Lululemon Athletica (LULU) 2 Jun 222022 Q1 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the lululemon athletica inc.

First Quarter 2022 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 athletica. to I President, conference lululemon would Instructions] turn Investor now for Vice [Operator Tubin, like the Howard over Relations to Please, go ahead.

to Thank and quarter call. good Welcome you, lululemon's afternoon. earnings first conference

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

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

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

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

call financial I’d find remind operating to summary of like begin our you key will hour. visit our as Before X the as our scheduled first a site quarter investor to infographic. where for call, well investors is statistics Today’s we for the our quarterly

one to please So have limit over now like the a turn their call And give to at I others question opportunity Calvin. yourself would time to questions to the addressed. to

I with two. pleased the our growth many saw next highlights as you, presentation New lululemon, our at to person be York. are performance. a upon and Power I you we recent in one here These since plan, Thank our been today Analyst five-year Day exciting times quarter am just Howard. you share of It's month of embark X times the in of for over

are energized teams you laid we make and shared. out. the Our future providing with progress key of work on to initiatives I earnings we calls, updates deepen look the forward we as plan on the

and time our unique strong lululemon, to spend aspects the macro However, I'd environment to our continue of which like the performance. discussing today to contribute

CAGR basis very saw XX% in our first continues on year a momentum and and versus basis. several to response earnings the XX% is in core you grew this that the are to last and the our three-year As off impressive quarter new in the notable an our XXXX start. adjusted on Revenue per increased and share product, press XX% release, guest business Starting quarter. same XX% merchandise and with metrics our performance underscore remains There strong.

with XX%. experienced inventory approximately last position e-commerce we robust and stores both up And growth a demand, drive to continues channels, relative year. finally, strong we're in and traffic to in product Our

COVID-XX minutes on the momentum remain to With supply the and of up norms, mind, quarter, comfortable are with of in global closed few conditions we higher and our are related challenges into allows modest in our chain. given Consistent business we're chain. to we the in the to its within the Throughout than the to many and like that have us with the impacts a This second China, historical levels the retailers period supply our impact XX vendors. with While I'd we of for quarter our region, and our our the and our that a-third composition quality stores are seeing some stores inventory. with spend balance current first operations COVID-XX-related time. both on of seeing lockdowns a the of on seen

are in we with stores the over see basis. Even and are I'm to year a business double on you've reopening revenue remained closures, quarter, with digits in starting solid last first in Shanghai. three-year versus growing seen, sure As this growing restrictions XX% week, ease the Beijing, our and CAGR

of as our the we growth include looking volume. our openings components, track China. new on represents to trims China the for plans store addition, a Mainland volume X% of only fall Mainland When international XX sourcing unit planned upcoming remain this the for when increases. majority at goods X% and total year our From are other finished season, perspective, In

and experienced of of the our we expect and now up majority Although impact future vendors on level delays some running, are have receipts.

about the contact and said view with working the business Our risks. our current short and term current staying mitigate to teams in as in of are China, remain nature. we vendors Having this, regular all in closely our the we excited situation situation, monitoring

region, which balancing satisfying line strong, our to future guest demand. When supply we market. and team commensurate global in invest lead ensure meet improving To high. freight, address the we're at help looking uncertainties remains see times This a lululemon challenging. momentum our demand with Ocean are and environment investment is this in comes business we air priority. what freight time for will air with holds costs Our the important overall, chain, as issues, given continue we the carefully a is about to not excited in remain remains momentum important the these and guest brand

guidance. costs change ocean air trends all we pivot when see to our lines allow from and time Our in included us to are

assess and spoke just mentioned now as input Switching continue about, inflation, we increased air manage. to will freight. quarter, I to raw and last are as we We materials, seeing on costs carefully labor

We continue taking cost on to and ongoing are to the our efficiencies opportunities. working to include vendor actions the identify P& situation additional impact with mitigate partners pricing closely management L. our and These monitor

As a previously, we price implementing I've not to have seen are shared some sales impact select as negative any increases volume and our result.

period a pricing remain and this said, cautious Therefore, continue pricing unlike monitor a strategy. will However, use uncertainty, are we and sales. strategies, approach do the around as industry, line maintain our many this we increasing to prices to top in drive not intentional I accordingly. we very with we That monitor and promotional response measured guest lever of in toward

the which the quarter unique in of Given drive times our highlight performance for strengths to operating, wanted quarter. I you lululemon, after which we are

