Q4 Net Revenue Increases 53% to $245.4 million
Q4 Diluted EPS of $0.76 including tax adjustment
Fiscal 2010 Diluted EPS increases 106% to $1.69
VANCOUVER, British Columbia--(BUSINESS WIRE)--
lululemon athletica inc. (NASDAQ:LULU) (TSX:LLL) today announced
financial results for the fourth quarter and fiscal year ended January
30, 2011.
lululemon Cheer Station - New York Marathon lululemon educators cheer on thousands of New York Marathon runners at the lululemon cheer station just past the 21 mile marker in Harlem. (Photo: Business Wire)
For the fourth quarter ended January 30, 2011:
-- Net revenue for the quarter increased 53% to $245.4 million from $160.6
million in the fourth quarter of fiscal 2009.
-- Comparable stores sales for the fourth quarter increased by 28% on a
constant dollar basis.
-- Direct to consumer revenue increased 152% to $24.6 million, or 10% of
total Company sales, in the fourth quarter of fiscal 2010, from 6% of
total revenue in the same period last year.
-- Gross profit for the quarter increased by 66% to $143.5 million, and as
a percentage of net revenue gross profit increased to 58.5% for the
quarter from 53.9% in the fourth quarter of fiscal 2009.
-- Income from operations for the quarter increased by 72% to $71.3
million, and as a percentage of net revenue was 29.1% compared to 25.8%
of net revenue in the fourth quarter of fiscal 2009.
-- The tax rate for the quarter was 23.5% compared to 31.4% a year ago,
after an adjustment of $8.9 million reversing deferred tax liabilities
recorded in Q1 through Q3 of fiscal 2010. This adjustment resulted from
a revision to managements plans for repatriation of unremitted earnings
of the Canadian operating subsidiary. Normalized for this adjustment,
the tax rate for the quarter was 35.9%.
-- Diluted earnings per share for the quarter were $0.76 on net income of
$54.8 million, compared to diluted earnings per share of $0.40 on net
income of $28.5 million in the fourth quarter of fiscal 2009. Normalized
for the tax adjustment, diluted earnings per share for the quarter were
$0.64.
For the fiscal year ended January 30, 2011:
-- Net revenue for the fiscal year increased 57% to $711.7 million from
$452.9 million in fiscal 2009.
-- Comparable stores sales for fiscal 2010 increased by 30% on a constant
dollar basis, resulting in a record $1,726 sales per square foot as at
January 30, 2011.
-- Direct to consumer revenue increased 214% to $57.3 million, or 8% of
total Company sales, in fiscal 2010, from 4% of total revenue in fiscal
2009.
-- Gross profit for the fiscal year increased by 77% to $394.9 million from
$223.1 million in fiscal 2009. As a percentage of net revenue, gross
profit increased to 55.5% for fiscal 2010 from 49.3% in fiscal 2009.
-- Income from operations increased by 108% to $180.4 million, and as a
percentage of net revenue was 25.3% compared to 19.1% of net revenue in
fiscal 2009.
-- The tax rate for fiscal 2010 was 33.3% compared to 32.8% for fiscal
2009.
-- Diluted earnings per share in fiscal 2010 increased 106% to $1.69 on net
income of $121.8 million, compared to diluted earnings per share of
$0.82 on net income of $58.3 million in fiscal 2009.
The Company ended fiscal 2010 with $316.3 million in cash and cash
equivalents compared to $159.6 million at the end of fiscal 2009.
Inventory at the end of fiscal 2010 totaled $57.5 million compared to
$44.1 million at the end of fiscal 2009. The Company ended the quarter
with 137 stores in North America and Australia.
Christine Day, lululemon's CEO, stated: "We ended one of the best years
in lululemon's history with strong Q4 results that extended the
consistent sales growth and margin expansion that we enjoyed for each
quarter of 2010. The exceptionally strong sell through of our Q4 product
line leaves us with short term unmet demand in the first quarter due to
a low inventory position. However, the strength of our business model
and growing guest demand for our product give us the opportunity to
accelerate our store and e-commerce channel growth in 2011 and to
establish ourselves as the number one women's athletic wear brand. While
we will see some cost pressures in 2011, we are confident in our ability
to maintain our business model through disciplined management, operating
efficiencies and leverage on higher sales."
Updated Outlook
For the first quarter of fiscal 2011, we expect net revenue to be in the
range of $175 million to $180 million based on a comparable-store sales
percentage increase in the low double digits on a constant-dollar basis.
Diluted earnings per share are expected to be in the range of $0.36 to
$0.38 for the quarter. This assumes 72.4 million diluted
weighted-average shares outstanding and a 36% tax rate.
For fiscal 2011, we expect net revenue to be in the range of $885
million to $900 million and diluted earnings per share are expected to
be in the range of $1.90 to $2.00 for the full year. This assumes a tax
rate of 36% and 72.6 million diluted weighted-average shares outstanding.
