Third Quarter Net Revenue Increases 56% to $175.8 million
Third Quarter Diluted EPS of $0.36
VANCOUVER, British Columbia--(BUSINESS WIRE)--
lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced
financial results for the third quarter ended October 31, 2010.
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For the thirteen weeks ended October 31, 2010:
-- Net revenue for the quarter increased 56% to $175.8 million from $112.9
million in the third quarter of fiscal 2009. Net revenue from
corporate-owned stores was $143.2 million for the quarter, an increase
of 46% from $98.1 million in the third quarter of fiscal 2009, and
comparable-store sales increased by 29% on a constant-dollar basis.
-- Gross profit for the quarter increased by 72% to $96.8 million, and as a
percentage of net revenue gross profit increased to 55% for the quarter
from 50% in the third quarter of fiscal 2009.
-- Income from operations for the quarter increased by 103% to $42.4
million, and as a percentage of net revenue was 24% compared to 19% of
net revenue in the third quarter of fiscal 2009.
-- Diluted earnings per share for the quarter was $0.36 on net income of
$25.7 million, compared to diluted earnings per share of $0.20 on net
income of $14.1 million in the third quarter of fiscal 2009.
-- The tax rate for the quarter was 39% versus 33% a year ago. The tax rate
has been increased to take into account the additional deferred income
tax liability for estimated future taxes attributable to undistributed
earnings of the Canadian operating subsidiary.
For the thirty-nine weeks ended October 31, 2010:
-- Net revenue for the first three quarters increased 60% to $466.3 million
from $292.3 million in the same period of fiscal 2009. Net revenue from
corporate-owned stores was $388.2 million for the first three quarters
of fiscal 2010, an increase of 52% from $256.1 million in the first
three quarters of fiscal 2009. Year to date comparable-store sales
increased by 31% on a constant-dollar basis.
-- Gross profit for the first three quarters increased by 84% to $251.5
million from $136.5 million in the same period of fiscal 2009. As a
percentage of net revenue, gross profit increased to 54% for the first
three quarters of fiscal 2010 from 47% in the same period of fiscal
2009.
-- Income from operations for the first three quarters increased by 142% to
$109.1 million, and as a percentage of net revenue was 23% compared to
15% of net revenue in the same period of fiscal 2009.
-- Diluted earnings per share on a year to date basis was $0.93 on net
income of $67.1 million, compared to diluted earnings per share of $0.42
on net income of $29.8 million in the same period of fiscal 2009.
-- The tax rate for the first three quarters of fiscal 2010 was 40% versus
34% for the same period in the prior year. The tax rate has been
increased to take into account the additional deferred income tax
liability for estimated future taxes attributable to undistributed
earnings of the Canadian operating subsidiary.
The Company ended the third quarter of fiscal 2010 with $224.8 million
in cash and cash equivalents compared to $101.8 million at the end of
the third quarter of fiscal 2009. Inventory at the end of the third
quarter of fiscal 2010 totaled $73.0 million compared to $52.1 million
at the end of the third quarter of fiscal 2009. The Company ended the
quarter with 134 stores in North America and Australia.
Christine Day, lululemon's CEO stated: "We are very pleased with our
strong third quarter results. Our technical product continues to drive
our top line growth, cementing our position as an innovative athletic
wear company with yoga at our core. Looking ahead, we remain excited
about the potential for lululemon and will continue to execute on our
strategies and invest in our future for the significant growth
opportunities still ahead of us."
Updated Outlook
For the fourth quarter of fiscal 2010, we expect net revenue to be in
the range of $210 million to $215 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 $0.46 to
$0.48 for the quarter. This assumes 72.2 million diluted
weighted-average shares outstanding and a 40% tax rate.