We the have to many ongoing that and attributes lead in brand our make business. our create competitive momentum unique, advantages

pandemic has returns, shared fundamental grow. I've as for increased. to change guests and has live provide an active and recovery compelling versatile that wanting apparel to guest lifestyle opportunities desire behaviors related to healthy Plus, normalcy include before, and to contributed primary their categories, for well-being the touch And in finally, As seasons These our our a us and additional support for athletic direct and with every balanced growth the mitigates downs. connection focus and provides a to our a on very demand across apparel have model geographies, gender need we incredible strong to activities. and for across approach creates guests point. product our And DTC technical merchandise insights with our channels, mark across looking

a to growth for this we positions of take business. of our continue us and balanced continued will holistic view All and

innovate all are speaks while early our fact, our In momentum. to contributing strength to levers brand is business our and maintaining performance. and in is This of opportunity our to innings the our the all unique,

further innovation. our Finally, at look product let's

of to our of assortment innovation continue platform a the science to solve you unmet variety and when activities. technical needs assortment, you merchandise feel our a your principle across features foundational is to of bring We field to athletes science bring the We consistent our for leverage feel into perform your to flow our best to new best. utilized of development

women's and out men enthusiastic. it's With buys, very designing and shoe, In shoe leveraged first women. We for bring XXXX designed specific to designed women's to And X, our a meeting in response Blissfeel apparel footwear were XX-plus of best were for with prudent proud seen our been then we introduced We was adapt of solve industry has in by pipeline developing we unique World. for all stocks. the The shoe and strong, experience the have of the women named bedrock our years inventory product and that remains launched we we since it March, Runner's the the footwear and Our first. tennis, technical in we with response. and guest footwear, golf footwear quarter Many business. great space.

to our sales be a in exceeded expect in the forecast. better position far coming we demand inventory has Although weeks,

we As be do the remainder that of for year. will the a result, into chasing additional we anticipate inventory

play our specifically activities. manage strategy designed quarter. leveraging of tennis This comprised sales. as for to performed core assortment, well both well our collections our share from pieces wallet while activities. Golf grow assortment our core and of also These to this are allows driving styles Turning as in these us

pleased lean these We with to continue results these are and strategies. we'll into

have tell. ahead several stories quarter Looking exciting two, we product to into

development, fabric into determine for launched assortment. lightweight and also four First our innovation, women. a Run is our technical of while the This they mobility expect years styles unrestricted collaborative and Based looking of and delivering to the fabric men in breathability performance our SenseKnit sensation apparel zones provides with support, runners we X have seamlessly support, collection engineers we And upon the brought fabric. Lululemon. work newest to that continue from and ambassadors expanding SenseKnit, endurance are market proprietary we and research SenseKnit athletes, after week, for our sensation the directly

weeks. new has assortment for our leverage we've elements need as of and to heard Hike, is track launch This the versatility styles gained on specifically hiking unmet to done in designed guests hike tennis, our coming during This core hiking. golf pandemic. popularity the will combine Second specifically with from of we're as with is we the our assortment core an

Throwbacks. is Next

slide excited of and on footwear, spending product week, later has is Chargefeel to this opportunity. the some has to considerable been of team guests' jacket time styles styles, we versions track remain and for Inspire the are initial Asrto launched and just re-release this next two our limited out beginning second This best which with response. revamped mentioned, roll including category, our Pant, Our And just this the style, and of shaped additions of as Strongfeel. the our we We archives Restfeel the finally, us within find year, Crop. I in favorite our our best

and business operating our our summary, brand. product momentum the by the our in growth. So, results of innovation, our guidance approach and to model, enabled balanced our omni is of demonstrate our our strength This and

us, We I'll through now have manage guests, our what's continually to our Meghan. that, how shown the stakeholders. globe and ability it to by around our our consistently am other, inspired for With and I teams over deliver each happening turn for around for successfully

Thanks of you in saying to Day to I excited get Calvin. recent speak how begin meet person. was our Analyst many and I'll and by host with

on As for early we the launch used to goals, next our total we years. our five XXXX plan Analyst revenue delivered growth Day

of the Power Our to named a for from in $XX.X of upon billion xX. new $X.XX XXXX. plan, Three XXXX of calls billion doubling proven new and in revenue plan we've Power our total builds appropriately Three Hence, formula

Our new ongoing macro already headwinds we're start our a in against the teams environment. solid despite are the to plan and off executing

QX the approximately cash let including also So, me our will sheet, I when specifics performance. MIRROR you share and of comparing our position. million on tax financial XXXX QX details discuss exclude now metrics results XXXX, adjusted on $X for and operating associated Please QX for with effect. with that costs note our our the acquisition-related inventory balance QX the XXXX

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

and stores opened throughout that basis. with of in a increased above revenue of since closures related increased of total had of On a net XX% last a XX% currently trend an QX. QX basis driven Work have the basis, new average, in ahead predominantly stores by increase COVID-XX continues way to impact billion, increased our total digital. in XXXX. $X.XXX current our in to increased of CAGR driven on China. QX. by from a XX% Comparable levels XX% footage outperformance net and XX% versus XX% XX% XX XX% to stores America. sales and sales three-year XX%, We Productivity revenue On one-year open CAGR with QX, was North acceleration we on guidance, to date our In store three-year in XXXX For channel, QX. increase the year, addition XX% increased a

within a we of topline speaks CAGR traffic time, nearly total nearly basis, we XX% On stores new our sites revenue. channels. revenues XX% million XX.X% quarter, traffic to operating revenue of by basis, to traffic omni is while the Gross most In in the co-located to XX.X% increased three-year This on both XX%, model, with I'm compared revenue of international, on five e-commerce. increased America, basis a we in In category, seeing XX% we're and four over our profit and increased CAGR or opened CAGR same channel, revenue quarter in our a with and $XXX XX% three-year engage increase, QX, million three-year XX%, digital e-commerce During strength net basis. in increased a men's net what first increased net the globally of or and three-year stores North revenue ways up basis. saw them. XX% XX% women's and our as same the across completed accessories grew Within was XX% a stores, and traffic in XX%. on of contributed And for $XXX XX% both on also XXXX. apps excited over increased to convenient the at guests optimizations. CAGR

