Second Quarter Net Revenue Increased 39% to $212.3 million
Second Quarter Diluted EPS of $0.26
VANCOUVER, British Columbia--(BUSINESS WIRE)--
lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced
financial results for the second quarter ended July 31, 2011.
For the thirteen weeks ended July 31, 2011:
-- Net revenue for the quarter increased 39% to $212.3 million from $152.2
million in the second quarter of fiscal 2010.
-- Comparable stores sales for the second quarter increased by 20% on a
constant dollar basis.
-- Direct to consumer revenue increased 93% to $18.6 million, or 8.8% of
total Company revenues, in the second quarter of fiscal 2011, an
increase from 6.3% of total Company revenues in the second quarter of
fiscal 2010.
-- Gross profit for the quarter increased 52% to $122.1 million, and as a
percentage of net revenue gross profit increased to 57.5% for the
quarter from 52.8% in the second quarter of fiscal 2010.
-- Income from operations for the quarter increased 74% to $59.5 million,
and as a percentage of net revenue was 28.0% compared to 22.5% of net
revenue in the second quarter of fiscal 2010.
-- The tax rate for the quarter was 35.7% compared to 40.3% a year ago. The
decrease resulted from a revision to management's plans for repatriation
of unremitted earnings of the Canadian operating subsidiary.
-- Presented on a post-split basis, diluted earnings per share for the
quarter were $0.26 on net income of $38.4 million, compared to diluted
earnings per share of $0.15 on net income of $21.8 million in the second
quarter of fiscal 2010.
For the twenty-six weeks ended July 31, 2011:
-- Net revenue for the first two quarters increased 37% to $399.1 million
from $290.5 million in the same period of fiscal 2010.
-- Comparable stores sales for the first two quarters increased by 18% on a
constant dollar basis.
-- Direct to consumer revenue increased 72% to $32.4 million, or 8.1% of
total Company revenues, in the first two quarters of fiscal 2011, an
increase from 6.5% of total Company revenues in the first two quarters
of fiscal 2010.
-- Gross profit for the quarter increased 50% to $231.8 million, and as a
percentage of net revenue gross profit increased to 58.1% for the first
two quarters from 53.2% in the same period 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 first two quarters increased 67% to
$111.2 million, and as a percentage of net revenue was 27.9% compared to
23.0% of net revenue in the same period of fiscal 2010.
-- The tax rate for the first two quarters was 36.0% compared to 40.1% a
year ago. The decrease resulted from a revision to management's plans
for repatriation of unremitted earnings of the Canadian operating
subsidiary.
-- Presented on a post-split basis, diluted earnings per share for the
first two quarters were $0.49 on net income of $71.8 million, compared
to diluted earnings per share of $0.29 on net income of $41.4 million in
the same period 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 second quarter of fiscal 2011 with $264.7 million
in cash and cash equivalents compared to $178.2 million at the end of
the second quarter of fiscal 2010. Inventory at the end of the second
quarter of fiscal 2011 totaled $88.9 million compared to $66.5 million
at the end of the second quarter of fiscal 2010. The Company ended the
quarter with 151 stores in North America and Australia.
Christine Day, lululemon's CEO stated: "Our business remained very
healthy through the second quarter, as strong sales productivity and
operating margins grew pre-tax income by more than 60%. Our success is
based on running a healthy brand focused business. We are confident that
we are well positioned to manage successfully through the current
economic environment while sensibly pursuing our future opportunities."
Updated Outlook
For the third quarter of fiscal 2011, we expect net revenue to be in the
range of $225 million to $230 million based on a comparable-store sales
percentage increase in the low to mid-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 145.5 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 $930 million to $950 million and diluted earnings per share are
expected to be in the range of $1.10 to $1.14 for the full year. This
assumes 145.4 million diluted weighted-average shares outstanding and a
tax rate of 36%.
Conference Call Information
A conference call to discuss second quarter results is scheduled for
today, September 9, 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.
The presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with GAAP.
For more information on this non-GAAP financial measure, please see the
table captioned "Reconciliation of Non-GAAP Financial Measure - Constant
dollar changes" included in the accompanying financial tables, which
includes more detail on the GAAP financial measure that is most directly
comparable to non-GAAP financial measures and the related
reconciliations between these financial measures.
