lululemon athletica inc. (NASDAQ:LULU)

The analysis of the financial ratios over the observed quarters reveals several notable trends and fluctuations in operational efficiency and liquidity management.

Inventory Turnover

The inventory turnover ratio exhibited variability throughout the periods, with a general decline observed from mid-2020 through late 2022, dropping from approximately 2.74 to a low near 1.88. This suggests a slower rate of inventory movement during that time. However, from early 2023 onward, the ratio improved, reaching values above 3.0 in early 2024, indicating enhanced inventory management and quicker turnover.

Receivables Turnover

Receivables turnover showed significant fluctuation, with values ranging from a high near 98 in mid-2021 to lows around 61 in early 2023. Despite these swings, the ratio generally maintained within the 70-85 range, suggesting relatively consistent effectiveness in collecting receivables, although occasional dips point to periods of slower collection.

Payables Turnover

The payables turnover ratio decreased markedly from about 21.7 in early 2020 to values around 10-15 in subsequent quarters, indicating longer payment periods to suppliers over time. Occasional spikes up to nearly 21.0 were noted in early 2023, which may reflect temporary shifts in payment strategy or supplier terms.

Working Capital Turnover

Working capital turnover showed an upward trend from early 2020's 3.62 to peak levels above 6.0 in mid-2022, reflecting improved efficiency in using working capital to generate sales. Post-2022, the ratio slightly declined but remained above 4.5, demonstrating sustained operational efficiency.

Average Inventory Processing Period

The average number of days required to process inventory increased from 133 days in early 2020 to a peak near 195 days in late 2022, signaling slower inventory movement during this phase. Subsequently, this period shortened significantly, reaching around 120 days by early 2024, underscoring improvements in inventory turnover speed.

Average Receivable Collection Period

The receivable collection period remained relatively stable, fluctuating between 4 and 6 days, without indicating substantial changes in credit policy or collection efficiency.

Operating Cycle

The operating cycle mirrored inventory processing trends, increasing from around 138 days to a high near 200 days by late 2022, then decreasing to about 125 days by early 2024. These shifts highlight variations in total time to convert inventory and receivables into cash.

Average Payables Payment Period

The payment period to suppliers lengthened from approximately 17 days in early 2020 to over 30 days through much of 2021 and 2022, signaling an extended credit period from suppliers. A notable decline to around 17 days occurred briefly in early 2023 before stabilizing near 25-32 days in later periods.

Cash Conversion Cycle

The cash conversion cycle exhibited variability consistent with the other timing ratios, increasing from about 121 days in early 2020 to a peak near 166 days by late 2022, followed by a reduction to approximately 93 days in early 2024. The cycle lengthening indicated more cash tied up in operations, while the subsequent improvement points to better cash flow management.

Overall, the data suggest initial challenges in inventory and cash management peaking around late 2022, followed by a period of marked improvement through early 2024. While receivables management remained relatively steady, the company adjusted supplier payment terms and improved inventory turnover and cash conversion cycles, enhancing operational efficiency and liquidity positions in the most recent periods.

The analysis of the quarterly financial data reveals several key trends regarding cost of goods sold, inventories, and inventory turnover over the observed periods.

Cost of Goods Sold (COGS)

The cost of goods sold displays an overall increasing trend from the beginning to the end of the observed timeline. Initially, COGS was approximately 318 million USD but has escalated to values exceeding 1 billion USD in the later quarters. Notable spikes occur around the early months of 2023 and 2025, indicating periods of higher production or procurement costs. Despite some fluctuations, the general upward movement suggests growth in sales volume or increased costs of raw materials and production.

Inventories

Inventories exhibit a rising trajectory over the analyzed timeframe. Starting near 626 million USD, inventory levels more than doubled at several points, surpassing 1.7 billion USD towards the most recent quarters. The growth is somewhat consistent, with minor decreases or plateaus in certain quarters, such as early 2021 and early 2024. This increase may reflect strategic stockpiling to meet anticipated demand, expansion of product lines, or slower inventory turnover in some periods.

