VANCOUVER, British Columbia
--(BUSINESS WIRE)--
lululemon athletica
inc. (NASDAQ:LULU) today announced financial results
for the first quarter ended
May 1, 2016
.
For the first quarter ended
May 1, 2016
:
-
Net revenue increased by 17% to
$495.5 million
from
$423.5 million
in
the first quarter of fiscal 2015, or increased by 19% on a constant
dollar basis.
-
Total comparable sales, which includes comparable store sales and
direct to consumer, increased by 6%, or by 8% on a constant dollar
basis.
-
Comparable store sales increased by 3%, or by 5% on a constant dollar
basis.
-
Direct to consumer net revenue increased by 17% to
$97.6 million
, or
by 18% on a constant dollar basis.
-
Gross profit increased by 16% to
$239.1 million
, and as a percentage
of net revenue gross profit was 48.3% compared to 48.6% in the first
quarter of fiscal 2015.
-
Income from operations decreased by 15% to
$57.6 million
from
$68.0
million
in the first quarter of fiscal 2015, and as a percentage of
net revenue was 11.6% compared to 16.1% of net revenue in the first
quarter of fiscal 2015. Included in selling, general and
administrative expenses were net foreign exchange losses of
$13.5
million
, primarily due to the revaluation of
U.S.
dollar cash and
receivables held in
Canada
, which were
$9.1 million
more than the net
foreign exchange losses in the first quarter of fiscal 2015.
-
Income tax expense was
$11.8 million
, which included a net income tax
recovery of
$5.6 million
related to the Company's transfer pricing
arrangements and the associated plan to repatriate foreign earnings.
In addition, there was a related net interest expense of
$1.2 million
.
The effective tax rate in the first quarter of fiscal 2016 was 20.6%
compared to 30.3% in the first quarter of fiscal 2015. Excluding the
above tax and related interest adjustments, the effective tax rate was
29.8% in the first quarter of fiscal 2016.
-
Diluted earnings per share for the first quarter of fiscal 2016 were
$0.33
compared to
$0.34
in the first quarter of fiscal 2015. Excluding
the above tax and related interest adjustments, diluted earnings per
share were
$0.30
for the first quarter of fiscal 2016.
-
During the first quarter of fiscal 2016, the Company repurchased 0.2
million shares of the Company's common stock at an average cost of
$65.01
per share.
The Company ended the first quarter of fiscal 2016 with
$550.0 million
in cash and cash equivalents compared to
$655.9 million
at the end of
the first quarter of fiscal 2015. Inventories at the end of the first
quarter of fiscal 2016 increased by 21% to
$286.2 million
compared to
$236.5 million
at the end of the first quarter of fiscal 2015. The
Company ended the quarter with 373 stores.
Laurent Potdevin
, lululemon's CEO, stated: "We are pleased with our
first quarter performance, delivering strong sales results and gross
margin that exceeded expectations. We finished the quarter with our
inventory levels rebalanced and on track to achieve our goals for the
year."
Mr. Potdevin
continued: "I'm extremely proud of our teams who have
relentlessly built the capabilities and infrastructure necessary to
support profitable growth. By continuing to invest in our people and
focus on product innovation, we are well on our way to deliver on our
five year plan."
Updated Outlook
For the second quarter of fiscal 2016, we expect net revenue to be in
the range of
$505 million
to
$515 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
$0.36
to
$0.38
for
the quarter. This guidance assumes 137.5 million diluted
weighted-average shares outstanding and a 30.2% tax rate.
For the full fiscal 2016, we now expect net revenue to be in the range
of
$2.305 billion
to
$2.345 billion
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
$2.08
to
$2.18
for the full
year, or
$2.05
to
$2.15
normalized for the tax and related interest
adjustments made during the first quarter of fiscal 2016. This guidance
assumes 137.5 million diluted weighted-average shares outstanding and a
28.9% tax rate, which includes the above tax and related interest
adjustments.
Conference Call Information
A conference call to discuss first quarter results is scheduled for
today,
June 8, 2016
, 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
Constant dollar changes in net revenue, total comparable sales,
comparable store sales, and direct to consumer net revenue, and the
effective tax rate and diluted earnings per share excluding certain tax
and related interest adjustments, are not
United States
generally
accepted accounting principle ("GAAP") financial measures.
