lululemon athletica inc. (NASDAQ:LULU)

Current Income Tax Expense

The current income tax expense showed a generally upward trend over the six-year period. Beginning at $227,403 thousand in February 2020, it decreased slightly to $196,312 thousand in January 2021 before increasing significantly in subsequent years, reaching $703,082 thousand by February 2025. This suggests an overall increase in taxable income or changes in tax rates impacting current tax liabilities.

Deferred Income Tax Expense (Recovery)

The deferred income tax expense displayed more variability across the periods. It started at $24,394 thousand in February 2020 and rose to $34,125 thousand by January 2021. However, in January 2022, there was a notable reversal with a recovery of $6,867 thousand (negative expense). The figure then fluctuated again, with a positive expense of $9,400 thousand in January 2023, a recovery of $26,747 thousand in January 2024, and a significant expense of $58,379 thousand in February 2025. This pattern indicates shifts between deferred tax liabilities and assets, possibly reflecting changes in temporary differences or tax planning strategies.

Total Income Tax Expense

The total income tax expense, combining current and deferred amounts, followed an overall increasing trend. Starting at $251,797 thousand in February 2020, it increased slightly to $230,437 thousand by January 2021, followed by a sharp rise in January 2022 to $358,547 thousand. The upward trajectory continued through January 2023 and January 2024, reaching $625,545 thousand, and culminated at $761,461 thousand by February 2025. This upward trend aligns with the increase in current tax expense and indicates growing tax obligations over the analyzed periods.

Federal income tax at statutory rate

The statutory federal income tax rate has remained stable at 21% throughout the analyzed periods, indicating no changes in the baseline corporate tax burden at the federal level.

Foreign tax rate differentials

This rate increased from 4.6% in 2020 to a peak of 6.8% in 2023, then decreased to 4.3% by 2025. This suggests fluctuations in the impact of international tax environments, possibly due to changes in foreign income composition or tax policy adjustments in foreign jurisdictions.

U.S. state taxes

State tax rates showed minor fluctuations, generally around 1%, with a slight dip into negative territory (-0.4%) in 2023. The negative figure may indicate state tax refunds or credits experienced during that year. Overall, state taxes contribute a relatively small and variable portion to the total tax rate.

Non-deductible compensation expense

This component peaked at 2.1% in 2021 but otherwise remained below 1%, indicating a temporary increase in compensation costs that were not deductible for tax purposes, possibly related to stock-based compensation or incentives introduced during that period.

Excess tax benefits from stock-based compensation

Consistently negative and decreasing in magnitude from -0.4% to -0.1%, this reflects realized tax benefits on stock-based compensation that reduce the overall effective tax rate, albeit with diminishing effect over time.

Tax on unremitted foreign earnings

Introduced in 2023 at 1.4%, rising to 2.6% in subsequent years, this new tax component implies an increased tax burden related to foreign earnings not repatriated to the U.S., signaling possible changes in earnings retention strategies or tax regulations targeting offshore income.

Impairment of goodwill and other assets, gain on disposal of assets

Recorded only in 2023 at 7.8%, this significant one-time tax effect likely reflects asset impairments or disposals impacting that year's tax expense, contributing to the peak in the effective tax rate.

Permanent and other

This category varied between -0.9% and 1.3%, showing some volatility and reflecting miscellaneous permanent differences and other tax adjustments. The negative value in 2023 aligns with the year of notable asset impairments and unremitted earnings tax introduction.

Effective tax rate

The overall effective tax rate remained relatively consistent near 28% initially, dipped slightly to 26.9% in 2022, and then spiked to 35.9% in 2023, largely driven by asset impairments and unremitted foreign earnings tax. It subsequently declined to around 29% in 2024 and 2025, indicating normalization but at a slightly higher level than the early years.

Net Operating Loss Carryforwards

There is a fluctuating pattern observed, starting at 2,354 thousand USD in 2020 and peaking at 14,149 thousand USD in 2021. Subsequently, a decline occurs, with values dropping to 2,174 thousand USD by 2025, indicating the utilization or expiration of these carryforwards over time.

Inventories

Inventories show a clear upward trend from 8,763 thousand USD in 2020 to a significant peak of 43,471 thousand USD in 2023, followed by a decrease to 33,801 thousand USD in 2025. This suggests a buildup of inventory over the years with a notable reduction in the most recent period.

Accrued Bonuses

Accrued bonuses exhibit volatility, starting at 3,509 thousand USD in 2020, decreasing in 2021, then rising sharply to 19,075 thousand USD in 2024 before declining to 9,376 thousand USD in 2025. This may reflect changing compensation policies or performance-related payouts.

