Lululemon Athletica (LULU) 28 Mar 232022 Q4 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the lululemon athletica inc. Fourth Quarter 2022 Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. Instructions] [Operator

like Investor conference Please Relations now Tubin, to go turn President, Vice for to would over the Howard ahead. I lululemon athletica.

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

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

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

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

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

for the one Before financial to a as a fourth find is our so statistics begin quarterly our to and addressed. at site have others summary key question of give like for well as questions investors yourself one to our call visit call, to remind where infographic. hour, Today's operating the time their our I'd opportunity we investor scheduled you'll quarter to please limit the

like the now Calvin. And turn over call to to I'd

you, pleased today to strong lululemon. another to am Howard. Thank discuss I our here year to be strong finish for

also success. been our and have ambassadors without to on want continued my lululemon. employees, are to came your our around our gratitude seen As continue vendor commitment integral partners, I whom of xX to would press our release, to our momentum Three you've our from quarter we guidance see very to start business I'm of possible full adjusted in this our our guests, a update of far express January results incredible that our to Thank our the year results for four our you one. Power of ongoing behalf quarter excited our strength lululemon adjusted leaders represent in and None all and of senior the all solid plan. world. of collective, growth ahead so across the teams

our future are for brand holds the all and for We XXXX ready beyond. in

membership insights On across and share four our XXXX; international quarter results; several product to today's plan market year update an and finally, pipeline topics: call, gains; I full cover our for our our our program; business. recent

started. get let's So

am holidays appeal strong the year remains our another year of promotional merchandise to progressed speaks in pleased regular we were quarter CAGR guidance, new the well you merchandise, strength that in our on our and through as to three-year XX% XXXX. versus last and our spring see the four, basis. price points a up are business XX% normal that business revenue highly to in This and returned brand, continued momentum an was as from modest forward markdowns We model. the very out levels. assortment managed operating the can a good of with versus XXXX. only environment XX Our increasing our our to one began basis And to of quarter power and sales looking we transition of I and

Our CAGR business region. up be product as in across Revenue basis continues was a quarter on well category, increased XX%. Women's to balanced channel and four follows. three-year

deliver increase and last up adjusted year looking strong by to per region, And gains on e-commerce basis. was accessories and earnings we grew XX%. our EPS XX%. with saw America XX%. in increasing business continue CAGR up well, four a XX% XX% North increased as grew men's stores at We was XX%. and Our quarter international a share, And When company-operated versus XX% XX% three-year

also moment full would spend on like I XXXX year to our a results.

and XXXX, Adjusted xX exceed As goal XX you in a on significantly able XX% we XX% margin spring. one new CAGR in basis growth increased full Power basis. target. last adjusted on And and our plan growth EPS to margin points, China. and is supply know, CAGR five-year modest CAGR our and three-year pressure with we XXXX expansion In of chain margin the achieved backdrop, annual results of macro and XX% challenging increased increased a our line XXXX, strength deliver of XX% operating to XX% highest launched operating three-year compared and operating the brand level, annually. COVID-XX It were revenue year despite the revenue this the Three our plan issues basis, adjusted that our these assumes to the testament respectively. a revenue At while for we

a XXXX innovation. was newness Now to innovation. year and product strong for let's shift product

of our golf, and of footwear. to SenseKnit with categories fabric height styles. entered tennis the technology our our We launch with a core category capsules, cold expand we run continue and play weather and the with new We categories grew launch

include of innovation of product by franchise the success by category Several upon collections. Looking pipeline forward some of growth, building be our expansions and year to continue developed the teams. into XXXX, launched recently this ideas I excited incredibly our

popular versatile and Align campaign, in launch franchise. will First, [Get our weeks, the coming our we featuring Intuit]

began As we from which collection #X with recently, be a added the performing including styles, include bras. expanded mini away you Align style, bottom. we a our shorts, single leg More legging, grew to flare. pants We to then body know, and wide and