XX relative points increase approximately last which initial than Our decrease gross basis points basis to basis by markdowns product points challenges, of air margin point XXX freight, product increased year QX last of with Markdowns was to driven XXXX, XXX chain was decreased year. margin. approximately our of guidance XXX to flat a decrease were plans. Relative points. basis higher included margin related in in to an basis to by usage supply our macro due relative XXX

basis experienced fixed on This leverage of basis XX also of costs, by We foreign driven depreciation. exchange. from offset XX partially by deleverage and points was occupancy points

Moving to SG&A.

to relative earnings. of was decrease deductions store of capital accrual adjusted to portion XXXX to store tax $X.XX approach for and relocations our of QX quarter diluted related long-term on resulted in in our technology versus to expenditures compensation, XXXX. stock-based The per investments. invest prudently for pretax the to for primarily operating XX.X% income by were per withholding Net revenue, earnings, quarter, were approximately quarter tax offset XX% Capital locations, is quarter in corporate expense increase effective leverage renovations, in first managing for growth rate $XXX ago. QX, support continues quarter XX.X% last and freight expenses, million million, to growth, expenses compared and opportunities. of an a in earnings in also taxes to be of to diluted revenue, fiscal compared Our continuing XXXX, of million, a or and a somewhat air was net our SG&A the strategically million to $X.XX grounded an for XXXX, year inclusive SG&A relates the $XXX channels, business points QX, $XX investments investments year. QX the primarily XXX from while QX, and Canadian of $XXX due income net and year revenue compared for million, Leverage depreciation. last in of share, or XXXX. our Tax the was million to the Operating increased quarter XX.X% $XXX margin adjusted spend in net expense. basis or compared of compared or in XX.X% new share to the to $XX of adjusted of additional and XX.X% digital

versus quarter Turning was grew of facility. the cash with QX. to billion and last available XX% at million our equivalents and nearly million revolving balance sheet Inventory highlights. under the $XXX end and year credit We ended in of capacity $XXX cash $X.X our

having these freight costs strategically momentum, when impact chain higher industry-wide to on basis. a air to dollar line on continue help our support We supply with top an use looked and mitigate at issues inventory

as XXXX that of positioned of to relevant mention QX due on guidance I'd CAGR important times, beginning unit we is that and approximately well in-transit three-year XX%. left for comparing inventory point, guest the account, CAGR increase and last XXXX is line XXXX. supply to were plan demand basis. increased as since transit Hence, given this year, is inventory believe points the XX% our challenges is percentage It's on mention the to likely to have relative basis, relative ocean also product CAGR end the X XXXX, they unit most the into QX, chain comparison three-year due to pandemic. we On to year. the to We teams chain up that top relative contributing XXXX this our a supply issues. taken XX% of table under our a inventory receipts a three-year also of Again, to at

We XX% inventory. assortment, which core of our comprises also our leverage approximately continue to

approximately unit approximately end of On average quarter, the basis, QX. our will $XXX. program. $X on repurchase repurchased XX%. remain QX, authorized Looking of recently In At billion the an dollar before XXX,XXX on forward, levels we above inventory expect relative inventory dollar In begin the unit QX, growth one growth levels in at be modestly the to QX of to a see at remaining year CAGR approximately had year end basis QX. price up the both to in $XXX moderate million we of growth a last rate three-year and shares highest approximately year we will

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

year XX% to in to $X.XX of a three-year growth one range CAGR approximately of of XX%. XX% For billion the QX, $X.XXX billion, and expect representing revenue we

We net open expect in stores new to QX. company-operated XX

approximately We of gross to QX be to points expect margin basis in QX XXX down XXXX. relative

an XXX to flat points approximately constraints. of costs with port basis In QX, of freight guidance be to pressure QX includes we SG&A Our QX impact relatively expect our rate due congestion and from air capacity XXXX.

to EPS. Turning

We quarter of a EPS be range adjusted expect of $X.XX $X.XX share adjusted to to ago. in second versus per earnings $X.XX in year the the

a the range expect of realize to on estate in excludes $X.XX we to gain QX. $X.XX sale Our $X.XX real

