Economic Value Added (EVA)
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
Based on: 10-K (reporting date: 2026-02-01), 10-K (reporting date: 2025-02-02), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,600,923 – 18.24% × 6,957,618 = 331,632
The economic performance of the organization over the six-year period demonstrates a transition from value destruction to significant value creation, characterized by substantial growth in operating profits and a steadily expanding capital base.
- Net Operating Profit After Taxes (NOPAT)
- A general upward trajectory is observed in NOPAT, which grew from US$ 680,052 thousand in 2021 to a peak of US$ 1,928,398 thousand in 2025. While a slight contraction occurred in 2023, the subsequent surge in 2024 and 2025 indicates strong operational scaling. However, a decline to US$ 1,600,923 thousand is noted in 2026, suggesting a cooling of operational profitability.
- Invested Capital and Cost of Capital
- Invested capital has exhibited consistent annual growth, increasing from US$ 3,672,427 thousand in 2021 to US$ 6,957,618 thousand by 2026. This represents a continuous expansion of the resource base used to generate returns. Concurrently, the cost of capital remained remarkably stable, fluctuating narrowly around 19% for the majority of the period before decreasing to 18.24% in 2026.
- Economic Profit Trends
- Economic profit transitioned from a negative value of US$ -31,067 thousand in 2021—indicating that the company was not earning enough to cover its cost of capital—to positive territory in 2022. Although a sharp dip to US$ 62,509 thousand occurred in 2023, the metric peaked at US$ 686,432 thousand in 2025. The decline to US$ 331,632 thousand in 2026 aligns with the reduction in NOPAT, despite the lower cost of capital and continued increase in invested capital.
The overall data indicates that the company successfully shifted its financial position to generate returns in excess of its cost of capital for five consecutive years. The peak in economic profit in 2025 suggests optimal alignment between operational efficiency and capital deployment, whereas the 2026 results indicate a reduction in the efficiency of value creation relative to the growing capital base.
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Net Operating Profit after Taxes (NOPAT)
lululemon athletica inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-02-01), 10-K (reporting date: 2025-02-02), 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).
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 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,798,441 × 4.40% = 79,131
5 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 79,131 × 21.00% = 16,618
6 Addition of after taxes interest expense to net income.
Net operating profit after taxes (NOPAT) and net income both demonstrate a general upward trajectory over the observed period, though with some fluctuations. NOPAT consistently exceeds net income throughout the timeframe, indicating the presence of non-operating expenses or other factors reducing reported net income.
- Overall Trend
- From January 31, 2021, to February 1, 2026, NOPAT generally increased. A significant rise is observed between 2022 and 2024, followed by a slight decrease in the most recent year presented. The period between 2021 and 2024 shows a robust growth pattern.
- Year-over-Year Changes
- NOPAT increased from US$680,052 thousand in 2021 to US$1,040,291 thousand in 2022, representing a substantial year-over-year growth. A moderate decrease occurred between 2022 and 2023, with NOPAT reaching US$933,695 thousand. However, 2024 saw a significant rebound, with NOPAT climbing to US$1,622,788 thousand. The growth slowed in 2025, reaching US$1,928,398 thousand, and then decreased slightly to US$1,600,923 thousand in 2026.
- Relationship to Net Income
- The difference between NOPAT and net income remains positive across all reported years. This suggests that non-operating items, such as interest expense or one-time gains/losses, are impacting the bottom line. The magnitude of this difference varies year to year, but consistently, NOPAT provides a higher measure of operating profitability than net income.
- Recent Performance
- The most recent two years (2025 and 2026) show a deceleration in NOPAT growth. While NOPAT increased from 2024 to 2025, it decreased from 2025 to 2026. This shift warrants further investigation to determine the underlying causes, such as changes in operating costs, revenue growth, or tax rates.
In summary, the organization demonstrates a generally positive trend in NOPAT over the analyzed period, with a notable acceleration in growth between 2021 and 2024. However, the recent slowdown in growth suggests a potential shift in the company’s operating performance that merits further scrutiny.
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Cash Operating Taxes
lululemon athletica inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2026-02-01), 10-K (reporting date: 2025-02-02), 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).
The reported income tax expense and cash operating taxes demonstrate a consistent upward trend from 2021 through 2024, followed by a slight shift in 2025 and 2026. Both metrics increased substantially over the observed period, indicating a growing tax burden alongside overall financial performance.
- Income Tax Expense Trend
- Income tax expense increased from US$230.437 million in 2021 to US$625.545 million in 2024, representing a significant rise. This growth slowed in 2025, with expense reaching US$761.461 million, before decreasing to US$659.784 million in 2026. The 2026 value, while lower than 2025, remains considerably higher than the 2021 figure.
