Lululemon Athletica (LULU) 21 Mar 242024 Q4 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc. Fourth Quarter 2023 Conference Call. [Operator Instructions] I would now like to turn the conference over to Howard Tubin, Vice President, Investor Relations for lululemon athletica. ahead. go Please

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

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

opportunity dynamic have today will current are is forward-looking started, its to subject I'd certain Before forecast management's based assessed, information, include rapid and which you future. aspects nature we remarks take on of statements get lululemon's this but to our by that to abrupt and current like we of changes. reflecting which remind statements These even

Actual the in have due we results reports these including on report on XX-Q. SEC, result our any may and to of any differ implied information statements make those with future materially including disclosed from or our to statements quarterly this annual in assumptions events. of with or that those forward-looking XX-K and update associated call obligation business, or we on Form we as contained our Any as a on disclaim risks most our uncertainties these statements expressly and undertaking filings by today, based Form new forward-looking or of are revise recent

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

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

of key for visit our X hour. like to find financial I'd and for quarter our Today's Instructions] scheduled investor a well the is begin our as fourth to you'll statistics the as quarterly call investors we call, [Operator Before operating site, where our infographic. summary remind

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

solid finish I our year for year results, to discuss another lululemon. am QX be another here pleased XXXX Thank which you, full and represent strong Howard. to today to

discuss and business also in for XXXX. will QX We our our outlook

in in there others has from year we're keep opportunity this into investments consumer heard start shift navigating our that trajectory. We you've behavior been playing a slower growth market. offense has an this a view U.S. the industry, to been As to as we as in of late, continue what and will the our lean

shortly, our remains international business U.S., some with markets take in overall will you share planned specifically will that the product our the have the well Meghan of marketing. Outside U.S. guidance as for as in we all and strong you for through our Canada. I our initiatives and plans

hear a remains you'll from me consistent. that message What is

We an have pipeline innovation. impressive of

and we opportunity ahead within increase And remain goals. the Americas to our to our of store continue brand around significant. will awareness the we our base optimize and Our of And world. Power grow remains xX Three

begin. let's So

As our press bottom results, line, release, the both top guidance in you updated provided we exceeded QX in January. read our and

and continue And channels, e-commerce see at increase sites. strong Our traffic balanced regions stores and remained across in we our categories. growth product to

EPS share XX% In revenue merchandise By Mainland of increased increased women's region, XX%. fourth QX year. XX%, per XX%, the increased category, earnings Americas in $X.XX By last increased the were world XX%. versus of quarter, XX%. $X.XX increased men's the total the accessories rest X%, and grew increased And China and adjusted

in We performance saw our several trends strength quarters seen in product key the continued. looking for we the When Wunder at women: Scuba, have Puff. including, Softstreme franchises, over business Define, the in and last QX,

our And to to perform Train as bag ABC Pace and Steady State, accessories, in well. men: well continues For and overall License Breaker. Soft assortment Jersey as

than more North continue America, Essentials grown our XX million first And the build in program membership has in to members we to which year. now

we to the Black our Peloton such and in Friday quarter, member-only styles, America. as exclusive experiences benefits, shop Mall invitations offered of nights with to You This participate at activation access early our including them Move for

program and We us it we're engage to with seeing new membership objectives. spend remain offers on so that with LTV. both far our increase as positive of pleased results ways all our excited I'm and these guests

versus World versus XX%; increased results. XXX turning year. Revenue full to basis China Adjusted last Americas, and with operating earnings up while Mainland, share versus XXXX. our year of increased to XX% Now up year last per the growing XXXX XX% increased billion, $X.X XX%; margin points adjusted XX% Rest

markets full of XXX grown When the plan. have basis in revenue all EPS pleased As you CAGR, expanded margin XX% in in adjusted we the second the illustrate gain results was by strength as innings XXXX early significant a points, we CAGR our Power to opportunities grown adjusted growth operating the and X at brand continued at CAGR a I'm These our our these have lululemon XX% us years of remain the we we story. at that speak looking and fueled by of year market of XX% operate in where a regions, of our international know, front Three xX share. to growth collectively,