Inventory Turnover

Inventory turnover ratios indicate the frequency with which inventory is sold and replaced, with values fluctuating between approximately 1.88 and 3.04 over the quarters. There are discernible dips in turnover around late 2021 and mid-2022, reaching the lowest near 1.88, signaling slower movement of inventory or buildup. Conversely, higher turnover ratios above 3.0 appear in early 2021 and early 2024, suggesting more efficient inventory management or increased sales velocity during these periods. The variability in turnover reflects changing dynamics in inventory management efficiency relative to sales and production cycles.

In summary, the data points to sustained growth in both cost of goods sold and inventory levels, indicative of business expansion or increased demand expectations. However, the fluctuating inventory turnover highlights periods of both improved and challenged inventory management efficiency, which could have implications for working capital requirements and operational effectiveness.

Net Revenue Trend

The net revenue shows a generally increasing trend over the examined periods, marked by considerable fluctuations likely influenced by seasonal or operational factors. Starting at approximately $652 million, the revenue rose sharply at multiple intervals, notably reaching peaks above $3.2 billion by early 2024. Periodic dips are observable, suggesting cyclicality or market changes, but the overall trajectory is upward, indicating growth in sales volume or pricing power.

Accounts Receivable

The accounts receivable balance fluctuates throughout the periods but shows an overall moderate upward trend from around $48.7 million to roughly $139 million by mid-2025. The increases in receivables generally correspond with higher revenue periods, reflecting expanded credit sales or extended collection periods. Some variability signifies changing credit policies or payment behaviors.

Receivables Turnover Ratio

The receivables turnover ratio exhibits notable oscillations, moving between the low 60s up to near 100 in some quarters. Higher turnover ratios indicate efficient collection practices and lower outstanding receivables relative to sales, while lower ratios suggest slower collections. The ratio does not show a definitive long-term trend but varies in alignment with receivables and revenue fluctuations, potentially reflecting dynamic credit management strategies or market conditions.

Correlation Insights

An inverse relationship can be inferred between accounts receivable and receivables turnover in several periods: higher receivables balances tend to coincide with lower turnover ratios and vice versa. Moreover, rapid revenue growth phases often see a corresponding increase in accounts receivable, which might temporarily reduce turnover efficiency until collections catch up with sales.

Summary

The data reveals a company experiencing significant sales growth accompanied by rising accounts receivable, with variability in the efficiency of receivables collection. These trends suggest expanding business operations with some pressure on working capital management. Monitoring receivables turnover ratios alongside receivable balances will be essential to maintaining healthy cash flows amid ongoing revenue increases.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits a fluctuating upward trend over the observed periods. Starting at approximately $317.6 million, the figure generally increases with some variability, reaching peaks beyond $1.4 billion in early 2025. Notable surges occur around January 2021, January 2023, and February 2025, suggesting periods of heightened production or sales activity. Intermittent declines, for example post January 2022 and July 2022, appear temporary within the overall rising trajectory.

Accounts Payable

Accounts payable also shows an increasing pattern over time, rising from about $78.9 million to above $373 million by August 2025. Though there are some decreases after peaks—particularly following January 2023 and early 2025 periods—the general trend is upward. This growth aligns broadly with the rise in cost of goods sold, indicating an expanding scale of operations or supplier credit utilization.

Payables Turnover Ratio

The payables turnover ratio displays considerable variability, ranging from lows near 9.14 up to highs exceeding 21.7. Initially, the ratio experiences a decline from above 21 down to around 9 by early 2022, signaling a slower rate of payments relative to purchases. Subsequent quarters show intermittent recovery with spike values, such as nearly 21 in early 2023 and peaks above 15 in select later periods. The fluctuations suggest changes in payment policies, supplier terms, or working capital management strategies over time.

