lululemon athletica inc.

Thank you for standing by. This is the conference operator. Welcome to the Lululemon Athletica Inc. fourth quarter 2025 earnings conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Analysts who wish to join the question queue may press star then one on the telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Howard Toobin, Vice President Investor Relations for Lululemon Athletica. Please go ahead.

Thank you and good afternoon. Welcome to Lululemon's fourth quarter earnings conference call. Joining me today are Megan Frank, Interim Co-CEO and CFO, and Andre Mestrini, Interim Co-CEO, President and Chief Commercial Officer. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward-looking statements reflecting management's current forecast of certain aspects of Lululemon's future. These statements are based on current information, which we have assessed, but by which its nature is dynamic and subject to rapid and even abrupt changes. Actual results may differ materially from those contained in or implied by these forward-looking statements, due to risks and uncertainties associated with our business, including those we have disclosed in our most recent filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we expressly disclaim any obligation or undertaking to update or revise any of these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our annual report on Form 10-K and in today's earnings press release. In addition, the comparable sales metrics given on today's call are on a constant dollar basis. The press release and accompanying annual report on Form 10-K are available under the Investor section of our website at www.lululemon.com. On today's call, Megan will share an update on the action plan we laid out for you on our last earnings call. Andre will discuss our regional performance. Megan will return to review our financials and guidance outlook. And then the team will be happy to take your questions. Before I turn the call over to Megan, I'd like to remind investors to visit our investor site, where you'll find a summary of our key financial and operating statistics for the fourth quarter, as well as our quarterly infographic. Also, please note that the purpose of today's call is to discuss Lululemon's 2025 financial results and 2026 outlook, And we ask that you keep your questions focused on our performance.

