Form 8-K - Current report

0001397187false00013971872024-05-292024-05-29

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

May 29, 2024

Date of Report (Date of earliest event reported)

lululemon athletica inc.

(Exact name of registrant as specified in its charter)

 

Delaware

001-33608

20-3842867

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

1818 Cornwall Avenue

Vancouver, British Columbia

Canada, V6J 1C7

(Address of principal executive offices, including Zip Code)

Registrant's telephone number, including area code: [phone]

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Common Stock, par value $0.005 per share			LULU			Nasdaq Global Select Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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Item 2.02.			Results of Operations and Financial Condition.

On June 5, 2024, lululemon athletica inc. (the "Company") issued a press release announcing its financial results for the first quarter ended April 28, 2024 and certain other information. A copy of the Company's press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. As previously announced, the Company has scheduled a conference call for 4:30 p.m. Eastern time on June 5, 2024 to discuss its financial results.

Item 8.01.			Other Events.

On May 29, 2024, the board of directors approved a $1.0 billion increase to the Company's existing stock repurchase program. The repurchase authorization has no time limit and does not require the repurchase of a minimum number of shares. Common shares may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934. The timing and actual number of common shares to be repurchased will depend upon market conditions, eligibility to trade, and other factors.

As reported in the Company's fiscal 2023 Annual Report on Form 10-K filed with the SEC on March 21, 2024, during the fourth quarter of 2023, the Company made changes to its identified operating segments. For comparability purposes, it has recast the quarterly prior period segment data for fiscal 2023 to reflect the change and included this information in the attached Exhibit 99.2. This recast only affects the Company's segment reporting and does not change its consolidated operating net revenue, income from operations, or net income.

Item 9.01.			Financial Statements and Exhibits.

 (d) Exhibits.

Exhibit No.						Description
99.1						Press release issued on June 5, 2024.
99.2						Segmented Information
104						Cover Page Interactive Data File (formatted in iXBRL)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			lululemon athletica inc.
Dated: June 5, 2024			/s/ MEGHAN FRANK
			Meghan Frank
			Chief Financial Officer

Exhibit 99.1

LULULEMON ATHLETICA INC. ANNOUNCES FIRST QUARTER FISCAL 2024 RESULTS

BOARD OF DIRECTORS AUTHORIZES $1.0 BILLION INCREASE IN ITS STOCK REPURCHASE PROGRAM

Revenue increased 10% to $2.2 billion

Comparable sales increased 6%, or increased 7% on a constant dollar basis

Diluted EPS of $2.54

Vancouver, British Columbia – June 5, 2024 – lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the first quarter of fiscal 2024, which ended on April 28, 2024.

Calvin McDonald, Chief Executive Officer, stated: "In the first quarter, we saw strong momentum in our international markets, demonstrating how our brand continues to resonate around the world. Guests responded well to our product innovations across categories, and we are pleased by the progress we are making to optimize our U.S. product assortment. Looking ahead, we continue to have a significant runway for growth and are confident in our team’s ability to powerfully deliver for our guests in 2024 and beyond."

For the first quarter of 2024, compared to the first quarter of 2023:

•Net revenue increased 10% to $2.2 billion, or increased 11% on a constant dollar basis.

–Americas net revenue increased 3%, or 4% on a constant dollar basis.

–International net revenue increased 35%, or 40% on a constant dollar basis.

•Comparable sales increased 6%, or 7% on a constant dollar basis.

–Americas comparable sales were flat compared to the first quarter of 2023.

–International comparable sales increased 25%, or 29% on a constant dollar basis.

•Gross profit increased 11% to $1.3 billion.

•Gross margin increased 20 basis points to 57.7%.

•Income from operations increased 8% to $432.6 million.

•Operating margin decreased 50 basis points to 19.6%.

•The effective income tax rate for the first quarter of 2024 was 29.5% compared to 29.1% for the first quarter of 2023.

•Diluted earnings per share were $2.54 compared to $2.28 in the first quarter of 2023.

•The Company ended the first quarter of 2024 with 711 company-operated stores.