$X.XX three-year XX% in of range of When of forth which our be XX% in low For and higher year revenues XX%, our expect of at to to to e-commerce teens leading of high higher the XXXX, the grows in assumes to XXs to full a relative growth XX%, revenue, to our business now we This continues growth the billion XXXX new $X.XX range be set total looking ×X up CAGR revenue three-year our target to billion. guidance plan. than XXXX. Three the than CAGR we Power approximately implies

continue expect net open new We to to XX XXXX. in company-operated approximately stores

include openings new markets XX and increase XX% the low in in in will range XXXX Our store stores in represents footage international a approximately total. square our

full points basis increased in costs costs XXX strategic between Studio, and are be versus our through content in XXXX. investment increase reduction decrease margin and marketing, will in network year The by flows to to XXX which SG&A. For digital is MIRROR. relative for offset a a gross forecasting increased the gross last by margin we year, The to driven DC reduction lululemon development

versus expectation of a now have we our flat. to XX basis prior air In expect addition, approximately impact negative points modest freight of

points now the lululemon sales shift the I we Turning last for mentioned. by just MIRROR air Studio, mentioned. leverage it basis to increased operating basis at versus forecasting for XXX And driven inclusive XXXX, expense full just to of the SG&A we I points expect incremental looking with in approximately when of year, year XX the and investments be XX to freight XXXX, margin year, of flat full are

the to full tax we XX.X%. now year rate For to our XXXX, expect XX% effective be

XX.X%. tax QX, our rate be For to expect approximately we effective

versus diluted in share XXXX, per XXXX. adjusted fiscal of in of $X.XX EPS expect year the we earnings $X.XX adjusted to the For $X.XX range

on gain in any we repurchases QX. guidance share and real the to the realize excludes EPS estate Our a impact sale of future expect

infrastructure be to XXXX. as technology increased continue The store and as digital supply to chain, $XXX capabilities, and expenditures other million versus new expect million approximately openings We general reflects XXXX in for renovations projects. increase capital corporate to $XXX investment our well

remarks. Our to $XXX power our approximately current in turn that, Thank range I'll of for Three over is it of of you. X% with xX million back to And closing to $XXX X% million target X%. Calvin revenue, with line some

Thank you, Meghan.

As toward we to delivering that to an Lululemon the results, that every years. lead my potential breakout you both Lululemon emerges the navigate which of the within weeks It us all We uncertainty take the participant, industry. as confidence about five in by questions. can to work leaders next and globe. deliver held the to from we'll And Three our our was and simply And incredible. of now people is and every our kind from virtually Annual organization. this X,XXX Two of our helping feel their Operator? brought double detailed sets within passion business to best. to our Summit see incredible on lies our retail It's reinforces ago, culture your ahead Leadership growth enthusiasm elevate and during continues performance plans we apart what at xX for spoke around honor our goals the Power from our together human Lululemon purpose,

comes Instructions] Matthew with question [Operator ahead. first The Boss go from JPMorgan. Please

congrats on Great. nice quarter. another Thanks. really And

about across thought CAGR, the striking across you was North men's, top quarter I and line this women's, what international Calvin, the meaning was consistency, strength XX% America. So delivered

it? driving upside comments think to ability relative the speak to about second you brand that of start the you the best maybe just then May how So to the Any the overall maybe quarter? And expansion inventory to versus think is have? demand the momentum what could of chase TAM, you your on help really to

QX those to innings we to and internationally me continue as category, Matthew. of before, men's Thanks, and we're across channel growth, you've where double innovation, similar Well, And to and across retail business to heard our our working gender experience balanced levers -- our product activity, growth momentum markets. digital plays of in know, different. in I we all early have while women's levers, it you was grow and our think America. it no plays And and how as still with physical of and in penetration we and are double in room our all to growth we store the North footprint opportunity we're say

a last in lifting the as look the working success. we've the it's So tennis, our in seen continues business, own innovation into gain to strength with knowing bring golf our and to few new in organization. help the and of continue last well play the launched ability, quarters core. towards inside that innovation product just and we it's what might SenseKnit, future And that across to sharing run. And our further to a we levers credibility of which our of quarter and as is in launch the as categories And to we saw balance play the activities do those our activities that been and lot out. have of continue driving goal run, and We doubling into narrative one, good and you as yoga, can pipeline years wonderful the days, train, fabric we very achieved feel all the we and forward when look future create confidence I the see where the forward

of pipeline resonating for the we have how see excited confidence very new I'm opportunities product forward. innovation is we'll So, a in move that about as continue to growth and those lot

in we're Matt, of as guide with three-year I'd business of momentum for inventory our we terms the with progresses, And continued feel QX. in just CAGR really reflected the our our terms comfortable year to And in position. inventory May, add think that XX% I the then to in as pleased relationship sales

for year, done team to we XX% little nice a job to As the into feel second our bit more overall. now of full conservative we us more have well demand. of the meet in to positioned in a XX% move QX, are a some has pulling inventory forward the of the guiding and to macro we half, given to front sight QX of clearly uncertainty And line

Best great. again. luck. of That's Congrats

you. Thank

The Mark Baird. next Please with ahead. question Altschwager go comes from

my see good for question. guess afternoon. updated guidance. the the Hi, you respect taking to to momentum. first, Thank It's I just with great

both flowing even high sales of with headwinds than on the you -- others more QX through there. and that You kind with earnings raised guidance and facing of the some some the the end upside are macro of incremental out

business? broader demand? you of plan for So, has year more. the you you to what could have feel unpack the of kind the regarding I a about that perhaps consumer I various bit was incremental hoping changed guess do And couple the remainder ago? just months how there in relative Should the a be levers of some choppiness with

