Lululemon Athletica (LULU) 31 Aug 232024 Q2 Earnings call transcript

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

Second Quarter 2023 Conference Call. [Operator Instructions] 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. second to earnings

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

you statements of get like reflecting forecast certain aspects remind management's future. we remarks today this opportunity to current Before our take will lululemon's started, to I'd that include forward-looking of

have changes. our due assessed, associated based is reports the and uncertainties from on with current to report including SEC, may with implied we or including its to statements our information, those XX-Q. Form These by differ in by statements Form nature but which risks quarterly recent disclosed our dynamic rapid most XX-K, are which and annual filings business, and Actual forward-looking materially subject and contained these in on even on those abrupt our we results have

Any any of forward-looking of events. expressly as of result this statements we call or today, information to and that assumptions disclaim on based these on are or or revise as undertaking a update any we future new obligation statements make

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

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

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

the would over And now to turn like Calvin. to I call

to I'm share of discuss second Howard. to you, everyone I'll planned X activations here the our the quarter half launches with some and of highlights year. of product our Thank recent have performance for we speak results. pleased Today, to exciting the and be the

release, As in as new results second world. quarter you've read strongly continue our with our press our around guests our markets to product expectations in exceeded resonate launches and core the

I'll many On and I have performance, provide then details business. outlook quarter the call, today's to opportunities on the will our our X we speak across

of it for financials your over and review turn update, then and the Meghan to the a questions. guidance I'll take Next, we'll

So let's get started.

strong our across business Revenue last in EPS year. and with in Our portfolio. last expectations. increased and our versus and e-commerce versus our same adjusted EPS in XX% both business grew year remained increased XX% XX% stores Comparable exceeding revenue with sales X quarter the X% strength period

These the strength well and positioned the how demonstrate half we results second XXXX. business of for of the are

quarter. expect XX% growth In Meghan call. in XX% range you later will into our are fact, X strong the continue momentum our revenue with we in quarter for the to guidance share detailed and seeing the

we looking women's, now men's some strong our innovation share innovation, and into accessories I bring product more assortment. brand Let's X at and posted on performance. regional growth across building detail quarter newness double-digit look highlights in When strategies product, as and at as we

franchises to women's our up responding XX%, core very accessories Specifically men's as guests well in our XX% XX%. increased X, newer play and as well women's, In activities. quarter increased are was

and dance our in including We key continue to jogger. see franchises, strength define our studio scuba,

for X, collection with to the us. another well guests emerged has we saw as meaningful offering. Softstreme responding across addition, franchise strength our quarter In In

remain collections golf and tennis our play, to performers us. Turning strong for

plays the with specifically solve of to strategy secondary leverage shared unmet to these continuing our styles sweat for introduced our we've designed while across before, guests' versatility activities. activities for our their core We needs As assortment.

In in franchise, ABC the popular men's, of our him. most like strength ongoing our for X I'd we're to seeing highlight

evolve continue upcoming teams which assortment, includes WovenAir fits and Warpstreme, fabrics, to X available styles the unmet Our in expand is needs for Utilitech in and fabrics now X planned X and additional with proprietary and for solves seasons.

franchise, to guests, this from same while we share trusted As are wallet guests existing time, attracting at our gaining expand the of brand. we new

our is XX% quarter helping the pouches performing assortment in are growth and X. entire small well. accessories bag Crossbody styles, in and these In to accessories, drive contributed backpacks results

create Our we continue assortment. realize to coming the expand opportunity meaningful as over months bag the solutions innovative to will teams and seasons our

sizes, I Belt Bag, and growth the strength. and color our incredibly Looking develop strong expanded across accessories guests Everywhere year's of top our the specifically Bags multiple strategy our on with patterns pleased double-digit prints of Everywhere to from well. Consistent am we Belt assortment generated waves, are team at most styles, responding franchises popular our last

Turning to footwear.

men's We an in offering. gearing our are to how for steady run to versatile we most We update next team the style, progress to making continues up our introduced and category, recently train with and excited launch I'm footwear are evolve the this Chargefeel year. of X,

the Stay launch year, pipeline we details. collection ability will needs of guests. continued tuned of at of additional the am pleased the will new which the our second exciting our Looking innovation. unmet with show an In fall, in to now for our women's, address I half

jersey of and across technical the is from recently state great a same is our On fabric how used in Steady constructed exceeding can our are scuba we franchise, of both genders. X X, example expectations. we our side, the our new steady in the quarter men's which franchises, soft and leverage launched state collection, fabrics

all in guests Our provides stretchy softness quick soft several incredible includes in our drying, fabric, and styles, jersey jersey with collection his which sweat-wicking.

