particularly our conservative enabling we've and more with X% integration related

for $XXX reflects shop-in-shops, impact Calvin new Our you. capital the of to versus as for XXXX including range to supply expect be capabilities, call some now projects. approximately store technology back increase updated We XXXX. to also other turn in remarks. corporate as that, $XXX MIRROR our Thank increased million openings with EPS digital The the And any future chain, million repurchases. share well expenditures and general excludes over infrastructure closing renovations, and investment I'll

strong Thank the quarter. performance Lululemon and us such pleased across high you, allows metric which very of to with am level category, a every deliver major Meghan. I

quarter grow am strategies $X expect expand revenue place fourth to for testament particularly throughout and continues a course agility proud XXXX finish with of And the team the to the how a and inventory, enable and pandemic the the year pass The I time. to be strength, leadership Lululemon. first as to and the the annual with to in to the commitment billion in business. this of to begun questions. the of passion continue level happy is take we we upon the your in of us we'll staffing and have momentum We Operator. position build way of over the our people that,

Thank you. [Operator Instructions].

Adrienne ahead. Our of Barclays. Yih go Please first from comes question

great afternoon, you their tremendously a retail, in wanted in Calvin, likes average retail going most power XXXX, what’s is talking initial start retails to touching touch and pricing job start difficult environment. and Good in by for I didn't think the what like really initial to there XXXX. about of the but they are

just an that thinking Lululemon the that ongoing So how wondering to safety issues, sock. you're core for XXXX supply in supply relative of there a as Meghan, in you kind much. about scheduled to chain and pricing. in weeks Thank spring that increase very XX% is of given

On plans pricing Adrienne. have we strategy Thanks time. change pricing our to no at this

and as place We're As studying exist, pricing on that based XXXX. the technical but market make our have into plans and and competitive you accordingly. no dynamics adjustments know to a we heading change make price garments innovation lead always opportunities necessary the with we

that of advantage do opportunities while of sits terms details core on capitalize in XXXX that where team an assortment the at makes and have forward we aren’t showing is pull looking inventory that in actively and plans we in core our to today, the inventory, proportion that product for Adrienne us. sense our in

the luck of for Best you Thank very Holidays! Great! much.

you. Thank

Thank you.

of comes Boss question Matthew go next ahead. JP Please from Morgan. Our

quarter. another and Thanks, nice on congrats Great!

second and which up new you've of mentioned speak to and stores the of demand XXXX digital, exceeding So in that XX% and you you're balance your for to year-to-date quarter. strength versus between Could brand? customer the sustainable video seeing acquisition drivers points supply straight revenues Calvin, the now

number are that. inventory been much Matthew. able the and a the obvious the these innovation for though driving to and drops, results, the way materialized product just even achieve challenge to we've in The into chasing in our categories we've the launched one of point product haven't that which Yeah, entire guest the in the seen overall to thanks There metrics and design is pretty we've be and that. our activities intended teams of been some

being in guest know it at represent our pandemic, the present designed remains said, That during to. strong; which way it and post. there's able acquisition, upside and we So look when was product very to an the to new and the has we before intended

new We guests the into come see continue to brand.

more chose to. brand do omni. guest were enabled we into seeing could them shift engage a guests or those was omni have We that were up different through there and seeing during of only know not loyal, retention remained to spending, strong. position our we purchasing, to early with spend continue the and journey store our some we more access spend digital, the Lululemon store-only pandemic and we when We because such of have strong the their categories success our closed alluded new were were and in high migrating and that that guests guests to have incredibly stores not What

the continue being returned operating, brand with to are men’s. grow. as that seeing them acquirer and stores of up stores back we to Now very the reference pleased we're We great

back get It we know know Now was intention, strong foot best. a through really is of – numbers retention while but to new incredibly guests, inputs, predominantly product out. a men's come And the stronger you we it team only chasing see it even our we're was guests wasn’t able and healthy. and to had our guests, our has you've all having good and they up and migration very our get positioning wonderful are guests a did seen our bigger stores and factor that we above and it, business a job what all maintaining going behind new our XXXX digital of that of is perform those

had and seen in the and That's perfect and you more inventory that elaborate that point far positioning. so ideal chase plan, if product demand. demand to my product your that then color the ability on took positioning, do moment given great maybe meet into Could to in your on and to of wish changes freight quarter, a but question exceeds trends world on an is what you've fourth what you air steps outsized second product, that the position, it's your lead to you or proactive you

thank product no, there saw balanced across We've second top, categories across and you. across activities. Very our shorts, layer, any growth in. we men's coming the men's bottoms, to sweat growth and haven't skirts and been categories on great Overall women's. Yeah, the seen dramatic trends into shifts that

innovating every So doing and across all it as across very be our across region women's, are before, again our the that mentioned men's, we and across channels, growth business and I stores have category, incredibly would for remains There and that each into we and have and activities Outerwear identified we are us I digital. in across that balanced have more of? is that wanted well category depth are didn't performed some the has we light this products season there on. we've wanted. a are would What

