Second Quarter Net Revenue Increases 56% to $152.2 million
Second Quarter Diluted EPS of $0.30
VANCOUVER, British Columbia--(BUSINESS WIRE)--
lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced
financial results for the second quarter ended August 1, 2010.
For the thirteen weeks ended August 1, 2010:
-- Net revenue for the quarter increased 55.8% to $152.2 million from $97.7
million in the second quarter of fiscal 2009. Net revenue from
corporate-owned stores was $129.4 million for the quarter, an increase
of 52.1% from $85.1 million in the second quarter of fiscal 2009, and
comparable-store sales increased by 31% on a constant-dollar basis.
-- Gross profit for the quarter increased by 77.8% to $80.3 million, and as
a percentage of net revenue gross profit increased to 52.8% for the
quarter from 46.2% in the second quarter of fiscal 2009.
-- Income from operations for the quarter increased by 138.9% to $34.2
million, and as a percentage of net revenue was 22.5% compared to 14.7%
of net revenue in the second quarter of fiscal 2009.
-- Diluted earnings per share for the quarter was $0.30 on net income of
$21.8 million, compared to diluted earnings per share of $0.13 on net
income of $9.2 million in the second quarter of fiscal 2009.
-- The tax rate for the quarter was 40.3% versus 35.6% a year ago. The tax
rate has been increased to take into account the additional future
income tax liability which could arise on repatriation of excess
unremitted earnings of the Canadian operating subsidiary.
For the twenty-six weeks ended August 1, 2010:
-- Net revenue for the first two quarters increased 61.9% to $290.5 million
from $179.4 million in the same period of fiscal 2009. Net revenue from
corporate-owned stores was $245.0 million for the first two quarters of
fiscal 2010, an increase of 55.1% from $158.0 million in the first two
quarters of fiscal 2009. Year to date comparable-store sales increased
by 33% on a constant-dollar basis.
-- Gross profit for the first two quarters increased by 92.9% to $154.7
million from $80.2 million in the same period of fiscal 2009. As a
percentage of net revenue, gross profit increased to 53.2% for the first
two quarters of fiscal 2010 from 44.7% in the same period of fiscal
2009.
-- Income from operations for the first two quarters increased by 175.9% to
$66.7 million, and as a percentage of net revenue was 23.0% compared to
13.5% of net revenue in the same period of fiscal 2009.
-- Diluted earnings per share on a year to date basis was $0.58 on net
income of $41.4 million, compared to diluted earnings per share of $0.22
on net income of $15.8 million in the same period of fiscal 2009.
-- The tax rate for the first two quarters of fiscal 2010 was 40.1% versus
35.1% for the same period in the prior year. The tax rate has been
increased to take into account the additional future income tax
liability which could arise on repatriation of excess unremitted
earnings of the Canadian operating subsidiary.
The Company ended the second quarter of fiscal 2010 with $178.2 million
in cash and cash equivalents compared to $83.8 million at the end of the
second quarter of fiscal 2009. Inventory at the end of the second
quarter of fiscal 2010 totaled $66.5 million compared to $46.5 million
at the end of the second quarter of fiscal 2009. The Company ended the
quarter with 130 stores in North America and Australia.
Christine Day, lululemon's CEO stated: "Our strong sales momentum
reflects increased brand awareness driven by the strength of our product
innovation, guest experience and community engagement. We achieved
$1,532 in sales per square foot for the second quarter driven by the
exceptional performance of our newest stores. We are intently focused on
our existing growth strategies which include fueling our rapidly growing
e-commerce business and leveraging our showrooms into 20 to 25 store
openings in 2011."
Updated Outlook
For the third quarter of fiscal 2010, we expect net revenue to be in the
range of $155 million to $160 million based on a comparable-store sales
percentage increase in the high-teens on a constant-dollar basis.
Diluted earnings per share are expected to be in the range of $0.22 to
$0.24 for the quarter. This assumes 72.5 million diluted
weighted-average shares outstanding.
For the full fiscal 2010, we now expect net revenue to be in the range
of $645 million to $650 million and diluted earnings per share are
expected to be in the range of $1.18 to $1.22 for the full year. This
assumes 72.3 million diluted weighted-average shares outstanding.
Consistent with the adjustment to the tax rate in the first quarter of
fiscal 2010 the updated outlook assumes a tax rate of 40% for fiscal
2010.
Conference Call Information
A conference call to discuss second quarter results is scheduled for
today, September 10, 2010, at 9:00 am Eastern Time. Those interested in
participating in the call are invited to dial (877) 303-3203
approximately 10 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 United States 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 January 31, 2010 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
Thirteen Thirteen Twenty-Six Twenty-Six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
August 1, August 2, August 1, August 2,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenue $152,208 $97,721 $290,505 $179,401
Costs of goods sold 71,910 52,557 135,850 99,213
Gross profit 80,298 45,164 154,655 80,188
As a percent of net revenue 52.8% 46.2% 53.2% 44.7%
Selling, general and 46,055 30,832 87,938 56,003
administrative expenses
As a percent of net revenue 30.2% 31.6% 30.3% 31.2%
Income from operations 34,243 14,332 66,717 24,185
As a percent of net revenue 22.5% 14.7% 23.0% 13.5%
Other income (expense), net 2,092 23 2,254 101
Income before provision for 36,335 14,355 68,971 24,286
income taxes
Provision for income taxes 14,628 5,111 27,676 8,524
Net Income 21,707 9,244 41,295 15,762
Net loss attributable to (85) - (85) -
non-controlling interest
Net income attributable to $21,792 $9,244 $41,380 $15,762
lululemon athletica inc.
Basic earnings per share $0.31 $0.13 $0.59 $0.22
Diluted earnings per share $0.30 $0.13 $0.58 $0.22
Basic weighted-average 70,820 69,948 70,708 70,176
shares outstanding
Diluted weighted-average 71,750 70,401 71,692 70,473
shares outstanding
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
August 1, 2010 January 31, 2010
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $178,172 $159,573
Inventories 66,520 44,070
Other current assets 14,358 12,767
Total current assets 259,050 216,410
Property and equipment, net 64,609 61,591
Intangible assets, net 24,735 8,050
Deferred income taxes and other assets 15,302 21,207
Total assets $363,696 $307,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $7,275 $11,027
Other current liabilities 37,019 39,908
Income taxes payable 2,419 7,742
Total current liabilities 46,713 58,678
Deferred income taxes and other non-current 23,669 15,472
liabilities
Stockholders' equity 293,314 233,108
Total liabilities and stockholders' equity $363,696 $307,258
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
Twenty-Six Weeks Ended Twenty-Six Weeks Ended
August 1, 2010 August 2, 2009
(unaudited) (unaudited)
Cash flows from operating
activities
Net income $41,295 $15,762
Items not affecting cash 22,436 12,489
Other, including net changes in (29,179) 482
other non-cash balances
Net cash provided by operating 34,552 28,733
activities
Net cash used in investing (24,053) (6,303)
activities
Net cash provided by financing 6,138 568
activities
Effect of exchange rate changes 1,962 4,002
on cash
Increase in cash and cash 18,599 27,000
equivalents
Cash and cash equivalents, $159,573 $56,797
beginning of period
Cash and cash equivalents, end $178,172 $83,797
of period
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant-dollar changes
(unaudited)
Thirteen Weeks Ended Thirteen Weeks Ended
August 1, 2010 August 2, 2009
% Change % Change
Comparable-store sales (GAAP) 38% (10)%
Increase (decrease) due to foreign (7)% 8%
exchange rate changes
Comparable-store sales in constant 31% (2)%
dollars
Source: lululemon athletica inc.