lululemon athletica inc. (NASDAQ:LULU)

The analysis of the financial turnover and cycle ratios over the presented periods reveals several notable trends.

Inventory Turnover

The inventory turnover ratio shows a general declining trend from May 2020 through October 2022, dropping from 3.39 to a low of 1.88, suggesting inventory is being sold less frequently. Following this decline, there is a recovery beginning in early 2023, with turnover rising back above 3.0 by May 2024 before slightly tapering off again. This pattern may indicate periods of slower inventory movement followed by improved sales or inventory management.

Receivables Turnover

Receivables turnover begins at a high of 98.94 in early 2020, then experiences a marked decrease and fluctuates between roughly 60 and 90 thereafter. This indicates that the efficiency in collecting receivables decreased initially but has remained relatively stable with some volatility, reflecting variations in credit policy or customer payment behaviors.

Payables Turnover

Payables turnover shows more volatility, with an initial decline from nearly 22 in May 2020 to a low of approximately 9 in mid-2022, followed by a rebound to moderate levels around 15 by May 2025. The lower turnover suggests longer payment periods during the mid-periods, which may reflect strategic supplier payment terms or cash management policies.

Working Capital Turnover

This ratio increases from about 3.35 in early 2020 to a peak of above 6 in mid-2022, indicating more efficient use of working capital during that period. It then declines moderately but remains above 4 thereafter, suggesting sustained relatively efficient operational use of working capital overall.

Average Inventory Processing Period

The average inventory processing days increase notably from around 108 days early in 2020 to as high as 195 days in early 2023, indicating slower inventory movement and potentially excess stock. Later periods show a reduction back toward approximately 120–138 days, reflecting improved inventory management or acceleration in sales cycles.

Average Receivable Collection Period

The receivable collection period remains relatively stable, fluctuating narrowly between 4 and 6 days throughout all periods, implying consistent customer payment terms and collection efficiency over time.

Operating Cycle

The operating cycle lengthens from approximately 112 days early in 2020 to over 200 days around early 2023, which corresponds with slower inventory turnover and longer inventory processing periods. This extended cycle suggests an overall deceleration in the conversion of resources into cash. The cycle shortens somewhat after 2023 but remains elevated relative to early 2020 levels.

Average Payables Payment Period

The payables payment period extends from about 17 days in early 2020 to peaks of over 40 days by mid-2022, indicating the company is taking longer to pay its suppliers during this phase, possibly to conserve cash. This metric subsequently decreases back to the 20–30 day range towards 2025, suggesting a normalization in payment patterns.

Cash Conversion Cycle

The cash conversion cycle similarly lengthens from about 95 days in early 2020 to a high point around 166 days in early 2023, indicating a longer duration between cash outflows and inflows. Afterward, there is a trend toward reduction, with the cycle falling back to approximately 100–130 days in the most recent periods, indicating improved liquidity timing but not returning to the earlier faster cash turnover.

In summary, the data reflect a period of slowed asset turnover and extended operating and cash conversion cycles during 2020 through early 2023, with impairments in inventory movement and payable management contributing to longer cash tied-up periods. Subsequently, from 2023 onward, there are signs of recovery and efficiency improvement across these metrics, although some ratios have not yet reverted to pre-2020 levels. This suggests adjustments in operational and financial practices were undertaken to better manage working capital and cash flow in response to earlier slower turnover periods.

The cost of goods sold (COGS) exhibits a general increasing trend over the analyzed quarterly periods. Initially, COGS grew steadily from approximately 360.6 million US dollars in early May 2019 to a peak exceeding 1.24 billion US dollars by early 2023. This growth is marked by intermittent fluctuations, including notable spikes during February 2020 and January 2023, suggesting seasonal or demand-driven variability. Following these peaks, a temporary decline or stabilization occurs before the upward trajectory resumes. The data toward 2024 and early 2025 indicates continued high levels of cost, with figures frequently surpassing 900 million US dollars and reaching over 1.4 billion US dollars in February 2025, reflecting sustained elevated production or sales volume.

Inventories also display an overall upward trend over the reported timeframe, with some fluctuations in specific quarters. Starting at around 443 million US dollars in early May 2019, the inventory levels generally increase, reaching over 1.74 billion US dollars by October 2022. Thereafter, a period of decline is evident through early 2024, before inventories rise again to approximately 1.65 billion US dollars by May 2025. The inventory levels tend to lag behind COGS increases, potentially reflecting adjustments in supply chain management or stockpiling strategies in response to changing demand or market conditions.

