lululemon athletica inc. (NASDAQ:LULU)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, the company demonstrates efficient management of its receivables and payables, though fluctuations are present. Inventory management shows a more pronounced cyclical pattern, and working capital turnover indicates evolving efficiency in utilizing current assets and liabilities.

Inventory Turnover

Inventory turnover decreased from 2.93 to a low of 1.88 before recovering to 2.99. This suggests periods of slower inventory movement, potentially due to supply chain disruptions or shifts in product demand, followed by improvements in inventory management. The most recent values indicate a return towards levels seen in earlier periods, but with some volatility.

Receivables Turnover

Receivables turnover generally remained high, fluctuating between 77.74 and 98.38 for much of the period. A significant decrease to 61.02 was observed, followed by a partial recovery. More recently, a substantial drop to 44.24 is noted, followed by a rebound to 58.23, indicating potential changes in credit policies or collection efficiency. The subsequent increase to 88.11 suggests a correction, but the latest values show a decline again.

Payables Turnover

Payables turnover demonstrates an increasing trend overall, starting at 10.90 and peaking at 20.95. This suggests the company is increasingly utilizing its credit terms with suppliers. A subsequent decrease is observed, but values remain generally elevated compared to the beginning of the period. The most recent values show a slight decrease, but remain relatively high.

Working Capital Turnover

Working capital turnover increased from 3.86 to a high of 6.06, indicating improved efficiency in managing working capital. It then decreased to 4.86 before fluctuating between 4.56 and 5.65. The latest values suggest a slight decline, but remain within a reasonable range.

Average Inventory Processing Period

The average inventory processing period generally increased from 125 days to a peak of 195 days, mirroring the decline in inventory turnover. This indicates inventory is taking longer to sell. A subsequent decrease to 122 days is observed, followed by fluctuations, with the most recent value at 158 days. This suggests a lengthening of the time required to convert inventory into sales.

Average Receivable Collection Period

The average receivable collection period remained consistently low, generally between 4 and 5 days. A slight increase to 6 days and then 8 days was observed, corresponding with the decrease in receivables turnover, before returning to 6 days. This indicates efficient collection of receivables, though recent fluctuations warrant monitoring.

Operating Cycle & Cash Conversion Cycle

The operating cycle and cash conversion cycle generally moved in tandem, reflecting the combined impact of inventory processing and receivable collection periods. Both metrics increased initially, then decreased, and have shown recent fluctuations. The cash conversion cycle increased from 96 to 166 days before decreasing to 110 days, indicating changes in the efficiency of converting investments in inventory and other resources into cash. The latest values suggest a slight increase in both cycles.

Average Payables Payment Period

The average payables payment period decreased significantly from 33 days to 17 days, then increased to 32 days, and has fluctuated since. This suggests the company initially shortened its payment terms to suppliers, then extended them again, potentially to manage cash flow or take advantage of supplier credit terms. The most recent values indicate a slight increase.

Overall, the observed trends suggest a dynamic operating environment. While the company generally demonstrates efficient management of its short-term assets and liabilities, fluctuations in key ratios warrant continued monitoring to identify potential areas for improvement and to understand the underlying drivers of these changes.

The inventory turnover ratio exhibits fluctuations over the observed period, generally ranging between 1.88 and 3.04. An initial period of relative stability is followed by a period of decline, then a recovery, and finally, a renewed decline. The ratio appears sensitive to seasonal patterns and potentially, broader economic conditions impacting consumer demand.

Initial Stability & Decline (May 2021 – October 2022)

The inventory turnover ratio begins at 2.93 and remains relatively stable through August 2021, at 2.96. A downward trend is then observed, decreasing to a low of 1.88 by October 2022. This decline coincides with a significant increase in inventory levels, suggesting a potential slowdown in sales relative to inventory accumulation. Cost of goods sold also increased during this period, but not at the same rate as inventory.

Recovery (January 2023 – February 2025)

From January 2023, the ratio demonstrates a recovery, peaking at 3.03 in January 2024. This improvement is associated with a decrease in inventory and a substantial increase in cost of goods sold. The ratio remains above 2.50 through February 2025, indicating improved inventory management and sales velocity. However, the increase in cost of goods sold is more pronounced than the decrease in inventory, contributing to the higher turnover.

Recent Decline (May 2025 – February 2026)

Following February 2025, the inventory turnover ratio experiences another decline, reaching 2.31 by November 2025 before a slight recovery to 2.83 in February 2026. This recent decrease is accompanied by a continued increase in inventory levels, while cost of goods sold also increased significantly, suggesting a potential challenge in maintaining sales momentum relative to inventory investment. The most recent value indicates a potential stabilization, but further monitoring is warranted.