X, made and are offer overall our launch fabric assortment. quarter The will cold a from in how of products enhance with down. view our These and specifically we are Move performance but collections for fabric expand our features. On Later quarter we These outerwear we waterproof And lounge styles weather X, offering technical new lounge and new performance will offering for men's with jackets consistent runs. in designed design

These few our consistently bring while innovation at examples we expand how are of the into just a categories. time, core new into same

guests. We solve are continue journey of opportunity of significant innings unmet us as early needs for still the in have we our and ahead our product to of the

innovation of is xX product our our brand of a also opportunity increase plan, to we tenet Three While real growth have awareness. a key Power

United only outside of the exception previously and with every the XX% our remains As the in brand Australia, States. America. unaided discussed, And single is we awareness North unaided which the awareness operate of U.K. in our market we digits still in in

quarter, have initiative. across key XXXX, gains Last In event the our our and Get globe. several efforts growth the It we Angeles in spoke for and the our initiatives, to awareness increase of Los the Into in and accelerated Swap of initial including Dupe markets consideration about are seeing we we campaign, further lululemon, phases launch

the overall that and begin the In key holiday quarter and for across awareness campaigns have increase the of build product to brand will on our support globe. upcoming lululemon X, excitement several launches, season deck we activations

highlights. some share me Let

in reception leadership in Into another continue quarter bottoms the X. Given to installment Get our It we'll with campaign, to positive position highlight our

on global focus and feature will campaign the Leylah tennis Fernandez. our professional ambassador core player, women, franchises our and For

sites well exciting our men, U.S. as ABC we'll support for stores and assets with include The e-commerce some elevate our some from will television will franchise campaign and the across the And guests. fun media special test targeted also digital in

build will e-commerce in on soft on we our a larger with Zalando consumer-facing site. June with EMEA, In this launch launch popular

fulfill Zalando with guests and us is strong way leading into to bring relationship lululemon a across where wholesale orders it Zalando excellent for as an and Our is player. the brand ourselves, is not Europe, we new

in weeks and And finally, Day to global the awareness index release we'll Mental raise in Health coming well-being World October. celebrate our

across about the U.S. awareness markets. We our grow brand international in excited are opportunity ongoing all the and to

the within P&L community larger keeping marketing and percentage are sales unchanged, Our campaigns. as confines an on grassroots scale And number our annual guests approach this spend the we brand and stable of a and with frequency activations to basis. doing overall to building but we also global relatively engaging remains of are increasing and

In invest behind our strategically able continued top media initiatives in our in acceleration ways. our are we growth addition, line drive drivers. awareness, to regional the then unlocks leveraging creative new brand Shifting dollars and to that paid now to and earned both

broad-based see to continue strength. We

XX% Specifically, in North international grew America revenue XX%. quarter increased and in X

all China, we acceptance where to in across international, and our grew XX%. revenue delivered markets growth see Greater brand great Within of continue strong

share. our with strength of double-digit we we gain target, X, continue America, with North consistent xX Power quarter pleased remain Within growth the of the to market underlying and in business Three with

In last year. U.S. the time in of Circana's industry service. period consumer decreased revenue Over to gains active share points women's same adult in tracking with gained the this quarter both market period, X.X X, lululemon U.S. and men's according apparel to its the compared

a half back I pipeline of the mentioned, In planned. of XXXX, as compelling have we innovation

thus focus solve quarter to can We continue needs. in X. America our seeing new far relative to quarter will also that on I we X, in business share for are acquiring we North their unmet as And accelerate guests