Mark. Thanks Yes.

the There, sight I second quarter, second three-year little as overall XX% we've reported more mentioned, time. CAGR of said, line for rate. benefit from the like EPS bit a of into the is year. as freight upside. year, some flowing reflects this air momentum incremental flowing we for then have we do So, our obviously terms pressure comfortable raise quarter QX of in our conservative the I the through in to tax have at so second which our feeling guidance. QX, also And in for some point of But a little guide and half

as scenarios ensure years, terms and flexible employing but demand being of multiple well. guest able leverage, we're couple we've there meet demand the the it remaining In as freight, with as running it and as air to comes of been over also that on we're to last move year, matching throughout pushing we flexible

years our developed terms So, certainly using how the are last agile meeting of we guest that we in in muscle demand. of throughout couple that

give in just seeing And on but is perspective kind is guess, you that. trends having I terms your I and percent tracking of I of what you're those us full a what you guidance for if that mentioned, with could the this, incorporated Thanks know, mid-ish-single-digit little Thanks. of productivity? store your China, more just bit to where kind but back getting a closures sales, apologize I -- missed quarter-to-date? it's in

Yes.

stores strength more China, have our of Also would so seeing, impact Beijing. a and situation close in to continue stores Beijing comes small Shanghai. of in was approximately our overall, I Shanghai -- sourcing, by X close We unit In in say, week, of China, did also there. the reopen total we into our this the closely our improved currently, account say, XX, of of We've monitor closed that regions. we're XX% begin And seeing terms and taken of out have QX than but keeping of in our I made volume ease restrictions in guidance. XX up of we're primarily XX in overall that a on eye, revenue other percentage to would And there. out

luck. Thank of best you and

Thank you.

comes Ike with question next from Wells Please, Fargo. Boruchow go The ahead.

Thank you. afternoon. Hey. Good

Meghan Calvin, ancillary markdowns Is potential any curious rest I more others? of the feel little Just you Like, women's, year. on than kind of but bit a on are know Thanks. Meghan, at does what like the just it on have I your your you bit a rest the pockets think any categories, could of XQ where maybe area in then thought you little cadence where flat said, there inventory newer men's, broad-based? there a is of -- too were into year? And -- change looking this -- and just the some is thinking QX, where of little there's the much? talk categories bit markdown of more I'm

Ike. thanks, -- So

unit possible, three-year inventory XX top of points terms well and and don't have our which the in then pockets were of basis environment a relatively little an down in wish our a I'd at flat anything, might on core year-over-year QX cadence given XXXX. dynamic inventory, had so XX% we QX, the change positioned. business we no be inventory, some as as trend We and certainly with well markdown piece liability. nature where is assortment confident line and And we we XX% I in-transit of -- of the basis come just for there throughout going aligned plans have been, into where adjusting when more, feel CAGR we a bit to If growth, feel to mentioned, markdowns attached So doesn't inventory into of say, year. about look the our pushing markdown and our with

Thanks. Got it.

you. Thank

The next go question Stanley. comes from Kimberly Greenberger Please, with Morgan ahead.

just Great. results some to Thank suggest I ask seeing, and the we're is a least you. your There's market this But for signs your base. Greenberger. end chatter wanted lower This on weakness Kimberly don't customer all slowdown quick on in there's Straton across the at consumer. a any question. Alex

also you is could customer you of remind of to, talk can you kind certain household income across maybe if customer? us So lulu or demographics? of And regions see just a certain in what signs average weakness any in the of

Hi, Alex, it's [Technical Calvin. We… Difficulty]

the conference Pardon the the reconnect This Pardon speakers we with We online have us. interruption. speakers. operator. interruption. the as is back call do the standby, Please

Okay.

everyone. that, about Sorry

out. at here WiFi the went office Our

cellphone. question a and with from we'll in your dialed call. then are I'm the we Alex, going continue to So answer,

I'm not acquisition it very guests about been guest going spending do strong, beginning. spending so from has apologize very of we're the guest has year. real good see did guest on we we impact for strong. any spring. any last the feel got material how I again, the the here, not with question both and of of stimulus did and a as over their healthy, We of behave indicator growth this to health in-store contributing we been you in cycled and very very We the seeing interruption. another to new out, the And guest. numbers, from momentum engaged that But earlier of the both traffic part health our answer Current experience I our checks the We benefit terms of company. good my So shared online, think take hence,

this QX, macroeconomic we every as and to look needs this engaging but category, we forward, continue healthy QX, So prioritizes and metrics product for the their in where our the spend very their versatility how of conditions, in day. remain optimistic it monitor guest beginning guest see is and

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

a year and worse. guidance full little little good like wanted It on focus a I XQ is minute. gross Thanks, the better a afternoon. for looks margin to