Some keep as are in there but enough fueling delay But our our we able we've definitely have able layer and we're than and early that goods, of portfolio leading to across core, of results and the our second more achieved. to have been good through a our in. holiday delayed, our receipts. in made growth items and and where they continue shutdown, been the have and overall, we into air leaned some result seen those fuel key areas the sure of we OTM we've certain to to drivers balance entire are and have because they that categories, is balance But be of We've position. fall inventory freight a the

about and don't freight. XX% inventory product did expectation an flexibility environment XX% weeks six decisions do We normal of of we actively leveraging those really the up XX%, And as I’ll reflective and growth but is something with inventory above as chain for we're managing supply do constraints, to on make much where put that have We chain it team’s teams Certainly out. air there. was which – a opportunity. our have supply just

again! color. That's great Congrats

Thank you.

Our Boruchow Wells Fargo. go next of Ike ahead. question comes from Please

you guess and saying kind guess should way of basis Is pressure. a share what I for to year more. for I get in specific, guess of everyone. what afternoon you I to XXXX? the us too in half guys pressure year recapture possibly just us much reasonable for How kind any should into I XXX freight expect could guys of Good based for if full next you're of on XXX guys see dynamic of or to today to don't the is know you Hey! expect to dig points you we you orders, then spring Meghan, you air based the expect on bit want with first to wanted there that

Thanks Ike.

high there'll maintain into will half point think margin there think we little long Spring move over are mark maintaining commitment put on the the now expansion margin will to soon in our said, air expansion be outlook. that more right historically That we presents a share our year first gross to with goal, next year. well us pressures expect in and business other be as freight but XXXX, low fine five next I full the the a and investments term, an we sell-through modest our margin puts price be as but that and in some on and downs, as year. opportunity normalization our chain supply some ‘XX of to do of we takes Certainly modest we'll

to fair pressure it that the should be this say freight of is air peak in QX? the Meghan,

I believe so.

Thanks.

comes of from Mark Baird. Please ahead. Our next question go Altschwager

for Good afternoon! Thanks taking question. my

you pleased sound start to approach of year period mean the I supply any on Monday light the left forward in relatedly, holiday and table have the in how you especially the Cyber happening. about given there start out, this quarter potential be season. sales some talked chain then Friday, So Were to disruption? also may to And your some but to might versus mindful years, the that prior Black with very in constraints, pull of sales you've changes inventory the you're

on building just rates. level about growth potentially you. confidence and QX the Thank maybe talk So your of

Mark. Thanks

going to well beginning and our investing Black and stores Thursday performed I to further The In sure volume the to pandemic volume, anticipate I strategy back Monday, really we of demand. the and as change as largest my satisfy we made terms ready, the incredibly online sort position hard the in RDCs ready. quite play of digital and inventory get for the frankly, you to promotion of to in Cyber months opening support. our history full that the get of Lululemon no the by we In as thanksgiving team’s were to and channel there a been site mean, didn't our in on day We've and definitely worked tactic. over to the don't alluded markdowns, shopping Friday good we remarks, had was know. take We that

ready So markdown volume. demand, work the there product our there work anything that, anything and to wasn't we core drive the just there saw out to activity, good and unique, for traditional getting all demand get hard artificial with and wasn't

are We you a know anticipating forward. pull

ahead. we We with monitor of the that to the as to There and we're that for ready our continuing achieved the knew weeks. get are big monitor ahead are and we pleased to weeks pleased coming Meghan continuing We're start quarter needed mentioned. weeks November. So out strong and we have some to we're a coming position;

just I’d growth next in QX Mark, terms And of add year.

on that in America give growth in metrics North ability on our on and Calvin again, as confidence to space expansion new was more we'll guest the Spring share ’XX the next well both our and think to our engagements in line, And as continue International us I the existing of year in grow strategies. outlook. to five top pointing

for next thinking guess you just dilutive it platform profitability us how year? if you're Thank give you. to Can I balancing up and net perspective quick some the growth EPS for could. on to you. I on expect And you XXXX? would be the just about MIRROR follow a Thank

Sure.