- Cash Operating Taxes Trend
- Cash operating taxes mirrored the trend of income tax expense, increasing from US$202.048 million in 2021 to US$664.080 million in 2024. Similar to income tax expense, the rate of increase moderated in 2025, reaching US$717.311 million, and then increased slightly to US$725.456 million in 2026. The 2026 value is substantially higher than the 2021 amount.
- Relationship Between Metrics
- Cash operating taxes consistently remained below income tax expense across all reported years. The difference between the two metrics varied annually, but generally remained within a range of approximately US$20 million to US$50 million. This suggests potential timing differences in the recognition of tax liabilities and actual cash payments.
The observed increases in both income tax expense and cash operating taxes likely correlate with increased profitability. The slight decrease in income tax expense in 2026, while cash operating taxes continued to rise, warrants further investigation to determine the underlying cause, potentially related to deferred tax asset adjustments or changes in tax regulations.
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Invested Capital
lululemon athletica inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2026-02-01), 10-K (reporting date: 2025-02-02), 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).
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.
Over the observed six-year period, a consistent upward trend is evident in all three financial items presented. Total reported debt & leases, stockholders’ equity, and invested capital all demonstrate growth from January 31, 2021, through February 1, 2026. The rate of increase, however, varies across these items.
- Total Reported Debt & Leases
- Total reported debt & leases exhibits a steady increase throughout the period, beginning at US$798,681 thousand in 2021 and reaching US$1,798,441 thousand in 2026. The growth appears to accelerate from 2023 onwards, with larger absolute increases year-over-year compared to the earlier period. This suggests a potential shift towards increased reliance on debt financing or significant capital lease obligations.
- Stockholders’ Equity
- Stockholders’ equity also shows consistent growth, starting at US$2,558,566 thousand in 2021 and culminating in US$4,961,840 thousand in 2026. While the growth is consistent, the rate of increase is notably higher between 2022 and 2024, indicating substantial increases in retained earnings or equity issuances during those years. The rate of growth moderates in the final two years.
- Invested Capital
- Invested capital, representing the sum of debt and equity, demonstrates the most substantial growth in absolute terms. It increases from US$3,672,427 thousand in 2021 to US$6,957,618 thousand in 2026. The growth trajectory mirrors the combined trends of debt and equity, with a pronounced acceleration beginning in 2023. This indicates a significant expansion of the company’s asset base funded by both debt and equity.
The consistent growth in invested capital, coupled with the accelerating trend in debt, warrants further investigation into the company’s capital allocation strategy and its ability to generate returns commensurate with the increased capital employed. The relative proportions of debt and equity within invested capital also merit attention, as changes in this mix can impact financial risk and cost of capital.
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Cost of Capital
lululemon athletica inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 18,411,394) | 18,411,394) | ÷ | 20,209,835) | = | 0.91 | 0.91 | × | 19.69% | = | 17.93% | ||
| Operating lease liability3 | 1,798,441) | 1,798,441) | ÷ | 20,209,835) | = | 0.09 | 0.09 | × | 4.40% × (1 – 21.00%) | = | 0.31% | ||
| Total: | 20,209,835) | 1.00 | 18.24% | ||||||||||
Based on: 10-K (reporting date: 2026-02-01).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 41,201,220) | 41,201,220) | ÷ | 42,777,011) | = | 0.96 | 0.96 | × | 19.69% | = | 18.96% | ||
| Operating lease liability3 | 1,575,791) | 1,575,791) | ÷ | 42,777,011) | = | 0.04 | 0.04 | × | 4.30% × (1 – 21.00%) | = | 0.13% | ||
| Total: | 42,777,011) | 1.00 | 19.09% | ||||||||||
Based on: 10-K (reporting date: 2025-02-02).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 60,337,715) | 60,337,715) | ÷ | 61,740,997) | = | 0.98 | 0.98 | × | 19.69% | = | 19.24% | ||
| 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 | 19.31% | ||||||||||
Based on: 10-K (reporting date: 2024-01-28).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 40,732,106) | 40,732,106) | ÷ | 41,802,440) | = | 0.97 | 0.97 | × | 19.69% | = | 19.18% | ||
| 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 | 19.24% | ||||||||||
Based on: 10-K (reporting date: 2023-01-29).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 43,998,362) | 43,998,362) | ÷ | 44,879,414) | = | 0.98 | 0.98 | × | 19.69% | = | 19.30% | ||
| 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 | 19.34% | ||||||||||
Based on: 10-K (reporting date: 2022-01-30).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 41,338,271) | 41,338,271) | ÷ | 42,136,952) | = | 0.98 | 0.98 | × | 19.69% | = | 19.31% | ||
| 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 | 19.36% | ||||||||||
Based on: 10-K (reporting date: 2021-01-31).