Overall Analysis

The data reflects an expanding business scale characterized by increasing cost of goods sold and accounts payable figures. The rising accounts payable alongside higher costs imply greater purchasing volumes or extended supplier credit. Variability in the payables turnover ratio indicates occasional shifts in the timing or efficiency of payments, which could be influenced by negotiated terms or cash flow considerations. The combination of these patterns suggests active management of payables in response to growth and changing operational needs.

Working Capital

The working capital shows fluctuations over the analyzed periods, beginning at a value above one million US dollars and experiencing a decrease in the second quarter of 2020. It then gradually increased, reaching peaks in early 2023 and early 2024, with the highest value recorded in January 2024. Subsequent periods indicate a decline, although values remain relatively high compared to the early periods. This suggests phases of operational investment and liquidity management adjustments.

Net Revenue

Net revenue demonstrates a generally upward trend with significant volatility across quarters. Starting from approximately 650 million US dollars, the revenue shows rapid growth with some downturns interrupting the pattern. Peak revenue is observed in early 2024 and early 2025, surpassing three billion US dollars. The fluctuations indicate variability in sales performance or market demand, but the overall growth trajectory is positive.

Working Capital Turnover

The working capital turnover ratio reveals an inverse relation to working capital levels, with higher ratios generally occurring when working capital is lower and vice versa. It starts at 3.62 and experiences a rise towards mid-2022, peaking at 6.06. Later periods show oscillations mostly between 4.5 and 5.5, except for a notable dip in early 2024. This ratio indicates the efficiency in utilizing working capital to generate revenue, reflecting periods of improved operational efficiency interspersed with moderate declines.

Overall Analysis

The data presents a company experiencing growth in net revenue with corresponding strategic changes in working capital management. While working capital expands to support increased business scale, turnover ratios fluctuate but remain relatively strong, indicating effective use of resources amidst growth phases. The periods of revenue peaks followed by working capital adjustment suggest responsive financial management aligned with market conditions and business cycles.

The inventory turnover ratio demonstrates fluctuations over the observed periods, indicating variations in inventory management efficiency. Initially, the ratio shows a declining trend from 2.74 to a low of 1.88 but recovers to higher levels around 3.03 before tapering off slightly again. This suggests periods of both slower and faster inventory turnover, reflecting changing business conditions or inventory strategies.

Correspondingly, the average inventory processing period, measured in days, exhibits an inverse pattern relative to the turnover ratio. Periods with lower turnover ratios coincide with higher inventory processing days, peaking at 195 days, implying slower inventory movement. Conversely, when turnover ratios improve, the processing days decrease, reaching minimum values around 120 days. This inverse relationship confirms that as inventory turns over more rapidly, the time inventory remains in stock shortens.

The fluctuations appear cyclical and suggest seasonality or operational adjustments as contributing factors. The initial period has moderate turnover with intermediate processing days, followed by a downturn in turnover and extended inventory holding times. Subsequently, a recovery phase is evident with improved turnover and reduced days. Toward the latest periods, the inventory turnover stabilizes around values slightly above 2.5, with processing times near 140 days, indicating a more balanced inventory management approach.

Overall, the data reflects ongoing efforts to optimize inventory levels and turnover rates. The changing values point to dynamic inventory management responding to demand variability, supply chain factors, or strategic choices with the aim of maintaining efficient stock levels while minimizing holding times.

Inventory Turnover Ratio Trends

Variable with initial decline, followed by recovery and slight fluctuation around mid-levels.

Average Inventory Processing Period Trends

Inversely correlated with turnover; ranges from approximately 120 days to nearly 200 days.

Relationship Between Metrics

Higher turnover corresponds with fewer days in inventory, confirming operational efficiency changes.

Implications

The patterns suggest responsiveness to market and operational conditions, reflecting efforts to balance inventory investment and turnover speed.

The quarterly financial data reveals notable fluctuations and patterns in receivables management over the analyzed periods.