So within dilution this mean have we're to and but as we year, we prudent year. to offer very not path is in over I then control specifics – been today, profitability terms decrease in next of would to the our MIRROR investment much share to begin expect that XXXX, going we do

holidays! Thank you. Great! Happy

Great! Thank you.

Thanks Mark.

Murphy of comes next from go Our Sandler. Piper ahead. Please question Erin

about brands good the any what for more in versus brands XX/XX Lulu there. just could I the are landscape you're Thanks, talk on hoping early And in reads and competitive bit seeing was then Great! any little national change relatedly, China you a you seeing dynamic market? global in between brands afternoon. in that

thanks Yeah, Erin.

market We our notable China haven't change from in brand in my any perspective opening remarks. heard as you seen the

year of XX%. of to with we pleased very results, the performance CAGR two continue the terms be In

headquarters a stores, invest real unique working within creating a and in-country feel that. opportunity really business, with market that way roles the invest We the is connect to our push we to opening in and play we role in continue Shanghai, to of in community, to exist that in China, see support help jobs and very continue Sweatlife the our initiatives and in that for continue to unique doing with and healthy which

pleased with our from perspective in the making So pleased with the we're investments we're and the connection community.

in mentioned, specifics, I’d Yeah, year it. China as CAGR Calvin in but of with we Erin, with QX, say expectations two completed and performance our XX/XX consumer in strong so XX% line generally approximately in the from terms

your building behind much. platform footwear next Great! how on about is just that investment are Thanks then thinking and if still for follow-up, that initiatives, you the year so material And planned I out. could

the growth how position, it, are three us. our it's track initiative. and growth unique launch it, in we're a for test taking as power approach a Spring Erin. and just on and excited a but reminder, We're the and to our shared Thanks still Yes, about therefore about shared ‘XX that this commitments for new of not it's excited we've inconsistent with learn opportunity we've required

Excellent! happy Thank you and so much holidays!

You too.

too. You

ahead. Hutchinson Bank of question from Lorraine of next comes Our America. Please go

afternoon. good Thanks,

of us the past can North on making give you're margins performance on update hopping and with Erin’s question, the you anything investments given the the international parity business margin about there? an to Just America

Hi Lorraine! Thanks.

profitable business our are international We in overall.

of to that then We that just ’XX. continuing the we path are out first in Europe. the half of profitability still the We ’XX, date impact into on throughout to XXXX had closures experienced and given pushed store

the remind of you question. And of sorry, half second can me your

in to at planning Asia. you're to investments parity looking just Yeah, the make given past all overall the

we for expansion the see international Yeah, in in opportunity That margin. our said, margin. we have certainly the American opportunity North also

expected there rent So pressure, our international region structural North below a would America. bit are to some to little items more in relative say I that tip are and

you. Thank

ahead. of Our Please next question comes go Cowen. from John Kernan

Excellent! on Thanks and taking my quarter. for job questions, nice the

revenue by reduction out chain and the expectations the now MIRROR. the outperformed business we this difficult your versus what what a where there given you what’s last guidance pretty given guess So core enables the from are environment much you outperform I events. gave to in expectations time to your supply core

been I’d it’s Yeah, John say basis. really broad

has particularly store XXXX women's, So come I accessories, well channels to and QX QX, and has both our acceleration so seen At across there. in be in performance, time some e-commerce of with in performance and same been was from XX% XXXX QX, up e-com, then we’ve exceeding as our say from continued think businesses the men's flat nice pleased very as I'd so productivity we've and which strong.

year and basis. year-over-year XX% XX% on QX then in up CAGR two we’re So a

border. I’d pleased really say So the across

A follow-up. quick Excellent!

little lower Just up expectations SG&A acquisition gross for on bit you they MIRROR, comments the obviously SG&A versus Are talk airfreight. where of some Can the of picked quarter. some a dollars, headwinds last implied dialing expense it on in on the costs the looks you of that? bit as back drives there? to like margin the were are SG&A investments Any

