VANCOUVER, British Columbia
--(BUSINESS WIRE)--
lululemon athletica inc. (NASDAQ:LULU) today announced financial results
for the third quarter ended
November 2, 2014
.
For the third quarter ended
November 2, 2014
:
-
Net revenue for the quarter increased 10% to
$419.4 million
from
$379.9 million
in the third quarter of fiscal 2013.
-
Total comparable sales, which includes comparable store sales and
direct to consumer, increased by 3% for the third quarter on a
constant dollar basis. Comparable store sales for the third quarter
decreased by 3% on a constant dollar basis and direct to consumer
revenue increased 27% on a constant dollar basis.
-
Direct to consumer revenue increased to
$77.2 million
, or 18.4% of
total Company revenues, in the third quarter of fiscal 2014, an
increase from 16.3% of total Company revenues in the third quarter of
fiscal 2013.
-
Gross profit for the quarter increased 3% to
$211.1 million
, and as a
percentage of net revenue gross profit decreased to 50.3% for the
quarter from 53.9% in the third quarter of fiscal 2013.
-
Income from operations for the quarter decreased 12% to
$81.2 million
,
and as a percentage of net revenue was 19.4% compared to 24.3% of net
revenue in the third quarter of fiscal 2013.
-
The effective tax rate for the third quarter of fiscal 2014 was 27.1%
compared to 29.5% a year ago.
-
Diluted earnings per share for the quarter were
$0.42
on net income of
$60.5 million
, compared to diluted earnings per share of
$0.45
on net
income of
$66.1 million
in the third quarter of fiscal 2013.
-
During the third quarter of fiscal 2014, the Company repurchased 1.8
million shares of the Company's common stock at an average cost of
$40.49
per share.
For the thirty-nine weeks ended
November 2, 2014
:
-
Net revenue for the first three quarters of fiscal 2014 increased 12%
to
$1,194.7 million
from
$1,070.2 million
in the same period of fiscal
2013.
-
Total comparable sales increased 1% for the first three quarters on a
constant dollar basis. Comparable store sales for the first three
quarters decreased by 4% on a constant dollar basis and direct to
consumer revenue increased 27% on a constant dollar basis.
-
Direct to consumer revenue increased 25% to
$206.7 million
, or 17.3%
of total company revenues, in the first three quarters of fiscal 2014,
an increase from 15.5% of total company revenues in the first three
quarters of fiscal 2013.
-
Gross profit for the first three quarters of fiscal 2014 increased 8%
to
$604.1 million
, and as a percentage of net revenue gross profit was
50.6% for the first three quarters as compared to 52.4% in the same
period of fiscal 2013.
-
Income from operations for the first three quarters of fiscal 2014
decreased 8% to
$218.8 million
, and as a percentage of net revenue was
18.4% as compared to 22.2% of net revenue in the same period of fiscal
2013.
-
Tax expense for the first three quarters was
$96.0 million
, which
included a non-recurring adjustment of
$31.3 million
related to the
repatriation of foreign earnings that will be used to fund the share
buyback program. The normalized tax rate before the
$31.3 million
non-recurring tax adjustment would have been 28.9%, compared to 29.7%
a year ago. The tax rate for the first three quarters of fiscal 2014,
including the non-recurring tax adjustment, was 42.8%.
-
Excluding the non-recurring tax adjustment, diluted earnings per share
were
$1.10
in the first three quarters of fiscal 2014. Including the
non-recurring tax adjustment, diluted earnings per share for the first
three quarters of fiscal 2014 were
$0.88
, which included a
$0.22
per
share impact from the non-recurring tax adjustment.
-
During the first three quarters of fiscal 2014, the Company
repurchased 3.3 million shares of the Company's common stock at an
average cost of
$39.94
per share.
The Company ended the third quarter of fiscal 2014 with
$633.6 million
in cash and cash equivalents compared to
$600.7 million
at the end of
the third quarter of fiscal 2013. Inventory at the end of the third
quarter of fiscal 2014 totaled
$229.9 million
compared to
$209.1 million
at the end of the third quarter of fiscal 2013. The Company ended the
quarter with 289 stores.
Laurent Potdevin
, lululemon’s CEO, stated: "I am pleased that our third
quarter results demonstrated sequential improvements as the quarter
progressed, with all key facets of our business - brand, guest
experience, and product - contributing to our momentum." Mr. Potdevin
continued: "I am confident that our strong team, coupled with strategic
investments into our core business areas, have already made a positive
impact and place us on a strong trajectory for further global growth."
