lululemon athletica inc.
For the period ended Aug 3, 2025. Filed Sep 4, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 3, 2025 · Filed Sep 4, 2025
LULU$110.79-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-05-04; filed 2025-06-05.
0001397187-25-000027
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsOverviewFinancial Highlights and Market Conditions and TrendsQuarter-to-Date Results of OperationsComparable SalesNon-GAAP Financial MeasuresSeasonalityLiquidity and Capital ResourcesCritical Accounting Policies and EstimatesOperating LocationsCurrent report: 10-Q
Period ended 2025-08-03; filed 2025-09-04.
0001397187-25-000039
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsOverviewFinancial Highlights and Market Conditions and TrendsQuarter-to-Date Results of OperationsYear-to-Date Results of OperationsComparable SalesNon-GAAP Financial MeasuresSeasonalityLiquidity and Capital ResourcesCritical Accounting Policies and EstimatesOperating LocationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 126 previous paragraphs and 195 current paragraphs.
68 unchanged; 46 reworded; 52 added; 12 removed; 0 previous and 29 current paragraphs rearranged.
Tables are not compared: 16 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
•Year-to-Date Results of Operations
Current report
–Americas comparable sales decreased 4%, or 3% on a constant dollar basis.
Current report
•Gross profit increased 5% to $1.5 billion.
Current report
•Income from operations decreased 3% to $523.8 million.
Current report
•Operating margin decreased 210 basis points to 20.7%.
Current report
On April 2, 2025, the United States announced the implementation of a 10% baseline tariff on imports from nearly all countries with higher country-specific tariff rates scheduled to begin April 9, 2025. The implementation of country-specific tariffs was subsequently delayed to allow negotiations. Certain countries, including Vietnam, have announced trade deals with the United States and most negotiated tariff rates are higher than the 10% baseline rate. There has been significant volatility in U.S. tariff and customs policy, and trade negotiations between the United States and other countries are ongoing.
Current report
The United States also approved the One Big Beautiful Bill Act on July 4, 2025, which removed the de minimis exemption for low value shipments imported into the United States in 2027. On July 30, 2025, the President of the United States issued an executive order removing the de minimis exemption for all countries beginning August 29, 2025.
Current report
These changes in the tariff landscape, including the de minimis removal, are expected to have a significant adverse effect on our business and results of operation. The countries from which we source the majority of our products are now subject to higher tariffs on imports into the United States. Further, the majority of our sales to U.S. e-commerce guests are currently fulfilled from distribution centers in Canada, and historically a significant proportion of these orders qualified for the de minimis exemption. The removal of this exemption increases the cost of fulfilling those orders. We are taking steps to mitigate the financial impact which includes vendor negotiations and selective price increases. These actions are not anticipated to fully offset the effect of higher tariffs and the removal of the de minimis exemption, and we anticipate a significant reduction in our gross margin and operating margin.
Current report
The impact of increased tariffs, net of mitigating activities, resulted in a reduction to gross profit for the first two quarters of 2025 of approximately $10 million. We estimate, based on the information available to us today, that increased tariffs, and the removal of the de minimis exemption, will reduce gross profit for 2025 by approximately $240 million, net of mitigation efforts.
Current report
This estimate is our best current view and may change materially as conditions evolve and new information becomes available. It reflects a number of assumptions including (i) the tariff rates and timing of implementation, (ii) the duration and scope of the de minimis exemption removal, (iii) the potential application of transshipment tariff rules, (iv) our ability to execute vendor savings, and (v) customer demand elasticity and pricing response. Actual results may differ materially from this estimate, whether because these assumptions prove inaccurate or because of subsequent changes in tariff policy, trade negotiations, sourcing conditions, consumer demand for our products, or other factors outside our control.
Current report
Because this is an evolving area, future developments may change our expectations materially. For additional information on related risks, please see “Risk Factors” in this quarterly report.
Current report
Our updated forecasts, inclusive of the trends above, have resulted in changes in the probability of achieving performance conditions of performance-based restricted stock units. Therefore, we recognized a reversal of stock-based compensation expense of $26.3 million during the second quarter of 2025.
