lululemon athletica inc

Financial Highlights

The summary below compares the third quarter of 2024 to the third quarter of 2023, and provides both GAAP and non-GAAP financial measures. The adjusted financial measures for 2023 exclude $72.1 million of post-tax asset impairment and other charges recognized in relation to lululemon Studio.

•Net revenue increased 9% to $2.4 billion. On a constant dollar basis, net revenue increased 8%.

•Comparable sales increased 4%, or 3% on a constant dollar basis.

–Americas comparable sales decreased 2%.

–China Mainland comparable sales increased 27%, or 24% on a constant dollar basis.

–Rest of World comparable sales increased 23%, or 20% on a constant dollar basis.

•Gross profit increased 12% to $1.4 billion. Adjusted gross profit increased 9%.

•Gross margin increased 150 basis points to 58.5%. Adjusted gross margin increased 40 basis points.

•Income from operations increased 45% to $490.7 million. Adjusted income from operations increased 12%.

•Operating margin increased 520 basis points to 20.5%. Adjusted operating margin increased 70 basis points.

•Income tax expense increased 54% to $152.5 million. Our effective tax rate for the third quarter of 2024 was 30.2% compared to 28.5% for the third quarter of 2023. The adjusted effective tax rate was 28.1% for the third quarter of 2023.

•Diluted earnings per share were $2.87 compared to $1.96 in the third quarter of 2023. Adjusted diluted earnings per share were $2.53 in the third quarter of 2023.

Market Conditions and Trends

Macroeconomic conditions, including consumer purchasing behaviors and foreign currency fluctuations, impact our business and operating costs. Such factors are expected to continue to impact our business throughout 2024, with the impact varying by market.

Consumer purchasing behaviors and their propensity to spend in our sector have been impacted by uncertain economic conditions including inflation, higher interest rates, and other factors, which has adversely impacted consumer demand for our products. We continue to monitor macroeconomic conditions and the trends in consumer demand for our products, including the economic environment in China Mainland.

We experienced revenue and traffic growth in the first three quarters of 2024 in all markets, but have experienced a reduction in our overall revenue growth in the Americas, driven by our operations in the United States. During the first three quarters of 2024, Americas comparable sales decreased 2%, or 1% on a constant dollar basis.

Foreign currency fluctuations have adversely impacted our financial results. Foreign currency fluctuations reduced the growth of our net revenue by $25.7 million when comparing the first three quarters of 2024 to the first three quarters of 2023, primarily due to the overall appreciation of the US dollar. We expect future exchange rate volatility to impact our results.