The inventory turnover ratio varies throughout the observed periods, ranging roughly between 1.88 and 3.39. Early data reveals a downward trend in turnover ratios from late 2019 through 2022, reaching a low near 1.88, implying slower inventory movement during this phase. This suggests that inventory was held longer, possibly due to supply chain disruptions, overstocking, or reduced sales velocity. Subsequently, there is a recovery with turnover ratios increasing again above 3.0 by 2024, indicative of improved inventory efficiency and faster conversion into sales. The variability in the ratio aligns with the cyclical nature of inventory and COGS patterns, highlighting periods of both accumulation and liquidation of stock.

In summary, both cost of goods sold and inventory have increased substantially over the period, with inventory turnover demonstrating periods of reduced efficiency followed by recovery. The trends reflect dynamic management of production costs and inventory levels, likely in response to market demand fluctuations and external operational challenges. The rising values of COGS and inventories coupled with variable turnover ratios indicate an evolving operational environment with phases of both expansion and optimization in inventory management practices.

The financial data reveals several key trends in revenue and receivables performance over the observed periods. Net revenue exhibits a generally upward trajectory with notable fluctuations associated with seasonal or market conditions. Beginning at approximately $782 million in early 2019, revenue demonstrates strong growth, peaking significantly in certain quarters, such as February 2020 and January 2023, where figures exceed $2.7 billion and $3.2 billion, respectively. Despite temporary declines, particularly around mid-2020 and early 2022, the longer-term trend indicates substantial expansion in revenue generation capacity.

Accounts receivable, net, also show growth aligned with revenue increases, reflecting the expansion of credit sales or payment terms extended to customers. Starting from about $20 million in early 2019, receivables increase with revenue spikes, reaching highs over $140 million on multiple occasions by 2024. This increase is consistent with the scale of operations growing over time.

The receivables turnover ratio presents more volatility and does not follow a strict upward or downward trend. It fluctuates between approximately 61 and 99 during the observed quarters. Higher turnover ratios, such as those recorded near May 2019 and 2021, suggest more efficient collection periods or stricter credit policies, while lower ratios, especially notable in early 2023, indicate slower turnover of receivables. These variations imply alternating shifts in credit management or changes in customer payment behavior.

Revenue Trends

Substantial growth overall with periodic peaks exceeding $3 billion, reflecting company expansion and possibly seasonal influences.

Accounts Receivable Growth

Increase in receivables corresponds with revenue growth, indicating greater sales on credit and expanding business volume.

Receivables Turnover Ratio

Variable ratio suggests fluctuating efficiency in collections, with some quarters showing stronger credit control and others slower receivables processing.

The financial data over the analyzed periods exhibit several notable trends and fluctuations across key financial items.

Cost of Goods Sold (COGS)

COGS demonstrated a general upward trend with periodic fluctuations. Initial values ranged around 360,595 thousand USD in early 2019, rising significantly through 2020, with a notable increase from May 2020 onward. Peaks are observed in February 2025 at approximately 1,429,545 thousand USD, indicating expanding cost inputs potentially reflective of business growth or inflationary pressures. Seasonal or event-driven demand could explain sudden increases in certain quarters, particularly in the later periods.

Accounts Payable

Accounts payable values also increased over the timeframe but displayed some volatility. Early periods in 2019 showed lower payable balances near 88,258 thousand USD, rising steadily to over 300,000 thousand USD in several quarters from 2021 onward. Peaks occurred sporadically, such as in October 2024, reaching 385,960 thousand USD, which may reflect extended credit terms, supplier relations changes, or increased purchasing volume. However, some declines occurred intermittently, suggesting payment cycles or operational adjustments.

Payables Turnover Ratio

The payables turnover ratio varied considerably across quarters. Early ratios above 20 diminished to approximately 9-11 in mid-2021, then fluctuated between 10 and 15 in subsequent periods, with occasional spikes reaching near 21. These variations indicate changes in the frequency with which the company settles its payables, possibly reflecting cash flow management strategies or supplier negotiation dynamics. Lower turnover ratios in some quarters may suggest slower payments or extended credit terms, whereas higher ratios could signal faster payables processing or improved liquidity.

Overall, the data depicts a company experiencing growth in operational scale, as evidenced by rising COGS and accounts payable, coupled with dynamic payables management reflected in fluctuating turnover ratios. This suggests an active adaptation to market or operational conditions, with liquidity and supplier terms as key focus areas.

The analysis reveals several key trends in working capital, net revenue, and working capital turnover over the observed periods.

Working Capital

There is a general upward trend in working capital from the beginning to the end of the period, starting around 668,642 thousand USD and reaching over 2,010,132 thousand USD by May 2025. However, fluctuations occur, for example, a noticeable dip during mid-2020 around the time of the August 2, 2020 quarter, where working capital decreased to approximately 726,446 thousand USD from a prior peak of 1,187,520 thousand USD in February 2020. After that, it recovers and sustains increases, peaking at about 2,429,316 thousand USD by January 2024, followed by a slight decline and further fluctuations towards the latter periods.