Updated Outlook
For the fourth quarter of fiscal 2014, we expect net revenue to be in
the range of
$570 million
to
$585 million
based on a total comparable
sales increase in the low single digits on a constant dollar basis. The
sales outlook relative to previous guidance is expected to be impacted
by approximately
$15 million
due to the combined impact of
West Coast
port delays, a lower Canadian dollar, and delayed store openings.
Diluted earnings per share are expected to be in the range of
$0.65
to
$0.69
for the quarter. This guidance assumes 142.6 million diluted
weighted-average shares outstanding and a 30.2% tax rate. The guidance
does not reflect potential future repurchases of the Company's shares.
For the full fiscal 2014, we now expect net revenue to be in the range
of
$1.765 billion
to
$1.780 billion
based on a total comparable sales
increase in the low single digits on a constant dollar basis. Diluted
earnings per share are expected to be in the range of
$1.53
to
$1.57
for
the full year, or
$1.74
to
$1.78
normalized for the non-recurring tax
adjustment incurred in the first quarter of fiscal 2014 related to the
repatriation of foreign earnings that will be used to fund the share
buyback program. This guidance assumes 144.3 million diluted
weighted-average shares outstanding and a 37.9% tax rate, which includes
the above tax adjustment, or 29.4% before the tax adjustment. The
guidance does not reflect potential future repurchases of the Company's
shares.
Conference Call Information
A conference call to discuss third quarter results is scheduled for
today,
December 11, 2014
, at
9:00 a.m. Eastern time
. 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 Measures
Total comparable sales in constant dollars, comparable store sales in
constant dollars, changes in direct to consumer revenue in constant
dollars, diluted earnings per share excluding the non-recurring tax
adjustment, and the tax rate excluding the non-recurring tax adjustment
are not
United States
generally accepted accounting principle (“GAAP”)
performance measures.
We provide constant dollar total comparable sales, comparable store
sales, and changes in direct to consumer revenue because we use these
measures to understand the underlying growth rate of revenue excluding
the impact of changes in foreign exchange rates, which are not under
management’s control. We believe that disclosing these measures on a
constant dollar basis is useful to investors because it enables them to
better understand the level of growth of our business.
We disclose normalized diluted earnings per share and the normalized tax
rate because of their comparability to our historical information as
well as our diluted earnings per share guidance, which we believe are
useful to investors.
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 these non-GAAP financial measures, please see
the table captioned “Reconciliation of Non-GAAP Financial Measures”
included in the accompanying financial tables, which includes more
detail on the GAAP financial measure that is most directly comparable to
each non-GAAP financial measure, 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 and our prospects and strategies for
future growth. 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 ability to maintain the value and reputation of our brand, including
any negative publicity regarding our products or the production methods
of our suppliers or manufacturers; the acceptability of our products to
our guests, including receiving products that comply with our technical
specifications and quality standards; our reliance on and limited
control over third-party suppliers to provide fabrics for and to produce
our products; an economic downturn or economic uncertainty in our key
markets; our exposure to various types of litigation; increasing product
costs and decreasing selling prices; our ability to anticipate consumer
preferences and successfully develop and introduce new, innovative and
updated products; our ability to accurately forecast customer demand for
our products; any unforeseen disruption of our information systems; any
material disruption of our information systems; our ability to manage
our growth and the increased complexity of our business effectively; the
fluctuating costs of raw materials; our ability to expand
internationally in light of our limited operating experience and limited
brand recognition in new international markets; our highly competitive
market and increasing competition; our ability to deliver our products
to the market and to meet customer expectations if we have problems with
our distribution system; our ability to protect our intellectual
property rights; our ability 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
or other
countries; our ability to successfully open new store locations in a
timely manner; our ability to comply with trade and other regulations;
the continued service of our senior management; seasonality;
fluctuations in foreign currency exchange rates; the operations of many
of our suppliers are subject to international and other risks; our
ability to source our merchandise profitably or at all; 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 we undertake no obligation to
publicly update such forward-looking statements to reflect subsequent
events or circumstances, except as may be required by law.