Meghan Frank, Chief Financial Officer, stated: "We reported first quarter results ahead of our expectations as we operated with agility and continued to make strategic investments in the business. As we look to the rest of the year, we remain focused on leveraging our strengths and differentiated model to advance our Power of Three ×2 strategy and fuel performance. We are energized by the opportunities in front of us and believe we are well-positioned to drive sustainable, long-term growth."

Stock Repurchase Program

During the first quarter of 2024, the Company repurchased 0.8 million shares of its common stock for a cost of $296.9 million.

On May 29, 2024, the board of directors approved a $1.0 billion increase to the Company's stock repurchase program. Including this increase, as of June 5, 2024, the Company had approximately $1.7 billion remaining authorized on its stock repurchase program.

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Balance Sheet Highlights

The Company ended the first quarter of 2024 with $1.9 billion in cash and cash equivalents and the capacity under its committed revolving credit facility was $393.8 million.

Inventories at the end of the first quarter of 2024 decreased 15% to $1.3 billion compared to $1.6 billion at the end of the first quarter of 2023.

2024 Outlook

For the second quarter of 2024, the Company expects net revenue to be in the range of $2.400 billion to $2.420 billion, representing growth of 9% to 10%. Diluted earnings per share are expected to be in the range of $2.92 to $2.97 for the quarter. This assumes a tax rate of approximately 30%.

For 2024, the Company continues to expect net revenue to be in the range of $10.700 billion to $10.800 billion, representing growth of 11% to 12%, or 10% to 11% excluding the 53rd week of 2024. It continues to expect operating margin for the year to be approximately 23.3%. Diluted earnings per share are now expected to be in the range of $14.27 to $14.47 for the year. This assumes a tax rate of approximately 30%.

The guidance does not reflect potential future repurchases of the Company's shares.

The guidance and outlook forward-looking statements made in this press release are based on management's expectations as of the date of this press release and do not incorporate future unknown impacts, including macroeconomic trends. The Company undertakes no duty to update or to continue to provide information with respect to any forward-looking statements or risk factors, whether as a result of new information or future events or circumstances or otherwise. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of risks and uncertainties, including those stated below.

Power of Three ×2

The Company's Power of Three ×2 growth plan calls for a doubling of the business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The key pillars of the plan are product innovation, guest experience, and market expansion and the growth strategy includes a plan to double men's, double e-commerce, and quadruple international net revenue relative to 2021.

Conference Call Information

A conference call to discuss first quarter results is scheduled for today, June 5, 2024, at 4:30 p.m. Eastern time. Those interested in participating in the call are invited to dial 1-800-319-4610 or 1-604-638-5340, if calling internationally, approximately 10 minutes prior to the start of the call. A live webcast of the conference call will be available online at: https://corporate.lululemon.com/investors/news-and-events/events-and-presentations. A replay will be made available online approximately two hours following the live call for a period of 30 days.

About lululemon athletica inc.

lululemon athletica inc. (NASDAQ:LULU) is a technical athletic apparel, footwear, and accessories company for yoga, running, training, and most other activities, creating transformational products and experiences that build meaningful connections, unlocking greater possibility and wellbeing for all. Setting the bar in innovation of fabrics and functional designs, lululemon works with yogis and athletes in local communities around the world for continuous research and product feedback. For more information, visit lululemon.com.

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Non-GAAP Financial Measures

Constant dollar changes are non-GAAP financial measures. A constant dollar basis assumes the average foreign currency exchange rates for the period remained constant with the average foreign currency exchange rates for the same period of the prior year. The Company provides constant dollar changes in its results to help investors understand the underlying growth rate of net revenue excluding the impact of changes in foreign currency exchange rates. Management uses these constant currency metrics internally when reviewing and assessing financial performance.