Turning international. to

while XX% we of total remains this nicely, expanding early In our balanced versus penetration which remains quarter our business journey. strong And X, and in in X below Our XX% across long-term are how year. quarter just regions. reinforces international target, growth last represented still sales

regional included a year, of more this our this National country XX local X,XXX we me third share the from recent Let across competitions in teams stores Day Shenzhen. regional the some the the games games. celebrated highlights. held in hosted XXX with summer cities. in past August China, installment final activation, weekend in national now participants our sweat In Fitness than Through culminated This which

continued EMEA well. and APAC Our region to also perform

This the growth the In are beginning of year drive the North and optimization we store well of most market have mature as reap to as opportunity into outside to America, our program store recent market. in our benefits this and ample of future. rollout foreseeable this ship still from is we Australia,

was opened our the our July, in of in brand APAC in the in in Bangkok market region. clear which opening demand and The for strongest first the in lululemon store pent-up XXXth the region. store ever Thailand the also APAC We marked was the this location

uptick In APAC, impact travel business. addition, we've a on and having a also noticeable which positive within tourism in our seen is

the second EMEA, into in our opened to strong store in business. With groundswell exciting incredibly and this city lululemon our European all see ongoing international It's markets for our grow in our support August, key at in our us that welcomes brand. new Amsterdam, of And to the which lululemon lululemon reflects we acceptance a store community investment the each within we of community. see all across brand opening, of expanding

for Our about runway continue am growth as is expand the I future and our optimistic substantial, business. to we

a I'll of it to with review financials over and And that, guidance. Meghan turn our for updated our

Thanks, Calvin.

enabling top line momentum QX, strong exceed Our us remains both guidance. and in bottom our to

to XX% strength In guidance it about continued back-to-school responding versus remains are early positioned innovations. sales XX%, addition, also from moderate as well and to product to approximately both composition and QX fall level I'm our our our standpoint. well our inventory continuing and into guests growth of excited see a

financials. into dive let's our QX Now

in net broad-based with a increase driven Comparable stores in increased X% e-commerce. to by increase total across $X.X XX% the a QX, revenue and sales billion, For XX% rose business. XX% strength

XX% across net increased the XXXX. addition our XXX of by footage ended QX last XX sales In new last XX% channel, since increased stores quarter store the versus Square the of total year. driven total globe. stores of lululemon a versus with year, We

a saw XX% revenue we XX%. last Greater increasing XX last Within XX% or And year, quarter, $XXX and and revenue with X grew the increased by year we versus channel, revenues America, optimizations. XX% XX%. our international, In increased of last women's new During men's category, increase North total Within opened net totaled completed XX% digital XX% stores million versus revenue. accessories year. versus China increased

we across traffic speaks to This stores in engage as channels, strength over convenient channels. XX%. them. and ongoing omni our as In both see model strength and increased traffic of to we most to operating both great guests also the It's with digital our

net of revenue the to was XX.X% compared QX Gross of in profit or $X.X for second XX.X% quarter net XXXX. billion revenue

supply XXX resulting development with QX chain in increased margin driven by several last rate year overall strength versus of points combination product following: the by over investment was product from in of the and favorability, profit ongoing pleased margin continue occupancy a and points driven to the XX costs we realize and in gross supply increase last freight strong on basis years. gains XXX in the primarily The predominantly top point chain. product basis quarter, we and the basis remain The product deleveraged

XX saw impact also from We unfavorable basis exchange. points foreign of

Moving to SG&A.

investments in continues year. net deleverage better-than-expected the our opportunities. growth while our approach road driven while $XXX be revenue also to brand prudently period invest revenue SG&A We in of strategically were our achieved to quarter, accelerated Three by to line to behind to we've continuing Of Our fuel awareness predominantly approximately for our long-term million to or strength managing initiatives grounded of XX% last expenses in continuing map. invest same XX.X% net among our the additional expenses strategic top Power build xX compared

quarter. income XX and of or adjusted of XX.X% operating the basis revaluation, of net for leverage net revenue million the Operating margin XX.X% $XXX in approximately in translation revenue QX both compared XXXX. Foreign exchange, of to points was quarter contributed

$XXX for Capital of approximately relocations primarily new quarter the the capital adjusted ago. in were compared XX.X% of or diluted for technology quarter to $X.XX last spend pretax QX $X.XX Net compared the second of Tax to quarter income renovations, expense and EPS for chain to the this for quarter or million, of store effective relates was per million supply $XXX million a XX.X% XXXX. in year expenditures million year rate earnings of was compared share second $XXX approximately costs. tax an and the quarter for year. The $XXX locations, to

