lululemon athletica inc. (NASDAQ:LULU)

The financial ratios presented demonstrate generally stable performance with some fluctuations over the observed period. Asset turnover, both reported and adjusted, increased from 2021 to 2023 before experiencing a slight decline in the most recent two years, stabilizing in 2026. Liquidity, as measured by the current ratio, shows more volatility, with a dip in 2022 followed by increases in subsequent years, indicating a strengthening liquidity position. Leverage ratios exhibit a consistent, albeit gradual, increase, suggesting a moderate reliance on debt financing. Profitability and returns show a more complex pattern, with adjustments generally leading to slightly higher values.

Asset Turnover

Both reported and adjusted total asset turnover ratios increased from 1.05 and 1.06 in 2021 to 1.45 and 1.46 in 2023, respectively, indicating improved efficiency in utilizing assets to generate revenue. A slight decrease is then observed in 2024 and 2025, followed by a minor decline in 2026, suggesting a potential stabilization or slight reduction in asset utilization efficiency.

Liquidity

The reported current ratio decreased from 2.41 in 2021 to 1.86 in 2022, potentially indicating reduced short-term liquidity. However, it rebounded to 2.49 in 2024 and remained relatively stable through 2026. The adjusted current ratio shows a similar pattern but consistently reports higher values, suggesting a stronger liquidity position when accounting for adjustments. The difference between reported and adjusted values indicates potential timing differences or classification of current assets and liabilities.

Leverage

Adjusted debt to equity and debt to capital ratios show a steady increase from 0.29 and 0.22 in 2021 to 0.34 and 0.25 in 2026, respectively. This indicates a gradual increase in the proportion of debt financing relative to equity and total capital. Adjusted financial leverage also increased from 1.51 in 2021 to 1.59 in 2026, confirming a moderate increase in the use of financial leverage.

Profitability & Returns

Reported net profit margin fluctuated significantly, peaking at 15.59% in 2022 and reaching 16.12% in 2024, before declining to 14.22% in 2026. The adjusted net profit margin demonstrates more stability, remaining relatively consistent around 15-16% throughout the period. Both reported and adjusted ROE and ROA exhibited similar trends, with adjustments generally resulting in slightly higher values. ROE peaked in 2024 at 36.63% (reported) and 34.37% (adjusted) before decreasing in 2026. ROA followed a similar pattern, peaking in 2024 and declining in 2026.

Overall, the adjustments to the financial ratios generally result in slightly improved values, particularly for profitability and returns. The observed trends suggest a company that has generally improved its asset utilization and profitability, while maintaining a moderate level of financial leverage. The fluctuations in certain ratios warrant further investigation to understand the underlying drivers and potential implications for future performance.

The adjusted total asset turnover ratio for the analyzed period demonstrates a generally increasing trend, followed by a stabilization and slight decline. Initial values indicate growth, peaking in 2023, before exhibiting a more subdued pattern in subsequent years.

Overall Trend

From 2021 to 2023, the adjusted total asset turnover ratio increased from 1.06 to 1.46, representing a substantial improvement in the efficiency with which assets are used to generate revenue. The rate of increase slowed between 2023 and 2025, with the ratio reaching 1.40. A slight decrease to 1.32 is then observed in 2026.

Year-over-Year Changes

The largest year-over-year increase occurred between 2021 and 2022, with a change of 0.22. The increase from 2022 to 2023 was 0.18. The change from 2023 to 2024 was minimal, at 0.01. From 2024 to 2025, the ratio increased by 0.01, and then decreased by 0.08 from 2025 to 2026.

Comparison to Reported Values

The adjusted total asset turnover ratio consistently mirrors the reported total asset turnover ratio across all periods. The difference between the two values for each year is negligible, suggesting that adjustments made to net revenue and total assets have a limited impact on the overall turnover calculation.

Recent Performance

The most recent two years, 2024 and 2026, show a stabilization and then a slight decline in the adjusted total asset turnover ratio. While still at a relatively high level, the decrease from 1.40 in 2025 to 1.32 in 2026 warrants monitoring to determine if this represents a developing trend or a temporary fluctuation.

In summary, the company demonstrates effective asset utilization, as indicated by the consistently high adjusted total asset turnover ratio. The recent stabilization and slight decrease suggest a potential shift in asset efficiency that may require further investigation.