Receivables Turnover Ratio

The receivables turnover ratio exhibits volatility, with values ranging approximately from a low of 61.02 to a high of 98.38. Initially, the ratio hovered around the high seventies and sixties, indicating moderate turnover efficiency. A significant peak occurs around August 2021 reaching 98.38, suggesting enhanced effectiveness in collecting receivables during that period.

Following this peak, the ratio declines and fluctuates, with some troughs evident, such as in January 2023 at 61.02, indicating slower collection or potentially increasing receivables. Afterwards, the ratio stabilizes around the high seventies to mid-eighties, showing a return to moderate turnover levels. Recent quarters depict a moderate improvement with values mostly in the 70s and 80s, implying somewhat steady management of receivables.

Average Receivable Collection Period (in days)

The average collection period remains relatively stable throughout the timeline, predominantly around 4 to 5 days, with a slight variation up to 6 days in January 2023. This consistency suggests a relatively steady credit policy and collection efficiency, despite fluctuations in the turnover ratio.

Slight extensions to 5 or 6 days in some quarters correlate with corresponding dips in receivables turnover ratio, reflecting periodic slower collections. Conversely, periods with a 4-day collection period often align with higher turnover ratios, indicative of more effective receivables management.

Overall Insights

The analysis indicates that while receivables turnover ratio has experienced some variability, the company has generally maintained a short average collection period, typically around 4 to 5 days. These trends point to effective credit control and timely collections despite market or operational fluctuations.

The peak in turnover during mid-2021 suggests a temporary enhancement in receivables efficiency, possibly due to operational improvements or market conditions favoring quicker payments. Subsequent declines and recoveries may reflect cyclical behavior or shifts in credit policies.

Consistent management of the collection period limits cash flow risk, supporting liquidity. Monitoring these metrics will remain crucial to ensure sustained effectiveness in receivables management.

The financial data reveals notable trends in the company's inventory management, receivables collection, and overall operating cycle over the observed periods.

Average Inventory Processing Period

The average inventory processing period exhibits significant variability across the reported quarters. Beginning at 133 days, it increased to a peak of 195 days in late 2022, indicating a lengthening of the inventory turnover process. Subsequently, the period shortened notably around early 2024, reaching lows near 120 days, before rising again moderately towards the latter periods, ending at 141 days. This fluctuation suggests intermittent challenges and improvements in inventory management efficiency, potentially reflecting changes in demand, supply chain conditions, or stock control policies.

Average Receivable Collection Period

The average receivable collection period remains relatively stable throughout the timeline, fluctuating modestly between 4 and 6 days. Such stability indicates consistent credit and collection practices, with no significant delays or accelerations in customer payments. The maintenance of a short receivable period reflects positively on the company's ability to manage credit risk and maintain liquidity.

Operating Cycle

The operating cycle trend closely mirrors that of the inventory processing period, ranging from a low of 125 days to a high of 200 days. This cycle increased steadily during the mid to late 2022 periods, indicating an elongation in the time from inventory acquisition to cash collection. The cycle duration then decreased to around 125 days in early 2024, followed by an uptick towards the end of the dataset. These changes in the operating cycle largely result from the fluctuations in inventory period, as the receivable period remained stable. The lengthening in the operating cycle could have implications on working capital requirements and overall operational efficiency.

Overall, while receivables management appears consistent and efficient, inventory processing exhibits greater volatility, heavily influencing the company's operating cycle. The periods of extension in inventory processing and operating cycle suggest phases where inventory turnover slowed, potentially signaling inventory buildup or supply chain disruptions, whereas the reductions indicate improved operational pacing and inventory management effectiveness.

The analysis of the payables turnover ratio and average payables payment period over the observed quarters reveals notable fluctuations and trends in the company's payment behavior to its suppliers.