Turning to low versus QX, the of year. quarter $XXX to XX% year. end billion to and end of last last sheet in cash $X.X versus be double our equivalents with billion high cash QX, and revolving At credit under single capacity million We highlights. the Inventory ended the $X.X was nearly inventory digits the in at balance up we of available up our facility. expect

in continue to hardware low relatively relatively is XXXX shares anniversaried. MIRROR growth. we $X in QX the growth expect growth due of the of At inventory to we XXX,XXX The our $XXX We QX, sales at remaining not approximately be we average line have rate for repurchase yet approximately took price billion end to QX, had $XXX. with provision an million and repurchased In program. on

guidance outlook. me now shift our Let to

ourselves the year to expectations, business that We allows for strength of start. with seen same very the while solid us pleased QX some upside to off invest through of and to continue flowing into half bottom our as is to QX strategic future initiatives upside the time, we've The line. to a be up in our set of first at exceeded growth, our the the

business to over consistent of that several the that macro uncertainties With being plan approach the scenarios. we for multiple we the exist said, and environment aware in current with our the remain last prudent continue and years, be

Now let me with QX. begin

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

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

XXX XXX freight growth, centers to driven of QX and somewhat points modest support to relative on and will be expense, XXXX. strategic as by occupancy deleverage as depreciation. We This gross by increase teams margin supply lower well in basis offset investments to including expect distribution chain, QX future product to

growth continues deleverage basis XXX decision relative In points contraction grow approximately including for QX, expect brand deleverage at initiatives points margin QX, by invest globally. QX to looking last rate to XXXX. of we to to relative SG&A our XXX expect strategic our This we operating awareness to year. basis XX When to those to reflect in

EPS. to Turning

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

full stores be net low $X.XX XX% approximately square in XXXX of expect represents approximately to to We the plan. This to year growth target XXXX. new growth contribute XX overall teens. complete the growth in XX Shifting We company-operated will co-located footage revenue range Power our revenue Three now in This to open expect to remodels. the to range of XXXX and billion. now xX relative billion exceeds the and $X.XX XX% in to of

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

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

For the approximately full year, versus down XXX XXXX. we now expect airfreight to basis be points

expect at year XXXX. them line to relatively in markdowns looking When last continue with to year, the full we in for be

Turning to full SG&A the for year.

XXXX. continue We deleverage XXX to of basis forecast versus to points XXX

business our While prudently, we the been continue sales strong. trend has to plan

to this ahead invest also operating annually. pillars expansion gives of the mentioned margin our xX modest Three us delivering earlier, for into of growth year opportunity goal while As this I Power our

When year looking increase now versus expect at XXXX, XX to to it we XX year. points full the operating margins basis for last

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

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

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

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

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

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

to I'll back that, With over Calvin. turn the call

you, Thank Meghan.

of in position demonstrate, the results very we a strong these midpoint As ahead. XXXX at arrive what's for

achieving We Power basis. on and of both recognize we opportunity drumbeat the growth front goals connects deliver a a through and successful guests a our with growth us of XXXX within the remain that expansions Three business contained delivering to the product market and of us category regular in in steady focused continue We plan. on sustained xX our significant

we guests confidence our deliver our and our high shareholders. demonstrate My ability our in leadership and extremely remains people to consistently as for our

the day to teams possible. many and across grateful I'm brand champion every lululemon make these our who results

look your now forward Operator? And questions. to taking we

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

another quarter. nice congrats And on

in then elaborate to you that progressed. North the on China the North cited second August recent in strong strength, trends, the America? could just Calvin, customer you as global you more So saw speak notably America And of and quarter the broad-based drivers acceleration that could demand and you momentum on

to Matt. this the channels, Great. well and Similar and balanced both the categories product our driven both half that's so Thanks, and through really growth categories, business. performance our all innovation across OTM core as from as markets which men's of is it first year, success women's the across e-comm new be -- continues stores, that to both fueling across

