Executive Summary
In Q1 2024, Lululemon Athletica Inc reported a robust 10% year-over-year revenue growth, reaching $2.21 billion, aided by strong international performance, particularly in the China market which saw a 52% increase. Earnings per share surged to $2.54, up from $2.28 in the same quarter last year. The company faced challenges in the U.S. market, particularly in the women's category due to a narrow color palette and stock shortages in smaller sizes. Management reiterated their commitment to rectifying these issues and emphasized confidence in future growth, backed by a strong product pipeline and increased brand engagement efforts.
Key Performance Indicators
QoQ: -31.08% | YoY:10.40%
QoQ: -33.01% | YoY:10.80%
QoQ: -50.93% | YoY:15.07%
QoQ: -51.99% | YoY:10.68%
QoQ: -51.89% | YoY:11.84%
Key Insights
**Revenue Performance:** Revenue grew by 10% YoY to $2.21 billion, an increase from Q1 2023.
**Gross Profit:** Gross profit rose to $1.28 billion, achieving a gross margin of 57.7%, slightly up from 57.5% in Q1 2023.
**Operating Income:** Operating income was $433 million, translating to an operating margin of 19.6%, down from 20.1% the previous year due to higher SG&A expenses.
**Net Income:** Net income for the quarter was $321 million, yielding a net margin of 14.5%.
**Stock Performan...
Financial Highlights
Revenue Performance: Revenue grew by 10% YoY to $2.21 billion, an increase from Q1 2023.
Gross Profit: Gross profit rose to $1.28 billion, achieving a gross margin of 57.7%, slightly up from 57.5% in Q1 2023.
Operating Income: Operating income was $433 million, translating to an operating margin of 19.6%, down from 20.1% the previous year due to higher SG&A expenses.
Net Income: Net income for the quarter was $321 million, yielding a net margin of 14.5%.
Stock Performance: Management repurchased $300 million in stock in Q1 and anticipates an increase in buyback authorization to $1.7 billion overall.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.21B |
10.40% |
-31.08% |
| Gross Profit |
1.28B |
10.80% |
-33.01% |
| Operating Income |
461.90M |
15.07% |
-50.93% |
| Net Income |
321.42M |
10.68% |
-51.99% |
| EPS |
2.55 |
11.84% |
-51.89% |
Key Financial Ratios
operatingProfitMargin
20.9%
operatingCashFlowPerShare
$1.01
freeCashFlowPerShare
$-0.03
Management Commentary
On revenue growth, CEO Calvin McDonald stated, "Our total revenue increased 10%, or 11% in constant currency. By region, we saw continued strong momentum in our international business with revenue in China Mainland up 52%."
Regarding women's product performance, McDonald commented, "We did not maximize the business in the U.S., due to missed opportunities such as a narrow color palette and stock shortages in specific sizes."
CFO Meghan Frank added, "We are maintaining our revenue guidance for the year while increasing our EPS guidance due to better than expected performance."
On the brand's future, McDonald expressed, "Our brand continues to resonate with guests around the world, and our growth opportunities in the U.S. remain compelling."
Our total revenue increased 10%, or 11% in constant currency. By region, we saw continued strong momentum in our international business with revenue in China Mainland up 52%.
â Calvin McDonald, CEO
We did not maximize the business in the U.S., which was the result of several missed opportunities, including a color palette that was too narrow.
â Calvin McDonald, CEO
Forward Guidance
Management has maintained revenue guidance for FY 2024 in the range of $10.7 billion to $10.8 billion, predicting an 11% to 12% growth over the previous year. Specific focus will be placed on U.S. operations as product availability issues are resolved in the back half of the year. The company aims for revenue growth of 10% to 11% excluding a 53rd week in the fourth quarter.