And pressures I air So XXXX. maybe through much you the quarter should freight you throughout offer then was in both there? insight of parts fourth the of on you go then expect how recoup these could moving some wondering to some and

margin, in decline XXX point to the full terms we're XXX gross pressure of in of points for so Lorraine, year. guiding XXX to basis and approximately QX basis then

we look include for year-over-year. points of flat. pressure. to from year year, basis for impact points. modestly air in XXXX, pressure point of basis note previously would even And also the as at, increased we that freight XXX just operating The margin We then the a terms freight pressure air inclusive air full second XXX basis outlook When of our I have does the XX freight had quarter under it's

you and for XXXX those to the keep the say, long that. in the revenue team that think as the then So I pressures you. certainly this mentioned, balance to supply our obviously will to closely I chain of recoup and continue at over Calvin updated as and us momentum. the we'll Thank point opportunity moderating decisions, balance we with you see think with the But continues term be time, environment, and monitoring

Brooke question comes next Sachs. The Goldman with from Roach

our year. consumers thinking get agile your potentially into looking the with afternoon dressed How shift Calvin, thank remains have so to these that consumer they you versus may I'd last a shifts much world? as to you're Good preferences now ensure and and you. brand Thank are for living wallet how COVID between how dressing are categories taking consumer on share you perspective question. like about

Brooke. Thanks,

factor versatile the core most is I apparel. assortment our important think product to performance is

around versatility activity-based lifestyle times It And at saw pandemic. our is uptick house, continued. we gear designed activity, the used of sweats, has that outdoor through as for an for the behavior use. Although has that continued

very the our is as activities. strong as brand our play and continue well about a the drives result key that assortment. we're the confident strong grow within OTM grow business, that of to in how that. seeing between strong innovation with we've have our the choosing train what as to happened have And that into general seen well the And of what performance that are are core versatile continues But we trends women's as through essence as lifestyle men's, do through a factor and functional to in performance-based and ability the our brand. for that excited what play the in opportunity have starts feel and studio. categories every the is which In of sales was as yoga, of we're QX, we in pandemic. in to to our run through So we now categories the And assortments and from a I apparel into they QX athletic pipeline it shared I people as But our those day. very innovation think we to

We are in and business momentum. activities momentum of the to is fuel and the and that supporting post guests biggest driving be growth continues their the pandemic the our our sweat during of and

go Paul from Citigroup. Please comes question with ahead. Lejuez next The

to quarter. you on think second XXXX. your occupancy an also Curious curious, customers? passing to you us of you XX through Calvin, for versus willing of Thanks. you're I some what mentioned seeing this about prices. absorb unit on Guys, And cautiousness higher second and half update average costs through mentioned you're look I'm think much points question, half the leverage the pass into first I you give on how can then to might basis what

leverage Thanks. point? is at Just the curious your point on occupancy this what line comp

Hey Paul.

terms I raw in of air increases AUC, freight put modest in So, aside, seeing if material prices. we're

monitor suppliers as in AUC to look continue XXXX. closely our and So, those into no we working impacts, with material change closely underlying our and

our about XX% In terms of pricing, we're taking modest assortment. of price increases on

before, strategically that the competitive our of terms make continue goods forward. and strategy quality to of move prices at as look said and a we'll we As in use we as and landscape, we

large I our to as our very three-year leveraging trend, In topline XX% well as strong obviously, our of topline occupancy, outperformance strength terms at And think of a sales on overall e-commerce CAGR. the given occupancy business. -- the degree,

that the leverage haven't continue see as We we but point, line out XXXX. on throughout move to broken item opportunity

Thanks.

what materials percent price you remind Could me are of follow-up. quick of petroleum-based, raw the your oil? just oil one -- tied somehow Just to

We can haven't broken follow-up additional that information. with out, but some

Thanks. guys. Good luck

comes The from Suisse. with Credit ahead. next Please go Michael Binetti question

our Thanks guys. Hey taking here. questions for

pressure in was year you question Just air in baking pressure, leverage one basis to I basis earlier, first think to XXX started quarter housekeeping. positive think last points in XQ. year, for you're said get Meghan, know for air the the points half. helps. as the pressure To comparison basis I you of in I quick second paying And Lorraine's XX of XXX of freight freight points the

that maybe back picture, air it make I would take some want So, guess, -- quite heard cost I Lorraine just bigger go I to that out were sounded get trend pronounced to pretty here prior consumers sure say then, accelerating costs. like because Calvin, versus the e-commerce stores. has you back can't And time saying to I freight some it we've of e-commerce to air a of quarter basis. the seen on three-year slowing dynamic is one a been that the as actually with business thing jumps other brands

that guys go you point that helping good Aside think execution, just of in the direction other industry? channel old-fashioned specific the anything from of is out to you kind

Michael, I'll first the take that of part question.

we some are in second year, So we move year. half increases as of last terms up into of freight, against air the the

we have be looking point terms I think, the expect at to we're one-year a But impact of when how QX future, off coming of So air would freight leverage say look a basis. the on I in moderating, to think water in too a last we air in do I early lap expect year. say high the but see of as line year leverage to on XXXX that full freight, point. we how QX the

a And factors. online of I performance, Perfect. it's think our number on

large some very continues above talking growth start and numbers. store levels. by the said, strong, productivity XXXX over in very were the performance I'll stores you As cycling our just to our be about

and both and in mentioned, and So in be and is come at back seeing were e-commerce success the traffic are And And store in expense guests I stores numbers. strong healthy to they incremental continue the not benefit forward. where our of -- perform coming to we continue productivity as online stores moving very above is to the our in. as were XXXX, very

