VANCOUVER, Canada--(BUSINESS WIRE)--
lululemon athletica inc. [NASDAQ: LULU; TSX: LLL] today announced
financial results for the thirteen weeks ended November 2, 2008.
For the thirteen weeks ended November 2, 2008:
-- Net revenue increased 34% to $87.0 million from $64.9 million for the
third quarter of fiscal 2007. Net revenue from corporate-owned stores
was $77.6 million, an increase of 31% from $59.1 million for the third
quarter of fiscal 2007, with comparable store sales increasing 4% on a
constant-dollar basis compared to the third quarter of fiscal 2007.
-- Income from operations increased 7% to $13.1 million, or 15.0% of net
revenue, compared to $12.2 million, or 18.9% of net revenue, in the
third quarter of fiscal 2007.
-- Diluted earnings per share from continuing operations were $0.13 on net
income of $8.8 million, compared to diluted earnings per share of $0.12
on net income of $7.9 million in the third quarter of fiscal 2007.
Diluted earnings per share in the third quarter of fiscal 2007 exclude a
$0.01 loss per share associated with the discontinued operations
resulting from the Company's closure of its four stores in Japan.
For the thirty-nine weeks ended November 2, 2008:
-- Net revenue increased 50% to $249.6 million compared to $165.9 million
for the same period in fiscal 2007. Net revenue from corporate-owned
stores increased 51% to $225.2 million compared to $148.8 million for
the same period in fiscal 2007, with comparable store sales growth of
10% on a constant-dollar basis.
-- Income from operations increased 39% to $40.5 million, or 16.2% of net
revenue, compared to $29.2 million, or 17.6% of net revenue, in the
first nine months of fiscal 2007.
-- Diluted earnings per share from continuing operations were $0.42 on net
income of $29.6 million, compared to diluted earnings per share of $0.24
on net income of $16.8 million for the same period in fiscal 2007.
Diluted earnings per share were $0.40 for the first thirty-nine weeks of
fiscal 2008 and $0.23 for the same period in fiscal 2007, after
deducting the associated loss for discontinued operations in Japan.
Christine Day, lululemon's CEO stated: "While we are pleased that we met
our earnings expectations in the third quarter, we recognize that we are
operating in an increasingly difficult environment. During this current
downturn we will operate our business prudently through careful
inventory management, expense controls and conservative capital
investments. We believe that our business model will prove resilient
throughout this challenging time and we will emerge from these
conditions with strong growth potential for our brand."
Guidance
Based on the trends in the macro environment and the weaker Canadian
dollar, which are both negatively impacting our business results, we are
revising our outlook for the balance of the year. For fourth quarter
2008, we now anticipate reported net revenue to be in the range of $90
million to $95 million. This is based on a comparable store sales
decline in the low double digits on a constant-dollar basis and six new
store openings during the quarter. We now expect diluted earnings per
share for the fourth quarter of 2008 to be in the range of $0.15 to
$0.17; incorporating a 34% tax rate and 70.7 million diluted weighted
average shares outstanding.
For fiscal 2008, the Company now expects diluted earnings per share in
the range of $0.55-$0.57 as compared to its previous range of
$0.68-$0.71. Revised guidance for the full year includes net revenue
between $340 million and $345 million and 35 planned new store openings
in North America.
We continue to expect an average effective tax rate in the low 30% range
for the full year and anticipate diluted weighted average shares
outstanding of approximately 71 million for 2008. Fiscal 2008 earnings
guidance includes a loss of $0.02 per share recorded in the second
quarter resulting from the Company's closure of its four stores that
operated in Japan.
Conference Call Information
A conference call to discuss third quarter results is scheduled for
today, December 11, 2008, at 9:00 AM Eastern Time. Investors interested
in participating in the call are invited to dial (877) 681-3372
approximately ten minutes prior to the start of the call. The conference
call will also be webcast live at www.lululemon.com.
About lululemon athletica inc.
lululemon athletica (NASDAQ: LULU; TSX: LLL) is a yoga-inspired athletic
apparel company that creates components for people to live longer,
healthier and more fun lives. By producing products that help keep
people active and stress free, lululemon believes that the world will be
a better place. Setting the bar in technical fabrics and functional
designs, lululemon works with yogis and athletes in local communities
for continuous research and product feedback. For more information, http://www.lululemon.com.
Non-GAAP Financial Measure:
Constant dollar net revenue changes, which exclude the impact of changes
in foreign exchange rates, are not Generally Accepted Accounting
Principle ("GAAP") performance measure. We provide constant dollar
revenue changes because we use the measure to understand the underlying
growth rate of revenue excluding the impact on a quarter by quarter
basis of items that are not under management's direct control, such as
changes in foreign exchange rates.