A constant dollar basis assumes the average foreign exchange rates for
the current period remained constant with the average foreign exchange
rates for the same period of the prior year. We provide constant dollar
changes in net revenue, 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 effective tax rate and diluted earnings per share
excluding certain tax and related interest adjustments because of their
comparability to our historical information, 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; our highly competitive market and increasing competition;
an economic downturn or economic uncertainty in our key markets;
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;
changes in tax laws, capital or financing needs in
the United States
, or
our intentions with respect to the reinvestment of foreign earnings; 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
May 1, 2016
|
|
|
Thirteen Weeks
Ended
May 3, 2015
|
|
Net revenue
|
|
|
$
|
495,516
|
|
|
|
$
|
423,544
|
|
|
Costs of goods sold
|
|
|
256,385
|
|
|
|
217,667
|
|
|
Gross profit
|
|
|
239,131
|
|
|
|
205,877
|
|
| As a percent of net revenue |
|
|
48.3 |
% |
|
|
48.6 |
% |
|
Selling, general and administrative expenses
|
|
|
181,542
|
|
|
|
137,841
|
|
| As a percent of net revenue |
|
|
36.6 |
% |
|
|
32.5 |
% |
|
Income from operations
|
|
|
57,589
|
|
|
|
68,036
|
|
| As a percent of net revenue |
|
|
11.6 |
% |
|
|
16.1 |
% |
|
Other (expense) income, net
|
|
|
(486
|
)
|
|
|
529
|
|
|
Income before income tax expense
|
|
|
57,103
|
|
|
|
68,565
|
|
|
Income tax expense
|
|
|
11,767
|
|
|
|
20,755
|
|
|
Net income
|
|
|
$
|
45,336
|
|
|
|
$
|
47,810
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
$
|
0.33
|
|
|
|
$
|
0.34
|
|
|
Diluted earnings per share
|
|
|
$
|
0.33
|
|
|
|
$
|
0.34
|
|
|
Basic weighted-average shares outstanding
|
|
|
137,263
|
|
|
|
141,967
|
|
|
Diluted weighted-average shares outstanding
|
|
|
137,496
|
|
|
|
142,337
|
|
| lululemon athletica inc. |
Condensed Consolidated Balance Sheets |
Unaudited; Expressed in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
May 1, 2016
|
|
|
January 31, 2016
|
| ASSETS |
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
550,046
|
|
|
$
|
501,482
|
|
Inventories
|
|
|
|
286,230
|
|
|
284,009
|
|
Prepaid and receivable income taxes
|
|
|
|
92,095
|
|
|
91,453
|
|
Other current assets
|
|
|
|
42,822
|
|
|
40,095
|
|
Total current assets
|
|
|
|
971,193
|
|
|
917,039
|
|
Property and equipment, net
|
|
|
|
377,813
|
|
|
349,605
|
|
Goodwill
and intangible assets, net
|
|
|
|
25,320
|
|
|
24,777
|
|
Deferred income taxes and other non-current assets
|
|
|
|
27,329
|
|
|
22,656
|
|
Total assets
|
|
|
|
$
|
1,401,655
|
|
|
$
|
1,314,077
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
6,443
|
|
|
$
|
10,381
|
|
Accrued inventory liabilities
|
|
|
|
21,901
|
|
|
25,451
|
|
Accrued compensation and related expenses
|
|
|
|
35,083
|
|
|
43,524
|
|
Income taxes payable
|
|
|
|
36,892
|
|
|
37,736
|
|
Unredeemed gift card liability
|
|
|
|
50,387
|
|
|
57,736
|
|
Other accrued liabilities
|
|
|
|
51,722
|
|
|
50,676
|
|
Total current liabilities
|
|
|
|
202,428
|
|
|
225,504
|
|
Deferred income tax liability
|
|
|
|
11,382
|
|
|
10,759
|
|
Other non-current liabilities
|
|
|
|
51,620
|
|
|
50,332
|
|
Stockholders' equity
|
|
|
|
1,136,225
|
|
|
1,027,482
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
1,401,655
|
|
|
$
|
1,314,077
|
| lululemon athletica inc. |
Condensed Consolidated Statements of Cash Flows |
Unaudited; Expressed in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
May 1, 2016
|
|
|
Thirteen Weeks
Ended
May 3, 2015
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
45,336
|
|
|
|
$
|
47,810
|
|
|
Items not affecting cash
|
|
|
|
|
22,066
|
|
|
|
17,955
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
(27,668
|
)
|
|
|
(44,825
|
)
|
|
Net cash provided by operating activities
|
|
|
|
|
39,734
|
|
|
|
20,940
|
|
|
Net cash used in investing activities
|
|
|
|
|
(26,644
|
)
|
|
|
(27,936
|
)
|
|
Net cash used in financing activities
|
|
|
|
|
(13,329
|
)
|
|
|
(17,041
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
48,803
|
|
|
|
15,439
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
|
48,564
|
|
|
|
(8,598
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
501,482
|
|
|
|
664,479
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
$
|
550,046
|
|
|
|
$
|
655,881
|
|
| lululemon athletica inc. |
Reconciliation of Non-GAAP Financial Measures |
Unaudited |
|
|
|
The below changes in net revenue, total comparable sales, comparable
store sales, and direct to consumer revenue show the dollar and
percentage change compared to the corresponding period in the prior
year.