We with product an story will global support this marketing campaign. integrated

positive Train the Vent this be T continue men's, which women's also to core will year, to In and accessible We of new we Short. innovate the Pace franchise. into activities licensed recently favorites. within expanding reviews Metal Blissfeel, Men's complement train our of franchise will footwear, from Wunder versions our same our it's have updated later we launch, with aesthetic incorporates Breaker version footwear that And media and in already introduced guest throughout have an seen and function fit kind to rollout. Updates which learnings we the our initial modern receiving of the

to footwear, performance will our first road we summer, shoe, with introduce Related are Blissfeel launch pleased version May, this In and Trail, guest we'll response. our we updated trail an Chargefeel. and to of

forward, also lineup expanding offerings excited continue in men's we're to and Looking our for launch XXXX. her our

to key solve not is other few drive guests. strategically markdown full-price remain merchandise the is needs how of or our and lululemon. competitive in do approach add These the business We advantages and versatility our that of to The we of unmet thing future. discounts intentions used examples through product, assortment client for One with clear the do of this we have so. our are a our promotions, one seasonal just a select run growth to and we will no for

October, you and on season, to in like would our learnings X-tier guests insights membership. update gained regarding the I brand. throughout how our new holiday program membership Now this We our America we with past many launched engage and North

to at program, no cost. our which is with start guess me offered Let Essentials

have the this enrolled exceeding While number potential program. first sign-ups I this release not wanted we that to we This metric expectations. share more X do demonstrates intend five our the months, members. significantly to of is than significant behind regularly, already million the In

offers speaks early our involved. us. rapid no tier the the loyalty guests, benefits show and discounts the of frequency several incredible of engaging content, Essentials to program compelling results increases membership guests with the sign-up and to of access are our The rate While

of in to one retention the behavior have expect engagement drive going For participated we of of this example, program, forward. least already purchasing and incremental members more than and XX% benefits the at

insights Related valuable informing to also the lululemon next Studio steps. have that tier of gained are membership program, our we our

in we a our Meghan moment. in press taking you to impairment with more As associated related charge mentioned release, an goodwill assets we with details share will are MIRROR. and

increased to paid some of options Through MIRROR. saw As provided but experience, city-based did were for were members our spend. of we guest the to we in increase participants. we member and guests new learnings us how benefits, also North sweat only an acquisition enjoy a member acquisition our engage acquisition saw we tested engagement, these in XXXX. you These prior with membership basis America in know, that Not to through the eager program

has launch recent lululemon paid The new a provided of scale way to Studio membership program. a

engaged incremental content of our connection and on them of our build purchases community guests, deepens best-in-class Our product. helps drive with lululemon

product the suggests X%, X% In after on members, increases studying fact, is behavior this analysis and approximately incremental. that of their spend initial lululemon our

at-home as However, has our you fitness since the space acquisition, know, challenging. been

maintain it And our the enough has content, has level love our members expectations. investment. improve, though match our to sales improved even not did CAC While to of hardware current continued not

launch we the invest to from combined addressable this solution in to innovation. Studio to efficient are when potential digital lower prudently and through growing with model app-based in total The we expand and members way monthly evolve new being our and necessary. in business, allow as We learn continue we model more subscription rate, test, for will a any offering the on we lululemon at members. As same view focused our will well. million content X we only We a hardware us market view Essentials evolving app-based summer this as

much not a program the as originally a of has Although intended, membership fully materialized new our we're better the in in position our and as understanding result. community acquisition

we want I market the share. the strength the gears, speak to seeing Shifting in brand of and to lululemon gains are

nearly in me guests. with more by and at looking Let existing metrics new growth across delivered guests transactions increase new few in existing and a transactions, continues by In When our well increase XX% you. XX% be balanced a four, transactions than quarter to we guests. share

for to mid- contributed results these a year, full increase to XX% metrics. high both the For

last market I in began we in over we Group's time every four, the and these of since brand points the the achieved significant and share U.S., a Consumer market grew and In lululemon adult to year period, world. U.S. its in Analyst according This America. at in in this industry detailed market numbers touch our recent in the we the gain we to apparel gained to caps compared North this the X% is same by any NPD tracking Next, And to in around XXXX, market our highest speaks most grow share This which decreased service. of key quarterly continued market revenue market active And X.X our gain growth fiscal opportunity year. share. North will Tracking our we've on XXXX, U.S., it quarter within share Day, quarter. America brand as have awareness the a markets period

