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 – 18.13% × 6,957,618 = 339,839
The financial trajectory indicates a transition from initial value destruction to a period of significant economic value creation, reaching a zenith in 2025 before experiencing a contraction in 2026.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated substantial growth between 2021 and 2025, rising from 680,052 thousand to 1,928,398 thousand. While a temporary dip was observed in 2023, the overall trend remained positive until 2026, when profit decreased to 1,600,923 thousand.
- Capital Investment and Cost of Capital
- A consistent expansion of the capital base is evident, with invested capital growing annually from 3,672,427 thousand in 2021 to 6,957,618 thousand in 2026. The cost of capital remained highly stable, oscillating around 19% for five years before a notable decrease to 18.13% in the final period.
- Economic Profit Performance
- Economic profit turned positive in 2022, following a negative result of -26,403 thousand in 2021. Value creation peaked in 2025 at 694,547 thousand. The subsequent decline to 339,839 thousand in 2026 reflects the impact of declining NOPAT occurring simultaneously with a continued increase in invested capital, which effectively expanded the total capital charge despite the reduction in the cost of capital percentage.
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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 | × | 19.56% | = | 17.82% | ||
| 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 | 18.13% | ||||||||||
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 | × | 19.56% | = | 18.84% | ||
| 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 | 18.96% | ||||||||||
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 | × | 19.56% | = | 19.11% | ||
| 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 | 19.18% | ||||||||||
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 | × | 19.56% | = | 19.06% | ||
| 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 | 19.12% | ||||||||||
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 | × | 19.56% | = | 19.17% | ||
| 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 | 19.22% | ||||||||||
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 | × | 19.56% | = | 19.19% | ||
| 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 | 19.24% | ||||||||||
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 | 339,839) | 694,547) | 475,901) | 68,221) | 289,140) | (26,403) | |
| 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 | 4.88% | 10.67% | 7.96% | 1.51% | 7.40% | -0.72% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Nike Inc. | — | -3.69% | 6.34% | 7.24% | 8.98% | 8.58% | |
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 × 339,839 ÷ 6,957,618 = 4.88%
4 Click competitor name to see calculations.
The trajectory of economic value creation demonstrates a recovery from initial value destruction to a period of significant value generation, though recent results indicate a decelerating trend. The relationship between the expanding capital base and the volatile economic profit highlights fluctuations in capital efficiency over the analyzed period.
- Invested Capital Expansion
- Invested capital shows a persistent and linear increase, growing from 3.67 billion USD in January 2021 to approximately 6.96 billion USD by February 2026. This represents a substantial and steady commitment of resources toward the growth of the operational base.
- Economic Spread Ratio Dynamics
- The economic spread ratio experienced significant volatility, starting at -0.72% in 2021 before climbing to a peak of 10.67% in February 2025. This trajectory indicates a phase where the return on invested capital significantly exceeded the cost of capital. However, a subsequent contraction to 4.88% in February 2026 suggests a decline in the marginal efficiency of the deployed capital.
- Economic Profit Analysis
- Economic profit shifted from a deficit of 26.4 million USD in 2021 to a zenith of 694.5 million USD in February 2025. The observed dip in 2023 to 68.2 million USD and the final decrease in 2026 to 339.8 million USD correlate with the fluctuations in the spread ratio, indicating that while positive value is still being created, the magnitude of this creation has diminished relative to the total invested capital.
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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 | 339,839) | 694,547) | 475,901) | 68,221) | 289,140) | (26,403) | |
| 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 | 3.06% | 6.56% | 4.92% | 0.84% | 4.58% | -0.60% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Nike Inc. | — | -1.58% | 2.73% | 2.88% | 4.06% | 4.05% | |
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 × 339,839 ÷ 11,110,880 = 3.06%
3 Click competitor name to see calculations.
The financial performance across the analyzed period is characterized by consistent revenue expansion coupled with significant volatility in economic value creation. While the top line demonstrated uninterrupted growth, the ability to generate economic profit above the cost of capital fluctuated, indicating varying levels of capital efficiency.
- Adjusted Net Revenue Trends
- A sustained upward trajectory is observed in adjusted net revenue, which grew from 4.44 billion USD in January 2021 to 11.11 billion USD by February 2026. This represents a steady increase in market scale and sales volume throughout the six-year period.
- Economic Profit Fluctuations
- Economic profit exhibited substantial volatility, beginning with a deficit of 26.4 million USD in 2021. After a recovery in 2022, a sharp contraction occurred in 2023, where profit fell to 68.2 million USD. A strong recovery followed, peaking at 694.5 million USD in 2025, before declining to 339.8 million USD in 2026.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of absolute economic profit. The margin transitioned from a negative 0.60% in 2021 to a peak of 6.56% in 2025. However, a notable compression is evident in the final period, with the margin dropping to 3.06% in 2026 despite the continued increase in adjusted net revenue. This divergence suggests that the cost of capital or operating expenses increased at a rate that outpaced value creation in the final year.
Overall, the data indicates that while the organization successfully scaled its operations, the efficiency of its value creation was inconsistent. The peak performance in 2025 was followed by a marked decrease in the economic profit margin, signaling a reduction in the surplus generated relative to the capital employed.
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