Inventory & Cost of Goods Sold Relationship

A consistent pattern is observed where increases in cost of goods sold generally correlate with increases in the inventory turnover ratio, and vice versa. However, the magnitude of change in cost of goods sold often exceeds that of the inventory turnover ratio, suggesting that factors beyond inventory management, such as pricing strategies or promotional activities, also influence sales volume.

Overall, the inventory turnover ratio demonstrates cyclical behavior. While periods of efficient inventory management are evident, the recent trend suggests a potential need to reassess inventory control strategies and sales forecasting to optimize inventory levels and maintain healthy turnover rates.

The receivables turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which the company converts its receivables into cash. An initial period of relative stability is followed by a notable decline, then a recovery, and finally another decline.

Initial Period (May 2021 - January 2022)

The receivables turnover ratio begins at 87.37 and generally increases to 98.38 before declining to 81.25. This suggests a period of improving efficiency in collecting receivables, followed by a slight weakening. The ratio remains above 80 for most of this timeframe, indicating reasonably efficient collection practices.

Fluctuation and Decline (May 2022 - January 2023)

From May 2022 through January 2023, the ratio fluctuates between 84.75 and 61.02. A significant drop to 61.02 is observed in January 2023, representing the lowest point in the analyzed period. This decrease could be attributed to a variety of factors, including extended credit terms offered to customers, a slowdown in collections, or a substantial increase in sales on credit relative to cash sales. The subsequent recovery to 77.10 suggests a partial correction of these factors.

Recent Trends (April 2023 - February 2026)

The ratio demonstrates a degree of volatility in the latter part of the period, ranging from 77.10 to 58.23. A sharp decline to 44.24 is noted in November 2025, followed by a recovery to 58.23. The most recent value, 58.23, represents a low point and warrants further investigation. This recent decline could indicate a worsening of collection efficiency or a strategic shift in credit policies. The final value of 58.23 is significantly lower than the initial values observed, suggesting a potential area of concern.

Overall Trend

While the ratio exhibits periods of stability and improvement, the overall trend suggests a weakening in receivables turnover, particularly in the most recent quarters. The substantial decrease in the latter part of the period requires attention to understand the underlying causes and implement corrective measures if necessary. The company should monitor this ratio closely and investigate the factors contributing to the recent decline.

The accounts payable turnover ratio for the analyzed period demonstrates considerable fluctuation. Initially, the ratio exhibited relative stability, followed by a period of significant volatility, and then a return to a more moderate range. Overall, the ratio suggests changes in the company’s payment practices and/or the volume of purchases made on credit.

Initial Stability (May 2, 2021 – Oct 31, 2021)

The payables turnover ratio remained relatively consistent, fluctuating between 10.89 and 11.50. This suggests a stable relationship between purchases and the speed at which the company paid its suppliers during this timeframe. Cost of goods sold increased during this period, but accounts payable increased at a similar rate, maintaining the turnover ratio.

Decline and Volatility (Jan 30, 2022 – Oct 30, 2022)

A noticeable decline in the ratio occurred, reaching a low of 9.14 in January 2022. The ratio then experienced a substantial increase to 20.95 in January 2023, representing the most significant peak in the observed period. This suggests a considerable shift in payment timing or a significant change in the volume of purchases relative to outstanding payables. The subsequent decrease to 10.85 in October 2022 indicates a return towards previous levels, but with continued variability. Cost of goods sold increased significantly in January 2023, while accounts payable decreased, driving the turnover ratio higher.

Recent Trends (Jan 29, 2023 – Feb 1, 2026)

From January 2023 through February 2026, the ratio continued to fluctuate, generally remaining between 11.51 and 15.91. A slight downward trend is observed in the latter half of the period, with the ratio ending at 14.54. This suggests a potential easing of payment terms or an increase in accounts payable relative to cost of goods sold. The most recent values indicate a continued, though moderated, level of activity.

Overall Observations

The observed fluctuations in the payables turnover ratio warrant further investigation. The significant peak in January 2023, followed by a decline, could be attributed to strategic changes in working capital management, seasonal factors, or specific supplier agreements. The overall trend suggests the company has been actively managing its payment terms and supplier relationships, adapting to changes in cost of goods sold and overall business conditions.

The working capital turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which working capital is utilized to generate revenue. An initial increase in the ratio is followed by periods of relative stability and subsequent decline, with a recent upward trend.

Initial Trend (May 2021 – January 2022)

From May 2021 to January 2022, the working capital turnover ratio demonstrates a consistent upward trend, increasing from 3.86 to 5.17. This suggests an improving ability to generate revenue from each dollar of working capital during this timeframe. The increase could be attributed to more efficient inventory management, faster collection of receivables, or optimized payment terms with suppliers.

Subsequent Fluctuations (February 2022 – January 2023)

Following the peak in January 2022, the ratio experiences a period of fluctuation. It declines to 4.86 by January 2023, with intermediate peaks and troughs. This suggests a potential stabilization or slight decrease in the efficiency of working capital utilization. The fluctuations may be linked to seasonal sales patterns or changes in operational strategies.