XX% Just increases April, X% taking to unaided in X%; X growth in X from to our China in the have to Australia we of since and UK, key last our X added the some XX% awareness awareness us points from points market. regions. in points in XX%; in to We seen

are from unaware our who As see you those these brand this which to significantly highlights regions more currently can numbers, meaningful consumers in compared of these opportunity. are,

full well. international our international markets. in remained four growth XX% earlier, generated strong four revenue North mentioned America and increased XXXX, In business in and as in for both while and the our our I America quarter full As quarter XX%, year business North year

would to continues China results turn where to our like in to our be significant. potential I

stores been We foundational people in the market. infrastructure, have have fueled in in that investing considerable growth

beyond. and are excited we COVID-XX accelerate, region for XXXX the the normalize, we are opportunities As the our seeing momentum impacts in in and of

versus China basis. in three-year over last a revenue than four, increased CAGR XX% on more quarter In year XX% and

revenue quarter had have and we seen impacted COVID-XX to While in a strong momentum December, accelerate finish in the one. quarter

markets. the We to we in in opened and in Pacific, brick-and-mortar Asia our solid commitment and our Center channels reflecting region build. in on count the store which supported to our have growth Kerry our now of our It's by an it early exceptional brand, our locations. across expression on Shanghai. We journey digital is across It's and and recently a the our store continue nearly talent foundation China market, track, in clear remain to XXX largest strategies international brings a we incredible our are

now I'll turn to Meghan. With it over that,

adjusted discuss the results. normalization be the We today our mid-January. exceeding a was relative I'm This note with in markdown excited on price updated strong to an we finished acceleration our to by to XXXX in Thanks, provided of enabled here Calvin. sales behavior along purchasing and results our full product. with QX trend, guidance

QX, at robust. business to be Looking our continues

will expansion airfreight. gross realize margin growth to expect by to significant inventory continue Our lower and moderate, driven we

impairment $X.XX per acquisition QX XXXX detail And more to now XXXX, me position. related XXXX earnings and exclude to QX with you for Adjusted our business. Let I including charges impairment shortly. release discuss earnings refer Please financial our when MIRROR the can will of exclude of charge comparing specifics $X.XX cash MIRROR. share and QX also share the our balance that the QX XXXX our QX will with of expense expense provide to I note metrics XXXX GAAP share details more for for on information the QX of XX-K the metrics. performance. per to for Form inventory on associated sheet, adjusted our related and earnings reconciliations

total with CAGR XXX in increase and total For Comparable channel, with stores XX% net XX% the levels. Productivity On three-year Square billion. basis, net stores the of globe. new revenue total by and XX% a versus last basis remains XXXX increased quarter increased footage sales store XXXX. a in a the XX% one-year XX% rose XX% increase increased on to across XX% since addition three-year $X.X XX%. QX, sales ended of revenue our increased In a digital. on a year, driven a stores CAGR of basis. above XX We QX lululemon

net optimizations. and quarter, completed During we XX opened new the XX stores

basis. versus XX% billion contributed increase year versus year or basis. a on we versus America, increased In increased XX% international, $X.X basis. XX% XX% Women's and our revenues digital on CAGR category, year and three-year And accessories and XX% basis. Within total revenues XX% CAGR top CAGR of and three-year on same men's and CAGR XX% three-year of XX% increased three-year on three-year a channel, a North last basis. by a grew And XX% last year line, XX% a on Within XX% the increased revenue versus a XX% last basis CAGR revenue. saw and last on

ongoing business, It's over over in basis, X% to in speaks to and strength strength also to see we engage across in traffic ways as stores convenient e-commerce. globally stores a of apps channels. and XX%. both CAGR them. In in three-year traffic e-commerce great traffic This XX%; increased and in increased On digital operating sites traffic guests our most our our model XX% to is up omni the with our

margin. decreased of by QX and gross net basis depreciation. within basis on partially a expense, year. offset margin teams XX points Adjusted fixed by of XX to a from investments freight gross offset This driven and was This deleverage offset factors: higher revenue merchandise point exchange points following XX profit These product benefit by by product gross basis on mix. in basis markdowns basis was leverage deleverage foreign was SG&A This Adjusted XX by driven in was billion lower was net in to XX.X% costs. occupancy margin, somewhat partially our which were primarily offset primarily within point increase of for in in of DC, by air XX increase or the the XX.X% relative FX $X.XX by primarily last revenue driven XXXX. fourth quarter compared points

from decline our favorability higher-than-planned air relative basis at up to relatively to they leverage of XX looking predominantly to basis to points, to to for year markdowns sales. XXX basis for flat contributing a XXXX, updated was markdowns points guidance, the was freight which full addition QX, due favorable points in and margin being XX in gross were versus markdowns Adjusted When XXXX.