We good a online on the of forward Specifically was boils we online investments. saw of down as And experience category concierge how basic as both a done reducing foundational, some efficiency team to channel. online, guest-facing One, around our a friction, some a also very shops. That well factors. in like know, through our on pulled a our initiatives, I we and has work think checkout footwear of product. the merchandise of there are The lot couple efficiency, combination you educator. initiatives, as just guest of engagement it strong lot

our the lot golf they're around it, in think early, And performs tennis yet we've online and secure and the are when in traditionally into both they I very they channel. time store channel. well online, shopping in Newness relationship. spent an engaging really store And newness quickly still building a diving omni-guest to and ensure

that that relationship building, last and we've it's omni-guest and nurturing or years. that But behavior initiatives team key building utilizing the So of it's a and product been a has the drivers of down boiling combination for that few definitely of been it. the lot been primary one of the is we've to

Okay. Thanks lot. a

question next Adrienne comes The with Yih go Barclays. from Please, ahead.

Good afternoon.

if early. tennis, wondering my footwear. was you insights share capsule what I stocked very golf from Let me congratulations. the and obviously Calvin, on They you were have out launches Product learned add looks fantastic. your could in

You're some waiting for replenishment there.

footwear So other you iteration like launches next for informed how hike? have new these the categories about and Thanks.

to some to A category footwear as We're for With that then and opportunity I'll play of about scenario, impacted start received expectations. adapting. it our and launched. a we is far into we're excess meant us. an going to take for a quicker with would sort to brand the pay I'll Encouraging, the focused little the fly a in an move be Thanks, not incredible footwear. but going supply and industry a of which an both it. chain excited the with wanted Great. guest. challenged knowing it's things, than global And in the bit that product we footwear exceeded we're supply of would on Adrienne. anticipated. approach, we've and and than demand and the test-and-learn we forward, have We is What's more all in we points supply think well ideal And exciting had shared, definitely capsules challenges, but we couple team it that and in lot went test-and-learn of learning it's was definitely moving that in demand

But have guests category Blissfeel will the we and we're we that expect some these So learn in to as through incredible we'll be resonate we're build this going on that we stock But periods month. coming we going to we'll back as go. going with. expect the colors be

we've We launch and a and this have Chargefeel fall. that very positive to our then slides this in response and summer both men's that and seen Strongfeel later week, already dropped and women's

how it's golf about I assortment positive Masters is Fernandez ability extend during mean excited we're brand is are tennis categories, our tennis that future to and our a golf needs. the as and opportunity versatile designed our PGA we been really in incredibly fit put of elasticity a learning a then both championships indication head-to-toe of as and And the a guest think indicated. are So opportunity and of well I our the drive offer very responding solution on wonderful our activities. our hike. and as that on the on into well, and And fantastic. percentage products spotlight for also our small those where solutions and and activities and product And we to the as a deliver specifically we design into unmet has leveraging assortment leverage core Leila to both ambassador and performed when really you and teams having

and strategy, more which lifting So team's learning. the resonating, well said sales in it's I it's where products we and wish in guest share of core, our and our indications guests. expanding had think existing It's one acquisition both both those and is working we those it's delivering of but Meghan wallet with

this guests excited how quarter the we're and So and of in the year. rest happening responded newness the with about

Thank luck. Great. Good Thanks. you.

Kernan question ahead. from The with comes Cowen. next go John Please

quarter the on in chain wanted what's momentum. of for cost some to are and question. back come air supply go environment. where supply great back Congrats there to Maybe the Excellent. guess, I average half. will a a down I rising Paul's the Obviously, in unit you chain cost offsets and freight

the offset are areas Your supply But environment to and XXXX? where very pricing and like chain rates an power. within what into got inflationary you've low, looks markdown the are

Yeah.

date, – be materials of I increases to taking there, assortment. and say we seen QX, started we've have some And prices. increases raw our in price modest less than said, XX% will we terms as in on I'd modest of So have

a have the We to-date. roll haven't seen throughout price year resistance And there. as few continue any actions we to we'll

continue that to we'll look as at a So lever.

I think even we margin at XXXX, we for operating look of are XXX freight. with overall, our when basis under year modestly that the point pressure air

obviously, our in near-term five-year our should opportunities navigating business the continue So momentum in across feel importantly the have of to and look through as average front continue that some drive terms in opportunity deliver expansion, operating air challenges And of that key to pressure. we of terms environment moderates, to our ensuring target we well. margin us freight of investments recouping air in freight with those we as modest on business

follow-up quick Understood. Maybe one on inventory.

competitive confidence full we levels point. sector, competitive just going the sets, dollars as of your sell-through balances I sell-through, throughout the inventory in QX pretty into across look to in are the holiday? some to full QX, meaningfully the price what's and we inventory the units at the maintain ability the go be maintain to at ability As price this in up into guess, inventory confidence higher all set, peers and much sector

Yes.