Net Revenue

Net revenue exhibits volatility but an overall strong growth trajectory over the period. Initial values near 782,315 thousand USD in May 2019 are followed by periods of decline and recovery, with a significant dip observed in May 2020 (651,962 thousand USD), likely reflecting adverse macroeconomic conditions. Post mid-2020, net revenue increases markedly, peaking at 3,611,497 thousand USD by October 2024. This surge suggests substantial business expansion or increased sales volume. Intermittent decreases after peaks indicate some variability but the general long-term trend remains positive.

Working Capital Turnover

Working capital turnover ratios, available from February 2020 onwards, indicate fluctuating operational efficiency in generating revenue from working capital. Early ratios start near 3.35 and rise steadily to above 6.0 in May 2022, showing improved efficiency. There is a subsequent decline and variability observed in later quarters, with ratios mostly ranging between 4.5 and 5.5. The peak turnover ratio aligns with periods of rapid revenue growth and increasing working capital, implying effective utilization of resources to produce sales during those times.

In summary, the data demonstrates a pattern of growth in both working capital and net revenue, punctuated by short-term declines possibly related to external factors. Working capital turnover trends reflect periods of strong operational efficiency, especially during mid to late 2021 and early 2022. The company appears to manage working capital prudently to support expanding revenue streams, though future periods show some normalization or fluctuation in turnover efficiency.

Inventory Turnover Ratio Trends

The inventory turnover ratio demonstrates a fluctuating pattern over the periods analyzed. Initially, values start at 3.39 in early 2020 and then decline steadily to a low of 1.88 in late 2022. This decline indicates a slowdown in how quickly inventory is sold or used. Following this trough, there is a recovery phase where the ratio increases again, reaching a peak of around 3.04 by mid-2024, before slightly declining again towards 2.65 in mid-2025. This overall trend suggests variability in inventory management efficiency, with periods of weakening turnover followed by improvement.

Average Inventory Processing Period Trends

The average inventory processing period exhibits an inverse relationship with the inventory turnover ratio, as expected. Starting from 108 days in early 2020, the period lengthens consistently to reach a peak of 195 days by late 2022, indicating inventory remains on hand for a longer duration. Afterwards, this metric decreases sharply to around 120 days by mid-2024, signaling an improvement in processing efficiency. The period then shows moderate fluctuations, ending near 138 days in mid-2025. This pattern aligns with the changes observed in inventory turnover, reflecting cyclical adjustments in inventory holding periods.

Overall Insights

The data reveals notable cyclical volatility in inventory management measures within the timeline analyzed. The mid-2020 to late-2022 interval indicates a period of declining inventory turnover and increasing days to process inventory, suggesting potential challenges in demand, supply chain, or inventory control. The subsequent recovery phase points to actions taken to improve inventory efficiency, supported by higher turnover ratios and reduced processing days. This cyclical behavior implies a reactive management approach to inventory dynamics, with attention needed to balancing stock levels and sales fulfillment agility.

Receivables Turnover

The receivables turnover ratio exhibits considerable fluctuation over the observed periods. Initially, the ratio declined from 98.94 to 68.09 by February 2020, indicating a slower rate of accounts receivable collection during this time. Following this trough, there was a recovery peak reaching 98.38 in October 2020, suggesting improved efficiency in receivables management. However, this recovery was followed by moderate variability, with the ratio oscillating mainly between the mid-70s and mid-80s for many subsequent quarters. Notably, the ratio dipped to a low near 61.02 in April 2023, marking another period of slower collection. The latest data points toward a modest recovery with values around the high 70s to upper 80s, ending with a slight decrease to 76.11 in May 2025. Overall, the ratio reflects periodic shifts in collection efficiency, with no clear long-term upward or downward trend.

Average Receivable Collection Period

The average receivable collection period remained relatively stable throughout the periods, generally ranging between 4 and 6 days. Early measurements from May 2020 to January 2021 consistently showed a 4-to-5-day collection period, signaling efficient receivable turnover. A slight increase to 6 days occurred in April 2023, coinciding with the previously noted dip in receivables turnover, indicating slower cash inflows from receivables at that time. Subsequently, the collection period reverted back to 4-to-5 days and remained steady through the final period in May 2025. This stability suggests consistent credit policies and collection practices despite some fluctuations in turnover ratios.