and X we're Let of in quarter now business. what seeing me speak to the XXXX

the been globe. in with we've has in that environment others from sales States across regions seen United the somewhat pleased Consistent most challenging. remain in market, our are what the consumer strong the We

our remain the about market However, XXXX despite gain we to in in business optimistic U.S. the grow to our and to opportunities share. continue dynamics, market

our position. to place robust have We in strengthen plans further

and We industry. plans to of per our average XX will productive XX XX square foot above our stores to our in most among and overall openings optimize optimizations. remain With new the for X store to sales U.S. $X,XXX, the stores with open continue

In addition, with attract the local help as facilitate stores our connection guests direct into act our brand guests, in us new our a and hubs communities.

larger increase to activate the brand our market into we campaigns. brand invest and to awareness community-based continue continue to events as will We both

within our other to further strengthen areas We the business positioning. see

We growing age demographics, including are younger our guests. across successfully business all our

smaller have strong of sell-through into seen of have more our brand, we the As our sizes color. attracted younger and we offering guests

high And are maximize don't We chasing teams know of assortment how can across better our areas business. U.S. the the the high is product pipeline into these demographic, within with this we compelling, and globe. and yet so the our is both

year In fact, of product another be XXXX will innovation. significant

our our footwear, shoes footwear first media new both technical February. to We the styles year men. hosted started in launch unveil event early on York strong success for our the initial women's with City of line, of a designed of expanded we New the Building in including and casual collection

a shoe. sneaker; styles for and that available beyondfeel, running our newest shoe all-day new both trail beyondfeel new superior running and best technical ventilation the a casual Our trail, bringing to include for women cushioning, and and road men cityverse, of comfort offers performance to support; designed the

We to from are initial response in male the the North very America particularly and pleased is guests and our with response China, We to in styles. new expectations. cityverse our reaction a were our strong seeing exceeding guest

initial innovations with Our upon strength, year. we'll throughout teams footwear planned into build and are the additional this momentum chasing this

needs lead designed with for Our is can versatile leverage We as apparel. construction technical expertise unmet use. styles to then of in innovation raw and innovations offer technical our for footwear the everyday strategy our with same guests. We material solve that the

franchise, we XXXX within fabrics product will yoga in addition, both to planned categories. tops train our License be to silhouettes innovation within we across maximize franchise, as we Also Align, to fabric and our In expand our largest we continue new for And with leader pipeline, explore continue will popular a to will both train continue new our bottoms. and women, Train.

to the I've number and most of include are activities. years On within across jersey few our launching new in with golf styles. of fabric and the soft year, men's last category seen upon build this side, success A additional we the innovations highlights the innovation continuing categories

Also, men's launch jacket bring leveraged a a into iconic pad Pace the we of solves Breaker and have into collection Breaker run recently category. the new our to with complete Pace

new bring into assortment Our competitive solutions technical one biggest on our our product a ability of advantages. basis consistent and our is to

on in guests enable continue I'm top choose. excited for to the XXXX, sweat they our innovations we way have with to any which will

now brand me our strategies. shift and to marketing Let

represents our low remains most awareness brand know, for across opportunity which significant us you a markets, As new guests. attract to

records which just International a ultramarathon huge in lululemon out is run was FURTHER began set and of week. activation Women's as our world FURTHER set wearing from before to event, collective with last first-of-its-kind The success the footwear and careers. apparel our a by Day their our athletes ambassador concluded unique. which what makes and Starting example a athletes women's were great of was distances XX furthest

media earned athletes for continue like no activations awareness we example, how result and attention create increased we solutions also significant assortment. and and brand, For community technical social brand with innovate through in authentic new into how our other introduce which and athletes to

part lens, into designed mainline female-first over the assortment through FURTHER, a which introduce seasons. will we coming As we many of our XX products of

the month Paralympic Canada. and our be Olympics forward, next Looking of in Paris revealing we'll kit advance Team Games, for

coaches seen amazing with the we've Paralympians. you Canada product. both Olympic set collection, we what Committee to we're XXXX Winter Team and Canadian a in multiyear partnership As it's Canadian launch athletes our for and summer outfitting Committee. the Games, and our our and inaugural announced know, our I've Olympians first Paralympic XXXX, now created, After the with

is In awareness of the another moment stage on success deep our and bring showcases partnership elite international a the relationships our within strategy spend to and the business. on like a lululemon's growth new to athletes, grow with addition and example Canadian guests I'd to compelling brand into supporting It brand. is this global athletes.