Current report
Foreign Currency Fluctuations
Current report
Quarter-to-Date Results of Operations: Second Quarter Results
Current report
•a net decrease in product margin of 70 basis points, comprised of:
Current report
–a net decrease of 80 basis points from higher markdowns, tariffs, and other costs, partially offset by higher pricing and lower product costs; and
Current report
–a favorable impact of foreign currency exchange rates of 10 basis points.
Current report
–an increase in distribution center and product department costs of 10 basis points.
Current report
–an increase in variable costs of $13.3 million primarily due to increased distribution costs, credit card fees, and packaging costs as a result of higher net revenue;
Current report
–an increase in technology costs of $3.0 million.
Current report
–an increase in other head office costs of $5.3 million; and
Current report
–a net decrease in employee costs of $10.1 million primarily due to a reversal of stock-based compensation expense due to change in the probability of achieving performance conditions, partially offset by increased salaries and wages expense.
Current report
The increase in selling, general and administrative expenses was partially offset by an increase in net foreign currency exchange and derivative revaluation gains of $0.3 million.
Current report
The increase in Americas net revenue was primarily due to a $56.6 million increase from new or expanded company-operated stores and our other channels. We added 26 net new company-operated stores in the Americas since the second quarter of 2024, including 14 company-operated stores from the acquisition of the Mexico operations. Americas comparable sales decreased 4%, or 3% on a constant dollar basis, driven by lower conversion rates and reduced store traffic, partially offset by higher e-commerce traffic and an increase in average order value.
Current report
The decrease in gross margin was primarily due to lower product margin and higher occupancy costs and depreciation as a percentage of net revenue.
Current report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, increased digital marketing expenses, and increased depreciation.
Current report
The increase in gross margin was primarily due to lower occupancy costs as a percentage of net revenue, partially offset by lower product margin.
Current report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, increased digital marketing expenses, and increased technology costs.
Current report
The decrease in gross margin was primarily due to higher occupancy costs as a percentage of net revenue as well as lower product margin.
Current report
Corporate expenses increased $7.0 million to $329.3 million in the second quarter of 2025 compared to the second quarter of 2024. The net increase was primarily due to higher technology costs and depreciation. The increase in corporate expenses was partially offset by lower employee costs driven by decreased incentive compensation as well as an increase in net foreign currency exchange and derivative gains of $0.3 million.
Current report
Year-to-Date Results of Operations: First Two Quarters Results
Current report
Selling, General and Administrative Expenses
Current report
–an increase in employee costs of $49.1 million primarily due to increased salaries and wages expense for retail employees, partially offset by decreased incentive compensation;
Current report
–an increase in technology costs of $5.6 million; and
Current report
–an increase in employee costs of $1.3 million primarily due to increased salaries and wages expense, partially offset by a reversal of stock-based compensation expense due to change in the probability of achieving performance conditions; and
Showing the first 40 of 52 passages. Open the source sections for the rest.
Removed paragraphs (12)
Previous report
–Americas comparable sales decreased 2%, or 1% on a constant dollar basis.
Previous report
•Gross profit increased 8% to $1.4 billion.
Previous report
•Gross margin increased 60 basis points to 58.3%.
Previous report
•Income from operations increased 1% to $438.6 million.
Previous report
Recently imposed tariffs on products imported into the United States, along with trade actions by other countries, may adversely affect our business. As a result of the tariffs imposed since April 2025, the cost of inventory in the United States has increased, which could lead to a significant reduction in gross margin and income from operations. Additionally, higher tariffs may lead to macroeconomic volatility, both in the United States and globally, potentially affecting consumer demand. We are taking steps to mitigate some of the financial impact from higher tariffs, which may include sourcing optimization, vendor negotiations, cost reductions, and selective price increases.
Previous report
Quarter-to-Date Results of Operations: First Quarter Results
Previous report
–an increase in employee costs of $11.5 million primarily due to increased salaries and wages expense;
Previous report
–an increase in other head office costs of $4.1 million.
