Lululemon Athletica Inc. (NASDAQ:LULU) Q3 2023 Earnings Call Transcript

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We don’t report the category specifically, but if we were to we are a significant player in outerwear and see a lot of opportunity to continue to develop into those across the performance needs of our guests, rain as an opportunity and then building upon our growing credibility and success in cold weather with the Wunder Puff, which we’re seeing very good success internationally, in China in particular right now. I’m very pleased how we’re set up in North America with success. And obviously, climate has been slightly different, but we’re not pointing to that and we’re excited where we see opportunity to grow that business. So outerwear will be another key growth driver for us, bags. But look to the core to continue to grow, continue to put our market share.

Operator, we’ll take one more question.

Operator: The next question is from Jay Sole with UBS.

Jay Sole : I just have a 2-part question. First, you touched on competition, but just in Q3 and over the Black Friday holiday. How does the competitive landscape impact your approach to pricing and promotions as a percent? And Calvin, if you could give us a little bit of a — little deeper dive on footwear, what you see in the women’s footwear business, what gives you confidence to launch the men’s footwear business, that would be super helpful?

Calvin McDonald: Great. Thanks, Jay. In terms of competitiveness in the marketplace, what I saw was a lot of discounting. I saw a lot of discounting early. I saw deeper discounts. And I saw some early and young players in this space discount consistently in days, weeks leading into and over the Cyber Five weekend. That’s what I observed. We didn’t change our approach or strategy, as I mentioned. We didn’t use sale language. We led with an early access, which had great value in the downloads of the app, which we know delivers a much greater value with our guests. We’re excited to be able to use a benefit to drive that strategy within our essential membership base. And we continue to sell and see very good regular price sales.

So I definitely saw a more dynamic promotionally driven environment by some of our peers, by some of the new entries into this category. We didn’t deviate. We didn’t change. And our results I talked to, I was very pleased with and indicated we didn’t need to. Guest still responds to innovative products and that’s what our pipeline is full. It’s what we continue to deliver, and we’ll continue to drive our growth into the oncoming quarters and through our Power of Three x2 strategy. And then relative to footwear, we’re early and we’re pleased where we are in our footwear journey. It’s a small category for us, especially in our Power of Three x2 growth plan in terms of the role that it plays in our growth targets. I’m glad we’re in footwear. I’m excited with what we’re learning and how we’re seeing and some of the early successes as we continue to test and learn.

We updated Blissfeel and Chargefeel this year. We continue to see success with our Restfeel across both men’s and women’s. We’re trying an open cell on Restfeel in additional locations, seeing great response this holiday period. So we continue to be excited about footwear and the newness that the team has in the category that we’ll be bringing forward and our current plans are to launch men’s in quarter 1 of 2024. We’ll continue to test and learn. But we’re seeing enough positive signals in response from the guest that we have an opportunity in this category, and we’re going to take a long-term view and build it, but excited about what we’re seeing so far.

Operator: That’s all the time we have for questions today. Thank you for joining the call, and have a nice day.

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