VANCOUVER, British Columbia
--(BUSINESS WIRE)--
lululemon athletica inc.
(NASDAQ:LULU) today announced financial results
for the second quarter ended
August 4, 2013
.
For the thirteen weeks ended
August 4, 2013
:
-
Net revenue for the quarter increased 22% to
$344.5 million
from
$282.6 million
in the second quarter of fiscal 2012.
-
Comparable stores sales for the second quarter increased by 8% on a
constant dollar basis.
-
Direct to consumer revenue increased 39% to
$49.4 million
, or 14.3% of
total Company revenues, in the second quarter of fiscal 2013, an
increase from 12.5% of total Company revenues in the second quarter of
fiscal 2012.
-
Gross profit for the quarter increased 19% to
$186.0 million
, and as a
percentage of net revenue gross profit decreased to 54.0% for the
quarter from 55.1% in the second quarter of fiscal 2012.
-
Income from operations for the quarter increased 12.5% to
$79.0
million
, and as a percentage of net revenue was 22.9% compared to
24.8% of net revenue in the second quarter of fiscal 2012.
-
The tax rate for the quarter was 29.7% compared to 19.1% a year ago.
The effective tax rate for the second quarter of fiscal 2012 reflected
an adjustment of
$7.2 million
, reversing taxes provided for in the
fourth quarter of fiscal 2011 through the first quarter of fiscal 2012.
-
Diluted earnings per share for the quarter were
$0.39
on net income of
$56.5 million
, compared to diluted earnings per share of
$0.39
on net
income of
$57.2 million
in the second quarter of fiscal 2012.
For the twenty-six weeks ended
August 4, 2013
:
-
Net revenue for the first two quarters of fiscal 2013 increased 22% to
$690.3 million
from
$568.3 million
in the same period of fiscal 2012.
-
Comparable stores sales for the first two quarters of fiscal 2013
increased by 8% on a constant dollar basis.
-
Direct to consumer revenue increased 40% to
$103.4 million
, or 15.0%
of total company revenues, in the first two quarters of fiscal 2013,
an increase from 13.0% of total company revenues in the first two
quarters of fiscal 2012.
-
Gross profit for the first two quarters of fiscal 2013 increased 14%
to
$356.7 million
, and as a percentage of net revenue gross profit was
51.7% for the first two quarters as compared to 55.1% in the same
period of fiscal 2012.
-
Income from operations for the first two quarters of fiscal 2013
increased 1% to
$144.9 million
, and as a percentage of net revenue was
21.0% as compared to 25.2% of net revenue in the same period of fiscal
2012.
-
The effective tax rate for the first two quarters of fiscal 2013 was
29.7% compared to 28.0% a year ago.
-
Diluted earnings per share for the first two quarters of fiscal 2013
were
$0.71
on net income of
$103.7 million
, compared to diluted
earnings per share of
$0.71
on net income of
$103.9 million
the same
period of fiscal 2012.
The Company ended the second quarter of fiscal 2013 with
$610.3 million
in cash and cash equivalents compared to
$444.3 million
at the end of
the second quarter of fiscal 2012. Inventory at the end of the second
quarter of fiscal 2013 totaled
$163.0 million
compared to
$125.4 million
at the end of the second quarter of fiscal 2012. The Company ended the
quarter with 226 stores in
North America
and
Australia
.
Christine Day
, lululemon's CEO, stated: "2013 continues to be the most
important and most productive year in lululemon's history. We have not
only worked our way back from the black luon setback, but have also
added very talented people in important functions and have taken major
steps forward on a number of key fronts including the expansion of our
international and men's businesses and many logistical initiatives. In
addition, our exclusive partnership with Noble announced today and
additional sources for luon will help to ensure that lululemon remains a
distinct leader in quality and innovation."
Ms. Day
continues: "We are
well on our way to finishing 2013 as a much stronger company than when
the year began. I am confident that the leadership currently in place
coupled with a new CEO will have tremendous success leveraging the
platform for growth."
Strategic global alliance with
Noble Biomaterials
Today we announced a strategic global alliance for X-STATIC® with
Noble
Biomaterials
. The partnership gives lululemon exclusivity to use Noble's
X-STATIC® antimicrobial technology in our performance apparel. Noble has
been a longstanding partner of lululemon, providing its X-STATIC®
technology for our Silverescent® fabric since 2005. This unique
opportunity allows us to continue to innovate our technical product with
X-STATIC® and secure our leadership position in “anti-stink” athletic
apparel. X-STATIC®'s properties have helped lululemon to set the
industry standard by using the most powerful silver fabric technology to
create our Silverescent® fabrics. Made with 99.9% pure metallic silver,
X-STATIC® is designed to provide permanent odor protection by naturally
inhibiting the growth of bacteria on the surface of fabrics. The silver
fiber is woven directly into the garment and will not wash out over time
through laundering.
Updated Outlook
For the third quarter of fiscal 2013, we expect net revenue to be in the
range of
$370 million
to
$375 million
based on a comparable-store sales
percentage increase in the mid-single digits on a constant-dollar basis.