Yeah, so QX. that excess QX to Cack we into experience continued our ratio Cack for the did of on in MIRROR LTV parameters,

on are Lululemon back there then SG&A So that a identified line there, side well. as been has that some pull have strategic also made contributing the to and we efficiencies

you. Thank it! Got

Our Citi. Please Paul go question comes from ahead. of next Lejuez

share MIRROR for Hey! connectivity they're number you have the that to and an Thanks guys. as Thanks. does in, terms on what stores your could update next year? just to that in what future shop-in-shops the plans out customer of of Curious, to you give could just maybe are you look Anything you shop-in-shops the currently? us

XXX in across Paul. We both our U.S. and Canada. Thanks did achieve stores, of the that’s goal

so I’ll number, the final it is XXX and call XX. XX the is number Canadian I think around

to have the support early. lead to We in view we're that activating at number to impact leads are again week the through saw unique had MIRROR really and forward. very performances pleased store the of channels driving, sense full we start the We a channel, traditional our test of it's with then this and proposition. ability and with number, of which unique where engagement learn very and encouraging, in those know leads think business to continue numbers synergies of very we doors, you general of building and those it's and conversion in unlock that MIRROR launched, of having One is wanted we in the operation, see it's when behind the a is know critical we results is you critical encouraging how to why demonstrations. sale, When MIRROR say the of is remains one but in which and is role and few in and Lululemon guest we been has of the going Canada having early results convert a just the to and each on advantages stores, both only MIRROR And the example awareness we're have demonstrations that higher product and store a keep uniqueness we traffic we and really been our and our seven which in-store tackle is which test foot – to category just is demonstrations and makes very are X% component key the almost the encouraging. We launch in opportunity, the this last which and MIRROR pleased invest synergies engaging it what our this this, volume retail one online, huge very already relationships with across guest our leveraging and in, I’d days initiative. of it conversion point all two play and X% weeks of key

bit sell customer going Lulu has horizon just MIRROR a if terms the of the your more. actually be that’s existing how in maybe product, to you're And that to using Thanks. base involved on thinking doing of little something

the engaging an is a sweating we which and to definitely on on say using that’s MIRROR sweating sides. to and everybody to both there's be and everybody opportunity want with know you operational MIRROR but there's think Lululemon we Lululemon in I a vision, want be aspirational, it's

our they is guests. a us, us, priority our We is sweat Lululemon with is are more As MIRROR business forward. which the already part we know because these way that and remain more role drives and and the shopped us priority guests our plays business core continue they will big our to move as with of with loyalty and more spend spend the Lululemon have and membership in we more or MIRROR forward, good, of is always with with community a which drive retention a that

is loyalty an So family and see in There those collective but and we MIRROR over, to the will about through we out. able play spend and we far. to those pleased and are There so the dynamics are play with opportunity. acquire come new seeing convert are dynamics them increased be retention, guests is

luck! good you, Thank Great!

you. Thank

Binetti comes Please Suisse. question from Credit go of next Our Michael ahead.

number been year, there I you if the different crowded pulled you then, for as a that they think get And of for forward than Analyst from few maybe some XQ. I for details as fulfill Day, and mentioned on could the get we you quite financial look taking growth Meghan, plan think than lot XX you what and because at some us revenue into SG&A know as the just But would you very capacity back us but a of some scenarios think the the thought Calvin because Thanks obviously guys! Hey look XX% a productivity a basis was I help thoughts on all thanks its XXXX points you the our revenue issues productivity every the give you if – basis times but the the type can leverage do are you realistic much maybe quarter. about. spend, growth has think you just lot scenarios with on up questions. we store e-commerce. should the But times, have I delivered, in pull any close that, you there you actually in forward, of the the model a thought was what to far about pandemic. And know a the some that if parts normal guess season. S.G&A, know fourth higher maybe about there, a was lot what of of helped we particularly I that in stores moving as if of XX%, think to how as holiday, there referenced

know returns and is to at and because As you those look or look those pulling of revenue is did and business Analyst investments period as it you than leverage period, earlier and investments the back Day generated we the just – out end you bigger the bigger a they excluding ‘XX at MIRROR you got thought looking core, you in start ‘XX. ’XX ‘XX that SG&A at

