Lululemon Athletica Inc Q1 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Brooke Roach - Goldman Sachs - Analyst : Good afternoon and thank you for taking our question. Calvin, you spoke about making some strategic adjustments in the US. Can you speak to your confidence in the Lululemon brand and the growth trajectory that you see in the US going forward, as well as the timing and magnitude of some of the strategic adjustments that you're making, and then perhaps contextualize the traffic and conversion trends that you saw in your US business as you move throughout the quarter? Thank you very much.

Question: Brooke Roach - Goldman Sachs - Analyst : Thanks so much. I'll pass it on.

Question: Alex Straton - Morgan Stanley - Analyst : Perfect. Thanks for taking the question. I've got one for Calvin and maybe one for Meghan. (inaudible) Calvin, bigger picture. I feel like we rarely hear of assortment missteps in Lulu's history. So kind of what change or maybe what do you think provokes that this year? And then bigger picture maybe for Meghan, China, obviously, a key growth area for you all. Can you talk about how the competitive landscape is different or similar? And then how you think about the revenue potential for Lulu in that market over time? Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 8:30PM, LULU.OQ - Q1 2024 Lululemon Athletica Inc Earnings Call

Question: Alex Straton - Morgan Stanley - Analyst : Thanks a lot. Good luck.

Question: Matthew Boss - JP Morgan - Analyst : Great, thanks. So maybe Calvin, just higher level or larger picture as we think about the US business. I mean, do you believe anything has structurally changed, if we're thinking about on a longer-term horizon? And then on the progression from here, just how best to think about progress to date you've already made, maybe with in-stock levels sizing and color and then just the cadence with each of those, as well as the product pipeline in the back half of the year. Just anything that you're really excited about that would support the sequential improvement as the year progresses?

Question: Matthew Boss - JP Morgan - Analyst : That's great color, Calvin. Meghan, but maybe could you speak to health of current inventory and then just drivers of markdowns in the first quarter, how best to think about markdowns in the second quarter In the back half of the year?

Question: Matthew Boss - JP Morgan - Analyst : Great. Best of luck. Thank you.

Question: Michael Binetti - Evercore ISI - Analyst : Hey, thanks. Congrats on nice quarter, guys. Maybe I can just continue that last question, Meghan, or could you speak a little bit of your confidence in the sustainability of the product margins in the US? And then I guess I'd be curious what you think are some of the difference is driving the GAAP results between Canada and the US, a little bit of a notable difference there? And then maybe just a little help understanding the US consumer dynamics, Calvin bigger-picture, how is purchase frequency, UPT, AUR changed if at all, looking at is you have across the cohorts that you acquired pre-COVID, during COVID, after COVID? Are there any change in key customer behavior? You KPIs to point out?

Question: Michael Binetti - Evercore ISI - Analyst : Thank you very much, guys.

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : Hey, everyone, quick question. Let's talk about Matt's question about the markdown. So I'll just make sure I understand, Meghan. So the markdown your guided in three months ago for Q1 was, I believe, flat and then we'll retain them down to 50 (inaudible). Some kind of curious, number one, what exactly transpired in the quarter kind of drive the you know, obviously, you mean to beat the gross margin line, but that line item, what exactly happened? And then you're maintaining the full year flat, but you're coming off of the Q1 was down and then you're saying Q2 will be down against. So it just it just feels like now there is a back half like, maybe ramp up and and markdown versus build there wasn't. So I guess I'm just trying to understand like the progress of the full year for the gross margin as well.

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : It's mainly a function of Q1 versus an impactful for the year on the markdown rate?

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : Okay, got it. Okay. Thanks a lot.

Question: Paul Lejuez - Citi - Analyst : Hey, thanks, guys. We iterated your sales guidance for the year, but curious, have you changed your outlook in any of the regions versus how you were thinking at the beginning of the year? And you also talked about, they're not being any structural differences in US market, but curious how you characterize the competitive landscape near term in 1Q relative to what you saw in the second half of '23. Any changes in promotional cadence amongst competitors out there that you're paying more attention to? Thanks.

Question: Sharon Zackfia - William Blair & Co. LLC - Analyst : Hi, good afternoon. I guess I'm curious if you've seen US trends, it kind of stabilize and become more predictable. And within the women's business, it wasn't clear to me whether you think you lost share within the quarter in the US or whether maybe the home market was a bit softer for the segment?

Question: Dana Telsey - Telsey Advisory Group - Analyst : Hi, good afternoon, everyone. Calvin and Meghan, as you think about store productivity levels in these stores in North America, is that changing at all from how you thought about it before and how our new stores opening? And then lastly, as you think about the men's business, which seems to be growing very strongly, any difference in terms of what you're seeing overseas versus in North America for the men's business? Thank you.

Question: John Kernan - Cowen and Company - Analyst : Thanks for squeezing me in. Congrats on nice quarter. Calvin, I think I heard you say international and still to reach 50% of sales. How does the complexion of that look on an omnichannel basis and geography basis?

Question: John Kernan - Cowen and Company - Analyst : It's outstanding. How should we think about the omnichannel business in the Americas? You made some big investments in co-located stores. You're still growing square footage in Canada and United States. I guess, how should we think about the DCC platform, a tremendous scale, e-commerce with tremendous scale, providing that's the balance of stores and e-commerce going forward in North America?

Question: John Kernan - Cowen and Company - Analyst : That's great. Thank you.