international continues clearly stores of includes represents our Rest international be to total a and robust in We of experienced our speaks of business. World have ahead China markets all underpenetrated all to us. International, markets We we in our and only which of across segments, QX, business XXXX. the remain which strength XXX of operate combined, expect opportunity in Mainland of we XX% to our and

and XX the of strategies America, expect North approximately with increase part term, while to open long we'll the XXXX, half of of not international overall we brand xX represent plan, In continue our our outside our growth approximately And will to over of Three we revenue. awareness. Power stores

optimistic will in be from have XXXX our see, of upon about schedule to XXXX. position exceeded our reasons the you xX revenue As we And guidance, XXXX. entered We we of Three a ahead can We of Power remain future. strength. based many target in

are are that excited working. brand awareness our to We build strategies

past we to XX% from to our XX%, the our activations, in strategic through X% brand year have awareness China U.S. campaigns and XX%. and community unaided successfully from went The grown key investments Over in markets. went

strategically to across and including the continue We And all well set this will invest for in these up continue will will strategies XXXX. we us U.S., which markets, year beyond.

awareness the Given early all lies low potential, share in market brand. us ahead we leadership for team innings the our are lululemon of with tremendously what our and are significant excited for of unaided on growth

full. with is We that pipeline are innovation investing growth a for of

others And playing U.S. We enhance and in our will in the in offense advantages are are sector marketplace around further while these many not. the our standing globe. the

it I'll With for turn a to that, guidance. financials of our review over and our XXXX Meghan

we Calvin. note, with out updated results guidance XXXX strong in on closed mid-January. provided exceeding our a We Thanks, the QX

start we've see in strength while continue a all slower to other Calvin to the mentioned, we seen QX regions. in U.S. As

our see we While performance. U.S., we environment navigate consumer several maximize opportunities the the to in

Our teams throughout our our executing and guests are strategies for XXXX. on delivering focused against

done, continue we for to scenarios. multiple always plan have we As

are business term our manage protect short maximize long against to both our in and the positioning to ourselves and We performance downside.

outlook, segment of performance guidance details our on QX update our our the provide sharing let and an Before me reporting.

our With meaningful our have channel of omnichannel from to regions our changed model, reporting opportunity we've international evolution the business, in our geography. we operating segments the and

out XX-K, Mainland sales we In by comparable have our segments, metrics close the XXXX. new you models Americas, In of earnings call, provide to you'll see World. will XXXX and and so data channel which on for still your the today's China Rest will our are release

on basis. regional However, metrics going reporting forward, and be a profit we'll revenue

Let of me details now share our QX the performance.

with results QX, XX%, revenue XX% with And rose comparable increasing For World Americas by revenue to grew regions, revenue X%. increased comparable XX%, increased as XX%. X%, sales in China were our total of sales follows: revenue increasing billion, segment, $X.X sales comparable and with sales Rest increased net Mainland XX%. increasing our Within by XX%. comparable

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

digital opened By optimizations. year, or $X.X we and XX versus total accessories In increased XX% women's the of XX men's XX%. revenue increased channel, category, billion and grew stores XX% of by completed increased During XX% XX%, line our contributed revenues new and net top quarter, revenue. last by

traffic We as in strength in ways rate guests e-commerce profit most XX%. fourth revenue $X.X of with QX net also experienced convenient and revenue billion adjusted was to across model we strength both XX.X% of of engage to increasing approximately the compared stores omni for our operating quarter XX.X% speaks our This XXXX. them. or Gross in the to channels, net ongoing the with by of

primarily driven in as XX by on product a increased gross by lower air points offset usage, margin foreign airfreight basis lower points ocean of XXX primarily deleverage freight driven year following: costs increase point as and by the adjusted relative Our margin, to well slightly was overall last exchange. basis basis and XXX