The adjusted current ratio exhibited a fluctuating trend over the analyzed period. Initially, the ratio demonstrated growth, followed by a period of stabilization and then a slight increase. A closer examination reveals specific patterns in the underlying components and the resulting ratio.

Current Assets

Current assets generally increased from 2021 to 2024, rising from US$2,124,379 thousand to US$4,060,577 thousand. A slight decrease was observed in 2025 to US$3,980,302 thousand, followed by a recovery to US$4,262,701 thousand in 2026. This indicates a generally positive trend in short-term asset accumulation, with a minor mid-period fluctuation.

Current Liabilities

Current liabilities consistently increased throughout the period, moving from US$883,178 thousand in 2021 to US$1,887,548 thousand in 2026. The rate of increase was most pronounced between 2021 and 2022, then moderated in subsequent years. This suggests a growing level of short-term obligations.

Reported Current Ratio

The reported current ratio initially decreased from 2.41 in 2021 to 1.86 in 2022, then recovered to 2.49 in 2024. It subsequently decreased to 2.16 in 2025 and increased slightly to 2.26 in 2026. This fluctuation reflects the combined effect of changes in both current assets and current liabilities.

Adjusted Current Liabilities

Adjusted current liabilities also increased over the period, from US$727,330 thousand in 2021 to US$1,570,916 thousand in 2026. The growth pattern was similar to that of the reported current liabilities, with a substantial increase initially and a more moderate pace thereafter. The adjustments made to current liabilities appear to consistently reduce the reported liability amount.

Adjusted Current Ratio

The adjusted current ratio began at 2.92 in 2021 and rose to 3.07 in 2024. A subsequent decline to 2.60 was noted in 2025, followed by a recovery to 2.71 in 2026. The adjusted current ratio consistently remained above the reported current ratio throughout the period, indicating that the adjustments to current liabilities positively impacted the liquidity position as measured by this ratio. The ratio suggests a generally healthy ability to cover short-term obligations with short-term assets, although the 2025 dip warrants further investigation.

In summary, while both reported and adjusted current ratios experienced fluctuations, the adjustments to current liabilities consistently presented a more favorable liquidity picture. The overall trend suggests a growing business with increasing short-term obligations, but a maintained capacity to meet those obligations with available current assets.

The adjusted debt to equity ratio exhibits a consistent upward trend over the observed period. This indicates a gradual increase in the proportion of debt financing relative to equity financing utilized by the company. While the increases are incremental, the pattern is clear and warrants further investigation into the underlying reasons for the shift in capital structure.

Adjusted Debt to Equity Ratio Trend

Beginning in 2021 at 0.29, the adjusted debt to equity ratio remained stable through 2022. A slight increase to 0.31 was observed in 2023, and this level was maintained in 2024. The ratio continued to climb, reaching 0.33 in 2025 and 0.34 in 2026. This consistent, albeit moderate, increase suggests a deliberate or evolving financing strategy.

The adjusted total debt and adjusted stockholders’ equity figures demonstrate corresponding growth. The adjusted total debt increased from US$798,681 thousand in 2021 to US$1,798,441 thousand in 2026. Simultaneously, adjusted stockholders’ equity grew from US$2,766,438 thousand to US$5,306,713 thousand over the same period. The growth in equity is substantial, but the proportional increase in debt is contributing to the rising debt to equity ratio.

Debt and Equity Growth

The absolute increase in adjusted total debt is significant, representing more than a doubling of debt over the six-year period. However, the absolute increase in adjusted stockholders’ equity is even larger. The rising ratio indicates that debt is growing at a faster rate than equity, leading to the observed trend.

The consistent increase in the adjusted debt to equity ratio, coupled with the growth in both debt and equity, suggests the company is leveraging debt to fund expansion or other strategic initiatives. Continued monitoring of this ratio is recommended to assess the potential impact on financial risk and future profitability.

The adjusted debt to capital ratio exhibits a consistent upward trend over the observed period. This analysis details the progression of this ratio, alongside its constituent components, from January 31, 2021, to February 1, 2026.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio increased steadily from 0.22 in 2021 to 0.25 in both 2024 and 2025, remaining at 0.25 through the projected period ending in 2026. This indicates a growing proportion of debt financing relative to total capital.