The Company's fiscal year ends on the Sunday closest to January 31st of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2023 was a 52-week year while 2024 will be a 53-week year. The expected net revenue increase excluding the 53rd week excludes the expected net revenue for the 53rd week of 2024. This enables an evaluation of the expected year-over-year increase in net revenue based on 52 weeks in each year.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or with greater prominence to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the section captioned "Reconciliation of Non-GAAP Financial Measures" included in the accompanying financial tables, which includes more detail on the GAAP financial measure that is most directly comparable to each non-GAAP financial measure, and the related reconciliations between these financial measures. The Company's non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures reported by other companies.

Forward-Looking Statements:

This press release includes estimates, projections, statements relating to the Company's business plans, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "outlook," "believes," "intends," "estimates," "predicts," "potential" or the negative of these terms or other comparable terminology. These forward-looking statements also include the Company's guidance and outlook statements. These statements are based on management's current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation: the Company's ability to maintain the value and reputation of its brand; changes in consumer shopping preferences and shifts in distribution channels; the acceptability of its products to guests; its highly competitive market and increasing competition; increasing costs and decreasing selling prices; its ability to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products; its ability to accurately forecast guest demand for its products; its ability to expand in light of its limited operating experience and limited brand recognition in new international markets and new product categories; its ability to manage its growth and the increased complexity of its business effectively; its ability to successfully open new store locations in a timely manner; seasonality; disruptions of its supply chain; its reliance on a relatively small number of vendors to supply and manufacture a significant portion of its products; suppliers or manufacturers not complying with its Vendor Code of Ethics or applicable laws; its ability to deliver its products to the market and to meet guest expectations if it has problems with its distribution system; increasing labor costs and other factors associated with the production of its products in South Asia and South East Asia; its ability to safeguard against security breaches with respect to its technology systems; its compliance with privacy and data protection laws; any material disruption of its information systems; its ability to have technology-based systems function effectively and grow its e-commerce business globally; climate change, and related legislative and regulatory responses; increased scrutiny regarding its environmental, social, and governance, or sustainability responsibilities; an economic recession, depression, or downturn or economic uncertainty in its key markets; global or regional health events such as the COVID-19 pandemic and related government, private sector, and individual consumer responsive actions; global economic and political conditions; its ability to source and sell its merchandise profitably or at all if new trade restrictions are imposed or existing trade restrictions become more burdensome; changes in tax laws or unanticipated tax liabilities; its ability to comply with trade and other regulations; fluctuations in foreign currency exchange rates; imitation by its competitors; its ability to protect its intellectual property rights; conflicting trademarks and patents and the prevention of sale of certain products; its exposure to various types of litigation; and other risks and uncertainties set out in filings made from time to time with the United States Securities and Exchange Commission and available at www.sec.gov, including, without limitation, its most recent reports on Form 10-K

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and Form 10-Q. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.

Contacts:

Investor Contact:

lululemon athletica inc.

Howard Tubin

1-604-732-6124

or

ICR, Inc.

Joseph Teklits/Caitlin Churchill

1-203-682-8200

Media Contact:

lululemon athletica inc.

Erin Hankinson

1-604-732-6124

or

lululemon athletica inc.

Madi Wallace

1-604-732-6124

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lululemon athletica inc.

The fiscal year ending February 2, 2025 is referred to as "2024" and the fiscal year ended January 28, 2024 is referred to as "2023".

Condensed Consolidated Statements of Operations

Unaudited; Expressed in thousands, except per share amounts 

						First Quarter
						2024						2023
Net revenue						$	2,208,891					$	2,000,792
Costs of goods sold						933,823						849,987
Gross profit						1,275,068						1,150,805
As a percentage of net revenue						57.7%						57.5%
Selling, general and administrative expenses						842,426						747,513
As a percentage of net revenue						38.1%						37.4%
Amortization of intangible assets						—						1,878
Income from operations						432,642						401,414
As a percentage of net revenue						19.6%						20.1%
Other income (expense), net						23,283						8,025
Income before income tax expense						455,925						409,439
Income tax expense						134,504						119,034
Net income						$	321,421					$	290,405
Basic earnings per share						$	2.55					$	2.28
Diluted earnings per share						$	2.54					$	2.28
Basic weighted-average shares outstanding						125,989						127,246
Diluted weighted-average shares outstanding						126,336						127,621

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lululemon athletica inc.

