VANCOUVER, British Columbia
--(BUSINESS WIRE)--
lululemon athletica
inc. (NASDAQ:LULU) today announced financial results
for the third quarter ended
November 1, 2015
.
For the third quarter ended
November 1, 2015
:
-
Net revenue for the quarter increased 14% to
$479.7 million
from
$419.4 million
in the third quarter of fiscal 2014.
-
Total comparable sales, which includes comparable store sales and
direct to consumer, increased by 9% for the third quarter on a
constant dollar basis.
-
Comparable store sales for the third quarter increased by 6% on a
constant dollar basis and direct to consumer revenue increased 21% on
a constant dollar basis.
-
Direct to consumer net revenue increased 16% to
$89.3 million
, or
18.6% of total Company revenue, in the third quarter of fiscal 2015,
an increase from 18.4% of total Company revenues in the third quarter
of fiscal 2014.
-
Gross profit for the quarter increased by 7% to
$224.8 million
, and as
a percentage of net revenue gross profit was 46.9% for the quarter
compared to 50.3% in the third quarter of fiscal 2014.
-
Income from operations for the quarter decreased by 16% to
$68.2
million
, and as a percentage of net revenue was 14.2% compared to
19.4% of net revenue in the third quarter of fiscal 2014.
-
The income tax expense for the third quarter of fiscal 2015 was
$12.1
million
, which includes an income tax recovery of
$7.7 million
related
to the Company's transfer pricing arrangements and taxes associated
with the repatriation of foreign earnings. In addition, there was a
related net interest expense of
$3.6 million
. The tax rate excluding
these adjustments was 28.8% in the third quarter of fiscal 2015
compared to 27.1% in the third quarter of fiscal 2014. The effective
tax rate in the third quarter of fiscal 2015 including these tax and
related interest adjustments was 18.6%.
-
Diluted earnings per share for the third quarter of fiscal 2015 were
$0.38
compared to
$0.42
in the third quarter of fiscal 2014. Excluding
the above tax and related interest adjustments, diluted earnings per
share were
$0.35
for the third quarter of fiscal 2015.
-
During the third quarter of fiscal 2015, the Company repurchased 1.6
million shares of the Company's common stock at an average cost of
$55.50
per share.
The Company ended the third quarter of fiscal 2015 with
$403.4 million
in cash and cash equivalents compared to
$633.6 million
at the end of
the third quarter of fiscal 2014. Inventory at the end of the third
quarter of fiscal 2015 totaled
$357.8 million
compared to
$229.9 million
at the end of the third quarter of fiscal 2014. The Company ended the
quarter with 354 stores.
Laurent Potdevin
, lululemon's CEO, stated: "We had a solid quarter in
line with our expectations underscored by the combination of our
product, guest and community initiatives along with tremendous guest
reception to major store openings around the world. I would like to
personally thank all of our educators who create amazing experiences for
our guests every day."
Mr. Potdevin
continued: "We’ve implemented critical organizational
changes this quarter and now have in place a complete, world-class
management team that is aligned with our strategic global priorities
focused on design and dedicated to creating long-term value."
Updated Outlook
For the fourth quarter of fiscal 2015, we expect net revenue to be in
the range of
$670 million
to
$685 million
based on total comparable
sales in the mid-single digits on a constant dollar basis. Diluted
earnings per share are expected to be in the range of
$0.75
to
$0.78
for
the quarter. This guidance assumes 139.0 million diluted
weighted-average shares outstanding and a 29.5% tax rate. The guidance
does not reflect potential future repurchases of the Company's shares.