I QX, change the and into to wonderful referenced that job heading innovation a to few jersey, And there's are new a team really state are the formula, him. guests launching. doing and we is steady that soft for responding the no call the on

innovation exciting some to come. have still We

which, the business, So international low every opportunity product we're acceleration still I unaided we is and are at awareness, on needs in and of targets, across a to teams our performing unmet globe continuation launching America incredible in opportunity, and delivering very our double-digit brand initiatives of Three xX line the North get Power think market growth that it's with addition just on in. to in that strongly, seeing

we across of reflection all message opportunity really it and consistent that So early of delivering have a on being a and team that's potential. balanced is innings -- us growth my

position about just Meghan, recapturing the we current composition Or That's you best as quarter? half. in speak overall a back headwinds health the that year And third could in the any think just to markdown the then, markdowns are ago? fourth into constraints quarter there great. to to of head inventory how the incurred and your And you

Yes, absolutely, Matt.

a drove expectation balance expectation, came So items lower. we in our that Relative at that few XX%. in terms was our of XX% end the inventory, so up there the of to approximately were quarter,

the So our expectations. be upside first revenue above would

inventory the and expecting costs double freight we're end how then timing third balance air in high low of lower single the some looking And we're to of being the of for at digits. at terms the QX, year, implications. being Second

And XXXX. of as with end move then we QX, in relatively sales into QX, in line

overall, So we're the say pleased of the with level I really inventory. and would our currency also

price to and markdowns expecting an really In terms which for XXXX markdowns consistent on a penetration is normalized over and in QX, We a levels, flat QX. We're run QX still of on wouldn't the also 'XX, anomalies business. expect low relatively us. markdown level markdowns, were with We to and note basis for annual nothing 'XX quarters. full healthy that's our be flat I year-over-year, penetration, in any high

question Barclays. next with Adrienne The Yih comes from

is feels of innovating -- able new -- Every faster. X you're and safe. by backdrop little they whereas another on the Congratulations. more how just results sort know so the inspire I'm being like competitive like business of stand-alone. been a really have list It really launches innovation, of And things Great. you to Calvin, that bit The that? are about. didn't driven there's call, wondering is sort we a you product get time newness,

So the investment? innovation wondering, what and are similar of sales then there, the in sort Canada if accelerated about time, you you us $X.X or double China, are just sales Meghan, opportunity of at turnover the And billion. the the you just can talk have pipeline to almost I'm the the year-to-date roughly kind have

the there? just talking and you the of there improvement So kind what about opportunities think about

All Adrienne. Thanks, right.

I our our excited and get the the balance our innovation, that very women's within terms about continue agree would to accessories our business, business, of men's In launches each speed of and the business. quarter pipeline across strong

the of strategy. and xX the through I execution strategy Three we've into Power been very Power Three of is think a it an deliberate innovation that of working

without then reference to and and design adding sharing to gender. how run of to what he versatility, we continue that just but improvements into across she leveraging don't very our simply allow and loves of franchises enhancements, launch core, You've terms those hero and being we heard that play against so our me and leverage in innovate core then categories some it we deliberate

which in our steady an and fabric brought For state that for instance, quarter, that took we him, were missing. was saw we assortment famous scuba in our this opportunity into a we

the to just team executing So continue I is strategy. see think the what you on

X, We from to can of X to guests a X, keep innovation lot have and anywhere to but very of a bring and be we the business team X, continues the quarters work X which our future as innovation ability X, and of lot to solve notion have that for we're feel horizon needs a as versus on we're unique about think where guest then years and sell to unmet marketplace. future through driving across forward core, having to that standout solving, I our in unmet horizons this is innovate we unmet And wants. that And able how, looking bring the that's truly a commercialize years. core as well true needs which excited our through and that

are with And really we then, up Adrienne, Greater in quarter, terms in performance of there XX% the the pleased China. China, in

region opening stores an have stores We in today year, the market. those China. in in the of We're XXX international China XX majority this

China also still approximately still term, the in as that beyond well early mentioned, X-year opportunity our innings the exciting some into -- there community As longer there's stores end build our on looking then set very we've growth. to And and awareness at over plan, of brand of and I terms had we've activations drive Calvin think XXX there.

Fantastic of results. Best luck.

Thank you.