Adjusted Total Debt

Adjusted total debt demonstrates a consistent increase throughout the period. Starting at US$798,681 thousand in 2021, it rose to US$1,798,441 thousand by 2026. The rate of increase appears relatively stable year-over-year.

Adjusted Total Capital

Adjusted total capital also increased consistently, from US$3,565,119 thousand in 2021 to US$7,105,154 thousand in 2026. The growth in adjusted total capital is substantial, but the proportional increase in adjusted total debt results in the observed rise in the debt to capital ratio.

The consistent increases in both adjusted total debt and adjusted total capital contribute to the upward trend in the adjusted debt to capital ratio. While capital is growing, the reliance on debt financing is also increasing, maintaining a relatively stable ratio in the later years of the observed period.

The financial leverage metrics demonstrate a generally stable pattern over the observed period. Total assets and stockholders’ equity both exhibit consistent growth from 2021 through 2026. While reported financial leverage fluctuates modestly, the adjusted financial leverage ratio presents a more consistent trend, suggesting the adjustments applied are smoothing out some underlying variations.

Total Assets & Stockholders’ Equity

Total assets increased steadily from US$4,185,215 thousand in 2021 to US$8,456,743 thousand in 2026. Stockholders’ equity also increased consistently, moving from US$2,558,566 thousand in 2021 to US$4,961,840 thousand in 2026. This indicates a strengthening financial position over time.

Reported Financial Leverage

Reported financial leverage initially increased from 1.64 in 2021 to 1.80 in 2022, then decreased to 1.68 in 2024. A slight increase to 1.76 is observed in 2025, followed by a further decrease to 1.70 in 2026. This suggests some volatility in the leverage calculation as reported, potentially due to changes in asset or equity composition not captured in the adjusted figures.

Adjusted Financial Leverage

Adjusted financial leverage shows a more moderate trend. It rose from 1.51 in 2021 to 1.65 in 2022, then decreased to 1.62 in 2023. A further decrease to 1.55 is seen in 2024, followed by a slight increase to 1.61 in 2025, and finally settling at 1.59 in 2026. The adjustments made to total assets and stockholders’ equity appear to result in a more stable leverage ratio over the period. The adjusted leverage remains below the reported leverage throughout the entire period.

The difference between reported and adjusted financial leverage suggests that the adjustments are reducing the impact of certain items on the overall leverage calculation. The consistent growth in both assets and equity, coupled with the relatively stable adjusted leverage, indicates a healthy and manageable financial structure.

The adjusted net profit margin exhibited a generally stable performance over the observed period, with some fluctuations. Initial values demonstrate a slight decrease followed by a return to prior levels, and then a modest decline in the most recent year presented.

Overall Trend

From January 31, 2021, to February 1, 2026, the adjusted net profit margin generally remained within a range of approximately 10.43% to 16.20%. The metric began at 15.91% in 2021, decreased to 15.88% in 2022, then experienced a notable drop to 10.43% in 2023. A recovery was observed in 2024 and 2025, reaching 16.20% and 16.19% respectively, before decreasing slightly to 15.59% in 2026.

Mid-Period Volatility (2022-2023)

A significant decrease in the adjusted net profit margin occurred between 2022 and 2023, falling from 15.88% to 10.43%. This represents the largest single-year decline in the observed period. The reasons for this decline would require further investigation, but it suggests a potential shift in cost structure or pricing dynamics during that timeframe.

Recent Performance (2024-2026)

Following the decline in 2023, the adjusted net profit margin demonstrated a recovery in both 2024 and 2025, stabilizing around 16.20% and 16.19% respectively. However, a slight decrease to 15.59% was observed in 2026, indicating a potential leveling off or the beginning of a new downward trend. This recent decline, while modest, warrants monitoring.

Comparison to Reported Margin

The adjusted net profit margin consistently exceeded the reported net profit margin across all years. The difference between the two metrics suggests the presence of adjustments impacting net income, which could include items such as restructuring charges, gains or losses on investments, or other non-recurring items. The consistent positive difference indicates these adjustments generally improve the reported profitability picture.

