0001397187false00013971872023-08-312023-08-31

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
August 31, 2023
Date of Report (Date of earliest event reported)
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lululemon athletica inc.
(Exact name of registrant as specified in its charter)
 
Delaware001-3360820-3842867
(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: (604) 732-6124
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.005 per shareLULUNasdaq 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.  ☐


Item 2.02.Results of Operations and Financial Condition.
On August 31, 2023, lululemon athletica inc. (the "Company") issued a press release announcing its financial results for the second quarter ended July 30, 2023 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 August 31, 2023 to discuss its financial results.
Item 9.01.Financial Statements and Exhibits.
 (d) Exhibits.
Exhibit No.  Description
99.1  
104
Cover Page Interactive Data File (formatted in iXBRL)


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: August 31, 2023/s/ MEGHAN FRANK
Meghan Frank
Chief Financial Officer


Exhibit 99.1

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LULULEMON ATHLETICA INC. ANNOUNCES SECOND QUARTER FISCAL 2023 RESULTS

Revenue increased 18% to $2.2 billion
Comparable sales increased 11%, or increased 13% on a constant dollar basis
Diluted EPS of $2.68
Vancouver, British Columbia – August 31, 2023 – lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the second quarter of fiscal 2023.
Calvin McDonald, Chief Executive Officer, stated: "Our Q2 results highlight the ongoing strength of the business amid a dynamic operating environment. I am proud of how our teams continue to deliver on our vision and offer an exciting pipeline of new products and experiences to our guests around the world. Our continued ability to gain market share and bring new customers into the brand illustrates the significant runway ahead for lululemon."
The adjusted non-GAAP financial measures below exclude the gain on the sale of an administrative office building in 2022 and the related tax effects.
For the second quarter of 2023, compared to the second quarter of 2022:
•Net revenue increased 18% to $2.2 billion, or increased 20% on a constant dollar basis.
–Net revenue increased 11% in North America, and increased 52% internationally.
•Total comparable sales increased 11%, or 13% on a constant dollar basis.
–Comparable store sales increased 7%, or 9% on a constant dollar basis.
–Direct to consumer net revenue increased 15%, or 17% on a constant dollar basis.
•Direct to consumer net revenue represented 40% of total net revenue compared to 42% for the second quarter of 2022.
•Gross profit increased 23% to $1.3 billion and gross margin increased 230 basis points to 58.8%.
•Income from operations increased 19% to $479.3 million. Adjusted income from operations increased 23%.
•Operating margin increased 20 basis points to 21.7%. Adjusted operating margin increased 80 basis points.
•Income tax expense increased 30% to $145.0 million. The effective tax rate for the second quarter of 2023 was 29.8% compared to 27.9% for the second quarter of 2022. The adjusted effective tax rate was 28.2% for the second quarter of 2022.
•Diluted earnings per share were $2.68 compared to $2.26 in the second quarter of 2022. Adjusted diluted earnings per share were $2.20 in the second quarter of 2022.
•The Company repurchased 0.5 million shares of its own common stock at an average price of $370.99 per share for a cost of $191.7 million.
•The Company opened 10 net new company-operated stores during the second quarter, ending with 672 stores.
Meghan Frank, Chief Financial Officer, stated: "Our performance remained strong in Q2 as both revenue and EPS exceeded our expectations. Our ongoing momentum is a reflection of our portfolio approach to growth, differentiated business model, and innovative product assortment. We are excited about our opportunities in the second half of the year and look forward to continue delivering on our Power of Three ×2 growth plan."
Balance sheet highlights
The Company ended the second quarter of 2023 with $1.1 billion in cash and cash equivalents and the capacity under its committed revolving credit facility was $393.6 million.
Inventories at the end of the second quarter of 2023 increased 14% to $1.7 billion compared to $1.5 billion at the end of the second quarter of 2022.
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2023 Outlook
For the third quarter of 2023, the Company expects net revenue to be in the range of $2.165 billion to $2.190 billion, representing growth of 17% to 18%. Diluted earnings per share are expected to be in the range of $2.23 to $2.28 for the quarter. This assumes a tax rate of approximately 30.5%.
For 2023, the Company expects net revenue to be in the range of $9.510 billion to $9.570 billion, representing growth of 17% to 18%. Diluted earnings per share are expected to be in the range of $12.02 to $12.17 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 does 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 direct to consumer, and quadruple international net revenue relative to 2021.
Conference Call Information
A conference call to discuss second quarter results is scheduled for today, August 31, 2023, 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.
Non-GAAP Financial Measures
Constant dollar changes and adjusted financial results 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.
Adjusted income from operations, operating margin, income tax expense, effective tax rates, net income, and diluted earnings per share exclude the gain on disposal of assets for the sale of an administrative office building and its related income tax effects in 2022.
The Company believes these adjusted financial measures are useful to investors as they provide supplemental information that enable evaluation of the underlying trend in its operating performance, and enable a comparison to its historical financial information. Further, due to the finite and discrete nature of this item, it does not consider it to be a disposal gain that is
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expected to arise in the normal course of its operations. Management uses these adjusted financial measures and constant currency metrics internally when reviewing and assessing financial performance.
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.
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 current 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 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.
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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 January 28, 2024 is referred to as "2023", the fiscal year ended January 29, 2023 is referred to as "2022".
Condensed Consolidated Statements of Operations
Unaudited; Expressed in thousands, except per share amounts 
Second Quarter
First Two Quarters
2023202220232022
Net revenue$2,209,165 $1,868,328 $4,209,957 $3,481,791 
Costs of goods sold910,654 812,852 1,760,641 1,555,922 
Gross profit1,298,511 1,055,476 2,449,316 1,925,869 
As a percent of net revenue58.8%56.5%58.2%55.3%
Selling, general and administrative expenses817,375 662,253 1,564,888 1,270,104 
As a percent of net revenue37.0%35.4%37.2%36.5%
Amortization of intangible assets1,879 2,195 3,757 4,390 
Gain on disposal of assets— (10,180)— (10,180)
Income from operations479,257 401,208 880,671 661,555 
As a percent of net revenue21.7%21.5%20.9%19.0%
Other income (expense), net7,362 145 15,387 123 
Income before income tax expense486,619 401,353 896,058 661,678 
Income tax expense145,016 111,832 264,050 182,159 
Net income$341,603 $289,521 $632,008 $479,519 
Basic earnings per share$2.69 $2.27 $4.97 $3.75 
Diluted earnings per share$2.68 $2.26 $4.96 $3.74 
Basic weighted-average shares outstanding126,969 127,619 127,108 127,848 
Diluted weighted-average shares outstanding127,263 127,906 127,442 128,224 