Diluted earnings per share are expected to be in the range of
$0.39
to
$0.41
for the quarter. This assumes 146.0 million diluted
weighted-average shares outstanding and a tax rate of 30.0%.
For the full fiscal 2013, we now expect net revenue to be in the range
of
$1.625 billion
to
$1.635 billion
and diluted earnings per share are
expected to be in the range of
$1.94
to
$1.97
for the full year. This
assumes 146.0 million diluted weighted-average shares outstanding and a
tax rate of 30.0%.
Conference Call Information
A conference call to discuss second quarter results is scheduled for
today,
September 12, 2013
, 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) is a yoga-inspired athletic apparel
company that creates components for people to live long, healthy and 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.
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 the effect of shipments of
products that fail to comply with our technical specifications or that
fail to conform to our quality control standards, the duration of any
shortage of products available for sale in our stores or for delivery to
guests or our ability to obtain replacement products in a timely manner,
any expected loss of net revenue resulting from the inability to sell
those products and related increased administrative and shipping costs,
and our future financial condition or results of operations. 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: our reliance on
and limited control over third-party suppliers to provide fabrics for
and to produce our products; negative publicity regarding any of our
products or our the production methods of any of our suppliers or
manufacturers; the effects of shipments of products that fail to comply
with our technical specifications or that fail to conform to our quality
standards; the effects of a shortage of products available for sale in
our stores or for delivery to guests; 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 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 laws related to our human resources policies or other procedures;
our failure to comply with trade and other regulations; our search for a
new CEO and the possibility of losing the services of other key
personnel; 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 risks
and uncertainties set out in filings made from time to time with the
United States Securities and Exchange Commission
and available at www.sec.gov,
including, without limitation, our most recent reports on Form 10-K and
Form 10-Q. 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
August 4, 2013
|
|
Thirteen Weeks
Ended
July 29, 2012
|
|
Twenty-Six Weeks
Ended
August 4, 2013
|
|
Twenty-Six Weeks
Ended
July 29, 2012
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
Net revenue
|
|
$
|
344,513
|
|
|
$
|
282,634
|
|
|
$
|
690,295
|
|
|
$
|
568,333
|
|
|
Costs of goods sold
|
|
158,558
|
|
|
126,879
|
|
|
333,616
|
|
|
255,314
|
|
|
Gross profit
|
|
185,955
|
|
|
155,755
|
|
|
356,679
|
|
|
313,019
|
|
| As a percent of net revenue |
|
54.0 |
% |
|
55.1 |
% |
|
51.7 |
% |
|
55.1 |
% |
|
Selling, general and administrative expenses
|
|
106,969
|
|
|
85,567
|
|
|
211,804
|
|
|
169,766
|
|
| As a percent of net revenue |
|
31.1 |
% |
|
30.3 |
% |
|
30.7 |
% |
|
29.9 |
% |
|
Income from operations
|
|
78,986
|
|
|
70,188
|
|
|
144,875
|
|
|
143,253
|
|
| As a percent of net revenue |
|
22.9 |
% |
|
24.8 |
% |
|
21.0 |
% |
|
25.2 |
% |
|
Other income (expense), net
|
|
1,295
|
|
|
1,166
|
|
|
2,796
|
|
|
2,076
|
|
|
Income before provision for income taxes
|
|
80,281
|
|
|
71,354
|
|
|
147,671
|
|
|
145,329
|
|
|
Provision for income taxes
|
|
23,816
|
|
|
13,652
|
|
|
43,928
|
|
|
40,653
|
|
|
Net income
|
|
56,465
|
|
|
57,702
|
|
|
103,743
|
|
|
104,676
|
|
|
Net income attributable to non-controlling interest
|
|
—
|
|
|
480
|
|
|
—
|
|
|
811
|
|
|
Net income attributable to lululemon athletica inc.