| lululemon athletica inc. |
Condensed Consolidated Statements of Operations |
Unaudited; Expressed in thousands, except per share amounts |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks |
|
Thirteen Weeks |
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Ended |
|
Ended |
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
Net revenue
|
|
$
|
419,396
|
|
|
$
|
379,900
|
|
|
$
|
1,194,722
|
|
|
$
|
1,070,195
|
|
|
Costs of goods sold
|
|
208,308
|
|
|
175,294
|
|
|
590,583
|
|
|
508,909
|
|
|
Gross profit
|
|
211,088
|
|
|
204,606
|
|
|
604,139
|
|
|
561,286
|
|
| As a percent of net revenue |
|
50.3 |
% |
|
53.9 |
% |
|
50.6 |
% |
|
52.4 |
% |
|
Selling, general and administrative expenses
|
|
129,932
|
|
|
112,270
|
|
|
385,294
|
|
|
324,075
|
|
| As a percent of net revenue |
|
30.9 |
% |
|
29.6 |
% |
|
32.2 |
% |
|
30.2 |
% |
|
Income from operations
|
|
81,156
|
|
|
92,336
|
|
|
218,845
|
|
|
237,211
|
|
| As a percent of net revenue |
|
19.4 |
% |
|
24.3 |
% |
|
18.4 |
% |
|
22.2 |
% |
|
Other income (expense), net
|
|
1,814
|
|
|
1,453
|
|
|
5,347
|
|
|
4,249
|
|
|
Income before provision for income taxes
|
|
82,970
|
|
|
93,789
|
|
|
224,192
|
|
|
241,460
|
|
|
Provision for income taxes
|
|
22,519
|
|
|
27,678
|
|
|
96,012
|
|
|
71,605
|
|
|
Net income
|
|
$
|
60,451
|
|
|
$
|
66,111
|
|
|
$
|
128,180
|
|
|
$
|
169,855
|
|
|
Basic earnings per share
|
|
$
|
0.42
|
|
|
$
|
0.46
|
|
|
$
|
0.89
|
|
|
$
|
1.17
|
|
|
Diluted earnings per share
|
|
$
|
0.42
|
|
|
$
|
0.45
|
|
|
$
|
0.88
|
|
|
$
|
1.16
|
|
|
Basic weighted-average shares outstanding
|
|
143,180
|
|
|
145,120
|
|
|
144,581
|
|
|
144,806
|
|
|
Diluted weighted-average shares outstanding
|
|
143,441
|
|
|
146,014
|
|
|
144,949
|
|
|
145,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Condensed Consolidated Balance Sheets |
Unaudited; Expressed in thousands |
|
|
|
|
|
|
|
November 2
,
|
|
February 2
,
|
|
|
2014 |
|
2014 |
| ASSETS |
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
633,582
|
|
|
$
|
698,649
|
|
Inventories
|
|
229,861
|
|
|
188,790
|
|
Other current assets
|
|
81,214
|
|
|
58,100
|
|
Total current assets
|
|
944,657
|
|
|
945,539
|
|
Property and equipment, net
|
|
301,841
|
|
|
255,603
|
|
Goodwill and intangible assets, net
|
|
27,458
|
|
|
28,201
|
|
Deferred income taxes and other non-current assets
|
|
10,531
|
|
|
23,045
|
|
Total assets
|
|
$
|
1,284,487
|
|
|
$
|
1,252,388
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
9,545
|
|
|
$
|
12,647
|
|
Accrued inventory purchases
|
|
42,484
|
|
|
15,415
|
|
Other current liabilities
|
|
92,605
|
|
|
87,383
|
|
Income taxes payable
|
|
3,116
|
|
|
769
|
|
Total current liabilities
|
|
147,750
|
|
|
116,214
|
|
Deferred income tax liability
|
|
11,376
|
|
|
3,977
|
|
Other non-current liabilities
|
|
40,100
|
|
|
35,515
|
|
Stockholders’ equity
|
|
1,085,261
|
|
|
1,096,682
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,284,487
|
|
|
$
|
1,252,388
|
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Condensed Consolidated Statements of Cash Flows |
Unaudited; Expressed in thousands |
|
|
|
|
|
|
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net income
|
|
$
|
128,180
|
|
|
$
|
169,855
|
|
|
Items not affecting cash
|
|
67,512
|
|
|
60,830
|
|
|
Other, including net changes in other non-cash balances
|
|
(28,851
|
)
|
|
(135,879
|
)
|
|
Net cash provided by operating activities
|
|
166,841
|
|
|
94,806
|
|
|
Net cash used in investing activities
|
|
(89,373
|
)
|
|
(71,945
|
)
|
|
Net cash (used in) provided by financing activities
|
|
(131,781
|
)
|
|
8,654
|
|
|
Effect of exchange rate changes on cash
|
|
(10,754
|
)
|
|
(20,949
|
)
|
|
(Decrease) increase in cash and cash equivalents
|
|
(65,067
|
)
|
|
10,566
|
|
|
Cash and cash equivalents, beginning of period
|
|
$
|
698,649
|
|
|
$
|
590,179
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
633,582
|
|
|
$
|
600,745
|
|
|
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Reconciliation of Non-GAAP Financial Measures |
Constant dollar total comparable sales (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks |
|
Thirteen Weeks |
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Ended |
|
Ended |
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
Total comparable sales (GAAP)1
|
|
1
|
%
|
|
8
|
%
|
|
(1
|
)%
|
|
10
|
%
|
|
Adjustments due to foreign exchange rate changes
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
Total comparable sales in constant dollars1
|
|
3
|
%
|
|
10
|
%
|
|
1
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Total comparable sales includes comparable store sales and
direct to consumer sales. Comparable store sales reflects net revenue at
corporate-owned stores that have been open for at least 12 months.
