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lululemon athletica inc. (LULU) (TSX:LLL) today announced
financial results for the second quarter ended July 29, 2012.
For the thirteen weeks ended July 29, 2012:
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Net revenue for the quarter increased 33% to $282.6 million from
$212.3 million in the second quarter of fiscal 2011.
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Comparable stores sales for the second quarter increased by 15% on a
constant dollar basis.
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Direct to consumer revenue increased 91% to $35.4 million, or 12.5% of
total company revenues, in the second quarter of fiscal 2012, an
increase from 8.8% of total company revenues in the second quarter of
fiscal 2011.
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Gross profit for the quarter increased 28% to $155.8 million, and as a
percentage of net revenue gross profit was 55.1% for the quarter as
compared to 57.5% in the second quarter of fiscal 2011.
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Income from operations for the quarter increased 18% to $70.2 million,
and as a percentage of net revenue was 24.8% as compared to 28.0% of
net revenue in the second quarter of fiscal 2011.
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The effective tax rate for the second quarter of fiscal 2012 was 19.1%
after an adjustment of $7.2 million, reversing taxes provided for in
Q4 of fiscal 2011 through Q1 of fiscal 2012. This adjustment resulted
from the finalization of management’s review of the tax impact of
intercompany pricing agreements entered into in Q4 of fiscal 2011.
Normalized for this adjustment, the tax rate for the second quarter of
fiscal 2012 was 29.2% compared to 35.7% in the second quarter of
fiscal 2011. The tax rate in the second quarter of fiscal 2012
reflects the ongoing impact of the revised intercompany pricing
agreements.
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Diluted earnings per share for the quarter were $0.39 on net income of
$57.2 million, compared to diluted earnings per share of $0.26 on net
income of $38.4 million in the second quarter of fiscal 2011. Second
quarter diluted earnings per share normalized for the tax adjustment
were $0.34 and would have been $0.31 at our previously estimated
effective tax rate of 36.5%.
For the twenty-six weeks ended July 29, 2012:
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Net revenue for the first two quarters of fiscal 2012 increased 42% to
$568.3 million from $399.1 million in the same period of fiscal 2011.
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Comparable stores sales for the first two quarters of fiscal 2012
increased by 20% on a constant dollar basis.
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Direct to consumer revenue increased 128% to $73.9 million, or 13.0%
of total company revenues, in the first two quarters of fiscal 2012,
an increase from 8.1% of total company revenues in the first two
quarters of fiscal 2011.
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Gross profit for the first two quarters of fiscal 2012 increased 35%
to $313.0 million, and as a percentage of net revenue gross profit was
55.1% for the first two quarters as compared to 58.1% in the same
period of fiscal 2011.
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Income from operations for the first two quarters increased 29% to
$143.3 million, and as a percentage of net revenue was 25.2% as
compared to 27.9% of net revenue in the same period of fiscal 2011.
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The effective tax rate for the first two quarters was 28.0% after an
adjustment of $2.0 million, reversing taxes provided for in Q4 of
fiscal 2011. This resulted from the finalization of management’s
review of the tax impact of intercompany pricing agreements entered
into in Q4 of fiscal 2011. Normalized for this adjustment, the tax
rate for the first two quarters of fiscal 2012 was 29.3% compared to
36.0% in the first two quarters of fiscal 2011. The tax rate for the
first two quarters of fiscal 2012 reflects the ongoing impact of the
revised intercompany pricing agreements.
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Diluted earnings per share for the first two quarters of fiscal 2012
were $0.71 on net income of $103.9 million, compared to diluted
earnings per share of $0.49 on net income of $71.8 million in the same
period of fiscal 2011. First two quarters diluted earnings per share
normalized for the tax adjustment were $0.70 and would have been $0.63
at our previously estimated effective tax rate of 36.5%.
The company ended the second quarter of fiscal 2012 with $444.3 million
in cash and cash equivalents compared to $264.7 million at the end of
the second quarter of fiscal 2011. Inventory at the end of the second
quarter of fiscal 2012 totaled $125.4 million compared to $88.9 million
at the end of the second quarter of fiscal 2011. The company ended the
quarter with 189 stores in North America and Australia.
Christine Day, lululemon’s CEO stated: "We continue to strive for the
right balance between strong growth and maintaining our market leader
focus on execution, innovation and investments in infrastructure and
while doing so delivered another strong quarter."
Updated Outlook
For the third quarter of fiscal 2012, we expect net revenue to be in the
range of $300 million to $305 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 $0.34 to
$0.36 for the quarter. This assumes 145.8 million diluted
weighted-average shares outstanding and a 29.5% tax rate.
For the full fiscal 2012, we now expect net revenue to be in the range
of $1.345 billion to $1.360 billion and diluted earnings per share are
expected to be in the range of $1.76 to $1.81 for the full year. This
assumes 145.8 million diluted weighted-average shares outstanding and a
tax rate of 28.9%, which includes the effects of the $2.0 million
adjustment to reverse taxes provided for in Q4 of fiscal 2011.
