Lululemon Athletica Inc. (LULU)

Activity ratios

Short-term

Turnover ratios

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020
Inventory turnover	5.60	4.69	5.10	5.55	5.96
Receivables turnover	76.84	61.32	81.06	70.47	98.99
Payables turnover	21.27	39.32	17.00	20.86	38.63
Working capital turnover	3.95	4.89	5.16	3.54	3.35

Lululemon Athletica Inc.'s activity ratios provide insights into how efficiently the company is managing its inventory, receivables, payables, and working capital.

1. Inventory turnover: Lululemon's inventory turnover has been relatively stable over the past five years, ranging from 4.69 to 5.96 times. This indicates that the company efficiently manages its inventory levels, with a higher turnover ratio suggesting that inventory is selling quickly.

2. Receivables turnover: The receivables turnover ratio for Lululemon has shown an increasing trend over the years, reaching 76.84 in 2024. This suggests that the company is collecting its receivables more frequently, indicating effective credit management and strong customer payment terms.

3. Payables turnover: Lululemon's payables turnover has fluctuated over the years, with a range from 17.00 to 39.32. A lower turnover ratio implies that the company is taking longer to pay its suppliers, which could be beneficial for cash flow management but may also indicate potential strain on supplier relationships.

4. Working capital turnover: The working capital turnover ratio has also varied over the years, with a range from 3.35 to 5.16. A higher turnover ratio suggests that Lululemon is effectively using its working capital to generate sales revenue.

Overall, the activity ratios indicate that Lululemon Athletica Inc. is effectively managing its inventory, receivables, payables, and working capital to drive efficient operations and financial performance.

Average number of days

		Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020
Days of inventory on hand (DOH)	days	65.18	77.78	71.61	65.76	61.24
Days of sales outstanding (DSO)	days	4.75	5.95	4.50	5.18	3.69
Number of days of payables	days	17.16	9.28	21.47	17.50	9.45

Lululemon Athletica Inc.'s activity ratios reflect how efficiently the company manages its operations and its ability to convert assets into sales.

1. Days of Inventory on Hand (DOH): The company's DOH has shown some fluctuations over the past five years, ranging from 61.24 days in 2020 to 77.78 days in 2023. A decrease in DOH signifies that Lululemon is selling its inventory more quickly, while an increase could indicate overstocking or inefficiencies in managing inventory levels. The lower DOH in 2020 and 2021 followed by an increase in 2022 and a subsequent decrease in 2023 suggest potential inventory management adjustments.

2. Days of Sales Outstanding (DSO): Lululemon's DSO has been relatively stable over the years, with a slight increase in 2023 compared to preceding years. A lower DSO indicates that the company is collecting receivables more quickly, which is generally favorable in terms of cash flow. Although Lululemon's DSO is relatively low, any upward trend in the future may warrant attention to ensure timely collections from customers.

3. Number of Days of Payables: Lululemon's days of payables have shown fluctuations with a notable increase in 2022 compared to 2021. A higher number of days of payables indicates that the company is taking longer to pay its suppliers, potentially indicating a liquidity advantage as it retains cash longer. However, longer payables periods may strain supplier relationships if not managed effectively.

In conclusion, Lululemon Athletica Inc. demonstrates efficient management of its inventory and accounts receivable, while also strategically managing its payables. These activity ratios provide insights into the company's operational efficiency and working capital management practices over the years.

Long-term

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020
Fixed asset turnover	6.20	6.42	6.73	5.90	5.93
Total asset turnover	1.35	1.45	1.26	1.05	1.21

Lululemon Athletica Inc.'s long-term activity ratios reflect the company's efficiency in managing its assets over the years. The fixed asset turnover ratio has shown a consistent trend of improvement, increasing from 5.93 in 2020 to 6.20 in 2024. This indicates that Lululemon is generating more revenue from its fixed assets, such as property, plant, and equipment, which is a positive sign of asset utilization efficiency.

On the other hand, the total asset turnover ratio has fluctuated over the years, peaking at 1.45 in 2023 and dropping to 1.35 in 2024. This ratio measures the company's ability to generate sales from all its assets, including fixed and current assets. Although the total asset turnover ratio has shown some variability, it generally indicates that Lululemon is effectively utilizing its total assets to generate sales.

Overall, the long-term activity ratios of Lululemon Athletica Inc. suggest that the company has been effectively managing its assets to drive revenue growth and operational efficiency over the years. The improvement in the fixed asset turnover ratio indicates a higher level of productivity from its fixed assets, while the total asset turnover ratio reflects the company's overall ability to generate sales from its total asset base.