Lululemon reported QQ2 2024 revenue of $2.371B, down 26.0% year over year, reflecting a softer demand environment versus the prior-year period. Despite the top-line decline, the company delivered solid margin discipline and meaningful cash generation. Gross profit reached $1.412B with a gross margin of 59.56%, supported by a favorable product mix and ongoing direct-to-consumer strength, while operating income was $540.2M (operating margin 22.78%) and net income was $392.9M (net margin 16.57%), resulting in diluted EPS of $3.15. Sequential improvements were evident versus QQ1 2024, with QoQ revenue rising 7.34%, gross profit up 10.75%, operating income up 24.87%, and net income up 22.25%, signaling better seasonal momentum and mix.
The company generated robust operating cash flow of $443.1M and free cash flow of $298.1M in the quarter, underscoring a healthy cash generation engine despite the revenue pullback. Cash and cash equivalents stood at $1.61B, while total debt was $1.46B, leaving net debt of approximately $(151)M—effectively a net cash position when considering cash on hand against gross liabilities. The balance sheet exhibits strong liquidity and a solid asset base, with a current ratio of 2.43 and a quick ratio of 1.46. In addition, management’s decision to repurchase shares contributed to a sizable financing outflow of about $587.9M, offset by ongoing free cash flow vigor. These dynamics provide the company with flexibility to navigate near-term demand headwinds while continuing to invest in brand and DTC initiatives.