Summary

The overall analysis indicates that while the receivables turnover ratio experienced moderate volatility with intermittent increases and decreases, the average collection period showed a stable and narrow range of variability. The company appears to maintain relatively consistent collection practices, with occasional deviations likely caused by external or operational factors affecting turnover efficiency. The observed patterns suggest an ability to manage receivables effectively within a short cycle, despite some short-term fluctuations in turnover performance.

Average Inventory Processing Period

The average inventory processing period exhibits a generally increasing trend with some fluctuations over the observed time frame. Initially, the period begins at 108 days and rises progressively, reaching peaks above 190 days, specifically around early 2023 (195 days). Following this peak, the period declines somewhat but remains elevated relative to earlier figures. The data shows variability between 120 and 160 days in the latter periods, indicating some improvements or adjustments in inventory management after the peak period.

Average Receivable Collection Period

The average receivable collection period remains relatively stable throughout the period analyzed. The values consistently range between 4 and 6 days, demonstrating a controlled and efficient management of receivables with only minor fluctuations. There is no significant upward or downward trend, suggesting steady performance in receivables collection.

Operating Cycle

The operating cycle mirrors the pattern observed in the average inventory processing period because it incorporates that measure plus the receivable collection period. It shows an increasing trend from around 112 days to a peak of 200 days in early 2023. After this peak, the operating cycle decreases but still remains higher than initial values, fluctuating around the 120–160 day range more recently. This reflects the combined effect of inventory and receivables management and suggests that the operating cycle lengthened significantly before partially normalizing.

Payables Turnover

The payables turnover ratio shows a fluctuating pattern over the observed periods, starting at a high level around 21.95 and 21.7, before dropping significantly to levels near 14.08 and then further down to around 10.9 to 11.5 from late 2020 through early 2022. During mid to late 2022, the ratio rose sharply again to a peak of 20.95, indicating accelerated payment of payables in that quarter. Following this, the ratio once again settled into a range between roughly 10.85 and 15.91 through early 2025, with considerable variability but no consistent upward or downward long-term trend. This volatility suggests intermittent changes in the company's payment strategies or supply chain conditions.

Average Payables Payment Period

The average payables payment period exhibited an inverse relationship with the payables turnover ratios, as expected. Initially, it ranged from 17 days, then increased significantly to a peak of 40 days around early 2022. After peaking, payment periods decreased sharply back toward the teens during parts of 2023 but rose again to the high 20s and low 30s thereafter. The payment period data implies that the company has varied its average time to settle payables, sometimes extending the payment duration to nearly 40 days, likely to optimize cash flow, then shortening it again, possibly in response to supplier terms or financial strategy adjustments.

Overall Trends and Insights

The company's accounts payable management shows a cyclical pattern characterized by alternating periods of faster and slower payables turnover. The periods of high turnover ratio coincide with shorter payment cycles, indicating quicker payment to suppliers. Conversely, lower turnover ratios correspond with longer payment periods. This fluctuation could reflect a strategic balance between maintaining liquidity and managing supplier relationships. The variability suggests responsiveness to changing operating conditions or cash management policies rather than a steady or linear progression in payables management.

The financial data reveals several key trends in operational efficiency and working capital management over the analyzed periods.

Average Inventory Processing Period

This metric shows a general upward trend from 108 days to a peak of 195 days around early 2023, indicating that inventory is being held for increasingly longer periods. After reaching this peak, the period declines somewhat, fluctuating between 120 and 157 days in the most recent quarters. This pattern suggests potential challenges in inventory turnover or changes in inventory management strategies.

Average Receivable Collection Period

The receivable collection days are relatively stable throughout the periods, fluctuating between 4 and 6 days. There is no clear trend toward increase or decrease, indicating consistent efficiency in collecting accounts receivable.

Average Payables Payment Period

The accounts payable payment period exhibits variability with a noticeable increase from 17 days to a peak of 40 days around mid-2022, then declines again with fluctuations ranging mostly between 23 and 34 days afterward. This suggests that the company initially extended its payment terms or delayed payments longer but later adjusted back to shorter payment periods.

Cash Conversion Cycle

The cash conversion cycle generally follows the inventory processing period trends, starting at 95 days, rising to a peak near 166 days in early 2023, and then decreasing moderately in subsequent periods. The fluctuations parallel changes in inventory and payables periods, reflecting the combined effect of changes in inventory holding, receivables collection, and payment policies on the overall liquidity cycle.

Overall, the data indicates a lengthening in the time inventory is held and variability in payment timing to suppliers, which collectively have stretched the cash conversion cycle during the observed timeframe. Meanwhile, the collection of receivables remains stable, reflecting consistent credit and collection practices. Recent periods show some reversal or stabilization in inventory and payables periods, possibly indicating management efforts to optimize working capital.