Lululemon Athletica Inc Q4 2024 Earnings Call Transcript

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

Question: Alex Straton - Morgan Stanley & Co. LLC - Analyst : Perfect. Thanks so much, and congrats on a great quarter. I just wanted to focus, Calvin, on the modest US revenue growth you're expecting for the year. Can you just elaborate a little bit around how you define modest? And should that be consistent throughout the year? Any difference in cadence by quarter? And then just how you really arrive at that as the right level from here? 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. MARCH 27, 2025 / 8:30PM, LULU.OQ - Q4 2024 Lululemon Athletica Inc Earnings Call

Question: Brooke Roach - Goldman Sachs & Company, Inc. - Analyst : Good afternoon, and thank you for taking my question. Calvin, I was hoping you could elaborate on your marketing strategy from here. Are you seeing the response that you're hoping to get as you build into some of these additional customer acquisition vehicles such as Membership Madness week. And then can you speak to what that's driving in terms of consumer acquisition and retention, specifically in the US? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 27, 2025 / 8:30PM, LULU.OQ - Q4 2024 Lululemon Athletica Inc Earnings Call

Question: Brooke Roach - Goldman Sachs & Company, Inc. - Analyst : Great. And then Meghan, can you elaborate on the plants that you haven't had in your guidance for tariffs this year. If tariffs were to widen to a broader set of geographies, what are your mitigation strategies right now? And what is the quantification of the current tariff impact under what you're seeing today?

Question: Dana Telsey - Telsey Advisory Group - Analyst : Hi, Calvin. As you think about the effectiveness of the marketing and what you're seeing globally, I saw the new store in Tokyo, obviously, London also. How are you planning for international go-forward? And how do you think of the activations there? And then Meghan, on the margins, the cadence of margins as we go through 2025, are there any puts and takes of what we should be mindful of? And just lastly, for the first quarter sales growth guidance, are you currently within those rates now? Thank you.

Question: Lorraine Hutchinson - BofA Global Research - Analyst : Thank you. Good afternoon. Have you included any improvement from the choppy first-quarter traffic performance in North America in the full-year guidance? And are there ways to be more aggressive on some of these marketing activations to drive stronger traffic as we move through the year?

Question: Matthew Boss - J.P. Morgan Securities LLC - Analyst : Great. Thanks. So, Calvin, could you elaborate on sales metrics in the US as you've introduced recent newness? Just your confidence in this year's product pipeline with first quarter to date sales trends unchanged relative to the fourth quarter despite the softening macro that I know you cited. And then, Meghan, just your comfort with content and composition of inventory today? And what have you been -- what have you embedded for markdowns in the gross margin guide?

Question: Janine Stichter - BTIG, LLC - Analyst : Hi. Thanks for taking my question. Questions for Meghan. I was hoping you could just elaborate a bit on your SG&A philosophy. With the guidance you gave for deleverage of 40 to 50 basis points this year, if we see better sales, would we expect it to still be in that range? Or would you put more into SG&A? Or on the flip side, if we have sales come in weaker, maybe just elaborate on some of the areas where you might have some flat. Thank you.

Question: Aneesha Sherman - Bernstein Institutional Services LLC - Analyst : So Meghan, talking about the Americas versus international growth, you talked about a kind of low- to mid-single-digit outlook for the Americas. That would put international growth quite a bit lower than what you did in 2024. Can you give some color around where you may be seeing a slowdown internationally? Are there particular markets? And what gives you -- what your assumption is coming from? And then a quick follow-up on your levels of investments. You talked about foundational investments, strategic investments, marketing. Can you talk about how flexible the cost base is to the downside in the event of a tougher macro scenario, what would margin progression look like? Thank you.

Question: Michael Binetti - Evercore ISI Institutional Equities - Analyst : Hey, guys. Thanks for taking our question here. So Meghan, you started the year guiding gross margin flat and finished up 65 basis points in the US slowed from where you thought it was going to be in the year. Can you help -- I know you offered some comments on 4Q, but when you look at the year in total you went different than you thought earlier in the year. Curious where, as you look at 2025, do those occupancy conservatism still exist? Or where do you see conservatism in the guidance for the year, both in gross margin again as well as in sales and SG&A?

Question: John Kernan - TD Cowen - Analyst : Good afternoon. Thanks for taking my question. Meghan, it looks like marketing went up to about 5% of sales this year. It's still below some of your bigger peers. I think it's up about 50 basis points year over year. How do you think about marketing within fiscal '25 and also long term? Is this something given all the activations that Calvin talked to you earlier that you could flex up to drive faster sales in the Americas?

Question: Paul Lejuez - Citi Investment Research - Analyst : Hey. Thanks, guys. On the traffic slowdown, I think you specifically mentioned the US, but can you talk about what you saw in the other regions including Canada, including China, international, or Rest of World? And anything within the US that you could call out regionally? Obviously, there's been some unfavorable weather in the first quarter. Curious if you're seeing any impact from that. Thanks.

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : Hey. Thanks for taking my question. Just keep going with the US, is what you're seeing more broad-based? Is it more on the women's side, more on the men's side, just kind of curious what you see there? And then given, Calvin, your talk of the innovation and newness flowing through, as the year progresses, it sounds like you're baking in like essentially no improvement in North America trend from here. Shouldn't we be expecting North America -- sorry -- US specifically to improve as there progresses given the merchandise flow that you're speaking to?

Question: Jay Sole - UBS Securities LLC - Analyst : Great. Thank you so much. Would it be possible to clarify on the square footage growth, how much square footage growth you're planning for the US this year, and also how much square footage drove you're planning for China? Thank you.

Question: Jay Sole - UBS Securities LLC - Analyst : Got it. And then on some of the store adds, did the store ads happen in US? Are upsizing stores in the US this year?