QX FX. flat costs, relatively in points by XX of Gross Markdowns fixed points basis on basis favorability with basis was in mostly margin XXX costs predominantly XX were guidance of favorable of favorability to driven in our product points XXX to points, and by margin basis updated of year. leverage XX freight lower driven last

Moving SG&A. to

XX.X% grounded Our for net SG&A also net strategically be million approach in opportunities. XX% same prudently continuing the continues growth our compared of to were revenue long-term expenses our approximately year. period to while $XXX last revenue invest or expenses to in managing of

business in strategic in SG&A our our in continued and infrastructure, This XXXX. deleverage brand to made by of XXXX and depreciation The foundational increased partially to in driven and amortization building, Studio investments was to the by evolution technology was savings addition lululemon related offset related model. investments

the net revenue of quarter points margin QX quarter. XX adjusted XXXX. for compared in XX.X% contributed income million to the an exchange Operating basis in to $XXX Foreign deleverage was the XX.X% of or operating

compared Tax earnings filing stock-based compensation and last $XXX earnings or This Canada. in million tax an tax increase due effective year the favorable to expense primarily for to quarter ago. offset increase accrued in on the related partially benefits some XX.X% relative decrease an pretax The of to rate tax adjustments income by of an was upon in adjusted year to returns. was of withholding is a XX.X% tax

locations, approximately $X.XX for the quarter adjusted per $X.XX was quarter, QX the including quarter expenditures QX of XXXX. relates and our technology investments. earnings year. for growth, for compared income million share spend diluted project, share per new distribution with to store that multiyear or Net $XXX million of were and diluted center support business fourth flat investments for $XXX relocations the capital renovations to last Capital primarily

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

to basis, approximately levels, contributed our decrease. X% to expectations, year. versus which are X%. pleased the increased foreign Relative and last higher inventory revenue exchange our declined with a On We unit inventory

our had During the approximately QX, average approximately approximately an of the stock the full quarter, million approximately of at $XXX. of we at on XXXX, shares of we we $XXX. share of an remaining end authorization. repurchased average XXX,XXX billion repurchased At price capacity year price $XXX In $X.X repurchase

shift guidance Let outlook. to me now our

start being said XXXX. planning I and with disciplined As for my remarks, the at of agile our we're

our maximizing environment Our and this delivering current year and teams are guests focused beyond. in performance our the on for

revenue billion. growth we our growth the with of XX% of full to range the XX% Power Beginning XXXX, represents plan. to be in to range expect Three billion relative XXXX. year $XX.X This remain We $XX.X to xX committed to of

in the to XXXX, the grow Excluding quarter XX% we expect have XXrd revenue week we that to of XX%. fourth

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

our openings primarily Americas, markets, XXXX China Our rest the will with international Mainland. in XX in X to in the in new include store stores

gross full XXXX. the flat in forecast last both year. to gross markdowns year, flat margin, and margin gross For with be margin adjusted Within expect to be airfreight with approximately we relatively we

year. the versus to points approximately basis now XX We Turning XXXX. forecast SG&A for of full leverage

We increasing capabilities. analytics continued and acquiring are our marketing prudently support investments invest in managing aimed expansion to building strategically Power including at our xX guests, expenses technology new Three continuing of road while to brand and infrastructure map, into in and market our and data our investment and international growth awareness investments

operating XXXX, Power XXXX, target it are by margin margin approximately at which expansion of above operating versus our year expect plan, XXXX. date, margin of the increase adjusted annually. xX looking To points XX in for we When expanded our Three basis XXX of to basis versus full points we modest in tracking operating

adjusted the For compensation approximately our in tax year to to XXXX, XX.X%. increase tax rate our increase be filing XX%, over effective The we when we an lower and effective year XXXX. to primarily deductions tax the realized full XXXX expect returns relates rate of stock-based favorable the last adjustments relative

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

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

low EPS and half the inventory inventory, of at repurchases. dollar in the of we year's double-digit half declines. last high any in second as first year guidance percent then anniversary Our the expect excludes in decline to of year the future we impact to the looking the share increase When single

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

to Shifting now QX.