Previous report
–an increase in technology costs of $2.6 million.
Previous report
The increase in gross margin was primarily due to higher product margin partially offset by deleverage on occupancy and depreciation costs.
Previous report
The increase in gross margin was primarily due to leverage on occupancy costs and depreciation as well as higher product margin.
Previous report
The decrease in gross margin was primarily due to higher product margin, partially offset by deleverage on distribution center costs and depreciation costs.
Reworded paragraphs (46)
Previous wording
Our fiscal year ends on the Sunday closest to January 31 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 2025 will end on February 1, 2026 and will be a 52-week year. Fiscal 2024 was a 53-week year and ended on February 2, 2025. Fiscal 2025 and fiscal 2024 are referred to as "2025," and "2024," respectively. The first quarter of 2025 and 2024 ended on May 4, 2025 and April 28, 2024, respectively.
Current wording
Our fiscal year ends on the Sunday closest to January 31 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 2025 will end on February 1, 2026 and will be a 52-week year. Fiscal 2024 was a 53-week year and ended on February 2, 2025. Fiscal 2025 and fiscal 2024 are referred to as "2025," and "2024," respectively. The first two quarters of 2025 and 2024 ended on August 3, 2025 and July 28, 2024, respectively.
Previous wording
We use comparable sales as a metric to evaluate the performance of our business. Due to the 53rd week in 2024, comparable sales are calculated on a one week shifted basis such that the 13 weeks ended May 4, 2025 is compared to the 13 weeks ended May 5, 2024 rather than April 28, 2024. Refer to the Comparable Sales section of this MD&A for further information.
Current wording
We use comparable sales as a metric to evaluate the performance of our business. Due to the 53rd week in 2024, comparable sales are calculated on a one-week shifted basis such that the 13 or 26 weeks ended August 3, 2025 is compared to the 13 or 26 weeks ended August 4, 2024 rather than July 28, 2024. Refer to the Comparable Sales section of this MD&A for further information.
Previous wording
The summary below compares the first quarter of 2025 to the first quarter of 2024:
Current wording
The summary below compares the second quarter of 2025 to the second quarter of 2024:
Previous wording
•Net revenue increased 7% to $2.4 billion. On a constant dollar basis, net revenue increased 8%.
Current wording
•Net revenue increased 7% to $2.5 billion. On a constant dollar basis, net revenue increased 6%.
Previous wording
–China Mainland comparable sales increased 7%, or 8% on a constant dollar basis.
Current wording
–China Mainland comparable sales increased 17%, or 16% on a constant dollar basis.
Previous wording
–Rest of World comparable sales increased 6%, or 7% on a constant dollar basis.
Current wording
–Rest of World comparable sales increased 12%, or 9% on a constant dollar basis.
Previous wording
•Operating margin decreased 110 basis points to 18.5%.
Current wording
•Gross margin decreased 110 basis points to 58.5%.
Previous wording
•Income tax expense increased 1% to $135.8 million. Our effective tax rate for the first quarter of 2025 was 30.2% compared to 29.5% for the first quarter of 2024.
Current wording
•Income tax expense decreased 2% to $162.6 million. Our effective tax rate for the second quarter of 2025 was 30.5% compared to 29.6% for the second quarter of 2024.
Previous wording
•Diluted earnings per share were $2.60 compared to $2.54 in the first quarter of 2024.
Current wording
•Diluted earnings per share were $3.10 compared to $3.15 in the second quarter of 2024.
Previous wording
Our business continues to be negatively influenced by macroeconomic conditions, including consumer demand, trade policies, inflation, and foreign currency fluctuations. These factors have had varying effects across our markets and are expected to remain relevant throughout 2025.
Current wording
Across all markets, our business continues to be negatively influenced by macroeconomic conditions, including trade policies, shifting consumer demand, inflation, foreign currency fluctuations, and geopolitical instability. These factors have had varying effects across our markets and are expected to continue to impact our business throughout 2025 and beyond.