Condensed Consolidated Balance Sheets

Unaudited; Expressed in thousands 

						April 28, 2024						January 28, 2024						April 30, 2023
ASSETS
Current assets
Cash and cash equivalents						$	1,900,672					$	2,243,971					$	950,607
Inventories						1,345,267						1,323,602						1,580,313
Prepaid and receivable income taxes						192,955						183,733						182,393
Other current assets						329,193						309,271						339,989
Total current assets						3,768,087						4,060,577						3,053,302
Property and equipment, net						1,561,185						1,545,811						1,312,793
Right-of-use lease assets						1,263,749						1,265,610						993,471
Goodwill and intangible assets, net						23,992						24,083						44,123
Deferred income taxes and other non-current assets						211,482						195,860						167,855
Total assets						$	6,828,495					$	7,091,941					$	5,571,544
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable						$	261,605					$	348,441					$	287,464
Accrued liabilities and other						374,446						348,555						342,751
Accrued compensation and related expenses						132,911						326,110						125,053
Current lease liabilities						254,443						249,270						210,506
Current income taxes payable						53,087						12,098						30,213
Unredeemed gift card liability						268,296						306,479						223,970
Other current liabilities						38,783						40,308						36,814
Total current liabilities						1,383,571						1,631,261						1,256,771
Non-current lease liabilities						1,147,631						1,154,012						888,582
Non-current income taxes payable						15,864						15,864						28,555
Deferred income tax liability						29,150						29,522						54,533
Other non-current liabilities						32,471						29,201						23,027
Stockholders' equity						4,219,808						4,232,081						3,320,076
Total liabilities and stockholders' equity						$	6,828,495					$	7,091,941					$	5,571,544

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lululemon athletica inc.

Condensed Consolidated Statements of Cash Flows

Unaudited; Expressed in thousands 

						First Quarter
						2024						2023
Cash flows from operating activities
Net income						$	321,421					$	290,405
Adjustments to reconcile net income to net cash provided by operating activities						(193,897)						(244,902)
Net cash provided by operating activities						127,524						45,503
Net cash used in investing activities						(131,537)						(138,219)
Net cash used in financing activities						(328,628)						(115,399)
Effect of foreign currency exchange rate changes on cash and cash equivalents						(10,658)						3,855
Decrease in cash and cash equivalents						(343,299)						(204,260)
Cash and cash equivalents, beginning of period						2,243,971						1,154,867
Cash and cash equivalents, end of period						$	1,900,672					$	950,607

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lululemon athletica inc.

Reconciliation of Non-GAAP Financial Measures

Unaudited

Constant dollar changes

The below changes show the change for the first quarter of 2024 compared to the first quarter of 2023.

						Net Revenue
						Increase						Foreign exchange						Increase in constant dollars
United States						2		%				—		%				2		%
Canada						11						1						12
Americas						3						1						4
China Mainland						45						7						52
Rest of World						27						3						30
Total international						35						5						40
Total						10		%				1		%				11		%

						Comparable Sales(1)
						Increase						Foreign exchange						Increase in constant dollars
Americas						—		%				—		%				—		%
China Mainland						26						7						33
Rest of World						23						3						26
Total international						25						4						29
Total						6		%				1		%				7		%

__________

(1)Comparable sales includes comparable company-operated store and e-commerce net revenue. Comparable company-operated stores have been open for at least 12 full fiscal months, or open for at least 12 full fiscal months after being significantly expanded. Comparable company-operated stores exclude stores which have been temporarily relocated for renovations or have been temporarily closed.

Expected net revenue increase excluding the 53rd week

The Company's fiscal year ends on the Sunday closest to January 31st of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2023 was a 52-week year while 2024 will be a 53-week year.

						Fiscal 2024
Expected net revenue increase						11% to 12%
Impact of 53rd week						(1)%
Expected net revenue increase excluding the 53rd week (non-GAAP)						10% to 11%

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lululemon athletica inc.