Unredeemed Gift Card Liability

A consistent increase is evident, with balances growing from 6,815 thousand USD in 2020 to 18,956 thousand USD in 2025, implying rising outstanding obligations related to gift card redemptions over time.

Non-Current Lease Liabilities

Non-current lease liabilities steadily rise from 144,412 thousand USD in 2020 to 308,796 thousand USD by 2025, nearly doubling, which indicates increasing commitment to long-term lease obligations.

Research and Experimental Expenditures

Data is unavailable before 2024, but the values show an increase from 48,922 thousand USD in 2024 to 71,579 thousand USD in 2025, highlighting a growing investment in research activities in recent years.

Stock-Based Compensation

This expense consistently rises from 4,961 thousand USD in 2020 to 20,883 thousand USD in 2025, reflecting expanding employee compensation through stock incentives.

Property and Equipment, Net

The reported amounts fluctuate, initially positive but turning significantly negative from 2020 onwards, reaching -180,664 thousand USD in 2025. This negative presentation likely represents accumulated depreciation or revaluation adjustments, signifying asset value reduction or disposals over time.

Other Items

Several entries labeled as "Other" show mixed trends. One such category rises from 7,586 thousand USD in 2020 to 22,415 thousand USD in 2025, while another category shows negative values that fluctuate, indicating varying miscellaneous expenses or adjustments.

Deferred Income Tax Assets

A strong upward trend is observed from 183,844 thousand USD in 2020 to 487,980 thousand USD in 2025, suggesting increasing future tax benefits recognized on the balance sheet.

Valuation Allowance

The valuation allowance starts negative at -5,655 thousand USD in 2020, fluctuates over the years with reductions and increases, and reaches -7,902 thousand USD in 2025. This indicates adjustments in expected realizability of deferred tax assets.

Deferred Income Tax Assets, Net of Valuation Allowance

Consistent growth is notable from 178,189 thousand USD in 2020 to 480,078 thousand USD in 2025, reflecting overall stronger deferred tax asset positions after allowance considerations.

Intangible Assets, Net

Values begin negative and show a trend towards improvement from -21,556 thousand USD in 2021 to -5,224 thousand USD in 2023, with data missing in later years, implying reduction or impairment of intangible assets followed by possible disposal or reclassification.

Right-of-Use Lease Assets

These assets show increasing negative values from -132,059 thousand USD in 2020 to -269,089 thousand USD in 2025, correlating with rising lease liabilities and suggesting increased lease obligations recorded under accounting standards.

Unremitted Foreign Earnings

Data is missing in early years; however, negative values appear in 2024 and 2025 (-41,198 thousand and -106,986 thousand USD respectively), indicating accumulated earnings in foreign jurisdictions not yet repatriated.

Deferred Income Tax Liabilities

There is a steady increase in deferred income tax liabilities, growing more negative from -190,186 thousand USD in 2020 to -561,181 thousand USD in 2025, signaling higher tax obligations expected in future periods.

Net Deferred Income Tax Assets (Liabilities)

Net deferred tax positions are negative throughout the periods, fluctuating and reaching -81,103 thousand USD in 2025, showing that deferred tax liabilities outweigh assets on a net basis with some volatility across years.

Deferred income tax assets

The value of deferred income tax assets exhibited a significant decline from 31,435 thousand USD in early 2020 to a low point of approximately 6,091 thousand USD by early 2022. Following this period, there was a gradual increase, reaching 17,085 thousand USD by early 2025, indicating a recovery and possible improvement in temporary differences that produce deductible amounts in future periods.

Deferred income tax liabilities

The deferred income tax liabilities showed a fluctuating pattern over the same timeframe. Starting at 43,432 thousand USD in early 2020, the liabilities rose sharply to 58,755 thousand USD by early 2021, then slightly decreased in 2022 and 2023 to around 53,352 and 55,084 thousand USD respectively. There was a significant decline to 29,522 thousand USD by early 2024, followed by a sharp increase to 98,188 thousand USD in early 2025. This volatility suggests changes in taxable temporary differences, possibly influenced by variations in asset valuations or tax planning strategies.

Overall observations

The contrasting movement patterns between deferred tax assets and liabilities suggest dynamic shifts in the company's tax positions from 2020 through 2025. The increase in deferred tax assets towards the later periods may point to increased tax benefits expected to be realized in the future, while the large fluctuations in tax liabilities could indicate changes in asset bases or timing differences subject to taxation. The notable peaks and troughs in liabilities particularly merit further analysis to understand underlying causes, such as changes in tax law, asset revaluations, or operational factors influencing taxable income.