For the full fiscal 2015, we now expect net revenue to be in the range
of
$2.025 billion
to
$2.040 billion
based on total comparable sales in
the high single digits on a constant dollar basis. Diluted earnings per
share are expected to be in the range of
$1.81
to
$1.84
for the full
year, or
$1.78
to
$1.81
normalized for the tax and related interest
adjustments made during the third quarter of fiscal 2015. This guidance
assumes 140.9 million diluted weighted-average shares outstanding and a
27.6% tax rate, which includes the above tax adjustments. 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 9, 2015
, 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
inc. (NASDAQ:LULU) is a yoga-inspired athletic
apparel company with products that create transformational experiences
for people to live happy, healthy, fun lives. 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, and changes in direct to consumer net revenue in
constant dollars, the tax rate excluding certain tax and related
interest adjustments, and diluted earnings per share excluding certain
tax adjustments 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 net revenue because we use
these measures to understand the underlying growth rate of net 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 the tax rate and diluted earnings per share excluding
certain tax and related interest adjustments because of their
comparability to our historical information as well as our diluted
earnings per share guidance, which we believe is 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 highly competitive market and increasing competition;
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; our ability to safeguard against
security breaches with respect to our information technology 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 ability to
deliver our products to the market and to meet customer expectations if
we have problems with our distribution system; imitation by our
competitors; 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 South and
South East Asia
; 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; our exposure to various types of litigation;
actions of activist stockholders; 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
Ended
November 1
,
2015
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Thirty-Nine
Weeks Ended
November 1
,
2015
|
|
Thirty-Nine
Weeks Ended
November 2
,
2014
|
|
Net revenue
|
|
|
$
|
479,693
|
|
|
$
|
419,396
|
|
|
$
|
1,356,247
|
|
|
$
|
1,194,722
|
|
|
Costs of goods sold
|
|
|
254,896
|
|
|
208,308
|
|
|
713,548
|
|
|
590,583
|
|
|
Gross profit
|
|
|
224,797
|
|
|
211,088
|
|
|
642,699
|
|
|
604,139
|
|
| As a percent of net revenue |
|
|
46.9 |
% |
|
50.3 |
% |
|
47.4 |
% |
|
50.6 |
% |
|
Selling, general and administrative expenses
|
|
|
156,619
|
|
|
129,932
|
|
|
439,906
|
|
|
385,294
|
|
| As a percent of net revenue |
|
|
32.7 |
% |
|
30.9 |
% |
|
32.4 |
% |
|
32.2 |
% |
|
Income from operations
|
|
|
68,178
|
|
|
81,156
|
|
|
202,793
|
|
|
218,845
|
|
| As a percent of net revenue |
|
|
14.2 |
% |
|
19.4 |
% |
|
15.0 |
% |
|
18.4 |
% |
|
Other income (expense), net
|
|
|
(2,890
|
)
|
|
1,814
|
|
|
(1,519
|
)
|
|
5,347
|
|
|
Income before income tax expense
|
|
|
65,288
|
|
|
82,970
|
|
|
201,274
|
|
|
224,192
|
|
|
Income tax expense
|
|
|
12,135
|
|
|
22,519
|
|
|
52,643
|
|
|
96,012
|
|
|
Net income
|
|
|
$
|
53,153
|
|
|
$
|
60,451
|
|
|
$
|
148,631
|
|
|
$
|
128,180
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
$
|
0.38
|
|
|
$
|
0.42
|
|
|
$
|
1.05
|
|
|
$
|
0.89
|
|
|
Diluted earnings per share
|
|
|
$
|
0.38
|
|
|
$
|
0.42
|
|
|
$
|
1.05
|
|
|
$
|
0.88
|
|
|
Basic weighted-average shares outstanding
|
|
|
140,282
|
|
|
143,180
|
|
|
141,198
|
|
|
144,581
|
|