Company-operated Store Count and Square Footage(1)

Square footage expressed in thousands

						Number of Stores Open at the Beginning of the Quarter						Number of Stores Opened During the Quarter						Number of Stores Closed During the Quarter						Number of Stores Open at the End of the Quarter
2nd Quarter 2023						662						12						2						672
3rd Quarter 2023						672						15						1						686
4th Quarter 2023						686						26						1						711
1st Quarter 2024						711						5						5						711

						Total Gross Square Feet at the Beginning of the Quarter						Gross Square Feet Added During the Quarter(2)						Gross Square Feet Lost During the Quarter(2)						Total Gross Square Feet at the End of the Quarter
2nd Quarter 2023						2,632						64						5						2,691
3rd Quarter 2023						2,691						109						3						2,797
4th Quarter 2023						2,797						173						3						2,967
1st Quarter 2024						2,967						35						14						2,988

 __________

(1)Company-operated store count and square footage summary excludes retail locations operated by third parties under license and supply arrangements.

(2)Gross square feet added/lost during the quarter includes net square foot additions for company-operated stores which have been renovated or relocated in the quarter.

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Exhibit 99.2

Segmented Information

Unaudited; Expressed in thousands

As reported in the Company's fiscal 2023 Annual Report on Form 10-K filed with the SEC on March 21, 2024, the Company changed its operating segments during the fourth quarter of fiscal 2023. The Company reports three segments: Americas, China Mainland, and Rest of World, which is Asia Pacific (“APAC”) and Europe and the Middle East (“EMEA”) on a combined basis. Previously, the Company's segments were based on selling channel. Please refer to Note 23. Segmented Information included in Item 8 in the Company's fiscal 2023 Annual Report on Form 10-K for further information.

The following table recasts the quarterly segment information for fiscal 2023 to reflect the current presentation:

						Fiscal 2023
						Q1						Q2						Q3						Q4						Total
Net revenue:
Americas						$	1,567,738					$	1,719,773					$	1,732,398					$	2,611,738					$	7,631,647
China Mainland						210,068						234,445						228,595						290,652						963,760
Rest of World						222,986						254,947						243,225						302,713						1,023,871
						$	2,000,792					$	2,209,165					$	2,204,218					$	3,205,103					$	9,619,278
Segmented income from operations:
Americas						$	581,222					$	660,570					$	636,714					$	1,058,678					$	2,937,184
(Percentage of net revenue of respective operating segment)						37.1		%				38.4		%				36.8		%				40.5		%				38.5		%
China Mainland						73,885						83,481						76,792						103,158						337,316
(Percentage of net revenue of respective operating segment)						35.2		%				35.6		%				33.6		%				35.5		%				35.0		%
Rest of World						43,794						51,292						45,552						61,194						201,832
(Percentage of net revenue of respective operating segment)						19.6		%				20.1		%				18.7		%				20.2		%				19.7		%
						$	698,901					$	795,343					$	759,058					$	1,223,030					$	3,476,332
General corporate expenses						295,609						314,207						321,480						309,140						1,240,436
lululemon Studio obsolescence provision						—						—						23,709						—						23,709
Impairment of assets and restructuring costs						—						—						74,501						—						74,501
Amortization of intangible assets						1,878						1,879						1,253						—						5,010
Income from operations						$	401,414					$	479,257					$	338,115					$	913,890					$	2,132,676

Cover Page Cover Page	May 29, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	May 29, 2024
Entity Registrant Name	lululemon athletica inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-33608
Entity Tax Identification Number	20-3842867
Entity Address, Address Line One	1818 Cornwall Avenue
Entity Address, City or Town	Vancouver
Entity Address, State or Province	BC
Entity Address, Country	CA
Entity Address, Postal Zip Code	V6J 1C7
City Area Code	604
Local Phone Number	732-6124
Title of 12(b) Security	Common Stock, par value $0.005 per share
Trading Symbol	LULU
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001397187
Amendment Flag	false

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