Total Assets

The total assets have exhibited a steady increase over the reported periods. Reported total assets rose from approximately $3.28 billion in early 2020 to about $7.60 billion by early 2025. Adjusted total assets follow a similar growth trajectory, remaining slightly lower than reported figures but reflecting consistent expansion, indicating a growing asset base predominantly maintained after adjusting for income tax effects.

Total Liabilities

Total liabilities also increased throughout the time frame. Reported liabilities expanded from around $1.33 billion in 2020 to nearly $3.28 billion in 2025. Adjusted liabilities track closely but are marginally lower, paralleling the trends observed in reported liabilities. The growth in liabilities suggests increased leverage or obligations which align with the company scaling its operations or financing structure concurrently with asset growth.

Stockholders’ Equity

Stockholders’ equity demonstrated consistent growth during the period, rising from roughly $1.95 billion in 2020 to over $4.32 billion in 2025 based on reported data. Adjusted equity figures are slightly higher than reported values but follow a parallel upward trend. This reflects an increase in retained earnings and/or additional paid-in capital, emphasizing strengthened net worth over time despite the increases in liabilities.

Net Income

Net income experienced fluctuations but with an overall upward trend. The reported net income decreased from approximately $646 million in 2020 to about $589 million in 2021, followed by a substantial rise to $975 million in 2022. After a dip to around $855 million in 2023, there was a significant increase reaching over $1.55 billion in 2024 and further climbing to approximately $1.81 billion in 2025. Adjusted net income adjusts these figures slightly upwards, maintaining the overall trend and indicating improvements in profitability with some volatility during the early years.

Summary Insights

The data indicate robust growth in total assets and stockholders’ equity, suggesting effective capital management and an expanding operational scale. The parallel increase in liabilities points to leveraged growth. The net income trends, while showing some early volatility, depict a strong recovery and significant profitability improvements in later years. The differences between reported and adjusted figures are generally minimal and consistent, implying that income tax adjustments have a stable but relatively small impact on the financial statement figures.

Net Profit Margin

The reported net profit margin exhibited a fluctuating pattern over the observed periods. It declined from 16.22% in early 2020 to 10.54% in early 2023, then increased sharply to 17.14% by early 2025. The adjusted net profit margin followed a similar trajectory, declining from 16.84% to 10.66% before recovering to 17.69%. This suggests a period of margin compression followed by a significant recovery and strengthening of profitability.

Total Asset Turnover

The total asset turnover showed an initial decrease from 1.21 in early 2020 to 1.05 in early 2021, indicating reduced efficiency in asset utilization. Thereafter, it improved steadily, reaching a peak around 1.45 in early 2023 before slightly moderating to near 1.39–1.40 by early 2025. Adjusted figures closely mirror the reported values, indicating consistency in asset turnover performance after tax adjustments.

Financial Leverage

Financial leverage displayed minor fluctuations but remained relatively stable, ranging between approximately 1.60 and 1.80 over the periods. The reported ratio peaked at 1.80 in early 2022, then generally trended slightly downward before rising again to 1.76 by early 2025. Adjusted leverage closely tracked these movements, indicating that leverage management remained consistent despite tax-related adjustments.

Return on Equity (ROE)

The reported ROE experienced significant volatility, dropping from 33.07% in early 2020 to a low point near 23.02% in early 2021, recovering to 35.60% by early 2022, then dipping again before achieving its highest value of 41.97% in early 2025. The adjusted ROE followed a similar pattern with slightly higher values at the end of the series (42.52%). This indicates strong shareholder returns after initial volatility and demonstrates improved profitability and effective use of equity capital in recent periods.

Return on Assets (ROA)

The reported ROA mirrored trends in profitability and asset efficiency, decreasing from 19.67% in early 2020 to 14.07% in early 2021, then oscillating before reaching a high of 23.87% by early 2025. Adjusted ROA was consistently higher than reported ROA, especially in later years, suggesting that the adjustments related to income tax positively impacted the return on assets. Overall, this indicates improving effectiveness in asset utilization combined with enhanced profitability.

General Observations

The data reveals a period of financial performance variability, with significant declines in profitability and efficiency around early 2021, followed by a strong recovery through to early 2025. The close alignment between reported and adjusted figures across all metrics suggests that deferred or adjusted income tax considerations have a limited impact on the underlying financial trends but do slightly enhance the profitability ratios. The increase in ROE coupled with stable leverage ratios indicates prudent financial management and an ability to generate higher returns without excessive risk.