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lululemon athletica inc.
Condensed Consolidated Balance Sheets
Unaudited; Expressed in thousands 
July 30,
2023		January 29,
2023		July 31,
2022
ASSETS
Current assets
Cash and cash equivalents$1,107,530 $1,154,867 $498,831 
Inventories1,660,753 1,447,367 1,462,076 
Prepaid and receivable income taxes224,916 185,641 166,438 
Other current assets330,734 371,578 259,749 
Total current assets3,323,933 3,159,453 2,387,094 
Property and equipment, net1,367,172 1,269,614 1,059,859 
Right-of-use lease assets1,079,198 969,419 867,901 
Goodwill and intangible assets, net42,380 46,105 453,776 
Deferred income taxes and other non-current assets179,775 162,447 152,081 
Total assets$5,992,458 $5,607,038 $4,920,711 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable$298,914 $172,732 $259,927 
Accrued liabilities and other 399,178 399,223 345,105 
Accrued compensation and related expenses192,289 248,167 153,381 
Current lease liabilities216,837 207,972 196,259 
Current income taxes payable20,576 174,221 50,815 
Unredeemed gift card liability216,116 251,478 172,666 
Other current liabilities42,460 38,405 29,057 
Total current liabilities1,386,370 1,492,198 1,207,210 
Non-current lease liabilities976,736 862,362 757,865 
Non-current income taxes payable15,864 28,555 28,555 
Deferred income tax liability55,258 55,084 53,271 
Other non-current liabilities24,748 20,040 16,012 
Stockholders' equity3,533,482 3,148,799 2,857,798 
Total liabilities and stockholders' equity$5,992,458 $5,607,038 $4,920,711 