Conference Call Information
A conference call to discuss third quarter results is scheduled for
today, December 9, 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 Thirty-Nine Thirty-Nine
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
October 31, November 1, October 31, November 1,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenue $175,800 $112,891 $466,305 $292,292
Costs of goods sold 78,968 56,553 214,818 155,766
Gross profit 96,832 56,338 251,487 136,526
As a percent of net revenue 55.1% 49.9% 53.9% 46.7%
Selling, general and 54,456 35,412 142,394 91,415
administrative expenses
As a percent of net revenue 31.0% 31.4% 30.5% 31.3%
Income from operations 42,376 20,926 109,093 45,111
As a percent of net revenue 24.1% 18.5% 23.4% 15.4%
Other income (expense), net 91 (3) 2,345 98
Income before provision for 42,467 20,923 111,438 45,209
income taxes
Provision for income taxes 16,532 6,855 44,207 15,379
Net Income 25,935 14,068 67,231 29,830
Net income attributable to 234 - 150 -
non-controlling interest
Net income attributable to $25,701 $14,068 $67,081 $29,830
lululemon athletica inc.
Basic earnings per share $0.36 $0.20 $0.95 $0.42
Diluted earnings per share $0.36 $0.20 $0.93 $0.42
Basic weighted-average 70,938 70,279 70,786 70,205
shares outstanding
Diluted weighted-average 71,835 71,100 71,782 70,759
shares outstanding
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
October 31, January 31,
2010 2010
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $224,775 $159,573
Inventories 73,023 44,070
Other current assets 13,919 12,767
Total current assets 311,717 216,410
Property and equipment, net 67,457 61,591
Intangible assets, net 26,488 8,050
Deferred income taxes and other assets 13,310 21,207
Total assets $418,972 $307,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $9,275 $11,027
Other current liabilities 49,483 39,909
Income taxes payable 5,518 7,742
Total current liabilities 64,276 58,678
Deferred income taxes and other non-current 28,023 15,472
liabilities
Stockholders' equity 326,673 233,108
Total liabilities and stockholders' equity $418,972 $307,258
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended
October 31, 2010 November 1, 2009
(unaudited) (unaudited)
Cash flows from operating
activities
Net income $67,231 $29,830
Items not affecting cash 36,201 21,109
Other, including net changes (15,515) 834
in other non-cash balances
Net cash provided by operating 87,917 51,773
activities
Net cash used in investing (34,433) (10,214)
activities
Net cash provided by financing 7,945 (27)
activities
Effect of exchange rate 3,773 3,503
changes on cash
Increase in cash and cash 65,202 45,035
equivalents
Cash and cash equivalents, $159,573 $56,797
beginning of period
Cash and cash equivalents, end $224,775 $101,832
of period
lululemon athletica inc.
Store Count and Square Footage1
Year ended January 30, 2011
Square Footage Expressed in Thousands
Number of
Number of Stores Number of
Stores Open Opened / Stores Number of
at the Acquired Closed Stores Open
Beginning of During the During the at the End of
the Quarter Quarter2 Quarter the Quarter
1st Quarter 110 4 0 114
2nd Quarter 114 12 0 126
3rd Quarter 126 4 0 130
Gross Square
Total Gross Feet Lost
Square Feet Gross Square due to Store Total Gross
at the Feet Added Closures Square Feet
Beginning of During the During the at the End of
the Quarter Quarter2,3 Quarter the Quarter
1st Quarter 316 9 0 325
2nd Quarter 325 25 0 350
3rd Quarter 350 14 0 364
1 Store count and square footage summary includes
corporate-owned stores which are branded lululemon athletica and ivivva
athletica.
2 Number of stores opened during fiscal 2010 are branded
lululemon athletica and include nine locations repurchased from our
Australian franchise operator and one reacquired franchise in Canada, in
the second quarter.
3 Gross square feet added during the quarter includes net
square foot additions for corporate-owned stores which have been
renovated or relocated in the quarter.
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant-dollar changes
(unaudited)
Thirteen Weeks Thirteen Weeks
Ended Ended
October 31, 2010 November 1, 2009
% Change % Change
Comparable-store sales (GAAP) 32% 11%
Increase (decrease) due to foreign exchange (3)% (1)%
rate changes
Comparable-store sales in constant dollars 29% 10%
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Source: lululemon athletica inc.