Net Income Trends

The reported net income shows an overall increasing trend with some fluctuations. It began at approximately 645.6 million USD in early 2020, decreased slightly in 2021 to 588.9 million USD, then recovered and rose substantially, reaching over 1.55 billion USD by early 2024 and further increasing to about 1.81 billion USD by early 2025. The adjusted net income follows a similar pattern but remains slightly higher in every period, indicating positive adjustments for deferred or non-recurring tax impacts. It started at approximately 670 million USD in 2020 and rose to nearly 1.87 billion USD by 2025.

Profit Margin Trends

The reported net profit margin experienced a decline from 16.22% in 2020 to 13.38% in 2021, followed by a recovery to 15.59% in 2022. There was a notable dip to 10.54% in 2023, which then improved significantly to 16.12% in 2024 and further to 17.14% in 2025. The adjusted net profit margin closely mirrors these movements, though it generally remains slightly higher than the reported margin, indicating adjustments that improve profitability measurements. The adjusted margin decreased from 16.84% in 2020 to 14.15% in 2021, rose to 15.48% in 2022, dipped to 10.66% in 2023, then increased to 15.84% in 2024, before reaching 17.69% in 2025.

Comparative Observations Between Reported and Adjusted Figures

In all periods, adjusted net income and adjusted net profit margin are higher than their reported counterparts, demonstrating consistent positive tax adjustment effects. The size of this adjustment varies over time but generally contributes a moderate increase to net income and profit margins, suggesting the company’s effective management of tax-related accounting adjustments.

Summary Insights

The financial data reflects a company experiencing growth in net income over the six-year period, despite some volatility in margin performance, particularly in 2021 and 2023. The substantial increases in net income and profit margins in the last two years indicate improvements in profitability and operational efficiency. Adjustments for income tax effects have a positive and consistent impact on reported earnings, slightly enhancing the depiction of financial health.

The analysis of the financial data over the six-year period reveals a consistent upward trajectory in total assets, both reported and adjusted. Reported total assets increased steadily from approximately 3.28 billion US dollars in early 2020 to about 7.60 billion in early 2025, representing more than a doubling in size. Adjusted total assets followed a similar pattern, closely mirroring the reported figures, which suggests limited discrepancies between reported and adjusted values for total assets.

Regarding the total asset turnover ratios, both reported and adjusted figures display a moderate degree of fluctuation rather than a consistent trend. The turnover ratio started at a relatively high level near 1.21 in early 2020 but declined to 1.05 in early 2021, indicating a decrease in asset efficiency during that year. Subsequently, turnover ratios improved, peaking at 1.45 in early 2023, before slightly declining to 1.36 and then modestly recovering to approximately 1.39 by early 2025. The adjusted total asset turnover closely aligns with the reported figures, indicating consistency and reliability in the adjustments made for tax considerations.

Overall, the data suggests that while the company has significantly expanded its asset base over the period, the efficiency with which these assets generate revenue, as indicated by the turnover ratios, has experienced volatility. The peak in asset turnover ratio in early 2023 corresponds with a period of strong operational performance, though this efficiency slightly decreased in the following years. The minimal differences between reported and adjusted figures imply that deferred income tax adjustments have little impact on the core asset metrics.

Assets

The reported total assets have shown a consistent upward trend from approximately 3.28 billion US dollars in February 2020 to about 7.60 billion US dollars in February 2025. This represents more than a twofold increase over the five-year period. Adjusted total assets follow a very similar pattern, closely tracking the reported figures, indicating minimal impact from deferred income tax adjustments on the asset base. The steady growth suggests expanding asset holdings, reflecting either business growth or acquisitions.

Stockholders’ Equity

Reported stockholders’ equity increased robustly from roughly 1.95 billion US dollars in 2020 to approximately 4.32 billion US dollars in 2025, more than doubling in size. Adjusted stockholders’ equity mirrors this growth pattern, with slightly higher values than reported figures in most years, implying that deferred tax-related adjustments slightly enhance the equity figure. This upward trajectory in equity is consistent with an increasing asset base and suggests retained earnings growth or capital infusions over the period.

Financial Leverage

Reported financial leverage ratios fluctuate within a narrow range of 1.64 to 1.80 throughout the period, peaking in 2022 and slightly declining in 2024 before a modest increase again in 2025. Adjusted financial leverage ratios show similar behavior, remaining slightly lower than reported ratios, indicating the effect of income tax adjustments reduces leverage somewhat. Overall, financial leverage remains relatively stable with no major volatility, suggesting maintained capital structure discipline despite substantial asset and equity growth.