Moving to SG&A.

were versus opportunities. of in the expenses continues long-term mentioned XX% The a channels $XXX also SG&A expenses quarter to revenue increased XX.X% net by I compared guarded from in prudently to leverage our million XXXX the resulted last corporate was approach period operating and managing invest strategically Our while benefit growth somewhat depreciation a in in from our earlier. approximately QX revenue offset SG&A and for be year. in FX, leverage increase This and of to our amortization. net continuing or same modest

for for expense due in taxes $X.XX approximately Adjusted fiscal and $XXX.X revenue an we primarily is had XX.X% for XX.X% $X.XX returns. for Adjusted increase income share share quarter to quarter revenue of on income adjusted earnings accruing tax earnings last for per adjusted operating Adjusted year was diluted to or the of XXXX. million was tax The a $XXX net a last Canadian quarter the the the XX.X% compared $XXX.X diluted to net fourth tax of rate million the portion to net income relative or to QX compared or ago. quarter withholding pre-tax was million XXXX XXXX. Canadian of of per year year some XX.X% effective filing of compared of of upon earnings benefit

last were $XXX year. million compared locations, project, the center capital distribution multiyear approximately our technology million investments. relocations in for growth, quarter to and including spend support business $XXX store investments renovations QX primarily and to new expenditures QX Capital approximately for relates of that

on a to charges balance we related turning sheet highlights, to our took business. Before MIRROR spend me the the let moment

ran the in came QX. below a Based are the These test, know, related during calculation As impairment assets the holiday our space approximately million, impairment per this a of $XXX MIRROR an on certain and expectations, remains fitness charges basis. evaluation the took $X.XX overall valuations upon challenged. to of long-lived at-home of at tax, share. we we standalone season net goodwill test based for therefore, you an of MIRROR the provision in sales end charges and The hardware or hardware. used totaled on MIRROR impairment

We a are pivoting on that we away model. from also hardware-centric to app-based focus more efficient the business acquired

key see standalone help the our revenue, MIRROR drive which of as doesn't reflect fully valuation membership of incremental revenue. strategy, a we incremental the While component Studio will

we forward, membership Looking excited remain our about program.

our continue spend. in incremental drive we already million As we and our see program, Calvin engagement have community, build opportunity shared, increase and members X over Essentials to to

to sheet the equivalents provision and the cash We our Turning expectations in excluding our capacity XX% This balance $XXX $X.X XX% Inventory our facility. ended now of $X.X the with and reflects billion, modestly under highlights. dollar XX% was of one of end MIRROR revolving cash year available for quarter million billion or under nearly for QX credit growth at growth. hardware.

full the XX% also continue model, like a on our XXXX, In positioned we last approximately well to dollar pleased We levels. product seasonless one-year inventory fulfill our would of and of inventory we end that I approximately demand. XX% remain growth QX, make inventory to maintain year. expect to core XX% we selling inventory. to while note to basis, to moderate, up guest price our At relative remain with to continues our will increase

line we relatively to second the out, half inventory of growth in in XXXX. further with Looking sales expect be growth

billion average approximately had of million on we repurchase end price our program. During QX, an the approximately of the at shares At $XXX repurchased $XXX. we XXX,XXX $X quarter, remaining

to outlook. now shift guidance me our Let

also and sales QX benefits in we expect mindful with the the are new the realize our prudently, and we're we in XXXX model. to airfreight lululemon excited our plan uncertainties ongoing continue lower of While and business from to macro the trends Studio we

growth while our expansion in have Power xX the pillars our opportunity operating of annually. into ahead to of also XXXX, modest goal for Three delivering slightly We margin invest

in XXXX, line range to our to than expect we of plan. Power in of xX slightly $X.XX to range In relative is to XXXX growth the revenue XX% represents billion. better billion growth $X.X to of Three be and This XX%

the will open XX XX co-located XX company-operated XXXX overall to double expect digits. approximately We in stores remodels. square low new This footage contribute to complete growth to in net and

openings markets, our will of XX XXXX Our XX include new in majority stores in China. store to with the for these international planned

margin last For to points XXXX. full increase freight by year, XXX to The predominantly basis relative to basis year is between we gross the versus points driven expansion lower expense. forecast XXX air

versus year full we at When points looking expect to them year, XXXX. the year, last be full and airfreight basis down markdowns the XXX be approximately line in For XXXX. to we for expect with

