lululemon athletica (LULU) Financials

lululemon athletica (NASDAQ: LULU) has shown steady revenue growth over the last four years, growing from approximately $2.0 billion in Q1 2023 to about $2.37 billion in Q1 2025. The company's operating revenue has increased consistently, indicating strong top-line growth driven by sustained demand for its products.

Key positive trends:

• Consistent revenue growth quarter-over-quarter and year-over-year, reaching $2.37 billion in Q1 2025 from $2.20 billion in Q1 2024 and $2.0 billion in Q1 2023.
• Improving gross profit margin evidenced by strong gross profits – $1.38 billion in Q1 2025 versus $1.27 billion in Q1 2024, showing efficient management of cost of revenue relative to sales.
• Solid net income growth, with Q1 2025 net income at ~$315 million, maintaining profitability despite increased operating costs.
• Earnings per share (EPS) shows consistent growth, with basic EPS at $2.61 in Q1 2025 versus $2.55 in Q1 2024 and $2.28 in Q1 2023, indicating effective shareholder value creation.
• Increasing total equity from approximately $3.3 billion in Q1 2023 to $4.3 billion in Q1 2025, reflecting strong retained earnings and capital management.
• Healthy cash and equivalents position, increasing from about $950 million in Q1 2023 to $1.33 billion in Q1 2025, suggesting solid liquidity.
• Consistent investment in plant, property, and equipment growing from $1.31 billion in Q1 2023 to $1.85 billion in Q1 2025, signaling commitment to long-term capacity growth and store expansions.

Neutral factors:

• Operating expenses remain relatively high but are mostly in line with revenue growth; SG&A expenses are managed closely to control profitability.
• Modest variations in working capital changes affecting cash flow, reflecting inventory management and receivables/payables cycles.
• Weighted average diluted shares outstanding remain stable around 120 million shares, indicating no significant dilution or buybacks impacting share count.

Potential negatives or risks:

• Q1 2025 experienced negative net cash flow from operating activities (-$119 million) and investing activities (-$107 million), combined with aggressive share repurchases (-$434 million), putting pressure on liquidity despite strong cash balance.
• Increasing accrued expenses and other current liabilities over the years, which may signal increased operational costs or accruals that need monitoring.
• Net income attributable to common shareholders is sometimes impacted by other non-recurring adjustments, which introduces some volatility to reported earnings.

Overall, lululemon demonstrates solid growth and profitability trends with effective capital management. The recent quarter's negative operating cash flow is a concern but appears linked to working capital swings and significant share repurchase activity, which could be part of a shareholder return strategy. Investors should monitor cash flow dynamics and expense control in upcoming quarters.