Summary

The financial data indicate strong growth in both assets and equity over the analyzed period, reflecting positive expansion trends. Adjustments for deferred income taxes have minimal impact on the reported figures, as observed by the close alignment of reported versus adjusted values. Financial leverage remains stable, indicating the company has not significantly increased its reliance on debt relative to equity despite growth. These trends collectively portray a financially strengthening entity with consistent asset accumulation, equity growth, and prudent leverage management.

Net Income Trends

The reported net income shows a fluctuating pattern over the analyzed periods, beginning at 645.6 million USD in early 2020, declining to approximately 588.9 million USD in 2021, then rising significantly to 975.3 million USD in 2022. A slight decline occurs in 2023, followed by a pronounced increase in 2024 and 2025, reaching 1.55 billion USD and 1.81 billion USD, respectively.

The adjusted net income follows a similar trajectory, with starting and ending values consistently slightly higher than the reported figures. The adjustment effects appear to be modest but consistent, maintaining the rising trend observed in the latter years. This suggests that the adjustments primarily enhance net income figures without substantially altering the overall trend.

Stockholders’ Equity Development

Reported stockholders’ equity demonstrates steady growth throughout the periods. Beginning at roughly 1.95 billion USD in 2020, the equity base increases steadily each year, reaching over 4.32 billion USD by 2025. This considerable growth indicates a strengthening capital base, which supports operational and financial stability.

The adjusted stockholders’ equity mirrors reported equity but maintains slightly higher values, reinforcing the notion that the adjustments are in favor of enhancing the equity position. The progression in adjusted equity is consistent with reported values, indicating ongoing growth and investor confidence over time.

Return on Equity (ROE) Analysis

Reported ROE exhibits variability, starting from 33.07% in 2020, dipping to 23.02% in 2021, then climbing to a peak of 35.6% in 2022. A subsequent decline in 2023 is observed, followed by a robust increase in 2024 and reaching a high of 41.97% in 2025. This pattern of volatility coupled with strong recoveries suggests changing profitability effectiveness relative to equity.

The adjusted ROE aligns closely with the reported figures but remains consistently marginally higher across all periods. This alignment suggests that tax and other deferred adjustments slightly improve the efficiency measure of how well equity is used to generate income, but do not materially shift the overall ROE trend.

Overall Insights

The data reveals an overall positive growth trajectory in net income and equity, with adjustments modestly enhancing financial indicators. Although some volatility in profitability ratios is evident, the long-term trend points to increasing operational efficiency and strengthening financial health. The consistency between reported and adjusted figures indicates transparent financial adjustments that affirm the company’s improving performance during the reviewed periods.

Net Income Trends

The reported net income experienced fluctuations over the period, starting at approximately $645.6 million in early 2020 and declining to about $588.9 million in early 2021. It then increased considerably to $975.3 million in early 2022 but dropped again to $854.8 million in early 2023. Subsequently, a strong upward trend is observed with reported net income rising to $1.55 billion in early 2024 and further increasing to $1.81 billion by early 2025. The adjusted net income shows a similar pattern, consistently slightly higher than the reported figures, indicating positive adjustments to reported earnings. The growth in adjusted net income is steady from $670.0 million in 2020 to $1.87 billion in 2025.

Total Assets Patterns

Reported total assets exhibit a continuous upward trend throughout the timeframe. Starting at about $3.28 billion in 2020, assets increase each year, reaching $7.09 billion in 2024 and $7.60 billion in 2025. Adjusted total assets follow a near-identical progression, marginally lower than the reported total, confirming consistent asset growth. This trend reflects ongoing asset accumulation or acquisitions over the years.

Return on Assets (ROA) Analysis

Reported ROA shows variability, beginning at 19.67% in 2020, dropping sharply to 14.07% in 2021, and recovering to 19.73% in 2022. Another decline occurs in 2023 to 15.25%, followed by a marked increase to 21.86% in 2024 and further to 23.87% in 2025. Adjusted ROA follows a similar trajectory but remains consistently slightly higher than reported ROA, indicating positive adjustments improve the return metrics. The overall trend suggests improving asset efficiency, especially notable in the latter years.

Overall Insights

The data reveals a company that experienced some volatility in profitability and asset utilization ratios during the early to mid-period but demonstrates strong recovery and growth in recent years. Both adjusted and reported figures corroborate the upward momentum in net income and asset base, alongside improving returns on assets. The consistent premium of adjusted values over reported values suggests the adjustments had a net positive impact on financial performance measures.