detail DC began XXXX our near share our Tilbury Let also Vancouver. me of opening in the some on center new with multiyear this We project. project distribution additional

is had For XXXX, growth. project In on Angeles and the Los year investing network Columbus also points in Projects Included distribution in in we with existing margin. support Greater guidance gross the this new associated of our of basis DC and these margin to building continue a our for negative impact initiatives. our expanding overall, Toronto. in basis XX XX the point include will area gross DCs year two a deleverage future

full year. investments of driven versus make increased SG&A to XXX growth. now our points experience the enhancing basis omni improve market expansion, for our support basis support investments by to XXX to capabilities to points by to future We foundational forecast continuing XXXX, and guest Turning predominantly deleverage

depreciation to investments. higher year due we expect current and prior addition, In

target operating points a XX expansion XX expect points basis to be it at of versus year. for basis Power of modest the XXXX, of looking Three When This margin we annually. xX increase year last ahead long-term slightly full would our to by

for of XX.X%. Power For rate increase plan accruing the increase as and reflects we a the Three to we taxes. rate our we of xX is be XXXX over effective line with of of longer-term tax approximately XXXX, Canadian expect in year an the provided withholding as effective full This adjusted tax our rate result expectations part expect our XX%, tax

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

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

future share repurchases. impact any of EPS excludes Our guidance the

growth The capital relocations a $XXX expect support increase expansion, new to We for capital XXXX. investments. to store center of be and including for million million business XXXX reflects renovations continuation technology approximately multiyear versus and $XXX our to investments distribution expenditures locations,

Our $XXX with Three X%. of target X% is of $XXX of revenue, xX current in million range our of to X% approximately million to line Power

Shifting now to QX.

$X.XX We growth XX% representing XX%. revenue to range year the one billion of billion, to expect in of $X.XX

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

We expect as In XXXX. basis gross increase centers margin XXX relative foreign driven basis to rate in basis well expect points distribution XX described. just by somewhat to expense, investments our to and to points will as of QX points by deleverage offset exchange. airfreight investments by to strategic relative to QX lower QX, This to XXX related be chain SG&A we in XXXX, basis points the XX I QX supply

of XXX we When basis operating looking expansion for expect approximately at margin QX, points.

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

over back With turn Calvin. it my and that, will up remarks wrap to I

driven balanced we passed time you, XXXX, Meghan. the markets. by revenue billion In across $X categories, in and growth Thank for first channels

signed first program Our to community, for Essentials long-term further pipeline is strengthens strengthen months, building guests innovation our driven up very million drive our keep relationship product More guest the X opportunity than and our membership strong. five which in by value. the

we're new new guests strong seeing is demonstrates expand which in share gains brand yet in in the market and just to we expand of unaided low, awareness us. about every front reasons Our momentum us, continue able remains attract of These and And the of operate, our to front we XXXX our coming some successfully I'm into show are runway where over years. all in both geographies. and the market that's and excited

now. Operator? taking to your forward look I questions

Yih [Operator first Adrienne from The comes Instructions] question Barclays. from

to And you notion stellar brand the for of unaided quarter. and into expand first that, was everybody great year Thank much. that you wondering awareness. coming very can momentum help upon congratulations I Calvin, if

just I expand to What of And your as are I that really flat think think or quickly, advertising year the sort expand And Meghan, were maybe said of a -- of be nice really in from kind promotional year? think, think XXXX, of little into notion two brand percent is a trying the powerful was so if we using those going notion that you last when to can you of of a last year. a that's understand you kind promos, And and promotions spend comparisons? what a awareness. of to improvement, just sales I avenues to then bit backdrop concept upon ICR there. coming more I

Thanks, Adrienne.

unaided in In the as and growth our exciting awareness, highlighted, improvements also both have. terms it's we you runway potential of but brand it, of to see

as momentum the working know as and to that guests So that acquire our we our approach North including is markets, well to we all business know drive overall America ability and to it's fuel going continue across the in U.S. the

messaging athletes of that relationships deploy of Expanding community sales, a is communities to which at investing we the awareness that our a wonderful through and local are this planning have activate first world, ambassadors brand the connecting opening to stores, contributions add that. percentage coordinated spend and we seen most activations continue How and with and it? just product we success relatively excited guests, which in Those some planned combination maintain brand current guests executing around lead for relationships. Our which with to as way the as campaigns Intuit] our what X% then make acquire well of great consistent. point, our And is will in for and deliberate excited in we you finally, [Get which I'm the to see And global you the our we've more into our with see collective. campaign, like and of of in these and drive the range. we're around our 'XX. vehicle the examples and both in in It's

