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 – 18.11% × 6,957,618 = 340,673
The financial trajectory from 2021 to 2026 indicates a transition from value destruction to significant value creation, characterized by a volatile but generally upward trend in economic profit. While the organization struggled to cover its cost of capital in 2021, it successfully shifted to generating positive economic profit for the subsequent five years, peaking in 2025 before experiencing a contraction in 2026.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited substantial growth over the majority of the period, rising from 680,052 thousand dollars in 2021 to a peak of 1,928,398 thousand dollars in 2025. A temporary decline was observed in 2023, followed by a sharp recovery in 2024. However, a downward trend emerged in 2026, with NOPAT falling to 1,600,923 thousand dollars, suggesting a decrease in operating efficiency or market headwinds toward the end of the period.
- Invested Capital
- Invested capital demonstrated consistent and uninterrupted growth throughout the analyzed timeframe. The capital base expanded from 3,672,427 thousand dollars in 2021 to 6,957,618 thousand dollars by 2026. A notable acceleration in capital investment occurred between 2023 and 2024, where invested capital increased by approximately 1.45 billion dollars, indicating aggressive expansion or strategic asset acquisition.
- Cost of Capital
- The cost of capital remained remarkably stable, maintaining a narrow range between 19.22% and 18.11%. A gradual downward trend is observable, with the lowest rate occurring in 2026. This stability suggests a consistent risk profile and a steady weighted average cost of capital despite the significant increase in total invested capital.
- Economic Profit Trends
- Economic profit transitioned from a negative value of -25,928 thousand dollars in 2021 to a peak of 695,372 thousand dollars in 2025. The volatility of this metric is closely linked to NOPAT fluctuations; for instance, the dip in NOPAT in 2023 resulted in a corresponding drop in economic profit to 68,801 thousand dollars. By 2026, economic profit declined to 340,673 thousand dollars, driven by the combination of falling NOPAT and a continuing increase in the capital base, which heightened the total capital charge.
The overall analysis reveals that while the organization has significantly scaled its operations and capital base, the ability to generate economic profit is highly sensitive to operating income. The decline in 2026 suggests that the incremental returns on new invested capital are diminishing, as the growth in the capital charge began to outpace the growth in NOPAT.
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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 | × | 19.54% | = | 17.80% | ||
| 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 | 18.11% | ||||||||||
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 | × | 19.54% | = | 18.82% | ||
| 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 | 18.95% | ||||||||||
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 | × | 19.54% | = | 19.10% | ||
| 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 | 19.17% | ||||||||||
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 | × | 19.54% | = | 19.04% | ||
| 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 | 19.11% | ||||||||||
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 | × | 19.54% | = | 19.16% | ||
| 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 | 19.20% | ||||||||||
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 | × | 19.54% | = | 19.17% | ||
| 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 | 19.22% | ||||||||||
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 | 340,673) | 695,372) | 476,670) | 68,801) | 289,645) | (25,928) | |
| 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 | 4.90% | 10.69% | 7.97% | 1.52% | 7.41% | -0.71% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Nike Inc. | -2.04% | -2.33% | 6.38% | 7.28% | 9.31% | 9.27% | |
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 × 340,673 ÷ 6,957,618 = 4.90%
4 Click competitor name to see calculations.
The analysis of economic value generation reveals a period of significant volatility followed by a peak in capital efficiency, ultimately concluding with a contraction in the most recent period. While the organization transitioned from value destruction to consistent value creation after 2021, the efficiency of the invested capital has fluctuated considerably.
- Economic Profit Trends
- Economic profit exhibited a volatile trajectory, starting at a deficit of US$ 25.9 million in 2021. A sharp recovery occurred in 2022, reaching US$ 289.6 million, before experiencing a notable contraction to US$ 68.8 million in 2023. Subsequent growth led to a peak of US$ 695.4 million in 2025, followed by a decline to US$ 340.7 million in 2026.
- Invested Capital Growth
- A consistent upward trend in invested capital is observed throughout the analyzed period. Capital increased steadily from US$ 3.67 billion in 2021 to US$ 6.96 billion by 2026. This continuous expansion indicates a sustained commitment to scaling the operational base and increasing the asset foundation.
- Economic Spread Ratio Dynamics
- The economic spread ratio, reflecting the return over the cost of capital, mirrored the fluctuations seen in economic profit. The ratio moved from a negative 0.71% in 2021 to a peak of 10.69% in 2025, signaling a period of high capital efficiency where returns significantly exceeded the cost of capital. However, by 2026, the ratio compressed to 4.90%, suggesting a decrease in the marginal productivity of the increased invested capital.
Overall, the relationship between the growing capital base and the fluctuating economic profit indicates that while the organization is successfully creating value, the rate of value creation peaked in 2025. The decline in both the economic profit and the spread ratio in 2026, despite the continued increase in invested capital, suggests a diminishing return on new investments during the final period.
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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 | 340,673) | 695,372) | 476,670) | 68,801) | 289,645) | (25,928) | |
| 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 | 3.07% | 6.57% | 4.93% | 0.84% | 4.59% | -0.58% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Nike Inc. | -0.95% | -1.00% | 2.74% | 2.89% | 4.20% | 4.36% | |
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 × 340,673 ÷ 11,110,880 = 3.07%
3 Click competitor name to see calculations.
The financial performance indicates a period of consistent revenue expansion contrasted by significant volatility in economic value creation. While adjusted net revenue followed a steady upward trajectory, the capacity to generate economic profit above the cost of capital fluctuated throughout the analyzed period.
- Revenue Expansion
- Adjusted net revenue grew consistently from 4.44 billion US dollars in January 2021 to 11.11 billion US dollars by February 2026. This represents a continuous growth pattern, indicating a scaling of operations and increasing market presence over the six-year span.
- Economic Profit Volatility
- Economic profit exhibited irregular movements, beginning with a deficit of 25.93 million US dollars in 2021. Although a recovery occurred in 2022, a sharp contraction was observed in 2023, with profit falling to 68.80 million US dollars. A subsequent strong rebound led to a peak of 695.37 million US dollars in February 2025, followed by a decrease to 340.67 million US dollars in 2026.
- Economic Profit Margin Trends
- The economic profit margin mirrored the volatility of absolute economic profit, moving from -0.58% in 2021 to a high of 6.57% in 2025. A significant margin compression occurred in 2023, where the ratio dropped to 0.84% despite the overall growth in revenue. By February 2026, the margin declined further to 3.07%, suggesting that the most recent increase in revenue did not result in a proportional increase in economic value added.
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