Stock Analysis on Net

lululemon athletica inc. (NASDAQ:LULU)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

lululemon athletica inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020 Feb 3, 2019
Net operating profit after taxes (NOPAT)1 1,622,788 933,695 1,040,291 680,052 711,860 519,499
Cost of capital2 16.60% 16.54% 16.63% 16.65% 16.53% 16.25%
Invested capital3 5,978,501 4,526,979 3,909,051 3,672,427 3,008,240 2,459,537
 
Economic profit4 630,221 184,730 390,362 68,758 214,693 119,772

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,622,78816.60% × 5,978,501 = 630,221

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. lululemon athletica inc. economic profit decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.

Net Operating Profit after Taxes (NOPAT)

lululemon athletica inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020 Feb 3, 2019
Net income 1,550,190 854,800 975,322 588,913 645,596 483,801
Deferred income tax expense (benefit)1 (26,747) 9,400 (6,867) 34,125 24,394 18,954
Increase (decrease) in unredeemed gift card liability2 55,001 43,283 52,347 35,435 21,001 16,744
Increase (decrease) in equity equivalents3 28,254 52,683 45,480 69,560 45,395 35,698
Interest expense
Interest expense, operating lease liability4 56,131 33,180 24,669 27,315 26,417
Adjusted interest expense 56,131 33,180 24,669 27,315 26,417
Tax benefit of interest expense5 (11,788) (6,968) (5,181) (5,736) (5,547)
Adjusted interest expense, after taxes6 44,344 26,212 19,489 21,579 20,869
Net operating profit after taxes (NOPAT) 1,622,788 933,695 1,040,291 680,052 711,860 519,499

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in unredeemed gift card liability.

3 Addition of increase (decrease) in equity equivalents to net income.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,403,282 × 4.00% = 56,131

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 56,131 × 21.00% = 11,788

6 Addition of after taxes interest expense to net income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. lululemon athletica inc. NOPAT decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.

Cash Operating Taxes

lululemon athletica inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020 Feb 3, 2019
Income tax expense 625,545 477,771 358,547 230,437 251,797 231,449
Less: Deferred income tax expense (benefit) (26,747) 9,400 (6,867) 34,125 24,394 18,954
Add: Tax savings from interest expense 11,788 6,968 5,181 5,736 5,547
Cash operating taxes 664,080 475,339 370,595 202,048 232,950 212,495

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. lululemon athletica inc. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

lululemon athletica inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020 Feb 3, 2019
Operating lease liability1 1,403,282 1,070,334 881,052 798,681 739,961 783,913
Total reported debt & leases 1,403,282 1,070,334 881,052 798,681 739,961 783,913
Stockholders’ equity 4,232,081 3,148,799 2,740,046 2,558,566 1,952,218 1,445,975
Net deferred tax (assets) liabilities2 20,346 48,682 47,261 52,024 11,997 (12,300)
Unredeemed gift card liability3 306,479 251,478 208,195 155,848 120,413 99,412
Equity equivalents4 326,825 300,160 255,456 207,872 132,410 87,112
Accumulated other comprehensive (income) loss, net of tax5 264,256 252,584 195,917 177,155 224,581 216,808
Adjusted stockholders’ equity 4,823,162 3,701,543 3,191,419 2,943,593 2,309,209 1,749,895
Work in progress6 (247,943) (244,898) (163,420) (69,847) (40,930) (74,271)
Invested capital 5,978,501 4,526,979 3,909,051 3,672,427 3,008,240 2,459,537

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of unredeemed gift card liability.

4 Addition of equity equivalents to stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of work in progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. lululemon athletica inc. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Cost of Capital

lululemon athletica inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 60,337,715 60,337,715 ÷ 61,740,997 = 0.98 0.98 × 16.91% = 16.53%
Operating lease liability3 1,403,282 1,403,282 ÷ 61,740,997 = 0.02 0.02 × 4.00% × (1 – 21.00%) = 0.07%
Total: 61,740,997 1.00 16.60%

Based on: 10-K (reporting date: 2024-01-28).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 40,732,106 40,732,106 ÷ 41,802,440 = 0.97 0.97 × 16.91% = 16.48%
Operating lease liability3 1,070,334 1,070,334 ÷ 41,802,440 = 0.03 0.03 × 3.10% × (1 – 21.00%) = 0.06%
Total: 41,802,440 1.00 16.54%

Based on: 10-K (reporting date: 2023-01-29).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 43,998,362 43,998,362 ÷ 44,879,414 = 0.98 0.98 × 16.91% = 16.58%
Operating lease liability3 881,052 881,052 ÷ 44,879,414 = 0.02 0.02 × 2.80% × (1 – 21.00%) = 0.04%
Total: 44,879,414 1.00 16.63%

Based on: 10-K (reporting date: 2022-01-30).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 41,338,271 41,338,271 ÷ 42,136,952 = 0.98 0.98 × 16.91% = 16.59%
Operating lease liability3 798,681 798,681 ÷ 42,136,952 = 0.02 0.02 × 3.42% × (1 – 21.00%) = 0.05%
Total: 42,136,952 1.00 16.65%

Based on: 10-K (reporting date: 2021-01-31).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 26,137,149 26,137,149 ÷ 26,877,110 = 0.97 0.97 × 16.91% = 16.45%
Operating lease liability3 739,961 739,961 ÷ 26,877,110 = 0.03 0.03 × 3.57% × (1 – 21.00%) = 0.08%
Total: 26,877,110 1.00 16.53%

Based on: 10-K (reporting date: 2020-02-02).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 19,223,439 19,223,439 ÷ 20,007,352 = 0.96 0.96 × 16.91% = 16.25%
Operating lease liability3 783,913 783,913 ÷ 20,007,352 = 0.04 0.04 × 0.00% × (1 – 21.00%) = 0.00%
Total: 20,007,352 1.00 16.25%

Based on: 10-K (reporting date: 2019-02-03).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »


Economic Spread Ratio

lululemon athletica inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020 Feb 3, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 630,221 184,730 390,362 68,758 214,693 119,772
Invested capital2 5,978,501 4,526,979 3,909,051 3,672,427 3,008,240 2,459,537
Performance Ratio
Economic spread ratio3 10.54% 4.08% 9.99% 1.87% 7.14% 4.87%
Benchmarks
Economic Spread Ratio, Competitors4
Nike Inc. 10.18% 11.19% 12.92% 12.58% -0.15% 15.90%

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 630,221 ÷ 5,978,501 = 10.54%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. lululemon athletica inc. economic spread ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

Economic Profit Margin

lululemon athletica inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020 Feb 3, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 630,221 184,730 390,362 68,758 214,693 119,772
 
Net revenue 9,619,278 8,110,518 6,256,617 4,401,879 3,979,296 3,288,319
Add: Increase (decrease) in unredeemed gift card liability 55,001 43,283 52,347 35,435 21,001 16,744
Adjusted net revenue 9,674,279 8,153,801 6,308,964 4,437,314 4,000,297 3,305,063
Performance Ratio
Economic profit margin2 6.51% 2.27% 6.19% 1.55% 5.37% 3.62%
Benchmarks
Economic Profit Margin, Competitors3
Nike Inc. 4.39% 4.45% 5.85% 5.94% -0.08% 5.76%

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × 630,221 ÷ 9,674,279 = 6.51%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. lululemon athletica inc. economic profit margin deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.