healthy a as And the year somewhat markdowns that through be of half And QX full in XXXX. QX, will with have XXXX at in in in the the coming biggest flat terms in by offset we're on for QX water -- of XX% came XXXX also to expecting mentioned, But markdowns, QX and hi, inventory, we relatively do be Adrienne, is level then our markdowns. full sales with then which of in-line end We we'll to XX% growth opportunity a view basis. XXXX line us. XXXX. we see And in second line year

question America. from Hutchinson Bank next from The Lorraine of comes

How to a region? update wanted was China I there? on the on last thinking are X% about of growth the give can And focus year. minute. profitability you you us It cadence an of for about sales for

China Lorraine, point in terms in of China, XXXX. we haven't on a put fine

we of I'd say XX% growth COVID at had a we disruption full However, a in is and and rate. year both still 'XX, were QX what degree

We that trend out as and of we QX. into particularly QX XXXX, have seen moved accelerate

that profitability, we So in in we XX% then terms are are profitable China. And above growth. of

put haven't that. on it beyond point fine a We

next from Brian comes Oppenheimer. The from Nagel question

congratulations. quarter, Great

my inventories because So sector. -- question I want I -- well I as for just topic lululemon on been that know want as to focus has a just big to the

I So you around year, you XX%. had up, math inventory fantastic fourth just you, the at results is here I'm guess, the quarter. looking in ended the

just without it the as we work inventory we expect course through that And that for guidance excess normal of 'XX, moderate? going is So essentially within business should context you the your any primarily are think saying -- you're of about gave, the to promotions? to really how

Yes.

airfreight a inventory, manage higher terms and in supply dynamic earlier We in of inventory a So navigating core chain of versus expense. historically. to core proportion our environment. And obviously, number the our of do XX% we we've buys have try did been

inventory pivot cost on also also increased saw time. more were saw We impacting to than who And shipping historically, airfreight later vendors then shipping balances. our we

at So it would to growth, of going to see that to new and to the come inventory still and end we moderate year. the I line in half And XX% the QX, XX% say, we're towards navigating the reality. of team is adjusting to expect second

goal is there manage with and Our inventory revenue be in time. we'll overall growth over line to our our believe

comes Lejuez next Paul Citi. The question from from

more share what a on half, looking geographies if want piggyback And first versus question. curious a you're you're geographies. if Just at And to take [ADC] going what in little second others? the get product bit half certain certain you from you're perspective to can bit inventory to you little separately, just it's on cost be to versus side? where the Curious a if time and this clear then anticipating in heavier year,

terms mentioned, overall Yes. in throughout year. inventory and full the pleased we the plan I move balances. with We're say composition, to, as by healthy we geography as penetration we notable nothing content price would a of have

move we terms In costs, we significant as any experienced of product significant and increases, don't changes XXXX, relatively any we haven't stable. throughout expect

next Boruchow Wells Ike comes question from The Fargo. from

first Maybe question. Calvin. Two-part for

you a Can bit about through the made decision. Just I of the on MIRROR the ultimately your that and little guys you saw informed you in kind more guess, of walk to several piece us decision in there eliminating hardware the piece And quantify that that anything of you eliminate what the holiday, business? kind hardware or can of are the business Meghan, is removed this P&L? operating losses quarters, the year? then past What revenue by being

up but we're Ike. Thanks, same the hardware, sign not a the are app having just MIRROR, a pay subscription to acts without to to lower On clarify, allow purchase I and that eliminating hardware. feature an monthly adding the fee will guest and we want content

it. it in And an clarify not as felt to built collective. make up with hardware we lower that. And enough summer. that to we've our will prudent not We -- million shared, want this this cost more will to improving, meet lululemon that launch and see didn't it still X they're to just a and tax the And into our expectations. that it easily I that launch and we think Essential continue pivot the appeal didn't us will to the improvement proving are migrate attract members we the build, to allow did being later we fast within entry, although So But and guests open Studio in performance audience our of just with broader October. to TAM restricted

portion embedded given separately it's the membership I we also five-year and plan. very revenue share our out now what of terms of is in was this a year our In break of that small program. MIRROR a it's P&L, portion don't very our small will But

we'll and to investment do continue have We see improving. continue moderated to levels, dilution so and