Economic Spread Ratio
lululemon athletica inc., economic spread ratio calculation, comparison to benchmarks
| Feb 1, 2026 | Feb 2, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 331,632) | 686,432) | 468,336) | 62,509) | 284,178) | (31,067) | |
| Invested capital2 | 6,957,618) | 6,507,336) | 5,978,501) | 4,526,979) | 3,909,051) | 3,672,427) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 4.77% | 10.55% | 7.83% | 1.38% | 7.27% | -0.85% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Nike Inc. | -2.10% | -2.40% | 6.31% | 7.20% | 9.23% | 9.20% | |
Based on: 10-K (reporting date: 2026-02-01), 10-K (reporting date: 2025-02-02), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 331,632 ÷ 6,957,618 = 4.77%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2026 reveals a period of significant expansion in capital investment accompanied by fluctuating levels of value creation. While the organization successfully transitioned from value destruction to value creation after 2021, the efficiency of the invested capital has exhibited notable volatility, peaking in 2025 before experiencing a downturn.
- Economic Profit Analysis
- Economic profit transitioned from a deficit of US$ 31.07 million in January 2021 to a peak of US$ 686.43 million by February 2025. A significant contraction occurred in January 2023, where profit fell to US$ 62.51 million before rebounding sharply. A subsequent decline to US$ 331.63 million is observed by February 2026, indicating a reduction in the surplus generated above the cost of capital.
- Invested Capital Expansion
- A consistent and linear increase in invested capital is observed throughout the analyzed period. Starting at US$ 3.67 billion in January 2021, the capital base expanded steadily to US$ 6.96 billion by February 2026. This upward trend demonstrates a sustained commitment to scaling operations and increasing the asset base over the six-year span.
- Economic Spread Ratio Performance
- The economic spread ratio reflects the volatility of economic profit, moving from -0.85% in 2021 to a high of 10.55% in February 2025. The compression to 1.38% in January 2023 highlights a period where the return on capital only marginally exceeded the cost of capital. The final decline to 4.77% in February 2026, occurring in tandem with the highest level of invested capital, suggests a diminishing marginal return on the most recent capital deployments.
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Economic Profit Margin
lululemon athletica inc., economic profit margin calculation, comparison to benchmarks
| Feb 1, 2026 | Feb 2, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 331,632) | 686,432) | 468,336) | 62,509) | 284,178) | (31,067) | |
| Net revenue | 11,102,600) | 10,588,126) | 9,619,278) | 8,110,518) | 6,256,617) | 4,401,879) | |
| Add: Increase (decrease) in unredeemed gift card liability | 8,280) | 1,873) | 55,001) | 43,283) | 52,347) | 35,435) | |
| Adjusted net revenue | 11,110,880) | 10,589,999) | 9,674,279) | 8,153,801) | 6,308,964) | 4,437,314) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 2.98% | 6.48% | 4.84% | 0.77% | 4.50% | -0.70% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Nike Inc. | -0.98% | -1.03% | 2.71% | 2.86% | 4.17% | 4.32% | |
Based on: 10-K (reporting date: 2026-02-01), 10-K (reporting date: 2025-02-02), 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).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × 331,632 ÷ 11,110,880 = 2.98%
3 Click competitor name to see calculations.
The financial performance over the analyzed period is characterized by consistent top-line growth contrasted with significant volatility in economic value creation. While adjusted net revenue followed a linear upward trajectory, the economic profit and the resulting margin experienced several fluctuations, indicating varying levels of efficiency in generating returns above the cost of capital.
- Adjusted Net Revenue Trends
- A steady and uninterrupted increase in adjusted net revenue is observed from January 31, 2021, through February 1, 2026. Revenue expanded from approximately 4.44 billion US dollars to 11.11 billion US dollars, representing a sustained growth phase in market penetration and sales volume.
- Economic Profit Volatility
- Economic profit demonstrated a non-linear progression. An initial period of value destruction was recorded in January 2021 with a negative economic profit of 31.07 million US dollars. This was followed by a recovery in 2022, a sharp contraction in 2023 to 62.51 million US dollars, and a subsequent surge to a peak of 686.43 million US dollars by February 2025. A subsequent decline to 331.63 million US dollars occurred by February 2026, suggesting that value creation did not scale proportionally with revenue growth.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of the absolute economic profit. The margin shifted from a negative 0.70% in 2021 to a peak of 6.48% in February 2025. A notable dip to 0.77% in January 2023 indicates a period where the spread between return on invested capital and the cost of capital narrowed significantly despite increasing revenues. The final recorded margin of 2.98% in February 2026 indicates a compression in value creation efficiency relative to the previous year.
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