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: an economic
downturn or economic uncertainty in our key markets; increasing product
costs and decreasing selling prices; our inability to anticipate
consumer preferences and successfully develop and introduce new,
innovative and updated products; our inability to accurately forecast
customer demand for our products; our inability to manage our growth and
the increased complexity of our business effectively; the fluctuating
costs of raw materials; our reliance on and limited control over
third-party suppliers to provide fabrics for and to produce our
products; our highly competitive market and increasing competition; an
unforeseen disruption of our information systems; our inability to
deliver our products to the market and to meet customer expectations due
to problems with our distribution system; our inability to cancel store
leases if an existing or new store is not profitable; increasing labor
costs and other factors associated with the production of our products
in China; our inability to successfully open new store locations in a
timely manner; our failure to maintain the value and reputation of our
brand; our failure to comply with trade and other regulations; our
competitors manufacturing and selling products based on our fabrics and
manufacturing technology at lower prices than we can; our failure to
protect our intellectual property rights; and other risk factors
detailed in our Annual Report on Form 10-K for the fiscal year ended
January 30, 2011 and our Quarterly Reports on Form 10-Q for fiscal 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 Twenty-Six Twenty-Six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
July 31, 2011 August 1, 2010 July 31, 2011 August 1, 2010
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenue $ 212,323$ 152,208$ 399,103$ 290,505
Costs of goods 90,251 71,910 167,346 135,850
sold
Gross profit 122,072 80,298 231,757 154,655
As a percent of 57.5 % 52.8 % 58.1 % 53.2 %
net revenue
Selling, general
and 62,589 46,055 120,587 87,938
administrative
expenses
As a percent of 29.5 % 30.2 % 30.2 % 30.3 %
net revenue
Income from 59,483 34,243 111,170 66,717
operations
As a percent of 28.0 % 22.5 % 27.9 % 23.0 %
net revenue
Other income 597 2,092 1,501 2,254
(expense), net
Income before
provision for 60,080 36,335 112,671 68,971
income taxes
Provision for 21,462 14,628 40,537 27,676
income taxes
Net income 38,618 21,707 72,134 41,295
Net income (loss)
attributable to 239 (85 ) 383 (85 )
non-controlling
interest
Net income
attributable to $ 38,379$ 21,792$ 71,751$ 41,380
lululemon
athletica inc.
Basic earnings $ 0.27$ 0.15$ 0.50$ 0.29
per share
Diluted earnings $ 0.26$ 0.15$ 0.49$ 0.29
per share
Basic
weighted-average 143,163 141,640 142,961 141,416
shares
outstanding
Diluted
weighted-average 145,228 143,500 145,108 143,384
shares
outstanding
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
July 31, 2011 January 30, 2011
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $ 264,728$ 316,286
Inventories 88,884 57,469
Other current assets 30,360 15,524
Total current assets 383,972 389,279
Property and equipment, net 151,120 70,954
Goodwill and intangible assets, net 28,434 27,112
Deferred income taxes and other assets 22,935 11,957
Total assets $ 586,461$ 499,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,445$ 6,659
Other current liabilities 60,598 60,306
Income taxes payable - 18,399
Total current liabilities 65,043 85,364
Non-current liabilities 21,741 19,645
Stockholders' equity 499,677 394,293
Total liabilities and stockholders' equity $ 586,461$ 499,302
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
Twenty-Six Weeks Ended Twenty-Six Weeks Ended
July 31, 2011 August 1, 2010
(unaudited) (unaudited)
Cash flows from operating
activities
Net income $ 72,134$ 41,295
Items not affecting cash 3,749 22,436
Other, including net changes in (56,354 ) (29,179 )
other non-cash balances
Net cash provided by operating 19,529 34,552
activities
Net cash used in investing (87,324 ) (24,053 )
activities
Net cash provided by financing 12,095 6,138
activities
Effect of exchange rate changes 4,142 1,962
on cash
Increase (decrease) in cash and (51,558 ) 18,599
cash equivalents
Cash and cash equivalents, $ 316,286$ 159,573
beginning of period
Cash and cash equivalents, end $ 264,728$ 178,172
of period
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant-dollar changes
Thirteen Weeks Ended Thirteen Weeks Ended
July 31, 2011 August 1, 2010
% Change % Change
Comparable-store sales (GAAP) 25% 38%
Adjustments due to changes in (5)% (7)%
foreign exchange rates
Comparable-store sales in constant 20% 31%
dollars
lululemon athletica inc.
Store Count and Square Footage1
Quarter ended July 31, 2011
Square Footage Expressed in Thousands
Number of
Number of Number of
Stores Number of
Stores Open Stores
Opened / Stores Open
at the Closed
Acquired at the End of
Beginning of During the
During the the Quarter
the Quarter Quarter
Quarter
1st Quarter 133 5 0 138
2nd Quarter 138 9 0 147
Total Gross
Gross Square Gross Square Total Gross
Square Feet
Feet Added Feet Lost Square Feet
at the
During the During the at the End of
Beginning of
Quarter2 Quarter2 the Quarter
the Quarter
1st Quarter 374 12 0 386
2nd Quarter 386 31 1 416
1 Store count and square footage summary includes
corporate-owned stores which are branded lululemon athletica and ivivva
athletica.
2 Gross square feet added/lost during the quarter includes
net square foot additions for corporate-owned stores which have been
renovated or relocated in the quarter.
Source: lululemon athletica inc.