Thanks, Howard. I'm glad to be here today to discuss our Q4 results, our outlook for 2026, and how we are executing our action plan to strengthen our brand, re-accelerate growth, and create value for shareholders. Andre and I are working side by side with the senior leaders across our organization to drive our strategies forward to improve the U.S. business, while also maintaining our international momentum and and are making progress to deliver the performance we know is possible in all our regions. We have a healthy and loyal customer base that remains engaged and looking to us for great product and experiences. We have strong teams who are motivated and excited to bring our new innovations and product assortments to our guests. And we are working across the company to refine and advance our initiatives across product creation, product activation, and enterprise enablement, which Andre and I will speak more about during our call today. We recognize there is more work to be done and we have been course correcting on a number of fronts, but we are encouraged by the guest response to our recent new product drops and activations. I'm grateful to our teams across the entire organization who remain committed to delivering products and experiences our guests love. Together, we are taking the right steps that will allow us to realize the full potential of Blue Lemon. Before I speak to our action plan, I would like to call attention to today's announcement welcoming Chip Berg to our board of directors. As you likely know, Chip Berg is the former longtime president and CEO of the iconic brand Levi Strauss. He's a seasoned public company executive who brings deep retail and brand expertise, and he has extensive experience guiding successful transformations and driving value creation at global category-defining companies. His appointment as a director comes after a comprehensive search by the board and is part of the board's thoughtful ongoing refreshment process that has brought five new directors to the board over the last five years. I'd also like to acknowledge David Mussifer, one of our longtime directors, who has informed the board that he won't be standing for reelection. We are grateful for David's many contributions to Lululemon over the years. And with respect to the CEO search, I can share that our board is running a robust search process, and they've been meeting with highly qualified candidates. The process is moving forward, and we will provide an update on this topic at the appropriate time. I'll now dive into three components of our action plan. product creation, product activation, and enterprise enablement. During the fourth quarter, Andre and I dove deeper into each pillar of our plan and have been working with the teams across the organization to ensure we entered 2026 moving with focus and speed. We've been course correcting where needed to restore and protect our brand health over time. A top priority for the management team as we enter the year is returning to full price sales growth in North America. through a series of steps that include the inflection of product newness and reducing the level of markdown, skew reduction, and the rebalancing of inventory levels. This approach will reinforce our premium positioning that has long set Lululemon apart from others, while also protecting operating margin. So let's click down into product creation. Our priorities here are raising the bar on product design, delivering a consistent pulse of innovation, improving our speed to market, and ensuring a relentless focus on product quality. Hopefully you've been in our stores and visited our e-commerce sites and have seen some of our new innovations. I will take a moment to highlight a few of these for you, including Unrestricted Power, our newest iteration of ShowZero, and Thermozone. Unrestricted Power is a new train collection for women and men. It is constructed from Powerloo, our newest technical fabric innovation, which uses our highest filament yarn count and offers a remarkably soft feel, while also providing incredible stretch and support. Guests have responded positively since the launch, and we look forward to an exciting future for this new franchise. Next, we recently announced an updated version of our ShowZero No Show Sweat technology, meant for high sweat activities. This newest iteration of ShowZero was developed in collaboration with professional tennis player and Blue Lemon ambassador Francis Tiafoe and debuted at the BNP Paribus Open at Indian Wells earlier this month. The latest technology can seal sweat while also remaining incredibly lightweight and breathable. We plan to introduce new ShowZero products to guests later this year as we continue to scale the platform across activities and categories. And I also want to mention Thermazon, our newest collection of insulated jackets and vests. These products offer warmth, water and wind resistance and superior softness and are a great example of how we were leveraging our considerable expertise in developing technical apparel across our lifestyle and casual offerings. These are just some of the innovations that our team has been developing and we are encouraged by the response from guests to these offerings. When looking at our overall product assortment, you'll see it continue to evolve based on the strategic vision of our creative team. A few specific examples of what you can expect going forward include updates on some of our key lounge and lifestyle franchises, fewer logos, a more focused and coordinated color palette, and a more edited assortment of our smaller accessories. This enables us to present a more refined, uniquely Lululemon product assortment. As we introduce new and evolved product, we also recognize the importance of taking steps to further enhance and protect our product quality. I've been spending time with our supply chain team to ensure that as we shorten our go-to-market timeline, we do not sacrifice on quality. Maintaining the highest possible quality standards remains paramount for me and all of us at Lululemon. Shifting and product activation. It is incredibly important that we ramp up our efforts to further engage existing guests, bring new guests into the brand, and ensure all guests are made aware of our latest styles and innovations. Let me highlight two of our most recent activations for you, which occurred in the first quarter. The first is Studio Yet. This was a three-week pop-up, high-performance training space in Los Angeles, where we offered a variety of fitness classes taught by world-renowned trainers and coaches. The studio was a physical manifestation of our Global Yet campaign, which focused on the relationship between going after big goals and the daily work needed to achieve them. Guest response to Studio Yet was fantastic, with all classes selling out, significant media pickup across mainstream and social channels, and it, along with the community events we hosted in conjunction with the LA Marathon, provided a halo effect and sales lift to our stores in the Los Angeles area. And I'll also highlight the success over the past few weeks of our sponsorship of the BNP Paribas Open Tennis Tournament in Southern California, one of the most popular tournaments for players and fans. This is the first year of our three-year sponsorship, and the long lines in response to our pop-up store, where approximately two-thirds of the visitors were new to Lululemon, shows the significant potential for Lululemon within the tennis community. These events demonstrate that when we engage with our guests through our unique activations, we see a tangible response, and this continues to reinforce the opportunity for Lululemon going forward. When looking at our approach to integrated marketing, our plans continue to include more product-focused campaigns across social channels, which will leverage Lululemon ambassadors and other influencers to help ensure our guests are aware of new styles, innovations, and updates we're bringing into our assortments. Next, I'll turn to enterprise enablement, which includes our efforts to create efficiencies and manage costs across the company. While we have always been prudent with regard to expenses, we've been particularly vigilant over the last two years as sales trends in the US have faced headwinds and tariff policy has added pressure. We are continuing with this vigilance into 2026, and we are targeting meaningful savings as we simplify our operations and focus on scaling more effectively while continuing to invest in key growth initiatives. Key work streams are increasing efficiencies across inventory management, supply chain, and non-merchandise procurement, and reducing complexity while capitalizing on automation and AI opportunities. We know we must improve our performance in North America while continuing our momentum internationally. We have already taken decisive actions to position the business for sustainable growth. Looking forward, we have clear priorities and are moving with focus, speed, and determination as we implement the strategies across our action plan. You can really feel the energy across the organization about the path forward, and the team is excited about the opportunity ahead of us. I'll now turn the call over to Andre.