Alex Morgan question Stanley. comes next from from The Straton

another on quarter. from Congrats Two quick me. good ones

XX% And price you of new guests? the you the think represent? have of how rates business? whether any big in learnings they XX% I the can the existing to increase then the similar level business on Could mentioned that they us rest just so. that's insight The you first what you I guess, newer guests, categories give secondly, is on or sell-through share core, full to the guests on have those any new on XX% split compare a And to and the legacy business, of

Thanks, Alex.

across of of the guests, terms we all brand -- we success have In one see good of age is benefits across guests the new demographics. the

very well engagement. remains both as that as acquisition So healthy,

have continued. We and numbers the would guests, bit I in and particular, base, a terms healthy those very very as but But growth of the cohorts our and overall, the in little are over that have. we through new XX existing up and a and past wait guests, category we a in that younger shopping seen migrating younger XX frequent indicated, on the seeing, healthy healthy very guest overall, engaging engagement offering basis on how of months,

relative terms category, balance category of our of of in plan the positioned our XX% of the of to to category xX the inventory outside and of in seasonal with And pleased of terms I'd Three And inventory. breakdown nature product of aging core, share in the it be Power growth. that terms we're by XX% of

comes from Patel Raymond Rick from question next The James.

North expectations Congrats all about for America the growth in hoping new for the talk could on year. progress. was you your I

already lot of a progress made the in You've market.

about we see curious segments. I'm you strongest levers think the So as channels growth product and what as

North part So our of double-digit America, we're that at expectation looking we terms as achieving shared of in low xX. Three of Power our

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

Yes.

growth as we channels with products strongest and about Just levers think are the

I'd Yes. that frame that also in I context. say would

that XX% growth business, with women international to and rate of goal annually Xx So as North that well business, growth. as America e-commerce double-digit double low included also double-digit a low we our as store and have plan, part growth average our double our business, men's

Telsey Dana Group. comes next from from Advisory Telsey The question

the Congratulations on results.

how how should about as think that are for do there think product about XXXX, mindful through the evolving shape which we Is normalized go do you year? you markdowns and we them with you and takes be levels, puts As the that XXXX the margin of? see or any cadence

driven benefit we're for that in a down points basis airfreight, -- would really increase year, XXX and from shared Dana, by point we of XXX basis margin the to color gross so XXX full be points. basis

markdowns And center we in mentioned are to We our expecting really our that's little servicing at we a have to also flat year-over-year, time. demand distribution flat aimed be levels. pressure, XXXX of as bit over strategy

had biggest of quarter, by basis QX, opportunity in our markdowns points. to have through terms of biggest I in In the QX. then we And the terms in QX of cadence earlier, points be QX will in offset basis mentioned range opportunity airfreight, XXX XXX by

time, this then We -- we'll QX. expecting at the we we're year opportunity to be QX in will in be in have and point line last relative in higher QX, and will

see category product a in And more now. you're you opportunity that's on influence to the it. are most given on Got overall just, an the then coming challenged share this that category gaining the year, rollouts where do little have a that new Calvin,

I've is like balanced of The and and men's franchises a short balance categories bit the women's our activities. across across pace of seeing, of to been powerhouses then on styles as of breakers the of about. continuing what what terms additional building excited core is to I'm well proven it that innovation, men's our footwear what to It's In assortment. recent as recruit successes as similar to to in product, the the growth and adding and innovate new And to little shared update franchises really anticipating women's we've on a use and guests. excited way the is which bringing campaign train like styles energized men's a our launches license expression Align and I'm one with like continue to business a new then our to into and fantastic

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So the beyond. very my us anticipation for in for in balanced growth North 'XX is America, product globe still around and both

next comes Goldman Roach from Brooke The Sachs. question from

over age that the that relative could contemplate the the rate wondering engagement few or customer was to demographic? region, price And that may changed course the if for your expectation months, differ for full does with with of discounted how of customer that I engagement rest income Calvin, you product? year, last the you're engagement by seeing combined have

Brooke, into we of move normalize the through in see penetration, balance then price terms that QX. of markdown and January did we full as and

full we also reflected haven't which that view do We us. segment, we material flat a seen for any price we'll that we year-over-year, staying line in history, to maintain in customer healthy flat differences on XXXX, by color markdown with provided water that's as and relationship line healthy expect of the

from Binetti Michael question The Credit comes next from Suisse.