Payables Turnover Ratio

The payables turnover ratio exhibits significant variability throughout the periods. It started at a high level of 21.7 in May 2020, then declined sharply to 14.08 and continued to decrease reaching a low near 9.14 by early 2022. This indicates a slowing rate in payables turnover initially, suggesting longer payment terms or slower payments to suppliers.

Following this trough, the ratio experienced a considerable rebound in January 2023 to 20.95, indicative of a faster payables cycle during that quarter. However, after this peak, the ratio fluctuated between approximately 12 and 16, showing moderate volatility but no clear improving or deteriorating trend through to August 2025.

Average Payables Payment Period

The average payment period trends show an inverse pattern relative to the payables turnover ratio, consistent with financial theory. The days outstanding rose from 17 days in May 2020 to a peak around 40 days by early 2022, indicating the company was taking longer to pay its suppliers during this timeframe.

Subsequently, there was a sharp decrease to 17 days in January 2023, aligning with the peak in the turnover ratio seen concurrently, reflecting accelerated payments. Thereafter, the payment period stabilized mostly between 23 and 34 days with some periodic fluctuations, implying a return to more moderate payment practices over the latter periods.

Overall Insights

The initial decline in payables turnover and simultaneous increase in payment days from 2020 through early 2022 suggests a stretch in the payment cycle, which may have been a strategic response to liquidity considerations or external market conditions.

The quick reversal around early 2023 to faster payments could reflect improved liquidity, changes in supplier negotiations, or operational shifts prioritizing quicker settlements.

From 2023 onwards, the company's payment behavior shows moderate oscillations without a definitive directional trend, indicating perhaps a more balanced or stabilized approach to managing payables.

The financial metrics reveal several notable trends in the company's operational efficiency and working capital management over the observed periods.

Average Inventory Processing Period

This metric exhibits considerable variability, ranging from a low of 120 days to a high of 195 days. Initially, the inventory processing period increased steadily from 133 days to 156 days within the first three quarters, followed by fluctuating periods including a peak at 195 days in late 2022. More recently, there is a reduction towards approximately 120 days around early 2024, followed by slight increases reaching 141 days by mid-2025. This pattern suggests occasional inventory management challenges leading to longer holding periods, interspersed with phases of improved inventory turnover.

Average Receivable Collection Period

This period has remained relatively stable and low throughout the entire timeframe, consistently around 4 to 6 days. Minor fluctuations occur but no strong upward or downward trend is evident. The stable and short receivable collection period indicates effective credit management and strong cash inflow from customers.

Average Payables Payment Period

The payables payment period shows significant variation, ranging from 17 to 40 days. The earliest data points show an increase from 17 to 40 days, indicating that the company initially extended payment terms or delayed payments to suppliers. However, in the middle of the timeline, the period drops back to lower values around 17 days, then fluctuates between 23 and 34 days subsequently. These variations suggest a dynamic approach to managing payables, potentially balancing supplier relations and cash flow considerations.

Cash Conversion Cycle

The cash conversion cycle (CCC), summarizing the interaction of inventory, receivables, and payables, varies substantially between 93 and 166 days. Early in the period, the CCC remains around 95 to 129 days, with an increase reaching a peak of 166 days in late 2022, indicating a longer time to convert investments in inventory and receivables into cash. Following this peak, the CCC decreases sharply to 93 days in early 2024, indicating improved efficiency in cash flow management, before again rising moderately to around 115 days by mid-2025. The fluctuations in CCC closely reflect the changes in inventory and payables periods, given the stable receivables period.

In summary, the company demonstrates relatively consistent receivables management but faces notable volatility in inventory processing and payables payment periods. These fluctuations significantly affect the cash conversion cycle, suggesting periodic challenges in working capital optimization. The recent reductions in inventory period and CCC could indicate efforts to enhance operational efficiency and cash flow timing, though some reversion to higher cycle durations occurs subsequently. Continuous monitoring and refinement of inventory and payables management will be critical to maintaining efficient cash conversion and supporting the company’s liquidity position.