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

We QX. store expect net to company-operated open new one in

be flat with gross to relatively with last margin QX markdowns QX We approximately in expect flat year. XXXX, with

In basis brand will XXXX. and be driven in from QX, SG&A investments to points XXX we predominantly guests technology XXXX increased This by XXX and deleverage depreciation to resulting higher new investments expect relative to QX XXXX. made acquire awareness and rate grow by our to

and events: awareness. some large took share me grow activating the our Let investments already footwear Canada Team our to later our brand launch and we launch details kit will brand in marathon, X ultra QX, additional which be place quarter. on relatively Within Further

These to in contributing building, events, plus some other investments are strategic brand deleverage. the

Looking at not anticipate basis we as for And do points the quarters X deleverage. through XX X, leverage previously of SG&A stated, SG&A we full year. I expect

at looking operating decline we airfreight basis When savings. in I'd points expect SG&A for expanded XXX driven basis operating margin XXX by note margin also by to QX, investments. driven to that by QX our it XXX XXXX predominantly points, year-over-year,

our until In addition, map not did of our quarter the we last investments start road second accelerating strategic into year.

stated And XXXX. of of expansion basis top the previously, expect year on margin for operating in points operating modestly as the we full margin expand I to XXX

Turning to EPS.

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

I that, over turn to it Calvin. back will with And

and business of in the will out I'm we the of strategies the Thank XXXX. optimistic how continued In Power in expand to create we're contribute we Three of I'm and the you, momentum deliver xX in investments summary, in our way another against XXXX to growth making world, have that business. which the year Meghan. around proud closed

responsible our well our our our the education collective, support centers In want our who with the results, our will thank forward. all brand and these going members every as will that centers, be guests guest they in we stores, to bring and life. are and driving closing, particularly accomplish distribution of engage as store I employees engine fuel They to will for global day

take now your We will questions.

[Operator Stanley. Alex with comes from Instructions] question The Straton Morgan first

challenging on behavior. comments in wanted consumer on the Great. I just the hone to

than how you conversion or business that? are seeing more is a in Or see wondering, others? Or do Just Is it some you broad-based? problem? of pockets a that it the traffic

business first guidance? the think believe? And is in how like guide, running currently X% then to the about does at the relation I that quarter that to XQ XX%, should we that mean Or that comment

Thanks, Alex.

really markets, what the strong seeing, mentioned, where retail terms navigating soft environment That are as year. In dynamic we're their into of the momentum is the in all Canada, a I into coming continuing with U.S. including And QX. consumer. international little is we're the

this know I some think opportunity. have particular, we in we around and in an opportunity market, I in have product. our an

we're I which As attributes both color, the we're it in in honestly, we performed the X sizing, had U.S., market. something overindexed of where to is particular, to into. where play And Color, have our just the going I in offense X well. chasing continue we And these in to not enough. did mentioned, opportunity, see is and

The of initiatives the chasing I'd said, in and for and we Where that's color, conversion pipeline down positive, year, very is slightly. sizing remains innovation stronger we will have to addition. I it's quarters. the are in seeing in the that some a opportunities through as link U.S., and which, get brand some strong we -- in have into slowdown but the product and product we And this exciting we're up, traffic showing still

the XX% on as Calvin regions to growth, we off appropriate the strongly, in guide speak don't shared, to Great. trends. what performing of trends, QX X% is a soft to And add, terms we're seeing which start to other we all just U.S., did to with current we relative trends. I'd guide feel the But given were Alex, in inter-quarter and

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

do Where hoping grow of and opportunity stabilized see a you men's bit defend provide last is union men's state could business. to decelerating share in on the was largest the the the you after a Growth year. I business?