Previous wording
While total net revenue increased across all regions in the first quarter of 2025, comparable sales in the Americas decreased 2%, or 1% on a constant dollar basis. We experienced lower store traffic in the Americas, partially reflective of economic uncertainty, inflationary pressures, lower consumer confidence, and changes in discretionary spending.
Current wording
While total net revenue increased across all regions in the second quarter of 2025, comparable sales in the Americas decreased 4%, or 3% on a constant dollar basis. We experienced lower conversion rates and store traffic in the Americas, partially reflective of economic uncertainty, lower consumer confidence, changes in discretionary spending, and certain product offerings experiencing lower demand.
Previous wording
Foreign currency fluctuations negatively impacted our financial results during the first quarter of 2025, reducing net revenue growth by $21.3 million compared to the first quarter of 2024, primarily due to the overall appreciation of the US dollar. We expect ongoing exchange rate volatility to continue affecting our financial results.
Current wording
Foreign currency fluctuations negatively impacted our financial results during the first two quarters of 2025, reducing net revenue growth by $10.7 million compared to the first two quarters of 2024, primarily due to the overall appreciation of the US dollar relative to the Canadian dollar. We expect ongoing exchange rate volatility to continue affecting our financial results.
Previous wording
The increase in net revenue was primarily due to increased China Mainland net revenue. Americas and Rest of World net revenue also increased and global comparable sales increased 1%.
Current wording
The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue. Americas net revenue also increased, and global comparable sales increased 1%.
Previous wording
The increase in product margin was partially offset by a net increase in other cost of sales as a percentage of net revenue of 50 basis points, comprised of:
Current wording
•a net increase in other cost of sales as a percentage of net revenue of 40 basis points, comprised of:
Previous wording
•an increase in costs related to our operating channels of $38.1 million, comprised of:
Current wording
•an increase in costs related to our operating channels of $62.8 million, comprised of:
Previous wording
–an increase in employee costs of $25.4 million primarily due to increased salaries and wages expense for retail employees;
Current wording
–an increase in employee costs of $23.7 million primarily due to increased salaries and wages expense for retail employees, partially offset by decreased incentive compensation;
Previous wording
–an increase in other operating costs of $9.5 million primarily due to increased depreciation and occupancy costs;
Current wording
–an increase in other operating costs of $11.7 million primarily due to increased depreciation and occupancy costs;
Previous wording
–an increase in digital marketing costs of $9.4 million; and
Current wording
–an increase in digital marketing costs of $11.1 million; and
Previous wording
–an increase in technology costs, including cloud computing amortization, of $11.0 million;
Current wording
–an increase in technology costs, including cloud computing amortization, of $9.0 million;
Previous wording
–an increase in depreciation of $7.3 million; and
Current wording
–an increase in depreciation of $5.4 million;
Previous wording
–an increase in brand and community costs of $8.8 million;
Current wording
–an increase in brand and community costs of $4.0 million;
Previous wording
–an increase in contractor, advisory, and professional services of $8.9 million;
Current wording
–an increase in contractor, advisory, and professional services of $3.6 million;
Previous wording
The amortization of intangible assets in 2025 was primarily the result of the amortization of intangible assets recognized upon the acquisition of the Mexico operations.
Current wording
The amortization of intangible assets in 2025 was primarily the result of the amortization of intangible assets recognized upon the September 2024 acquisition of the Mexico operations.
Previous wording
The increase in China Mainland net revenue was primarily due to a $38.3 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 27 net new company-operated stores in China Mainland since the first quarter of 2024. The increase in China Mainland net revenue was also driven by an increase in comparable sales, which increased 7%, or 8% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a lower dollar value per transaction.
Current wording
The increase in China Mainland net revenue was primarily due to an increase in comparable sales, which increased 17%, or 16% on a constant dollar basis. The increase in comparable sales was primarily a result of increased e-commerce traffic, partially offset by a decrease in average order value. The increase in China Mainland net revenue was also driven by a $37.4 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 27 new company-operated stores in China Mainland since the second quarter of 2024.