Forward-Looking Statements:
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934 that involve risks, uncertainties
and assumptions, such as statements regarding our future financial
condition, financial results or results of operations, our prospects and
strategies for future growth, both in North America and internationally,
the development and introduction of new products, and the implementation
of our marketing and branding strategies. In many cases, you can
identify forward-looking statements by terms such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "intends,"
"estimates," "predicts," "potential" or the negative of these terms or
other comparable terminology. These forward-looking statements are based
on management's current expectations but they involve a number of risks
and uncertainties. Actual results and the timing of events could differ
materially from those anticipated in the forward-looking statements as a
result of risks and uncertainties, which include, without limitation:
the possibility that we may not be able to manage operations at our
current size or manage growth effectively; the possibility that we may
not be able to identify suitable locations to open new stores or attract
customers to our stores; the possibility that we may not be able to
successfully expand in the United States or in other markets, or expand
into new markets; the possibility that we may not be able to finance our
growth and maintain sufficient levels of cash flow; the probability that
a general economic slowdown will adversely affect our results of
operations and growth plans; increasing competition, which may cause us
to reduce the prices of our products or to increase significantly our
marketing efforts to avoid losing market share; the possibility that we
may not be able to effectively market and maintain a positive brand
image; the possibility that we may not be able to continually innovate
and provide our consumers with improved products; and other risk factors
detailed in our filings with the Securities and Exchange Commission,
including the risk factors contained in our fiscal 2007 Annual Report on
Form 10-K filed with the SEC and other filings we make with the SEC. Our
filings with the SEC are available at http://www.sec.gov.
You are urged to consider these factors carefully in evaluating the
forward-looking statements herein and are cautioned not to place undue
reliance on such forward-looking statements, which are qualified in
their entirety by this cautionary statement. The forward-looking
statements made herein speak only as of the date of this press release
and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
lululemon athletica inc.
Consolidated Statements of Operations (unaudited)
Expressed in thousands of dollars except per share amounts
Thirteen Weeks Three Months Thirty-Nine Nine Months
Ended Ended Weeks Ended Ended
November 2, October 31, November 2, October 31, 2007
2008 2007 2008
Net revenue $87,047 $64,925 $249,565 $165,949
Costs of goods 45,154 29,409 122,159 77,602
sold
Gross profit 41,893 35,516 127,406 88.347
As a percent of 48.1% 54.7% 51.1% 53.2%
net revenue
Selling,
general and 28,838 23,269 86,886 59,141
administrative
expenses
As a percent of 33.1% 35.8% 34.8% 35.6%
net revenue
Income from 13,055 12,247 40,520 29,206
operations
As a percent of 15.0% 18.9% 16.2% 17.6%
net revenue
Other expense (145) (419) (612) (596)
(income), net
Income before
provision for 13,200 12,666 41,132 29,802
income taxes
Provision for 4,370 4,763 11,572 13,010
income taxes
Net income from
continuing 8,830 7,903 29,561 16,792
operations
Net income
(loss) from 4 (334) (1,136) (649)
discontinued
operations
Net income $8,834 $7,569 $28,425 $16,143
Basic earnings
(loss) per
share:
Continuing $0.13 $0.12 $0.44 $0.26
operations
Discontinued -- (0.01) (0.02) (0.01)
operations
Net basic
earnings per $0.13 $0.11 $0.42 $0.25
share
Diluted
earnings (loss)
per share:
Continuing $0.13 $0.12 $0.42 $0.24
operations
Discontinued -- (0.01) (0.02) (0.01)
operations
Net diluted
earnings per $0.13 $0.11 $0.40 $0.23
share
Weighted
average
outstanding:
Basic 69,162,312 67,476,972 68,315,742 65,981,081
Diluted 70,609,486 71,683,523 71,008,015 69,896,384
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands of dollars
November 2, 2008 February 3, 2008
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $52,039 $52,545
Accounts receivable 4,007 4,302
Inventories 49,062 37,932
Prepaid expenses and other current assets 2,379 4,082
Total current assets 107,487 98,861
Property and equipment, net 59,893 43,605
Intangible assets, net 8,639 8,118
Deferred income taxes and other assets 22,000 4,508
Total assets $198,019 $155,092
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $8,448 $5,397
Other current liabilities 38,322 25,023
Income taxes payable --- 5,720
Total current liabilities 46,770 36,140
Deferred income taxes and other non-current 10,989 6,918
liabilities
Stockholders' equity 140,260 112,034
Total liabilities and stockholders' equity $198,019 $155,092
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant dollar changes
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 2, 2008 November 2, 2008
% Change % Change
Comparable-store sales (GAAP) (2)% 13%
Increase (decrease) due to 6% (3)%
foreign exchange rate changes
Comparable-store sales in 4% 10%
constant dollars
Source: lululemon athletica inc.