|
|
$
|
56,465
|
|
|
$
|
57,222
|
|
|
$
|
103,743
|
|
|
$
|
103,865
|
|
|
Basic earnings per share
|
|
$
|
0.39
|
|
|
$
|
0.40
|
|
|
$
|
0.72
|
|
|
$
|
0.72
|
|
|
Diluted earnings per share
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
$
|
0.71
|
|
|
$
|
0.71
|
|
|
Basic weighted-average shares outstanding
|
|
144,818
|
|
|
143,972
|
|
|
144,650
|
|
|
143,826
|
|
|
Diluted weighted-average shares outstanding
|
|
145,916
|
|
|
145,678
|
|
|
145,901
|
|
|
145,698
|
|
| lululemon athletica inc. |
Condensed Consolidated Balance Sheets |
Expressed in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 4, 2013
|
|
|
|
February 3, 2013
|
|
|
|
|
|
(unaudited)
|
|
|
|
(audited)
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
610,273
|
|
|
|
|
$
|
590,179
|
|
|
Inventories
|
|
|
|
|
163,004
|
|
|
|
|
155,222
|
|
|
Other current assets
|
|
|
|
|
64,863
|
|
|
|
|
41,652
|
|
|
Total current assets
|
|
|
|
|
838,140
|
|
|
|
|
787,053
|
|
|
Property and equipment, net
|
|
|
|
|
228,794
|
|
|
|
|
214,639
|
|
|
Goodwill and intangible assets, net
|
|
|
|
|
29,224
|
|
|
|
|
30,201
|
|
|
Deferred income taxes and other non-current assets
|
|
|
|
|
17,964
|
|
|
|
|
19,185
|
|
|
Total assets
|
|
|
|
|
$
|
1,114,122
|
|
|
|
|
$
|
1,051,078
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
$
|
12,721
|
|
|
|
|
$
|
1,045
|
|
|
Other current liabilities
|
|
|
|
|
86,960
|
|
|
|
|
92,675
|
|
|
Income taxes payable
|
|
|
|
|
1,260
|
|
|
|
|
39,637
|
|
|
Total current liabilities
|
|
|
|
|
100,941
|
|
|
|
|
133,357
|
|
|
Non-current liabilities
|
|
|
|
|
33,893
|
|
|
|
|
30,422
|
|
|
Stockholders’ equity
|
|
|
|
|
979,288
|
|
|
|
|
887,299
|
|
|
Total liabilities and stockholders’ equity
|
|
|
|
|
$
|
1,114,122
|
|
|
|
|
$
|
1,051,078
|
|
| lululemon athletica inc. |
Condensed Consolidated Statements of Cash Flows |
Expressed in thousands |
|
|
|
|
|
|
|
Twenty-Six Weeks
Ended
August 4, 2013
|
|
Twenty-Six Weeks
Ended
July 29, 2012
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net income
|
|
$
|
103,743
|
|
|
$
|
104,676
|
|
|
Items not affecting cash
|
|
42,039
|
|
|
22,762
|
|
|
Other, including net changes in other non-cash balances
|
|
(74,851
|
)
|
|
(63,918
|
)
|
|
Net cash provided by operating activities
|
|
70,931
|
|
|
63,520
|
|
|
Net cash used in investing activities
|
|
(44,014
|
)
|
|
(39,046
|
)
|
|
Net cash provided by financing activities
|
|
6,305
|
|
|
10,470
|
|
|
Effect of exchange rate changes on cash
|
|
(13,128
|
)
|
|
(95
|
)
|
|
Increase in cash and cash equivalents
|
|
20,094
|
|
|
34,849
|
|
|
Cash and cash equivalents, beginning of period
|
|
$
|
590,179
|
|
|
$
|
409,437
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
610,273
|
|
|
$
|
444,286
|
|
| lululemon athletica inc. |
Reconciliation of Non-GAAP Financial Measure |
Constant-dollar changes
(unaudited) |
|
|
|
|
|
|
|
Thirteen Weeks Ended
August 4, 2013
|
|
Thirteen Weeks Ended
July 29, 2012
|
|
|
% Change |
|
% Change |
|
Comparable-store sales (GAAP)
|
|
7
|
%
|
|
13
|
%
|
|
Adjustments due to foreign exchange rate changes
|
|
1
|
%
|
|
2
|
%
|
|
Comparable-store sales in constant dollars
|
|
8
|
%
|
|
15
|
%
|
| lululemon athletica inc. |
Store Count and Square Footage1 |
Twenty-Six Weeks Ended August 4, 2013 |
Square Footage Expressed in Thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Stores Open
at the
Beginning
of
the Quarter
|
|
|
Number of
Stores
Opened
During
the
Quarter2
|
|
|
Number of
Stores
Closed
During
the
Quarter
|
|
|
Number of
Stores Open
at the End of
the
Quarter
|
|
1st Quarter
|
|
|
211
|
|
|
|
8
|
|
|
|
1
|
|
|
|
218
|
|
|
2nd Quarter
|
|
|
218
|
|
|
|
8
|
|
|
|
—
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross
Square Feet
at the
Beginning
of
the Quarter
|
|
|
Gross Square
Feet Added
During the
Quarter2,3
|
|
|
Gross Square
Feet Lost
During the
Quarter3
|
|
|
Total Gross
Square Feet
at the End of
the
Quarter
|
|
1st Quarter
|
|
|
602
|
|
|
|
27
|
|
|
|
2
|
|
|
|
627
|
|
|
2nd Quarter
|
|
|
627
|
|
|
|
27
|
|
|
|
—
|
|
|
|
654
|
|
| 1Store count and square footage summary includes
corporate-owned stores which are branded lululemon athletica and
ivivva athletica.
|
| 2Number of stores opened during the quarter that are
branded lululemon athletica and ivivva athletica.
|
| 3Gross 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.
|
Investor Contact:
ICR, Inc.
Joseph Teklits
/Jean
Fontana, 203-682-8200
or
Media Contact:
ICR, Inc.
Alecia
Pulman
, 203-682-8224
Source: lululemon athletica inc.