|
Diluted weighted-average shares outstanding
|
|
|
140,457
|
|
|
143,441
|
|
|
141,470
|
|
|
144,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Condensed Consolidated Balance Sheets |
Unaudited; Expressed in thousands |
|
|
|
|
|
November 1, 2015
|
|
February 1, 2015
|
| ASSETS |
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
403,446
|
|
|
$
|
664,479
|
|
Inventories
|
|
|
357,753
|
|
|
208,116
|
|
Prepaid income taxes
|
|
|
124,776
|
|
|
40,547
|
|
Other current assets
|
|
|
42,529
|
|
|
37,870
|
|
Total current assets
|
|
|
928,504
|
|
|
951,012
|
|
Property and equipment, net
|
|
|
346,705
|
|
|
296,008
|
|
Goodwill
and intangible assets, net
|
|
|
25,407
|
|
|
26,163
|
|
Deferred income tax assets and other non-current assets
|
|
|
20,943
|
|
|
23,030
|
|
Total assets
|
|
|
$
|
1,321,559
|
|
|
$
|
1,296,213
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
5,845
|
|
|
$
|
9,339
|
|
Accrued inventory liabilities
|
|
|
40,250
|
|
|
22,296
|
|
Accrued compensation and related expenses
|
|
|
44,074
|
|
|
29,932
|
|
Income taxes payable
|
|
|
46,829
|
|
|
20,073
|
|
Unredeemed gift card liability
|
|
|
35,123
|
|
|
46,252
|
|
Other accrued liabilities
|
|
|
36,207
|
|
|
31,989
|
|
Total current liabilities
|
|
|
208,328
|
|
|
159,881
|
|
Deferred income tax liabilities
|
|
|
3,524
|
|
|
3,633
|
|
Other non-current liabilities
|
|
|
49,748
|
|
|
43,131
|
|
Stockholders' equity
|
|
|
1,059,959
|
|
|
1,089,568
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,321,559
|
|
|
$
|
1,296,213
|
|
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Condensed Consolidated Statements of Cash Flows |
Unaudited; Expressed in thousands |
|
|
|
|
|
Thirty-Nine Weeks
Ended
November 1,
2015
|
|
Thirty-Nine Weeks
Ended
November 2,
2014
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net income
|
|
|
$
|
148,631
|
|
|
$
|
128,180
|
|
|
Items not affecting cash
|
|
|
63,576
|
|
|
67,955
|
|
|
Other, including net changes in other non-cash balances
|
|
|
(186,267
|
)
|
|
(29,294
|
)
|
|
Net cash provided by operating activities
|
|
|
25,940
|
|
|
166,841
|
|
|
Net cash used in investing activities
|
|
|
(108,061
|
)
|
|
(89,373
|
)
|
|
Net cash used in financing activities
|
|
|
(167,452
|
)
|
|
(131,781
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
(11,460
|
)
|
|
(10,754
|
)
|
|
Decrease in cash and cash equivalents
|
|
|
(261,033
|
)
|
|
(65,067
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
664,479
|
|
|
698,649
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
403,446
|
|
|
$
|
633,582
|
|
|
|
|
|
|
|
|
|
|
|
| lululemon athletica inc. |
Reconciliation of Non-GAAP Financial Measures |
Constant dollar total comparable sales (unaudited) |
|
|
|
Thirteen Weeks
Ended
November 1
,
2015
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Total comparable sales1
|
|
|
3
|
%
|
|
1
|
%
|
|
Adjustments due to foreign exchange rate changes
|
|
|
6
|
|
|
2
|
|
|
Total comparable sales in constant dollars1
|
|
|
9
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
__________
|
| 1Total comparable sales includes comparable store sales
and direct to consumer sales. Comparable store sales reflects net
revenue at company-operated stores that have been open for at least
12 months.
|
|
|
| Constant dollar comparable store sales (unaudited) |
|
|
|
|
|
Thirteen Weeks
Ended
November 1
,
2015
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Comparable store sales1
|
|
|
—
|
%
|
|
(5
|
)%
|
|
Adjustments due to foreign exchange rate changes
|
|
|
6
|
|
|
2
|
|
|
Comparable store sales in constant dollars1
|
|
|
6
|
%
|
|
(3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
|
| 1Comparable store sales reflects net revenue at
company-operated stores that have been open for at least 12 months.