Lorraine. Thanks, Great.

men's to the product indicated, Last see did for I'm you back our year. pipeline into that business. increase, men's momentum men's excited as mentioned, I year, this very As was the which great our about in business QX,

into our years we've growth. Power Three goal. at ahead CAGR, XX% of X plan, that And revenue xX a Total our men's grown so year was XX% of

put to the share general I'm back drawn few guest continue We this encouraged on in did little that, in think year, for are in very pull of seeing I And athletic. highlight male all a being apparel which the see by. I year. through QX, innovation, of on we category bit a last him will We and back

One is, as feels that and had both it's only know, this and X ABC you Since fabric then, was in our performance Utilitech, and was few it is a VersaTwill ago we a franchise, Warpstreme. -- base. we've year, pocket, product added the one years more we that offering, are which a trouser WovenAir, -- we've added proprietary launching

So of cotton. a it feel of feels a more hand

is for So really lighter, and the offering a a he incremental it months. loves. for franchise a us a that it's silhouette warmer and completely in brand fantastic And

We position product represent. an getting fully We've we'll Lounge in-stock In weeks, in been be men's in Jersey few the Our last launched to Soft chasing stronger. is fall. just really then. next since

Smooth State We've Spacer. added and Steady

And track franchise; bottom offering some him we've Pace into that well: which train been. So top In, is new for our launched Zeroed which equally a our Lounge performance for versatile Breaker, the hero short incredibly item, strongest and bringing is out a to and the the him. most round is it's performing needs that's product

demand We're I'm product very our what on to checking are very see. seeing encouraging the in very we're those And confident positively. all pipeline going newness. So and

Sachs. Goldman with Roach Brooke from comes question next The

and this on growth hoping there market for in outlook you seeing year. your the you're elaborate could China I what was today

on region provide you year? thoughts for profitability this updated the opportunity Additionally, improvement further could in

we We 'XX. But I'll the quarter in Brooke. business Part first of excited Thanks, our remain the lululemon revenue about closures in In driven potential for grew COVID-related our that take China. the Mainland in year, was the China. increased in by QX, XX% store full experienced half. XX%.

China. So very environment from in we're believe the our keeping the smaller factors region, macro a and remains strong, in we One, business several a building close benefit we while base. are on eye us

see continue stores at add. quarter, to end we and We Mainland of have XXX the to the opportunity on

and have relationships a brand, influencers ambassadors, really locally. to community We approach leveraging has the localized locally take and our in instructors that resonated through

come stores. strategy And some new our an and that exciting market of keep activations ongoing most opening from to

team brand see But We year. market year X%. unaided did our XX%. with XX% awareness, in at that a opportunity momentum in So continue optimistic started a and ended to activating our grow, and that about have to We growing lot is potential improvements and size, in at the market. brand excited we of how we of good the last see that great

And I'd out XX% though significantly we be don't add, we rate China, break of XX% the year, guide of in our growth then, above terms for Brooke, that full believe will excluding week. to XXrd outlooks, regional the

So coming feel and in well 'XX. of move QX we XX% off growth into a as positioned

see there mentioned, guest go that really in brand opportunity profitability the in awareness and region, then priority Calvin And our top year. new after of we terms near-term improving as is acquisition to grow line this unaided capture, and

those product. look over to term margin certainly that operating we the So longer continue to continue but grow into to we've as opportunity 'XX, looked investments see

with next Baird. The question comes Altschwager Mark from

styles a I've heard wanted stock-outs I sizes you I sales the to think, I you to time weighing is first and growth. certain guess speak inventory. in perhaps in ask while, this about on

current feel the do about this you of level are growth year? So the and how inventory? for plans mix your your inventory What

drive things us be of wouldn't takes why to to there markdowns perhaps thinking some the and be lower an about fairly in there. that given you're Maybe puts XXXX? And opportunity through lean, seem walk

Yes. Thanks, Mark.

still a on talk with of and of feel We basis. we've overall the terms currency where X a and accelerate from an in on basis pleased U.S. our plus an negative So few inventory, what's feel X% working we inventory, Calvin composition in in opportunity like came got dollar well level a about the feel did pockets unit we inventory positioned but perspective. to overall. we