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lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Unaudited; Expressed in thousands 
First Two Quarters
20232022
Cash flows from operating activities
Net income$632,008 $479,519 
Adjustments to reconcile net income to net cash provided by (used in) operating activities(109,795)(625,137)
Net cash provided by (used in) operating activities522,213 (145,618)
Net cash used in investing activities(283,660)(224,944)
Net cash used in financing activities(305,651)(384,576)
Effect of foreign currency exchange rate changes on cash and cash equivalents19,761 (5,902)
Increase (decrease) in cash and cash equivalents(47,337)(761,040)
Cash and cash equivalents, beginning of period1,154,867 1,259,871 
Cash and cash equivalents, end of period$1,107,530 $498,831 

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lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measures
Unaudited; Expressed in thousands, except per share amounts

Constant dollar changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue
The below changes show the change for the second quarter of 2023 compared to the second quarter of 2022.
Net Revenue
Total Comparable Sales(1),(2)
Comparable Store Sales(2)
Direct to Consumer Net Revenue
Change18 %11 %7 %15 %
Adjustments due to foreign currency exchange rate changes2 2 2 2 
Change in constant dollars20 %13 %9 %17 %
__________
(1)Total comparable sales includes comparable store sales and direct to consumer net revenue.
(2)Comparable store sales reflects net revenue from company-operated stores that have been open for at least 12 full fiscal months, or open for at least 12 full fiscal months after being significantly expanded. Comparable store sales exclude sales from stores which have been temporarily relocated for renovations or have been temporarily closed.


Adjusted financial measures
The following tables reconcile adjusted financial measures with the most directly comparable measures calculated in accordance with GAAP. The 2022 adjustments relate to the gain on sale of an administrative office building and its related tax effects. Please refer to Note 3. Gain on Disposal of Assets included in Item 1 of Part I of the Company's Report on Form 10-Q to be filed with the SEC on or about August 31, 2023 for further information on these adjustments.
Second Quarter 2022
Income from OperationsOperating MarginIncome Tax ExpenseEffective Tax RateNet IncomeDiluted Earnings Per Share
GAAP results$401,208 21.5 %$111,832 27.9 %$289,521 $2.26 
Gain on disposal of assets(10,180)(0.6)(10,180)(0.07)
Tax effect of the above(1,661)0.3 1,661 0.01 
Adjusted results (non-GAAP)$391,028 20.9 %$110,171 28.2 %$281,002 $2.20 
First Two Quarters 2022
Income from OperationsOperating MarginIncome Tax ExpenseEffective Tax RateNet IncomeDiluted Earnings Per Share
GAAP results$661,555 19.0 %$182,159 27.5 %$479,519 $3.74 
Gain on disposal of assets(10,180)(0.3)(10,180)(0.08)
Tax effect of the above(1,661)0.2 1,661 0.01 
Adjusted results (non-GAAP)$651,375 18.7 %$180,498 27.7 %$471,000 $3.67 
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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 QuarterNumber of Stores Opened During the QuarterNumber of Stores Closed During the QuarterNumber of Stores Open at the End of the Quarter
3rd Quarter 2022
600 25 2 623 
4th Quarter 2022
623 34 2 655 
1st Quarter 2023
655 10 3 662 
2nd Quarter 2023
662 12 2 672 
 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
3rd Quarter 2022
2,258 139 7 2,390 
4th Quarter 2022
2,390 189 4 2,575 
1st Quarter 2023
2,575 64 7 2,632 
2nd Quarter 2023
2,632 64 5 2,691 
 __________
(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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v3.23.2
Cover Page Cover Page
Aug. 31, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 31, 2023
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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