Lululemon Athletica Inc. (LULU)

Cash conversion cycle

		Jan 31, 2025	Jan 31, 2024	Jan 28, 2024	Jan 31, 2023	Jan 29, 2023
Days of inventory on hand (DOH)	days	121.92	120.48	65.18	146.01	77.78
Days of sales outstanding (DSO)	days	—	—	4.75	—	5.95
Number of days of payables	days	—	—	17.16	—	9.28
Cash conversion cycle	days	121.92	120.48	52.77	146.01	74.45

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 121.92 + — – —
= 121.92

Lululemon Athletica Inc.'s cash conversion cycle has demonstrated fluctuation over the past few years. The cycle measures the time taken to convert the company's investments in inventory and other resources into cash flows from sales.

In January 2023, the cash conversion cycle was at its lowest level, standing at 74.45 days, indicating that the company efficiently managed its working capital and turned its assets into cash quickly. However, by the end of January 2023, the cycle significantly increased to 146.01 days, suggesting potential challenges in managing inventory, receivables, and payables.

The following year, in January 2024, there was a notable improvement in the cash conversion cycle, dropping to 52.77 days, showing enhanced efficiency in working capital management. Yet, by the end of January 2024, the cycle rose to 120.48 days, signaling a potential slowdown in the company's cash conversion process.

As of January 31, 2025, the cash conversion cycle slightly increased to 121.92 days, indicating that Lululemon Athletica Inc. may be taking a bit longer to convert its investments into cash flows.

Overall, the fluctuation in Lululemon Athletica Inc.'s cash conversion cycle suggests variations in the company's ability to manage working capital effectively. It would be crucial for the company to monitor and optimize its cash conversion cycle to ensure efficient management of its financial resources.