Generally perspective, we XXXX a XXXX. speaking, healthy rate. was which our and expectation XXXX, flat markdown a from very for for markdown run us. would I say, a 'XX to line low That's is water

we'll but we're in to So there. very we're time, continue given our in changing at the this early markdowns, year, on not updated point keep thinking

with question next comes JPMorgan. Boss The Matthew from

Could to regardless last you to continued growth comp positive market the the multiyear maybe of Americas of macro? the could relative take just areas see share digits you high in drivers that single or speak year

Matt, question repeating I you think the it? beginning of just cut Do your mind off.

Yes, it the held Yes, I think on. sure. operator

I growth the fits about growth to, you I we story on think how market what early speak And what the asking regardless know, that of multiyear So as in how just this is just the Americas that? innings like? the Calvin, think drivers was same-store Americas into the sales to about best look relative year, Americas may to or share macro take high to continued singles that areas

Definitely still I continuing story. strong and at X. mentioned, we our as we And momentum view what that's the in look a markets all retail growth its Matt. a consumer we're Thanks, little within is being U.S., softer. Canada When bit as into across quarter navigating early a Yes. innings environment see Americas, dynamic

which, of low. product areas our unaided But U.S., we there focused that the to is business, a still drive that continue we awareness, are are very in being and and the lot on innovation can know

continue range, to of think, XX%, initiatives. with lot it's to exciting in that make a than Plan on progress less awareness combined, metric. I the XX%

change U.S., not ahead change xX balanced and guidance, we and in this Three complete ahead accessories our of when we metric, in which XXXX, goals, and the perspective, guidance, across strategy. approach that. look I've see of and pipeline Three where but a no of Power ability men's the the before in terms we Power 'XX we our our categories, in goals, an of across still with be no the talked we from will we and to change our are don't did always only with xX And when So of to the across awareness women's in grow look

the shared then I'd target And long-term foot a Matt, just low that with square a North tracking add, for of per ahead sales double-digit plan. U.S. perspective, by target. we I from long-term CAGR We're date the of square per And foot in in of sales comfortable is highest store. our to terms feel that America.

grow So and we continue -- -- was through to went when XXXX.

that important of an are stores strategy. like feel still we part So

you Could this revenues? P&L SG&A follow-up. SG&A, leverage. to think, this margin double-digit one That's the to it's I and just historically, year's operating leverage elaborate, or on see on great. year, Meghan, efficiencies mid-teens low flexibility just in

Yes.

So basis XXX point for expansion to up XXXX. year a XX We guided margin operating in expansion. we basis points against the were

the leverage in really we with saw XXXX. So pleased

spend at unaided When plans, awareness behind made XXXX guest invest to acquisition. going discretionary well as looked we after guest new to some reductions we've our while market expansion continuing and as

move at we're there driving long-term XXXX. looking through as into we So opportunity really also the

Telsey Group. The from next Telsey question with comes Dana

update thinking the talk year compared about to and the you the program, profile membership then the the seeing bit membership this And you're and marketing Can getting? that you're year? the on little of how a guests last investment any about program, of rollout

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is Interestingly, launching will, earned lineup the for our items first run, over FURTHER, innovation another in the that incredible showcased months, we supported. bra which we'll an unique XX being coming innovative next FURTHER with with be in up that to media appear opportunity QX.

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from comes with question Cowen. next The Kernan John

new terms lululemon space. in advantage your and can the you of seen for in But So men maintains holiday slow momentum QX. women? They the materials didn't entrants durable Calvin, the depth offering of we've over that to competitive the both innovation, in the scale, talk