Recent Trends (February 2023 – February 2026)

From January 2023 to February 2026, the ratio initially declines to a low of 3.96 in April 2023, before exhibiting an upward trend, peaking at 5.65 in October 2024. It then experiences a slight decline to 4.67 in February 2026. This recent volatility could indicate adjustments in working capital management in response to changing market conditions or strategic initiatives. The increase from January 2023 to October 2024 suggests a renewed focus on efficient working capital utilization.

Overall Observations

The working capital turnover ratio generally remains above 3.8 throughout the period, indicating a reasonable level of efficiency in utilizing working capital. However, the fluctuations highlight the importance of continuous monitoring and optimization of working capital management practices. The recent upward trend, despite the earlier fluctuations, suggests a positive development in the company’s operational efficiency.

The average inventory processing period exhibited considerable fluctuation over the analyzed timeframe. Initially, the period demonstrated a slight decrease, followed by a period of expansion, and then a return towards lower values before fluctuating again. A detailed examination reveals distinct phases in inventory management efficiency.

Initial Phase (May 2, 2021 – Oct 30, 2022)

The average inventory processing period began at 125 days and initially decreased to 123 days. However, a clear upward trend emerged, peaking at 195 days by October 30, 2022. This suggests a lengthening of the time required to convert inventory into sales during this period, potentially due to factors such as increased inventory levels, slower sales velocity, or supply chain disruptions.

Correction and Volatility (Jan 29, 2023 – Oct 27, 2024)

Following the peak, the period contracted significantly to 146 days by January 29, 2023, indicating improved inventory management. However, this improvement was not sustained, with the period fluctuating between 120 and 157 days over the subsequent quarters. This volatility suggests ongoing challenges in maintaining consistent inventory flow.

Recent Trend (Feb 2, 2025 – Feb 1, 2026)

The most recent observations show a period of 122 days on February 2, 2025, increasing to 158 days on November 2, 2025, and then decreasing to 129 days on February 1, 2026. This continues the pattern of fluctuation observed in the prior period, though the latest value suggests a return towards the lower end of the observed range.

Overall, the average inventory processing period demonstrates a lack of consistent trend. While there have been periods of improvement, the persistent fluctuations suggest potential inefficiencies in inventory planning, demand forecasting, or supply chain operations. Further investigation into the underlying causes of these variations is warranted to optimize inventory management and improve operational efficiency.

The average receivable collection period remained consistently low over the analyzed period, generally fluctuating between four and five days. However, some variation is observed, particularly in more recent quarters.

Overall Trend

For the majority of the period, from May 2, 2021, through October 29, 2023, the average collection period remained stable, consistently at four or five days. This indicates efficient management of accounts receivable and a swift conversion of credit sales into cash.

Recent Fluctuations

Beginning with January 29, 2023, a slight increase in the average collection period is noticeable. The period rose to six days in that quarter, before returning to five days in the subsequent quarter. A more significant increase occurred in the quarter ending November 2, 2025, where the average collection period reached eight days. This is followed by a decrease to six days in the quarter ending February 1, 2026.

Potential Implications

The sustained low collection period generally suggests effective credit policies and collection procedures. The recent increases, while not substantial, warrant further investigation. Potential causes could include changes in customer payment terms, a shift in the customer base, or a temporary slowdown in collections. The increase to eight days in the most recent period is the largest observed and should be monitored closely.

In conclusion, while historically the company demonstrates a highly efficient collection of receivables, recent trends suggest a potential shift that merits attention and further analysis to ensure continued optimal cash flow management.

The operating cycle, comprised of the average inventory processing period and the average receivable collection period, exhibits fluctuations over the analyzed timeframe. Generally, the operating cycle demonstrates a tendency towards lengthening, particularly in the latter half of the period, though with notable quarterly variations.

Average Inventory Processing Period

The average inventory processing period generally increased from 125 days in May 2021 to a peak of 195 days in October 2022. Following this peak, a decrease was observed, reaching 120 days in January 2024. Subsequently, the period increased again, reaching 157 days in October 2024, before decreasing to 122 days in February 2025. The most recent periods show an increase to 138 days in May 2025, 141 days in August 2025, 158 days in November 2025, and 129 days in February 2026. This suggests potential inefficiencies in inventory management that are not consistently addressed, or are influenced by seasonal factors. The fluctuations could also reflect changes in supply chain dynamics or inventory sourcing strategies.

Average Receivable Collection Period

The average receivable collection period remained consistently low, generally between 4 and 6 days, throughout the majority of the analyzed period. A slight increase to 8 days was observed in November 2025, followed by a decrease to 6 days in February 2026. This indicates efficient credit and collection policies, and a consistent ability to convert receivables into cash quickly. The brief increase in November 2025 warrants further investigation, but does not appear to represent a systemic issue.