The adjusted net income and adjusted net revenue both increased consistently throughout the period, contributing to the overall stability of the adjusted net profit margin despite the fluctuations. Further analysis correlating these margin changes with specific cost components or revenue drivers would provide a more comprehensive understanding of the underlying business dynamics.

The adjusted return on equity (ROE) exhibited fluctuations over the analyzed period, spanning from January 31, 2021, to February 1, 2026. While generally remaining within a defined range, discernible trends and variations are present. Net income and stockholders’ equity, the components of ROE, both demonstrated overall growth during the period, though with some yearly variations.

Overall Trend

The adjusted ROE began at 25.52% in 2021, decreased to 24.67% in 2023, and then increased to 36.38% in 2025 before decreasing slightly to 32.64% in 2026. This suggests a period of initial stability, followed by a peak in profitability relative to equity, and a subsequent modest decline. The fluctuations indicate sensitivity to changes in either adjusted net income or adjusted stockholders’ equity.

Adjusted ROE – 2021-2023

From 2021 to 2023, the adjusted ROE experienced a decrease from 25.52% to 24.67%. This decline occurred despite an increase in adjusted net income and adjusted stockholders’ equity. The smaller proportional increase in adjusted net income compared to adjusted stockholders’ equity likely contributed to this reduction in ROE.

Adjusted ROE – 2023-2025

A significant increase in adjusted ROE is observed between 2023 and 2025, rising from 24.67% to 36.38%. This increase coincided with substantial growth in adjusted net income, which outpaced the growth in adjusted stockholders’ equity. This suggests improved profitability and efficient utilization of equity during this period.

Adjusted ROE – 2025-2026

The adjusted ROE decreased from 36.38% in 2025 to 32.64% in 2026. While both adjusted net income and adjusted stockholders’ equity continued to increase, the rate of increase in adjusted net income slowed relative to the growth in adjusted stockholders’ equity, resulting in the observed decline in ROE.

Comparison to Reported ROE

The adjusted ROE consistently differed from the reported ROE throughout the period. The adjustments made to net income and stockholders’ equity resulted in variations in the calculated ROE. The adjusted ROE generally presented a more conservative view of profitability relative to equity compared to the reported ROE, although the magnitude of the difference varied year to year.

In summary, the adjusted ROE demonstrates a dynamic relationship with changes in adjusted net income and adjusted stockholders’ equity. The observed fluctuations suggest the company’s profitability relative to equity is sensitive to the relative growth rates of these two key financial components.

The adjusted return on assets (ROA) exhibited a generally positive trend over the observed period, though with some fluctuations. Initial values demonstrate growth, followed by a stabilization and then a slight decline towards the end of the period. A comparison between reported and adjusted ROA consistently shows the adjusted figures to be higher, indicating the impact of adjustments made to net income and total assets.

Overall Trend

From January 31, 2021, to February 1, 2026, the adjusted ROA generally increased. It rose from 16.89% in 2021 to a peak of 22.60% in 2025 before decreasing to 20.54% in 2026. This suggests improving profitability relative to asset utilization for most of the period, with a recent moderation.

Year-over-Year Changes

A significant increase in adjusted ROA occurred between 2021 and 2022, moving from 16.89% to 20.30%. Growth continued, albeit at a slower pace, between 2022 and 2023, reaching 20.30% and 15.19% respectively. The largest year-over-year increase was observed between 2023 and 2024, with adjusted ROA climbing to 22.12%. The most recent period, 2025 to 2026, shows a decrease from 22.60% to 20.54%.

Relationship to Adjusted Net Income and Assets

The adjusted ROA’s trajectory aligns with changes in both adjusted net income and adjusted total assets. Adjusted net income increased consistently from 2021 to 2025, contributing to the rising ROA. While adjusted total assets also increased throughout the period, the growth in net income outpaced the growth in assets for much of the time, driving the ROA higher. The slight decrease in adjusted ROA in 2026 coincides with a slower growth rate in adjusted net income and a continued increase in adjusted total assets.

Comparison with Reported ROA

The reported ROA consistently falls below the adjusted ROA across all observed periods. The difference between the two ratios varies, but generally remains between 2% and 4%. This indicates that the adjustments made to net income and total assets have a material positive impact on the calculated ROA, suggesting the reported figures may not fully reflect underlying economic performance.