Previous wording
The increase in Rest of World net revenue was primarily due to a $25.5 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 10 net new company-operated stores in Rest of World since the first quarter of 2024. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 6%, or 7% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic.
Current wording
The increase in Rest of World net revenue was primarily due to a $31.1 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 10 new company-operated stores in Rest of World since the second quarter of 2024. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 12%, or 9% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in average order value.
Previous wording
•an increase in costs related to our product departments of 20 basis points.
Current wording
–an increase in costs related to our product departments of 10 basis points.
Previous wording
The increase in gross margin was primarily the result of a net increase in product margin of 110 basis points, comprised of:
Current wording
•a net increase in product margin of 10 basis points, comprised of:
Previous wording
•a net increase of 130 basis points from lower product costs and higher average unit retail, as well as lower damages, partially offset by higher freight costs; and
Current wording
–a net increase of 20 basis points from lower damages, as well as lower product costs and higher pricing, partially offset by higher markdowns, freight costs, and tariffs; and
Previous wording
•an unfavorable impact of foreign currency exchange rates of 20 basis points.
Current wording
–an unfavorable impact of foreign currency exchange rates of 10 basis points.
Previous wording
The increase in costs related to our operating channels was partially offset by a decrease in variable costs of $8.8 million primarily due to decreased distribution cost rates, partially offset by increased credit card fees as a result of higher net revenue.
Current wording
–an increase in variable costs of $4.5 million primarily due to increased credit card fees and packaging costs as a result of higher net revenue, partially offset by decreased distribution cost rates.
Previous wording
•an increase in head office costs of $51.6 million, comprised of:
Current wording
•an increase in head office costs of $68.7 million, comprised of:
Previous wording
•an increase in net foreign currency exchange and derivative revaluation losses of $10.8 million.
Current wording
•an increase in net foreign currency exchange and derivative revaluation losses of $10.5 million.
Previous wording
The increase in Americas net revenue was primarily due to a $57.1 million increase from new or expanded company-operated stores and our other channels. We added 22 net new company-operated stores in the Americas since the first quarter of 2024, including 14 company-operated stores from the acquisition of the Mexico operations. Americas comparable sales decreased 2%, or 1% on a constant dollar basis. The decrease in comparable sales was primarily a result of decreased conversion rates and a decrease in store traffic, partially offset by a higher dollar value per transaction and an increase in e-commerce traffic.
Current wording
The increase in Americas net revenue was primarily due to a $113.6 million increase from new or expanded company-operated stores and our other channels. We added 26 net new company-operated stores in the Americas since the second quarter of 2024, including 14 company-operated stores from the acquisition of the Mexico operations. Americas comparable sales decreased 3%, or 2% on a constant dollar basis, driven by lower conversion rates and reduced store traffic, partially offset by higher e-commerce traffic and an increase in average order value.
Previous wording
Corporate expenses increased $58.5 million to $377.2 million in the first quarter of 2025 compared to the first quarter of 2024. The net increase was primarily due to higher technology costs, employee costs, professional fees, and depreciation. Corporate expenses also increased due to an increase in net foreign currency exchange and derivative losses of $10.8 million.
Current wording
Corporate expenses increased $65.6 million to $706.5 million in the first two quarters of 2025 compared to the first two quarters of 2024. The net increase was primarily due to higher technology costs, depreciation, and professional fees. Corporate expenses also increased due to an increase in net foreign currency exchange and derivative losses of $10.5 million. The increase in corporate expenses was partially offset by lower employee costs driven by decreased incentive compensation.
Previous wording
The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $100.4 million, a decrease in other income (expense), net of $11.5 million, and an increase in income tax expense of $1.3 million, partially offset by an increase in gross profit of $108.1 million.
Current wording
The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $180.1 million, and a decrease in other income (expense), net of $19.8 million, partially offset by an increase in gross profit of $173.1 million, and a decrease in income tax expense of $1.3 million.