Conference Call Information
A conference call to discuss fiscal 2010 results is scheduled for today,
March 17, 2011, 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;
risks that the cost of raw materials could increase our cost of goods
sold and that we will not be successful in our efforts to protect our
business from the volatility of the market price for cotton and other
raw materials; risks that increasing labor costs and other factors
associated with the manufacture of our products in China could increase
our costs to produce our products; risks that we may not be able to
obtain quality products on a timely basis or in sufficient quantity from
our third-party suppliers to meet the demand for our products; 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 30, 2011 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 Fifty-Two Fifty-Two
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
January 30, January 31, January 30, January 31,
2011 2010 2011 2010
(unaudited) (unaudited)
Net revenue $245,399$160,606$711,704$452,898
Costs of goods sold 101,939 74,046 316,757 229,812
Gross profit 143,460 86,560 394,947 223,086
As a percent of net 58.5 % 53.9 % 55.5 % 49.3 %
revenue
Selling, general and 71,483 44,929 212,784 136,161
administrative expenses
As a percent of net 29.1 % 28.0 % 29.9 % 30.1 %
revenue
Provision for impairment 679 196 1,772 379
and lease exit costs
Income from operations 71,298 41,435 180,391 86,546
As a percent of net 29.1 % 25.8 % 25.3 % 19.1 %
revenue
Other income (expense), 542 66 2,886 164
net
Income before provision 71,840 41,501 183,277 86,710
for income taxes
Provision for income 16,873 13,050 61,080 28,429
taxes
Net Income 54,967 28,451 122,197 58,281
Net income attributable
to non-controlling 201 - 350 -
interest
Net income attributable
to lululemon athletica $54,766$28,451$121,847$58,281
inc.
Basic earnings per share $0.77$0.40$1.72$0.83
Diluted earnings per $0.76$0.40$1.69$0.82
share
Basic weighted-average 71,087 70,400 70,860 70,251
shares outstanding
Diluted weighted-average 72,181 71,308 71,929 70,949
shares outstanding
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
January 30, January 31,
2011 2010
ASSETS
Current assets
Cash and cash equivalents $316,286$159,573
Inventories 57,469 44,070
Other current assets 15,524 12,767
Total current assets 389,279 216,410
Property and equipment, net 70,954 61,591
Intangible assets, net 27,112 8,050
Deferred income taxes and other assets 11,957 21,207
Total assets $499,302$307,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $6,659$11,028
Other current liabilities 60,306 39,908
Income taxes payable 18,399 7,742
Total current liabilities 85,364 58,678
Deferred income taxes and other non-current 19,645 15,472
liabilities
Stockholders' equity 394,293 233,108
Total liabilities and stockholders' equity $499,302$307,258
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
Fifty-Two Weeks Ended Fifty-Two Weeks Ended
January 30, 2011 January 31, 2010
Cash flows from operating
activities
Net income $122,197$58,281
Items not affecting cash 33,832 28,889
Other, including net changes in 23,966 30,790
other non-cash balances
Net cash provided by operating 179,995 117,960
activities
Net cash used in investing (42,839 ) (16,307 )
activities
Net cash provided by financing 13,699 (2,649 )
activities
Effect of exchange rate changes 5,858 3,772
on cash
Increase in cash and cash 156,713 102,776
equivalents
Cash and cash equivalents, $159,573$56,797
beginning of period
Cash and cash equivalents, end $316,286$159,573
of period
lululemon athletica inc.
Store Count and Square Footage1
Year ended January 30, 2011
Square Footage Expressed in Thousands
Number of Number of Number of
Stores Open Stores Stores Number of
at the Opened / Closed Stores Open
Beginning of Acquired During the at the End of
the Quarter During the Quarter the Quarter
Quarter2
1st Quarter 110 4 0 114
2nd Quarter 114 12 0 126
3rd Quarter 126 4 0 130
4th Quarter 130 5 2 133
Total Gross Gross Square
Square Feet Gross Square Feet Lost Total Gross
at the Feet Added due to Store Square Feet
Beginning of During the Closures at the End of
the Quarter Quarter2,3 During the the Quarter
Quarter
1st Quarter 316 9 0 325
2nd Quarter 325 25 0 350
3rd Quarter 350 14 0 364
4th Quarter 364 13 (3 ) 374
1Store count and square footage summary includes corporate-owned stores
which are branded lululemon athletica and ivivva athletica.
2Number 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.
3Gross 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
January 30, 2011 January 31, 2010
% Change % Change
Comparable-store sales (GAAP) 32% 42%
Increase (decrease) due to foreign (4)% (13)%
exchange rate changes
Comparable-store sales in constant 28% 29%
dollars
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Source: lululemon athletica inc.