|
|
|
| Constant dollar changes in direct to consumer revenue (unaudited) |
|
|
|
|
|
Thirteen Weeks
Ended
November 1
,
2015
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Change in direct to consumer revenue
|
|
|
16
|
%
|
|
25
|
%
|
|
Adjustments due to foreign exchange rate changes
|
|
|
5
|
|
|
2
|
|
|
Change in direct to consumer revenue in constant dollars
|
|
|
21
|
%
|
|
27
|
%
|
|
|
|
|
|
|
|
|
| Effective tax rate, excluding tax and related interest adjustments |
|
|
|
|
|
Thirteen Weeks
Ended
November 1
,
2015
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Effective tax rate
|
|
|
18.6
|
%
|
|
27.1
|
%
|
|
Tax and related interest adjustments1
|
|
|
10.2
|
|
|
—
|
|
|
Effective tax rate, excluding tax and related interest adjustments
|
|
|
28.8
|
%
|
|
27.1
|
%
|
|
|
|
|
|
|
|
|
|
__________
|
|
1These adjustments relate to the Company's transfer
pricing arrangements and taxes associated with the repatriation of
foreign earnings. Please refer to Note 7 to the unaudited interim
consolidated financial statements included in Item 1 of Part I of
the Company's Report on Form 10-Q to be filed with the
SEC
on or
about
December 9, 2015
for an explanation as to the nature of these
items.
|
|
|
| Diluted earnings per share, excluding tax and related interest adjustments |
|
|
|
|
|
Thirteen Weeks
Ended
November 1
,
2015
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Diluted earnings per share
|
|
|
$
|
0.38
|
|
|
$
|
0.42
|
|
Tax and related interest adjustments1
|
|
|
(0.03
|
)
|
|
—
|
|
Diluted earnings per share, excluding tax and related interest
adjustments
|
|
|
$
|
0.35
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
__________
|
|
1These adjustments relate to the Company's transfer
pricing arrangements and taxes associated with the repatriation of
foreign earnings. Please refer to Note 7 to the unaudited interim
consolidated financial statements included in Item 1 of Part I of
the Company's Report on Form 10-Q to be filed with the
SEC
on or
about
December 9, 2015
for an explanation as to the nature of these
items.
|
|
|
| lululemon athletica inc. |
Store Count and Square Footage1 |
Thirty-Nine Weeks Ended November 1, 2015 |
Square Footage Expressed in Thousands |
|
|
|
|
|
Number of
Stores Open at
the
Beginning
of
the Quarter
|
|
Number of
Stores Opened
During the
Quarter2,4
|
|
Number of
Stores Closed
During the
Quarter2
|
|
Number of
Stores Open
at the End of
the
Quarter
|
|
1st Quarter
|
|
|
302
|
|
|
14
|
|
|
—
|
|
|
316
|
|
2nd Quarter
|
|
|
316
|
|
|
20
|
|
|
—
|
|
|
336
|
|
3rd Quarter
|
|
|
336
|
|
|
18
|
|
|
—
|
|
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross
Square Feet at
the
Beginning
of the Quarter
|
|
Gross Square
Feet Added
During the
Quarter2,3,4
|
|
Gross Square
Feet Lost
During the
Quarter2,3
|
|
Total Gross
Square Feet
at the End of
the
Quarter
|
|
1st Quarter
|
|
|
894
|
|
|
37
|
|
|
—
|
|
|
931
|
|
2nd Quarter
|
|
|
931
|
|
|
54
|
|
|
—
|
|
|
985
|
|
3rd Quarter
|
|
|
985
|
|
|
51
|
|
|
—
|
|
|
1,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
|
|
1Store count and square footage summary includes
company-operated stores which are branded
lululemon athletica
or
ivivva athletica.
|
|
2Number of stores opened/closed during the quarter that
are branded
lululemon athletica
or ivivva athletica.
|
| 3Gross square feet added/lost during the quarter includes
net square foot additions for company-operated stores which have
been renovated or relocated in the quarter.
|
| 4Excludes franchises.
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151209005401/en/
ICR, Inc.
Investor Contact:
Joseph Teklits
/Caitlin
Morahan, 203-682-8200
or
Media Contact:
Alecia
Pulman
, 203-682-8224
Source:
lululemon athletica
inc.