Previous wording
We use comparable sales to evaluate the performance of our company-operated store and e-commerce businesses from an omni-channel perspective. It allows us to monitor the performance of our business without the impact of recently opened or expanded stores. We believe investors would similarly find these metrics useful in assessing the performance of our business.
Current wording
We use comparable sales to evaluate the performance of our company-operated store and e-commerce businesses from an omni-channel perspective. It allows us to monitor the performance of our business without the impact of recently opened or expanded stores. We believe investors also find these metrics useful in assessing performance.
Previous wording
Comparable sales includes comparable company-operated store and all e-commerce net revenue. E-commerce net revenue includes buy online pick-up in store, back-back room, and ship from store net revenue in addition to our websites, other region-specific websites, digital marketplaces, and mobile apps. Our back-back room capability allows our store educators to access inventory located at our other locations and have product shipped directly to a guest's address or a store. Comparable company-operated stores have been open, or open after being significantly expanded, for at least 12 full fiscal months. Net revenue from a company-operated store is included in comparable sales beginning with the first fiscal month for which the store has a full fiscal month of sales in the prior year. Comparable sales excludes sales from new stores that have not been open for at least 12 full fiscal months, from stores which have not been in their significantly expanded space for at least 12 full fiscal months, from stores which have been temporarily relocated for renovations or temporarily closed, and sales from company-operated stores that have closed. Comparable sales also excludes sales from our selling channels other than company-operated stores and e-commerce. The comparable sales measures we report may not be equivalent to similarly titled measures reported by other companies.
Current wording
Comparable sales includes comparable company-operated store and all e-commerce net revenue. E-commerce net revenue includes buy online pick-up in store, back-back room, and ship from store net revenue in addition to our websites, other region-specific websites, digital marketplaces, and mobile apps. Our back-back room capability allows our store educators to access inventory located at our other locations and have product shipped directly to a guest's address or a store. Comparable company-operated stores have been open, or open after being significantly expanded, for at least 12 full fiscal months. Net revenue from a company-operated store is included in comparable sales beginning with the first fiscal month for which the store has a full fiscal month of sales in the prior year.
Previous wording
These non-GAAP financial measures are provided in addition to, and not a substitute for, or with greater prominence than, the corresponding financial measures calculated in accordance with GAAP. A reconciliation of the non-GAAP financial measures follows, 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. Our non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures reported by other companies.
Current wording
These non-GAAP financial measures are provided in addition to, and not a substitute for, the corresponding financial measures calculated in accordance with GAAP. A reconciliation of the non-GAAP financial measures follows, 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. Our non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures reported by other companies.
Previous wording
The below changes in net revenue show the change compared to the corresponding period in the prior year. Due to the 53rd week in 2024, the below changes in comparable sales are calculated on a one week shifted basis such that the 13 weeks ended May 4, 2025 is compared to the 13 weeks ended May 5, 2024 rather than April 28, 2024.
Current wording
The below changes in net revenue show the change compared to the corresponding period in the prior year. Due to the 53rd week in 2024, the below changes in comparable sales are calculated on a one-week shifted basis such that the 13 or 26 weeks ended August 3, 2025 is compared to the 13 or 26 weeks ended August 4, 2024 rather than July 28, 2024.
Previous wording
Net income decreased $6.8 million. The decrease in cash provided by operating activities was primarily as a result of a decrease in cash flows from changes in operating assets and liabilities of $208.5 million, primarily driven by changes in income taxes, inventories, and accrued liabilities, partially offset by changes in accrued compensation, accounts payable, and other assets. The decrease in cash provided by operating activities was also a result of lower cash inflows related to derivatives, partially offset by increased depreciation.
Current wording
Net income decreased $28.9 million. The decrease in cash provided by operating activities was primarily due to a decrease in cash flows from changes in operating assets and liabilities of $341.8 million, primarily driven by the timing of income tax payments, accrued liabilities driven by changes in the value of forward currency contracts, and inventory purchases, partially offset by the timing of accounts payable and changes in accrued compensation. The decrease in cash provided by operating activities was partially offset by increased depreciation, partially offset by lower stock-based compensation expense.