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

be. on to as most you've ability XXXX to investments item give into we And lot also into Can a move some continue to then margins talk successful line Meghan, investments? pulled you forward your of as us leverage the XXXX? generate of this gross examples

Lorraine. Absolutely,

So the we've expense. we've with we've also on revenue recouping momentum freight progress really air excited made and that been then had the

guidance XX% driver and the being ahead is basis to really then on XX% guiding points airfreight growth there. to original of our margin, now XXX target So revenue to with XXX our

invest ability given our Three it's map. is of to behind done it's what road Power us the xX So

the So coupled include that, a guest that think heard you then experience focus omni to improving on we China about talk with I expansion, and as would key drive international, excited a capabilities Day with brand the have notably in investments market us foundational Analyst And really forward. and is specifically we're awareness. what there, opportunity tremendous business

opportunity, half of And to the awareness, the in really this the us innovation some the coming given second drive have of upside marketing to this in capitalizing moments half invest activations that year. has up an year in we particularly brand on second of key

So drive and into long-term our sustain opportunity momentum. will that, we believe, our

were driving some little were. ahead map, be a of and we're that's Power we bit road awareness. So brand then Three where on upside xX We with initiative expecting to a from of opportunity coupled into

term. to margin expansion over really In longer modest and terms of our commitment leverage, we're focused on margin the operating feel good maintaining about operating

'XX, get up we the put shaping see a we point P&L closer the finer next components on to as we'll think of I where year.

The from Citi. Lejuez Paul next comes with question

how you North what hear stores And saw Just are America? levels business. love the performed Would about running productivity about want China store about if versus could over quarter. And currently to China talk e-comm? sort volatility to where China versus talk the of you in in

volatility, Paul, I'll I let X e-comm say the say, of really would strong months I the then And Calvin healthy the over in of on terms would we and didn't course store each of the of across growth performance. China comment any quarter. really quarter. experience

Center know, did Every look well opened our performing well stores stores as still and as some we in partners platforms X we've you But we store store some Mainland, grow predominantly as cities, into of such exceeded business, Tier online China bigger, business have We of market. work well. in of BXB lower plan, optimization our In our leveraging see opportunities Tier incredibly a first performing as to has X. more China really different of XXX which than through overall country to direct location, our the now they're clienteling where in is do is experiential business. our Tmall, terms that incredibly platform. markets with and is grow And and to guests other and but JD percentage direct through on .cn their working both is in of our Kerry the those the back X, selling as Tier channels, opportunity of to our

The the initiatives e-commerce incredible learnings team globally and driving some for us doing and business. is overall

can So are very way into. both is in educators. markets, our continue both all And acquisition we and determine and grassroots community in the driving do locations -- we the open build really brand the in markets, stores helping in us guest which -- new that opportunities new which through strong great it's traditionally to and

And from smaller in our driving very in significant a we opportunity, well, North behind standpoint, with productivity They're e-comm. they're just size, store the brand, the of a success but obviously, coupled -- see that but of productivity behind. slightly performing footprint, America, both

So very of and balanced exciting those all growth levers. across and good

what's market where China longer the can term? So profitability in think go that currently it you versus

the we Closest very America North say region. profitability I'd specifically. healthy. broken our It's Yes. haven't to out

an the in that that opportunity what we're long is I necessarily over we as really that have that on but margin, capitalizing in we would think present operating in market. scale the focused near market, term opportunity term, also not on the

from John comes Cowen. question next The TD with Kernan

question, very into high. structure Excellent. XX%, is Calvin, business of up revenue of international to when now. seemingly you I guess it's Paul's margin XX% this think this the talk dovetails I

I is history highest quarter. margin think gross second your this the in in quarterly

seeing how So contributing this internationally year? to margin the you're that's to about talk broadly just maybe expansion

sales market. I'll the the and relative the margin. tee to Meghan let potential mentioning speak success you at see up XX% of we the the market, our across I'll to where

indicated long didn't early seem quarter when we're region market, on growth the and of profitable we're we total XX% every think innings I every in that international of was last total of XX% in, our that sales, ago sales. our

market been for growing to in every the have Australia the growth the crossing company. having U.K. to single in, business overall the is awareness to longest, every of the in it's have and digit business it even some we've but be see the So brand we there, market, unaided XX% to the lowest we're exciting and digit double in where of incredibly teens. consistently It's consistently in contributing except the and the

have in international growth of a we So business. significant runway

really is, our back from in And that markets want growth brand think, are margin brand Power significant multiple touch would product balanced diversified of anything to at and being And hold xX. you XX-XX don't to I markets. unaided see that of mix? I today potential being think awareness. shared Meghan, getting Three with started. through beyond a I've we just But all this global brand if on the the profitable I XX%, and current before us that scale,