Hi Thanks. Meghan. Michael! It's

term for where question our an in say would long comes So for in flex multiple is would business store productivity, XXXX terms really SG&A. we I’ll and flat managing of slightly omni and I demand good looking the say to scenarios. at to again multiple take a we us QX, are the scenarios planning probably baseline store are perspective I also up from Though to productivity scenario. to terms of

we we're what and modest this growing point our operating of long on growth. income have commitment our remain we term really in is in and plan. excess expansion focused So our income that did SG&A At operating on sales

expenses, continue operating and next some we’ve margin investments with our accelerated of throughout. had occupancy spring come and of depreciation income, We some more grow also our and gross business, which in investment shift SG&A in ‘XX. sits on share to our in in to our dynamic again and growth lower so there e-com the some balance have outlook the to support had leverage of more We’ll five we’ll more year

Meghan. Thanks lot a

of ahead. go Goldman Please Roach Brooke from comes question next Sachs. Our

thank taking so our and you much afternoon, Good for question.

and remarks in strongly guest You prepared earlier to retention. spoke acquisition your

in What you about is of in the might that new activities forward? think you differ guest acquiring versus that or going customer you're years. of guest prior for new you acquired As profile today, the demographics preferred to that talk acquisition incremental guest can the your outlook terms how

I Thanks Brook. age, we But profiles all to the the different into are strong consumers, are resonating gender then retention a Lululemon. initiatives with I perspective, of at with on remain the lot From guest pleased general younger and and health new touch healthy will the a we mentioned, the from here the and activity blends. very of guests the across demographic as demographic very very, of younger continue deploy brand migration acquisition

to of call our the we're Sweat are linked look greatest tennis hike, our into multiple but activity, across and So at two helping and of that's categories, one in spend we very to just versatility position activity clear very early helping with for product play drive. to to versatility the their points: that categories, for we are activity the and defined one, guest and find those innovation then know our run, and allows it spend bottoms, product we it's guests what we've we own identified of to and and strategies. the of is is drive train that and are not they that strengths when significant it these But Life defined what it want strategy golf, we've shorts. yoga, businesses or very new and be second seeing tops, as layer product mind, be you share guests have a existing equally and wallet, share of need And guests

our existing just core it's with one that at on feel acquisition brand and launched cover driving smooth our our building yoga that which both new different spend through feel a delivers of example beginning Instill just a franchise space this guests. approach key Tight, to the material, we activities are guest new for through our know the you female guest and deliver As quarter, these completely sensation franchises

Thank pass you. on. I'll it

more Operator, question we’ll one take thanks.

Certainly.

Kimberly of Please Our Morgan final go from question comes Greenberger Stanley. ahead.

can I a on start gross so just up Thanks great. much. Okay, on Meghan, margin. follow

product I in in and XXX the the of XX so out, XXX I am think airfreight you basis to margin really increase that to that your okay than for you air in had decline points. basis accounted doing charger or a it? Is third say back me right way of here merchandise get points I indicated quarter freight think to If costs that that in quarter inbound margin. more point let's a gross about for an basis

would also, you're price planning, Kimberly! Hi a future sell think full if for looking I we mark historically about rates. just and for had through baseline high lower that down

So when expansion gross margin we're and Growth Plan. to in some into look have will Power margin rates we outlined we committed our as now future, our takes within puts that the modest X and we right

Okay, got it.

if there in bit the next you'll well that of sure airfreight I'm in a I third heard – merchandise airfreight the hopefully for small as a that. downs good back get you will on So give mark the of quantify pure or margin, understood. points cost - XXX the chunk maybe but basis not back QX the year perhaps potential on quarter, Meghan. okay be Did

we Yes, did.

So for XXX points to of also relative XXX basis relative pressure XXX XXXX. the and QX points year to XXXX full basis to in then

the are of either any increase I your colleagues raise for chains OEMs the price you experiencing Lululemon end to cost that cost on ton philosophically think in product feeling? raw Would an hear are supply question Calvin, you makes higher price of to My Calvin, much. philosophy some the know the would that think I for starting for appropriate be to into pricing last that the price sense performance to some our might year-after-year. putting be thanks consumer. heard to in for also goods What that from actual you're try a that we Would way of Okay, labor, that utilities, in the so Asia suppliers and you of materials. that

a we We just look because of a you just I consideration, we decisions to mean, at look pressures. as pricing built it committed the know won’t manage those to premium make margins. much of do But and you've maintain positioned I and a and and variety overall some. other our factors mix price laterally not ways it's is think to product. our to and business – market We’ll at that that alluded as innovation obviously variety brand the of are do inputs has really into there

Thanks the Fantastic! for color.

Thank you.

have That Thank all is questions joining day! for for the time call, today. you have we and nice a the