update think you kind I And Meghan. built on will of stores done add over had there -- of the guess there lot ICR, since my China, years, those time I nice any haven't a nice over since you in you've much three congrats operating normal on a capacity. past think pre-COVID. and I a quarter stores I

count, that or your be store they above global So on if sales do store China revenues sales productivity, any think just was averages Or global curious closer -- X% China but per store trend was those I'm should to stores of normal reason of if sales per at below it's mix? XX% flow. think to operating or XX% you would

lever to with you to pull us pricing XXXX. the thoughts have? there the have And about quarters. any urgent opportunity already on assets Just think I then hasn't know most Calvin, you recent for the in for on you think been in way this

for that to XXXX? change Any that. about talked You

Yes.

definitely, In throughout terms stores, China we move XXXX. impacted we by were of COVID as

smaller as our to tend that say we highly time. higher. opportunity balance than and So to They particularly percentage over an there. would expect would I I in stores productive the be North fleet, be of America, our view are that

pipeline there. store openings a of continue We have to long

foot North expansion to store market. of opportunities and we in terms where we've on early strong We employed and sales which the per capitalize very very healthy strategy, are also expand see to America square in

similar lever. to the a that And not a that took, price and And which margins, knowing then and to increased heavily throughout pull with a on manage only the year, industry it to allowed to promo We and us continue down. small full-price rely 'XX, what players into heading I'll continue many similar as on saw full to in and not price in approach is product manage of full only. our last team price with I'll Michael, year. approach back other selling we're going -- pricing and significant discount we proud But We're we up What a to pricing the it's any on seasonal we that the pricing, on this to with start assortment exiting was focus means prices shared markdowns moves And approach. pricing. of planning so on drastic lean with full our that selective be business. is start in percentage I'm have

Omar Saad from comes from question Evercore. next The

a to maybe touch maybe China how some the new efficacy? strategy paid Calvin, for quick guys, be the going of something you're could media? And the footwear, on hike, you would Is And helpful. that's markets using you use categories, cetera, other golf, as et couple of a in update that Just quick on well? follow-ups. like

Omar. Thanks,

continue our is media innovation we've the heavily compelling us, story. I earned those to paid In media, the in very, for leveraging to made on approach think both we'll which terms some and and years in and few And use back between always really of a balance of with gains last very great, playing of earned.

the paid both executed also -- specific. [Get Nikki and And and to job do the and campaign in in and local the campaign. leverage through Align into of And So team to getting working that digital we I see direct expressed Intuit] around a with through amplifying more to that. the and when in through to in stores a going are wonderful those, of continue you'll think digital regions and right and we're leading lot markets expression doing

guests like across just really execution in-store feels it store, expression for digital the applications. of omni fits and and a out So and the very

So expressed. see excited you for for campaign that to

And of the was... part question your second

on of new the some categories, update golf? hike, Just footwear,

Perfect.

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learn into response the test to with continue excited and the innovate we're category. So and and

one we'll Operator, more take question.

from UBS. Sole Jay from comes question Last

implies into Just teens. around of the high the it goes like the curious mid-teens seems about end by guidance range the the sales cadence for the the then it's rate And year. year. like QX looks growth

specific if that time, that accessories. driver assuming that's at go forecast or just curious wondering a the Just same part then like of And you about into the just there's algo? long-term back

do XX% a what assume QX. Calvin. to bags overall you mentioned Within I'm into and it's You strategy that, feel belt up bag the I driver, big belt brand going plan forward? how you with about is that category in worried just fits

Thanks, Jay.

our year, of pleased mindful we macroeconomic with throughout QX. into cadence really also headed the the in So trends uncertainty. And we're of terms are

direction our rate our time. XX% full to to of average is what be Power reflects at we So this The XX% slightly year feel appropriate the guidance above the of XX%. for xX Three growth

positioned well into year. headed feel So the we

opportunity But It's not bags, continue driver acquisition. all that contribute assortment moving results. great to our brand of grow, and on And our Not is not Bag, accessories Love as Everywhere job item. that bag just a categories, accessories We're and the and our It's excited we're forward guest a and healthy, it's done a well. we very as its business in guests. very awareness with one Belt the just one-hit about has mix business new item. the particular one compelling balanced across team in wonder. accessories been have as of That pleased total for an well business. a great that building

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