Yes, absolutely.

about So the for to a XXXX points of to points basis basis full operating guided XX XX year, That's we margin XX year-over-year. in expansion XX levels. above

profitability. is pleased still Within So performance. international we're below that that with North really America

scale as As still really I terms mentioned, the China being EMEA, expansion operating and opportunity those looking that we to closest to APAC in near continue And maximize some term the market. markets. then in of margin

and longer term, in focused revenue scaling I time. over the brand the market, over store and So the awareness we leveraging into on have would opportunity, driving international expansion say,

billion X follow-up this of driver of just other should a be $X on been Excellent. categories. year. north annually is obviously My It's well revenue. It bigger

You how talk category forward? that should that the we growth line item to and going think about of

Yes.

other as largest the be businesses as well would seasonal So pop-ups, within categories our components. that those franchise are

in seasonals in pop-ups. performance We terms markets well of also relatively consistent, I would have lululemon new as and by being say the growth I say, franchise outlets Studio. as driven would

And capitalize opportunity franchise with to that markets another the with so on there we'll and our I would going forward. we model within scale continue say have bucket

The comes with Brian question Oppenheimer. from next Nagel

the first, is Two mean talked but business you shove apologize if [indiscernible], strengthening fiscal into August. I nice questions, quarter. your Congrats I this together. I'll about another further specifically on QX, here of

understand you product where So us Are -- I geographies I there seeing help Then what's that? follow-up. categories, driving particularly -- you're a happen? particular that can mean, better? have

Brian. Thanks,

half came that a tail up some I the to incredible of men's. innovation of QX the set new at in out response We've seen is end needs position that combination featured sort bags. for state Into it's think I'm play with the men's being for excited in back of jersey of accessories Get women's our that. along activated really campaign soft about, and in geared It, ABC up were having across We've the of which steady

to both campus, digital core resonated products the regions bottoms to campaigning our terms has in some and We've relative back in of which done well of certain driven some in men's. and women's

he So and resonating very she been is that's in nice leveraging consistent awareness through core variety and America. of responding a are both at a -- it's response all North our innovation and we've to well as well that activations, markets, newness seen unaided some combination a in and campaigning, of as across getting

that, and from So it's formula, campus. I well, into as a approach back a business the similar to responded fall think, a has we to I driven, similar North really American head think,

inventory. That's Calvin. question appreciate my follow-up with to helpful, then I that. And regard very

really So you a done comments, at rationalizing job I will, just look and the mean, inventories. given your phenomenal numbers if you've of

in concern I and marketplace, lulu question, my inventory, the both of quarters in on the the So a ago mean, that few given was just level channel. about say,

you are now, and type recognize clear there regard you manage to to your at Is always critical point. we But inventories that your of some really inventories. are As past that way inventory all of have with the we your cleanliness inventory? now look

we've I some significant in balance have still degree Yes. some inventory on would say elevated mean cost basis. We a I airfreight made of progress. our

little would than bit term back normalized completely goal are slower to get the a over not longer turns inventory so our And say I to and turns and optimized rates. historical history, would those

the what that supply nice experienced. on able So the still inventory were dynamic was job so chain has really and navigating in some done to but opportunity, positioning upside that and saw a demand we capitalize we a team I think

comes Telsey Telsey The next question Dana Group. with from

great to see on your It's performance. terrific Congratulations the progress.

new as mentioning the product, zone As where And of enhancement? thing Calvin, we see you on higher AUR newness? you you're forward about moving programs stores How that the then impactful, this? do programs? regarding of big with Any Is stand And you for loyalty AUR which a driver I both and year. for was know with that some the are going e-commerce. outerwear think into do the loyalty last a And discussion the developing? a so traffic, is for

Thanks, Dana.

