First Quarter Net Revenue Increased 35% to $186.8 million
First Quarter Diluted EPS of $0.46
VANCOUVER, British Columbia--(BUSINESS WIRE)--
lululemon athletica inc. (NASDAQ:LULU) (TSX:LLL) today announced
financial results for the first quarter ended May 1, 2011.
lululemon athletica South Miami opened on April 15, 2011. (Photo: Business Wire)
For the first quarter ended May 1, 2011:
-- Net revenue for the quarter increased 35% to $186.8 million from $138.3
million in the first quarter of fiscal 2010.
-- Comparable stores sales for the first quarter increased by 16% on a
constant dollar basis.
-- Direct to consumer revenue increased 51% to $13.8 million, or 7.4% of
total Company sales, in the first quarter of fiscal 2011, an increase
from 6.6% of total Company sales in the first quarter of fiscal 2010.
-- Gross profit for the quarter increased by 48% to $109.7 million, and as
a percentage of net revenue gross profit increased to 58.7% for the
quarter from 53.8% in the first quarter of fiscal 2010. The increase
included 140 basis points from the non-recurring adjustment for the
recognition of input tax credits in the first quarter of fiscal 2011.
-- Income from operations for the quarter increased by 59% to $51.7
million, and as a percentage of net revenue was 27.7% compared to 23.5%
of net revenue in the first quarter of fiscal 2010.
-- The tax rate for the quarter was 36.3% compared to 40.0% a year ago. The
decrease resulted from a revision to management's plans for repatriation
of unremitted earnings of the Canadian operating subsidiary.
-- Diluted earnings per share for the quarter were $0.46 on net income of
$33.4 million, compared to diluted earnings per share of $0.27 on net
income of $19.6 million in the first quarter of fiscal 2010. The
increase included $0.02 in diluted earnings per share from the
non-recurring adjustment for the recognition of input tax credits in the
first quarter of fiscal 2011.
The Company ended the first quarter of fiscal 2011 with $260.9 million
in cash and cash equivalents compared to $173.6 million at the end of
the first quarter of fiscal 2010. Inventory at the end of the first
quarter of fiscal 2011 totaled $64.4 million compared to $50.8 million
at the end of the first quarter of fiscal 2010. The Company ended the
quarter with 142 stores in North America and Australia.
Christine Day, lululemon's CEO stated: "We've had a great start to the
year and a very successful first quarter considering our lean inventory
levels. We were able to generate strong sales and earnings growth while
also focusing on a successful transition of our e-Commerce platform
in-house. While cautious about the macro-environment, we remain
confident that our business momentum will continue through fiscal 2011."
Updated Outlook
For the second quarter of fiscal 2011, we expect net revenue to be in
the range of $200 million to $205 million based on a comparable-store
sales percentage increase in the mid-to-upper teens on a constant-dollar
basis. Diluted earnings per share are expected to be in the range of
$0.42 to $0.44 for the quarter. This assumes 72.6 million diluted
weighted-average shares outstanding and a 36% tax rate.
For the full fiscal 2011, we now expect net revenue to be in the range
of $915 million to $930 million and diluted earnings per share are
expected to be in the range of $2.10 to $2.16 for the full year. This
assumes a tax rate of 36% and 72.8 million diluted weighted-average
shares outstanding.
Conference Call Information
A conference call to discuss first quarter results is scheduled for
today, June 10, 2011, at 9:00 a.m. EST. Those interested in
participating in the call are invited to dial 1-877-303-3203
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 a long,
healthy and fun life. 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 risk that increasing costs of raw materials could increase our cost
of goods sold and cause our results of operations and financial
condition to suffer; increasing labor costs and other factors associated
with the production of our products in China, which could increase the
costs to produce 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 Weeks Ended Thirteen Weeks Ended
May 1, 2011 May 2, 2010
(unaudited) (unaudited)
Net revenue $ 186,780$ 138,297
Costs of goods sold 77,096 63,940
Gross profit 109,684 74,357
As a percent of net revenue 58.7 % 53.8 %
Selling, general and administrative 57,997 41,883
expenses
As a percent of net revenue 31.1 % 30.3 %
Income from operations 51,687 32,474
As a percent of net revenue 27.7 % 23.5 %
Other income (expense), net 904 161
Income before provision for income 52,591 32,635
taxes
Provision for income taxes 19,075 13,047
Net income 33,516 19,588
Net income attributable to 144 --
non-controlling interest
Net income attributable to lululemon $ 33,372$ 19,588
athletica inc.
Basic earnings per share $ 0.47$ 0.28
Diluted earnings per share $ 0.46$ 0.27
Basic weighted-average shares 71,380 70,599
outstanding
Diluted weighted-average shares 72,455 71,582
outstanding
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
May 1, 2011 January 30, 2011
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $ 260,871$ 316,286
Inventories 64,423 57,469
Other current assets 24,694 15,524
Total current assets 349,988 389,279
Property and equipment, net 144,917 70,954
Goodwill and intangible assets, net 28,769 27,112
Deferred income taxes and other assets 12,786 11,957
Total assets $ 536,460$ 499,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,409$ 6,659
Other current liabilities 55,581 60,306
Income taxes payable - 18,399
Total current liabilities 58,990 85,364
Non-current liabilities 21,609 19,645
Stockholders' equity 455,861 394,293
Total liabilities and stockholders' equity $ 536,460$ 499,302
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
Thirteen Weeks Ended Thirteen Weeks Ended
May 1, 2011 May 2, 2010
(unaudited) (unaudited)
Cash flows from operating activities
Net income $ 33,516$ 19,588
Items not affecting cash 6,277 9,026
Other, including net changes in (34,138 ) (16,042 )
other non-cash balances
Net cash provided by operating 5,655 12,572
activities
Net cash used in investing (74,831 ) (6,157 )
activities
Net cash provided by financing 8,158 4,982
activities
Effect of exchange rate changes on 5,603 2,670
cash
Increase (decrease) in cash and cash (55,415 ) 14,067
equivalents
Cash and cash equivalents, beginning $ 316,286$ 159,573
of period
Cash and cash equivalents, end of $ 260,871$ 173,640
period
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant-dollar changes
Thirteen Weeks Ended Thirteen Weeks Ended
May 1, 2011 May 2, 2010
% Change % Change
Comparable-store sales (GAAP) 19 % 51 %
Decrease due to foreign exchange (3 )% (16 )%
rate changes
Comparable-store sales in constant 16 % 35 %
dollars
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Source: lululemon athletica inc.