a we longer rate basis, under and then year. rate of So last look -- those freight growth with our the being on in also, at impacts transient air comparing ocean I one-year then to higher we're And also the think inventory when includes inventory periods durations.

these relevant planning and for period So the the look to unit consistent business. the three-year comparisons we is inventory look at our as at CAGR. And how really to to pandemic that most navigate And at supply disruptions looking that XXXX. is we way would have of with chain feel we're QX been relevant the

X in that X-year XX%, CAGR longer impact us of points that included for end unit so at in-transit was for the time. And up QX

unit So our adjusting aligned is for top with increase, that we momentum. XX% think, line well

we XX% when XX% were say, and guide. or at with it's still full in still of in X-year really QX year-over-year, revenue CAGR, terms QX our QX below price look then So I'd XX pleased XXXX. basis And points relatively then in that momentum markdowns flat

also leveraging at core and our We low we our about a year. markdowns looking to move overall to don't of that the as of really as the nonseasonal throughout well. which see assortment tend and change business, nature XX% posture is have So

right, All you. excellent. Thank

with from comes Omar next Please Saad ISI. The ahead. question Evercore go

the Greater There China huge to the a sort I I Thanks, going piece of what's but and that dive part of relatively little market dive still good Maybe consumer the well and I the in market premium brand pie market? brand years going for may been, be some to know that's think, deeper aside guys, of that growth China leisure talk on in athletic with in it's on seems going that Thanks. algorithm. kind to in be and small a over wear at afternoon. you lockdowns for about things inflection of in in on, what's least. wanted deeper XX current the a there. COVID bit long-term China. Putting the changed

Omar. Thanks,

are even China CAGR still our think double in year-over-year shared and that XX%. was with I alluded you growth we've to three-year is the challenges that digit

behind this other the the of We've moving forward. and North very are about America there's year in So, strong lived short-term These definitely operational brand challenges. and markets. and this excited momentum rest

in in the driving We continue did that and big to around that's support me brand. our culture protection, the one the the that's pay of the important through of because success to globe we as these investing teams is markets pillars

We're investing resonating. ambassador the We're market incredibly engaged in other in It's regions, and and community differentiated and SSC have Shanghai. product, the product. that interacting and like premium And in innovation the guest it investing It's get people with community market, our product. is the in within you is uniquely with malls. our a positioned working. similar to you'll is differently talent see relationships as chance in talent. educators positioned. We working, is go gender the the strategy terms a in we're We're differently markets, same to the dual is working, other of the When to positioned activity how is at

definitely been the an years. that bodes do just last a So, the in the are this but brand faced plans. well health with, And inflection excited many for brand very that's strong we are growth short-term is few agree building operational there's of about, and for of future been the our challenge is us

Thanks Calvin.

we'll Operator, question. more one take

The with Securities. Wedbush Nikic Please next Tom go question comes from ahead.

me squeezing for Thanks in. everybody. Hey

some How of new there about getting Is there that like offerings your part you're new is of experience and cetera, some there the footwear, make you that all et entered, too on customer help new kind of period and kind it the is pipe. sounds the golf hike do and tennis short sure product of So, at stuff storytelling got with in a concern you're footwear, coming categories much categories the down the selling et you kind and of happy your the you've pretty kind time, fabrication, on? capsules, these adding customer in any to of more navigating cetera? and

Tom. Thanks Great.

storytelling we our focus tell online, relationships the how product that our through it we key on and Nicky with how the team, the ambassadors. along of guests and both we the with our the definitely a Focusing tell story build brand, bringing through merchants, and

and absolutely deliberate is for One, core. in this is because want it proliferation, it product I'm reasons. designed a we continue means key number have big not we is a others product our focus. stores, highly target a and as activities we brand worried is a minimal SKU of overall know designed productive which So, small versatile most the space. for to to And we of differentiator It selectively in innovative versus grow that. a these few

sweating it's cases, and product. our So, guests using in how many already are our

brand on with We just design of that product it, the it. lift small credibility products story putting already are a validates, for brings to a number and

know we it guests primary activities. its because categories, our go-to on our in sweat focused we is product, and Second, secondary and their how

a have in confidence and relationship choosing Feel extending that, our Science activities and So that products we we're and brand are approach, trust are the just they're affinity innovative product through delivering they them in of they sweating the unmet for that sweat. and delivering satisfies that the needs how

So we're not stepping guests. already of outside relationship with have we the

we're what not in is, stepping core core. in leveraging sweating our overall the We outside specifically say our how are they're into and I'd already the to designing of And finally, that immediate response product, then need, I'm it items, golf be incredibly tennis and were footwear, activities all or which the strong, incremental immediate response categories just this he it to has on innovative an encouraged key product or excited, and that me the roll strength reaction, validates and brand, the we're think the that the with with coming bring results we focused out that's -- in strategy activities that well, of that are resonates. know delivers she need, I hiking. relationship and a the We know to quarters. continue it's the unmet validated when And these results going I on to

J.R. Sounds one ambassadors, of Smith seeing good. And as love I -- golf your so

you. Thank

a the That's you for today. time questions joining call, for nice we that all and have Thank the have day.