lululemon athletica inc. (NASDAQ:LULU)

The income statement reveals a consistent pattern of growth in net revenue over the observed period, from US$4.4 billion in 2021 to US$11.1 billion in 2026. While revenue increased steadily, profitability exhibited more nuanced trends. Cost of goods sold also increased consistently, but at a rate generally lower than revenue growth, resulting in expanding gross profit margins initially, followed by a stabilization and slight contraction in later years.

Revenue Growth

Net revenue demonstrated robust growth throughout the period, with a particularly significant increase between 2021 and 2022 (approximately 44%). Growth rates moderated in subsequent years, but remained positive, averaging around 15-20% annually between 2022 and 2025, before slowing to approximately 8% between 2025 and 2026.

Gross Profit and Margins

Gross profit increased from US$2.46 billion in 2021 to US$6.28 billion in 2026. The gross profit margin expanded from 55.8% in 2021 to 68.3% in 2023, then stabilized around 65-66% in 2024 and 2025, before decreasing slightly to 56.6% in 2026. This suggests increasing efficiency in production or sourcing initially, followed by potential pressures on pricing or increased input costs in the later periods.

Operating Expenses

Selling, general, and administrative expenses increased consistently alongside revenue, rising from US$1.61 billion in 2021 to US$4.07 billion in 2026. This indicates a continued investment in sales, marketing, and administrative functions to support growth. The ratio of these expenses to net revenue remained relatively stable, fluctuating between 36% and 42% throughout the period.

Non-Recurring Items

The company experienced an impairment of assets and restructuring costs of US$407.9 million in 2023 and US$74.5 million in 2024. Acquisition-related expenses were present in 2021 and 2022, but ceased in subsequent years. A gain on disposal of assets was recorded in 2023. These items impacted income from operations in the respective years.

Net Income and Profitability

Net income increased significantly from US$588.9 million in 2021 to US$1.81 billion in 2025, before decreasing to US$1.58 billion in 2026. The net income margin peaked in 2025 at 17.1%, and decreased to 14.3% in 2026. This decline in net income in 2026, despite continued revenue growth, suggests potential pressures from increased costs, higher tax expenses, or the impact of the slight contraction in gross margin.

Other Income and Taxes

Other income (expense), net, increased substantially over the period, moving from a small expense in 2021 to a significant income source by 2025. Income tax expense increased in line with pre-tax income, with the effective tax rate remaining relatively consistent around 25-30% throughout the period.

In summary, the company demonstrated strong revenue growth, but experienced fluctuations in profitability due to factors such as non-recurring items and potential cost pressures. While gross margins initially expanded, they stabilized and slightly contracted in the later years, contributing to a decrease in net income margin in 2026.