completely in was line the across you traffic As mentioned, e-comm. and strong both very stores pretty and much

really connect resonate and of drive the items a continuing omni to over traffic. of have to wherever guests So drive we're and us with that business. last strategy success and year them. and cycling has our And ours strategy some the is been categories drove convenient that for continues

So as guests of very encouraging on with strong strong both numbers which existing healthy, us. at just and numbers, top is engaging we look the very new how are

is We've obviously a is this a to for that. allows which less be North Essentials before but play community, is of teams, that million that expectations. And exceed the I us to allows with program the And now significant that membership member. far to into to us it's guest leverage we ways with unique it of deliberate signed XX think program launched had membership consistently membership, part indicate to that to are strength of going number share. have program, will in than us, America to relationship, to benefits continues a we mentioned not is engage membership unlock ago. up our that year us guest. I the more our it I allowing our But that We our a guests

them as the for is to way history data us which teams look effective teams in at the well in guests with communicate and and our interact our And assist digital very allows as with store that and marketing do. we the

exciting us of that an a continue and leverage. So it have plan to program will we for is we ideas lot new initiatives how

all to I think it's a part of it. it. I wouldn't point

the and And we comes through the period guests xX the innovation, the why to success continuing product of of it's our Three Power of brand, lululemon. that success ultimately, think beyond. and I see product for

Ike comes Fargo. next Boruchow The question from Wells with

clarification questions for me. X Just

XX% Just great. the on North full both? And that comp or on quarter-to-date is China, America then revenue was acceleration, growth

curious of the in guys guidance in are the the year, kind the terms back China Just what half? baking for remainder revenue of you for for kind of of growth

Thanks, Ike.

and total would in it So specifically, the in North America be terms comp. of acceleration

haven't In move we But terms the China, in China of QX are say in as as China performance in majority China I half -- And we sorry, strong feeling we year coming broken very second XX% And Greater positioned move would half the growth well in of of by stores performance, the openings. China. pleased stores mentioned, XXX And today, region. with our out a QX second XX off year, this. into as being into international. I those we're the we the of

The Roach from Brooke Sachs. question comes next with Goldman

the in age you composition those customers. was hoping growth America I of you existing on or the brand? seeing any elaborate customer Calvin, And are between income cohorts they and new by could performing difference How are customer North behavior as enter demographic?

Thanks, Brooke.

that to because overall years. past quarters, the new I've us how before, encouraging. guest are cohort pull see that behaving very behaved I the Bag the the similar we very terms the cohort past through think year in and frequency That's to last guest how of the Belt speak composition, of and nature how that encouraging cohorts. did and see Everywhere In to we view similar migration success the did of mentioned their in spend younger of And them engagement for it in of the performing sort engage I'll a of directly they is that behaving cohorts cohort has

see our of with retain we them. spend guests as wallet And as and coming by business ability share in and new still to our guests existing driven well team's increase

existing of overall sort and be in they're behaving and very the high that engagement brand both differently innovation formula. guest with responding to very business, and continues newness the longevity loyalty, signal very to in low nothing guest to new and the healthy would retained, factor that the contributing So

question. more X take we'll Operator,

from Morgan with comes Stanley. question next Alex Straton The

good Congrats on quarter. another One for me.

definitely on over this at they in number pop could year. be so revenue a stores, like looks or average high on per box. a the $X it It's million Just

store the just about in higher? I'm opportunity drives how note, number maybe about growth from how you related trajectory North that here? America think do you So the do think And specifically? What a on Meghan, wondering, here from

Alex. Thanks,

part terms high on foot, per have box to in per definitely high key per our square traffic size to in where So of we that and our store expand sales capitalize it's square foot, of locations sales sales strategy traffic. a

So we us It XX more across women's accessories, which really men's, are co-located on assortment mentioned, have approximately stores, call a are that opening I as holistic to capitalize traffic allows expansion. and we trend. what footwear

that America and So one in that. international We're still it's very along in on early we that for than North key we us monitor are definitely we're a strategy days strategy our further closely. in markets,

I and region across you America expansion and of I terms still measured in a And can international half But say, your and of would very strategy. then would both me sorry, deliberate North say question? store our remind the second runway, --

store growth the America, opportunity On North in specifically?

in North say broken range. America. I haven't footage would from out but not the the single year square this digits Globally, growth we're We double and specifics, low digits dissimilar high in

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