| Constant dollar comparable store sales (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks |
|
Thirteen Weeks |
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Ended |
|
Ended |
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
Comparable store sales (GAAP)1
|
|
(5
|
)%
|
|
2
|
%
|
|
(6
|
)%
|
|
5
|
%
|
|
Adjustments due to foreign exchange rate changes
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
Comparable store sales in constant dollars1
|
|
(3
|
)%
|
|
5
|
%
|
|
(4
|
)%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Comparable store sales reflects net revenue at
corporate-owned stores that have been open for at least 12 months.
| Constant dollar changes in direct to consumer revenue (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks |
|
Thirteen Weeks |
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Ended |
|
Ended |
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
Change in direct to consumer revenue (GAAP)
|
|
25
|
%
|
|
37
|
%
|
|
25
|
%
|
|
39
|
%
|
|
Adjustments due to foreign exchange rate changes
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
1
|
%
|
|
Change in direct to consumer revenue in constant dollars
|
|
27
|
%
|
|
40
|
%
|
|
27
|
%
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share, excluding the non-recurring tax
adjustment (unaudited)
|
|
|
|
|
|
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
Diluted earnings per share (GAAP)
|
|
$
|
0.88
|
|
|
$
|
1.16
|
|
Non-recurring tax adjustment
|
|
0.22
|
|
|
-
|
|
Diluted earnings per share, excluding the non-recurring tax
adjustment
|
|
$
|
1.10
|
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
Diluted tax rate, excluding the non-recurring tax adjustment
(unaudited)
|
|
|
|
|
|
|
Thirty-Nine |
|
Thirty-Nine |
|
|
Weeks Ended |
|
Weeks Ended |
|
|
November 2
,
|
|
November 3
,
|
|
|
2014 |
|
2013 |
|
Tax rate (GAAP)
|
|
42.8
|
%
|
|
29.7
|
%
|
|
Non-recurring tax adjustment
|
|
(13.9
|
)%
|
|
-
|
%
|
|
Tax rate, excluding the non-recurring tax adjustment
|
|
28.9
|
%
|
|
29.7
|
%
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Store Count and Square Footage1 |
Thirty-Nine Weeks Ended November 2, 2014 |
Square Footage Expressed in Thousands |
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Number of |
|
Number of |
|
Number of |
|
|
Stores Open at |
|
Stores Opened |
|
Stores Closed |
|
Stores Open |
|
|
the Beginning of |
|
During the |
|
During the |
|
at the End of the |
|
|
the Quarter |
|
Quarter2
|
|
Quarter2
|
|
Quarter |
|
1st Quarter
|
|
254
|
|
|
9
|
|
|
-
|
|
|
263
|
|
2nd Quarter
|
|
263
|
|
|
8
|
|
|
1
|
|
|
270
|
|
3rd Quarter
|
|
270
|
|
|
19
|
|
|
-
|
|
|
289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross |
|
Gross Square
|
|
Gross Square
|
|
Total Gross |
|
|
Square Feet at |
|
Feet Added |
|
Feet Lost |
|
Square Feet at |
|
|
the Beginning of |
|
During the |
|
During the |
|
the End of the |
|
|
the Quarter |
|
Quarter2,3
|
|
Quarter2,3
|
|
Quarter |
|
1st Quarter
|
|
740
|
|
|
24
|
|
|
-
|
|
|
764
|
|
2nd Quarter
|
|
764
|
|
|
26
|
|
|
3
|
|
|
787
|
|
3rd Quarter
|
|
787
|
|
|
61
|
|
|
-
|
|
|
848
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Store count and square footage summary includes
corporate-owned stores which are branded lululemon athletica or ivivva
athletica.
2 Number of stores opened/closed during the quarter that are
branded lululemon athletica or ivivva athletica.
3 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.
Investors:
ICR, Inc.
Joseph Teklits
/
Jean Fontana
,
203-682-8200
or
Media:
ICR, Inc.
Alecia
Pulman
, 203-682-8224
Source: lululemon athletica inc.