Third Quarter Net Revenue Increases 30% to $112.9 million
Third Quarter Diluted EPS of $0.20
Introduces Fourth Quarter Diluted EPS Outlook in the Range of $0.26
to $0.28
VANCOUVER--(BUSINESS WIRE)--
lululemon athletica inc. [NASDAQ: LULU; TSX: LLL] today announced
financial results for the third quarter ended November 1, 2009.
For the third quarter of 2009:
-- Net revenue increased 29.7% to $112.9 million from $87.0 million for the
third quarter of fiscal 2008. Net revenue from corporate-owned stores
was $98.1 million, an increase of 26.4% from $77.6 million for the third
quarter of fiscal 2008, and comparable-store sales increased by 10% on a
constant-dollar basis compared to the third quarter of fiscal 2008.
-- Gross profit for the quarter increased by 34.4% to $56.3 million, and as
a percentage of net revenue gross profit increased to 49.9% for the
third quarter of fiscal 2009 from 48.1% in the third quarter of fiscal
2008.
-- Income from operations increased by 60.3% to $20.9 million, and as a
percentage of net revenue was 18.5% compared to 15.0% of net revenue in
the third quarter of fiscal 2008.
-- Diluted earnings per share was $0.20 on net income of $14.1 million,
compared to diluted earnings per share of $0.13 on net income of $8.8
million in the third quarter of fiscal 2008. The tax rate for the
quarter was 32.8% versus 33.1% a year ago.
For the first three fiscal quarters of 2009:
-- Net revenue increased 17.1% to $292.3 million from $249.6 million for
the same period of fiscal 2008. Net revenue from corporate-owned stores
was $256.1 million, an increase of 13.7% from $225.2 million for the
same period of fiscal 2008, and comparable-store sales were even on a
constant-dollar basis compared to the same period of fiscal 2008.
-- Gross profit as a percentage of net revenue decreased to 46.7% from
51.1% of net revenue in the first three quarters of fiscal 2008.
-- Income from operations was $45.1 million, or 15.4% of net revenue,
compared to $40.5 million, or 16.2% of net revenue, in the first three
quarters of fiscal 2008.
-- Diluted earnings per share was $0.42 on net income of $29.8 million,
compared to diluted earnings per share of $0.40 on net income of $28.4
million in the first three quarters of fiscal 2008.
The Company ended the quarter with $101.8 million in cash and cash
equivalents as compared to $56.8 million at the end of fiscal 2008.
Inventory at the end of the quarter totaled $52.1 million as compared to
$49.1 million at the end of the third quarter in fiscal 2008.
Christine Day, lululemon's CEO stated: "Sales momentum continued to
build in the third quarter as consumers responded to our distinctive
product, community connections and in store guest experience. Our hard
work on our supply chain initiatives and strong relationships with our
suppliers allowed us to meet our growing demand." Ms. Day continued, "We
also made significant progress in improving our gross margin with a
return to the 50% level, and are very pleased to deliver these results
in a challenging retail environment."
Updated Outlook
For the fourth quarter of fiscal 2009, we expect net revenue to be in
the range of $140 million to $145 million based on a comparable-store
sales increase in the mid teens on a constant-dollar basis. Diluted
earnings per share are expected to be in the range of $0.26 to $0.28 for
the quarter. This assumes a tax rate of 35% and 71.3 million diluted
weighted-average shares outstanding.
Conference Call Information
A conference call to discuss third quarter results is scheduled for
today, December 9, 2009, at 4:30 PM Eastern Time. Investors interested
in participating in the call are invited to dial (877) 741-4242
approximately ten minutes prior to the start of the call. The conference
call will also be webcast live at www.lululemon.com.
The webcast will be accessible on our website for approximately 30 days
after the call.
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,
visit www.lululemon.com.
Non-GAAP Financial Measure
Constant-dollar net revenue changes, which exclude the impact of changes
in foreign exchange rates, is not a U.S. Generally Accepted Accounting
Principle ("GAAP") performance measure. We provide constant-dollar net
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 changes in foreign exchange rates, which are not under
management's direct control. We believe that disclosing net revenue
changes on a constant-dollar basis is useful to investors because it
enables them to better understand the level of growth of our business.