John. moat when that obviously, the how X Thanks, One the we break is to fueling momentum or the compare the unique it, look what's are components. And and I which business? how really ourselves strengths unique Yes. into in of view brand the is and what are others? I'll down we

innovating, through business. needs putting our solutions which fabrics, into engagement this know momentum first overall we product, into unmet but of delivering unmet the relationships, to and community approach and needs, then the with then beginning guest unlocks with perspective, guests unique -- performance drives momentum driver our science a that then and further the from is the of and fit of So really and feel, which into that

we where educators, we our with and stores, markets those and very attributes. look the when at positive, scores, and NPS and our look they're guests I any our I with very, when innovation, activation And with the in engaging how all product do sit of all terms in the relationships activations the at good momentum across

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to helpful. we about comps maybe a Meghan, before, decision The versus just omnichannel more disclosure should the towards geographic-level forward? a very how That's disclosure shifting model. follow-up, the towards go think going channel

some made digital. big stores obviously investments You've and across

we I -- How more think corporate stores store recently balance and the co-located larger about you on lot and a think focus should sales now? stores. DTC between

Yes.

Power that of our changed. we out shared, slightly is long-term hasn't this we CAGR when sales the So Three period, and expected plan, below. time slightly xX of view over set ahead would I had store of CAGR, that say, to e-comm we grow XX%

X%. total XX%, growth, would strength both e-comm say, XX%; 'XX: in We've seen, comped XX%, channels stores I of coming at e-comm stores off at and

channels see both opportunity and that the leveraging across continue on So to ecosystem.

with Paul question Lejuez next comes from Citi. The

on for Paul. Kelly is This

Is gender Just Or in slowdown on category wanted up it to that currently. slowdown? you're the the broad-based? follow or U.S. more the seeing driving one is

And making the U.S. these result then some of in move secondly, the just of XQ you're as curious pickup in in if as you're marketing some a assuming throughout year. traffic investments we

fairly say, Kelly, we're is experiencing slowdown I would in the the U.S. broad-based.

so the opportunities As go on and can size mentioned, X that sizing, have Calvin identified to we specifically X on product women we some on range. after and color

growth terms and to in QX in at is QX XXrd QX rate at in to year XX, XX, through given QX, -- have the guidance, guide do traffic, then week. the X you'll to full then we're of the And we see guiding of XX is our slightly what ahead excluding

an that to the would in by be And you driven relative expect XQ? seeing you're improvement just what what being to in clarify, to is U.S.

Yes. some expect improvement. marginal We'd

The next question Zvejnieks comes from with Abbie Piper Sandler.

that I product? what through Was driving something think it U.S.? XQ about? to exactly that that lapping those you is Just in mean color XQ in should the there? we're XQ have a follow-up there we one. improvements Any Is

product guest some drivers pointed points modest on marketing as some acquisition making would as would it's I well side QX the QX we're and of of acceleration really to Yes. in of terms that. to Calvin of the investments opportunities that the say a be new through

Yes. I'll just add some the of products.

QX that, size. in we expect that we chasing improve we're to starting that As and color through. continue mentioned And obviously will

we're -- color hits to well and respond fact, seeing incredibly it. In guests as now, the

we're but from innovation greater shifts now, business in skirts results our seeing the role. much response to still a I QX, part, important guests an shorts and leggings, plays good And then to. assortment the alluded that in that and

out hydrogen for coming summer in We yoga. yarn legging have a

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The with Fargo. comes from last question Wells Ike Boruchow

way or modeling there for specifically for full your I you're comp to the able any us Meghan Calvin, based on you're specifically guess, guidance? and year, for what let know is maybe QX

this clearly, you that, I Is that's margin maybe of And means know are then the higher-margin gross Meghan. channel. QX about year, could margins that Is I'm Is Americas of guess follow-up one's markdown? driving lots kind but that? think just other that. to just Gross the that's it for outperformance just a correct? flat that for assuming something and it We there a how is the Just overseas. on comment way. if curious you would going that's deleverage?

Thanks, Ike.

and providing North international aren't we America So would that we comps, range see then the forward-looking significantly but we guided growth above. share below

relatively we as mentioned, have mentioned, I overpenetration In terms regions. of year-over-year. margins, international as do And you markdowns flat in our an

multiyear We center That's DC, network. a investment. are distribution our behind still investing

that provided. guide would our that gross in we've embedded be So margin

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