Operating Cycle

The operating cycle mirrored the trends observed in the average inventory processing period, as it is the sum of the two components. It began at 129 days in May 2021 and peaked at 200 days in October 2022. A subsequent decline brought the cycle to 125 days in January 2024, but it then rose to 162 days in October 2024. The cycle decreased to 126 days in February 2025, before increasing to 143 days in May 2025, 146 days in August 2025, 166 days in November 2025, and 135 days in February 2026. The overall trend suggests a lengthening of the time required to convert raw materials into cash from sales, primarily driven by changes in inventory processing time. The consistent and short receivable collection period provides some offset to the longer inventory cycle.

In conclusion, while the company maintains a highly efficient receivable collection process, the inventory processing period demonstrates considerable variability, significantly impacting the overall operating cycle. Monitoring and optimizing inventory management practices appear crucial for improving operational efficiency.

The average payables payment period exhibited fluctuations over the observed period. Initially, the period remained relatively stable, followed by a period of volatility, and then a return to a more consistent range before concluding with further fluctuations.

Initial Stability (May 2, 2021 – Oct 31, 2021)

The average payables payment period began at 33 days and remained within a narrow range of 32 to 34 days for the first five periods. This suggests consistent management of supplier credit terms during this timeframe.

Increase in Payment Period (Jan 30, 2022 – Jul 31, 2022)

An increase was observed, reaching 40 days in January 2022, before decreasing to 31 days by July 2022. This could indicate a temporary strain on liquidity or a deliberate strategy to extend payment terms, followed by a return to more typical practices.

Volatility and Subsequent Reduction (Oct 30, 2022 – Apr 30, 2023)

The period experienced significant volatility, dropping to a low of 17 days in January 2023, before rising to 28 and 29 days in the subsequent two periods. This substantial decrease and subsequent increase suggest a possible shift in supplier relationships or a change in the timing of invoice payments. The period then decreased to 23 days by April 2023.

Fluctuations and Recent Trends (May 1, 2022 – Feb 1, 2026)

From May 2023 through February 2026, the average payables payment period continued to fluctuate, ranging from 23 to 34 days. A slight upward trend is observable in the latter half of the period, with the final reported value at 25 days. This suggests ongoing adjustments to payment strategies or evolving supplier agreements.

Overall, the average payables payment period demonstrates a dynamic pattern, influenced by factors such as cash flow management, supplier negotiations, and potentially seasonal variations in purchasing activity. The period has not exhibited a consistent upward or downward trend over the entire observation window.

The cash conversion cycle exhibited fluctuations over the analyzed period, generally trending upward from May 2021 through October 2022, followed by a period of relative stabilization and then another increase into late 2025. A closer examination of the component ratios reveals the drivers behind these movements.

Average Inventory Processing Period

The average inventory processing period demonstrated an increasing trend from 125 days in May 2021 to a peak of 195 days in October 2022. Subsequently, it decreased to 120 days in January 2023, remaining relatively stable around that level through April 2024. A further increase was observed, reaching 157 days in October 2024, before decreasing to 122 days in February 2025 and increasing again to 158 days in November 2025. This suggests potential shifts in inventory management strategies or changes in the speed of inventory turnover, with a recent trend towards longer processing times.

Average Receivable Collection Period

The average receivable collection period remained consistently low, generally fluctuating between 4 and 6 days throughout the majority of the period. A slight increase to 8 days was noted in November 2025, followed by a decrease to 6 days in February 2026. This indicates efficient management of accounts receivable and a consistent ability to collect payments from customers in a timely manner.

Average Payables Payment Period

The average payables payment period showed more variability. It remained relatively stable between 31 and 40 days from May 2021 to July 2022. A significant decrease to 17 days occurred in January 2023, followed by an increase to 34 days in October 2024. The period then decreased to 23 days in February 2025 and increased to 31 days in August 2025, before decreasing again to 25 days in February 2026. These fluctuations may reflect changes in supplier relationships or strategic decisions regarding payment terms.

Cash Conversion Cycle

The cash conversion cycle initially increased from 96 days in May 2021 to 166 days in October 2022, primarily driven by the lengthening inventory processing period. It then decreased to 93 days in January 2023, coinciding with the reduction in inventory processing time. The cycle subsequently increased to 138 days in November 2025, influenced by both increases in inventory processing and receivables collection periods. The final value of 110 days in February 2026 represents a slight decrease from the November 2025 peak. Overall, the cycle demonstrates sensitivity to changes in inventory management and, to a lesser extent, receivables and payables management.

The observed trends suggest a dynamic interplay between inventory, receivables, and payables. The increases in the cash conversion cycle, particularly those linked to inventory, warrant further investigation to determine the underlying causes and potential implications for liquidity and operational efficiency.