Showing the first 40 of 46 pairs. Open the source sections for the rest.
Rearranged current paragraphs (29)
Current report — wording carried from elsewhere
The decrease in gross margin was primarily due to:
Current report — wording carried from elsewhere
•a net increase in head office costs of $17.2 million, comprised of:
Current report — wording carried from elsewhere
The increase in the effective tax rate was primarily due to an increase in non-deductible expenses in international jurisdictions.
Current report — wording carried from elsewhere
The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $79.7 million, and a decrease in other income (expense), net of $8.3 million, partially offset by an increase in gross profit of $65.0 million, and a decrease in income tax expense of $2.7 million.
Current report — wording carried from elsewhere
The following table summarizes key components of our results of operations for the periods indicated:
Current report — wording carried from elsewhere
The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue. Americas net revenue also increased, and global comparable sales increased 1%.
Current report — wording carried from elsewhere
The decrease in gross margin was primarily due to:
Current report — wording carried from elsewhere
•a net increase in other cost of sales as a percentage of net revenue of 40 basis points, comprised of:
Current report — wording carried from elsewhere
–an increase in occupancy and depreciation costs of 30 basis points; and
Current report — wording carried from elsewhere
The increase in selling, general and administrative expenses was primarily due to:
Current report — wording carried from elsewhere
•an increase in costs related to our operating channels of $100.9 million, comprised of:
Current report — wording carried from elsewhere
–an increase in other operating costs of $21.2 million primarily due to increased depreciation and occupancy costs;
Current report — wording carried from elsewhere
–an increase in digital marketing costs of $20.5 million;
Current report — wording carried from elsewhere
–an increase in technology costs, including cloud computing amortization, of $20.0 million;
Current report — wording carried from elsewhere
–an increase in brand and community costs of $12.8 million;
Current report — wording carried from elsewhere
–an increase in depreciation of $12.7 million;
Current report — wording carried from elsewhere
–an increase in in contractor, advisory, and professional services of $12.4 million;
Current report — wording carried from elsewhere
–an increase in other head office costs of $9.5 million.
Current report — wording carried from elsewhere
The amortization of intangible assets in 2025 was primarily the result of the amortization of intangible assets recognized upon the September 2024 acquisition of the Mexico operations.
Current report — wording carried from elsewhere
On a segment basis, we determine income from operations without taking into account corporate expenses and certain other expenses. Corporate expenses include the cost of centrally managed support functions including product design, raw material development, product innovation, sourcing, supply chain, and global merchandising which are included in other cost of sales. Administrative corporate expenses include technology, brand and marketing, finance, human resources, legal, and other head office costs.
Current report — wording carried from elsewhere
The increase in China Mainland net revenue was primarily due to a $75.8 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 27 new company-operated stores in China Mainland since the second quarter of 2024. The increase in China Mainland net revenue was also driven by an increase in comparable sales, which increased 12%. The increase in comparable sales was primarily a result of increased e-commerce traffic, partially offset by a decrease in average order value.
Current report — wording carried from elsewhere
The increase in selling, general and administrative expenses was primarily due to higher employee costs and increased marketing expenses, as well as increased distribution costs and credit card fees driven by higher net revenue.
Current report — wording carried from elsewhere
The decrease in other income, net was primarily due to a decrease in interest income as a result of lower average cash balances and lower interest rates.
Current report — wording carried from elsewhere
•new stores that have not been open for at least 12 full fiscal months;
Current report — wording carried from elsewhere
•stores which have not been in their significantly expanded space for at least 12 full fiscal months;
Current report — wording carried from elsewhere
•stores which have been temporarily relocated for renovations or temporarily closed;
Current report — wording carried from elsewhere
•sales from company-operated stores that have closed; and
Current report — wording carried from elsewhere
•sales from our selling channels other than company-operated stores and e-commerce.
Current report — wording carried from elsewhere
The comparable sales measures we report may not be equivalent to similarly titled measures reported by other companies.