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 or results of operations, our prospects and strategies for
future growth, 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," "outlook,"
"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; risks that consumer spending may continue to
decline and that U.S. and global macroeconomic conditions may worsen;
the possibility that levels of comparable-store sales or average sales
per square foot will decline; the possibility that we may not be able to
successfully expand in the United States and other new markets;
increased competition causing us to reduce the prices of our products or
to increase significantly our marketing efforts in order to avoid losing
market share; the possibility that we may not be able to continually
innovate and provide our consumers with improved products; the
possibility that our suppliers or manufacturers may not produce or
deliver our products in a timely or cost-effective manner; and other
risk factors detailed in our Annual Report on Form 10-K for the fiscal
year ended February 1, 2009 and in our subsequent reports on Form 10-Q
filed with the Securities and Exchange Commission and available at www.sec.gov.
You are urged to consider these factors carefully in evaluating the
forward-looking statements contained herein and are cautioned not to
place undue reliance on such forward-looking statements, which are
qualified in their entirety by these cautionary statements. 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.
Condensed Consolidated Statements of Operations
Expressed in thousands, except per share amounts
(Unaudited)
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
November 1, November 2, November 1, November 2,
2009 2008 2009 2008
Net revenue $112,891 $87,047 $292,292 $249,565
Costs of goods sold 56,553 45,154 155,766 122,159
Gross profit 56,338 41,893 136,526 127,406
As a percent of net revenue 49.9% 48.1% 46.7% 51.1%
Selling, general and 35,412 28,838 91,415 86,886
administrative expenses
As a percent of net revenue 31.4% 33.1% 31.3% 34.8%
Income from operations 20,926 13,055 45,111 40,520
As a percent of net revenue 18.5% 15.0% 15.4% 16.2%
Other income (expense), net (3) 145 98 612
Income before income taxes 20,923 13,200 45,209 41,132
Provision for income taxes 6,855 4,370 15,379 11,571
Net income from continuing $14,068 $8,830 $29,830 $29,561
operations
Net income (loss) from -- 4 -- (1,136)
discontinued operations
Net income $14,068 $8,834 $29,830 $28,425
Basic earnings (loss) per
share:
Continuing operations $0.20 $0.13 $0.42 $0.44
Discontinued operations -- -- -- (0.02)
Net basic earnings per share $0.20 $0.13 $0.42 $0.42
Diluted earnings (loss) per
share:
Continuing operations $0.20 $0.13 $0.42 $0.42
Discontinued operations -- -- -- (0.02)
Net diluted earnings per $0.20 $0.13 $0.42 $0.40
share
Weighted-average
outstanding:
Basic 70,279 69,162 70,205 68,316
Diluted 71,100 70,609 70,759 71,008
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
November 1, 2009 February 1, 2009
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $101,832 $56,797
Inventories 52,103 52,051
Other current assets 12,133 8,140
Total current assets 166,068 116,988
Property and equipment, net 59,900 61,662
Intangible assets, net 8,257 8,160
Deferred income taxes and other assets 12,543 24,826
Total assets $246,768 $211,636
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $5,866 $5,269
Other current liabilities 33,581 37,933
Income taxes payable -- 2,133
Total current liabilities 39,447 45,335
Deferred income taxes and other non-current 14,722 11,459
liabilities
Stockholders' equity 192,599 154,842
Total liabilities and stockholders' equity $246,768 $211,636
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
(Unaudited)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
November 1, 2009 November 2, 2008
Cash flows from operating activities
Net income from continuing operations $29,830 $29,561
Items not affecting cash 20,829 3,146
Other, including net changes in other
non-cash
balances 834 (3,503)
Net cash provided by operating activities 51,493 29,204
Net cash used in investing activities (10,214) (35,639)
Net cash provided by financing activities 252 11,125
Effect of exchange rate changes on cash 3,504 (5,196)
Increase (decrease) in cash and cash
equivalents from
continuing operations 45,035 (506)
Cash and cash equivalents from continuing
operations,
beginning of period 56,797 52,545
Cash and cash equivalents from continuing
operations,
end of period $101,832 $52,039
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant-dollar changes
Thirteen Weeks Ended Thirteen Weeks Ended
November 1, 2009 November 2, 2008
% Change % Change
Comparable-store sales (GAAP) 11% (2)%
Increase (decrease) due to foreign
exchange rate changes (1)% 6%
Comparable-store sales in constant
dollars 10% 4%
Source: lululemon athletica inc.