Conference Call Information
A conference call to discuss second quarter results is scheduled for
today, September 7, 2012, 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 (LULU) is a yoga-inspired athletic
apparel company that creates components for people to live a 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 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 laws related to our human resources
policies or other procedures; 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 29, 2012, 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 29, 2012 July 31, 2011 July 29, 2012 July 31, 2011
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenue $ 282,634 $ 212,323 $ 568,333 $ 399,103
Costs of goods sold 126,879 90,256 255,314 167,310
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Gross profit 155,755 122,067 313,019 231,793
As a percent of net revenue 55.1 % 57.5 % 55.1 % 58.1 %
Selling, general and administrative expenses 85,567 62,584 169,766 120,623
As a percent of net revenue 30.3 % 29.5 % 29.9 % 30.2 %
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Income from operations 70,188 59,483 143,253 111,170
As a percent of net revenue 24.8 % 28.0 % 25.2 % 27.9 %
Other income (expense), net 1,166 597 2,076 1,501
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Income before provision for income taxes 71,354 60,080 145,329 112,671
Provision for income taxes 13,652 21,462 40,653 40,537
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Net income 57,702 38,618 104,676 72,134
Net income attributable to non-controlling interest 480 239 811 383
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Net income attributable to lululemon athletica inc. $ 57,222 $ 38,379 $ 103,865 $ 71,751
==== ======= ==== ======= ==== ======= ==== =======
Basic earnings per share $ 0.40 $ 0.27 $ 0.72 $ 0.50
Diluted earnings per share $ 0.39 $ 0.26 $ 0.71 $ 0.49
Basic weighted-average shares outstanding 143,972 143,163 143,826 142,961
Diluted weighted-average shares outstanding 145,678 145,228 145,698 145,108
lululemon athletica inc.
Condensed Consolidated
Balance Sheets
Expressed in thousands
July 29, 2012 January 29, 2012
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(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $ 444,286 $ 409,437
Inventories 125,378 104,097
Other current assets 33,861 13,559
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Total current assets 603,525 527,093
Property and equipment, net 181,122 162,941
Goodwill and intangible assets, net 30,893 31,872
Deferred income taxes and other assets 13,598 12,728
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Total assets $ 829,138 $ 734,634
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LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 6,953 $ 14,536
Other current liabilities 62,586 80,183
Income taxes payable 5,437 8,720
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Total current liabilities 74,976 103,439
Non-current liabilities 27,817 25,014
Stockholders’ equity 726,345 606,181
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Total liabilities and stockholders’ equity $ 829,138 $ 734,634
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lululemon athletica inc.
Condensed Consolidated
Statements of Cash Flows
Expressed in thousands
Twenty-Six Weeks Ended Twenty-Six Weeks Ended
July 29, 2012 July 31, 2011
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(unaudited) (unaudited)
Cash flows from operating activities
Net income $ 104,676 $ 72,134
Items not affecting cash 22,483 3,749
Other, including net changes in other non-cash balances (63,639 ) (56,354 )
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Net cash provided by operating activities 63,520 19,529
Net cash used in investing activities (39,046 ) (87,324 )
Net cash provided by financing activities 10,470 12,095
Effect of exchange rate changes on cash (95 ) 4,142
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Increase (decrease) in cash and cash equivalents 34,849 (51,558 )
Cash and cash equivalents, beginning of period $ 409,437 $ 316,286
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Cash and cash equivalents, end of period $ 444,286 $ 264,728
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lululemon athletica inc.
Reconciliation of Non-GAAP
Financial Measure
Constant-dollar changes
Thirteen Weeks Ended Thirteen Weeks Ended
July 29, 2012 July 31, 2011
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% Change % Change
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Comparable-store sales (GAAP) 13% 25%
Adjustments due to changes in foreign exchange rates 2% (5)%
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Comparable-store sales in constant dollars 15% 20%
lululemon athletica inc.
Store Count and Square
Footage(1)
Quarter ended July 29, 2012
Square
Footage Expressed in Thousands
Number of Number of Number of Number of
Stores Open Stores Stores Stores Open
at the Opened / Closed at the End of
Beginning Acquired During the
of During the Quarter
the Quarter the Quarter
Quarter(2)
=========== ============ ============ =============
1st Quarter 174 6 0 180
2nd Quarter 180 9 0 189
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 Quarter(2,3) Quarter(2,3) the
of Quarter
the Quarter
=========== ============ ============ =============
1st Quarter 494 14 0 508
2nd Quarter 508 30 0 538
(1)Store count and square footage summary includes
corporate-owned stores which are branded lululemon athletica and ivivva
athletica.
(2)Number of stores opened during the quarters which are
branded lululemon athletica and ivivva athletica.
(3) Gross square feet added/lost during the quarters includes
net square foot additions for corporate-owned stores which have been
renovated or relocated in the quarter.
SOURCE: lululemon athletica inc.
Investor Contact:
ICR, Inc.
Joseph Teklits / Jean Fontana, 203-682-8200
or
Media Contact:
ICR, Inc.
Alecia Pulman, 203-682-8224
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