|
|
|
| Constant dollar changes in net revenue |
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
May 1, 2016
|
|
|
Thirteen Weeks Ended
May 3, 2015
|
|
|
|
(In thousands) |
|
(Percentage) |
|
|
(In thousands) |
|
(Percentage) |
|
Net revenue increase
|
|
|
$
|
71,972
|
|
17%
|
|
|
$
|
38,926
|
|
10%
|
|
Adjustments due to foreign exchange rate changes
|
|
|
7,292
|
|
2
|
|
|
15,208
|
|
4
|
|
Net revenue increase in constant dollars
|
|
|
$
|
79,264
|
|
19%
|
|
|
$
|
54,134
|
|
14%
|
| Constant dollar changes in total comparable sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
May 1, 2016
|
|
|
Thirteen Weeks
Ended
May 3, 2015
|
|
|
Increase in total comparable sales1
|
|
|
|
|
|
|
|
|
|
|
6%
|
|
|
2%
|
|
|
Adjustments due to foreign exchange rate changes
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
4
|
|
|
Increase in total comparable sales in constant dollars1
|
|
|
|
|
|
|
|
|
|
|
8%
|
|
|
6%
|
|
|
__________
|
| 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 changes in comparable store sales |
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
May 1, 2016
|
|
|
Thirteen Weeks
Ended
May 3, 2015
|
|
Increase (decrease) in comparable store sales1
|
|
|
|
3%
|
|
|
(5)%
|
|
Adjustments due to foreign exchange rate changes
|
|
|
|
2
|
|
|
4
|
|
Increase (decrease) in comparable store sales in constant dollars1
|
|
|
|
5%
|
|
|
(1)%
|
|
__________
|
| 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 net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
May 1, 2016
|
|
Thirteen Weeks
Ended
May 3, 2015
|
|
|
Increase in direct to consumer net revenue
|
|
|
|
|
|
17%
|
|
27%
|
|
|
Adjustments due to foreign exchange rate changes
|
|
|
|
|
|
1
|
|
4
|
|
|
Increase in direct to consumer net revenue in constant dollars
|
|
|
|
|
|
18%
|
|
31%
|
|
| Effective tax rate, excluding tax and related interest adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
November 1
,
2015
|
|
|
Thirteen Weeks
Ended
November 2
,
2014
|
|
Effective tax rate
|
|
|
|
20.6%
|
|
|
30.3%
|
|
Tax and related interest adjustments1
|
|
|
|
9.2
|
|
|
—
|
|
Effective tax rate, excluding tax and related interest adjustments
|
|
|
|
29.8%
|
|
|
30.3%
|
|
__________
|
|
1These adjustments relate to the Company's transfer
pricing arrangements and the associated plan to repatriate 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
June 8, 2016
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
|
|
|
|
$
|
0.33
|
|
|
|
$
|
0.34
|
|
Tax and related interest adjustments1
|
|
|
|
(0.03
|
)
|
|
|
—
|
|
Diluted earnings per share, excluding tax and related interest
adjustments
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.34
|
|
__________
|
|
1These adjustments relate to the Company's transfer
pricing arrangements and the associated plan to repatriate 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
June 8, 2016
for an explanation as to the nature of these
items.
|
|
|
| lululemon athletica inc. |
Store Count and Square Footage1 |
Thirteen Weeks Ended May 1, 2016 |
Square Footage Expressed in Thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Stores Open at
the
Beginning of
the Quarter
|
|
|
Number of
Stores Opened
During the
Quarter3
|
|
|
Number of
Stores Closed
During the
Quarter
|
|
|
Number of
Stores Open
at the End of
the Quarter
|
|
|
1st Quarter
|
|
|
|
|
|
|
|
|
|
|
363
|
|
|
11
|
|
|
1
|
|
|
373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross
Square Feet at
the Beginning
of the Quarter
|
|
|
Gross Square
Feet Added
During the
Quarter2,3
|
|
|
Gross Square
Feet Lost
During the
Quarter2
|
|
|
Total Gross
Square Feet at
the End of the
Quarter
|
|
|
1st Quarter
|
|
|
|
|
|
|
|
|
|
|
1,071
|
|
|
26
|
|
|
2
|
|
|
1,095
|
|
|
__________
|
|
1Store count and square footage summary includes
company-operated stores which are branded
lululemon athletica
or
ivivva athletica.
|
| 2Gross 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.
|
| 3Excludes retail locations operated by a third party
under a license and supply arrangement.
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160608005452/en/
ICR, Inc.
Investors:
Joseph Teklits
/
Caitlin Morahan
203-682-8200
or
Media:
Alecia
Pulman
203-682-8224
Source:
lululemon athletica
inc.