lululemon athletica inc. (NASDAQ:LULU) today announced financial results
for the second quarter ended August 2, 2015.
For the second quarter ended August 2, 2015:
-
Net revenue for the quarter increased 16% to $453.0 million from
$390.7 million in the second quarter of fiscal 2014.
-
Total comparable sales, which includes comparable store sales and
direct to consumer, increased by 11% for the second quarter on a
constant dollar basis.
-
Comparable store sales for the second quarter increased by 6% on a
constant dollar basis and direct to consumer revenue increased 35% on
a constant dollar basis.
-
Direct to consumer net revenue increased 30% to $82.2 million, or
18.2% of total Company revenue, in the second quarter of fiscal 2015,
an increase from 16.2% of total Company revenues in the second quarter
of fiscal 2014.
-
Gross profit for the quarter increased by 7% to $212.0 million, and as
a percentage of net revenue gross profit was 46.8% for the quarter
compared to 50.5% in the second quarter of fiscal 2014.
-
Income from operations for the quarter decreased by 2% to $66.6
million, and as a percentage of net revenue was 14.7% compared to
17.4% of net revenue in the second quarter of fiscal 2014.
-
The effective tax rate for the quarter was 29.3% compared to 30.1% in
the second quarter of fiscal 2014.
-
Diluted earnings per share for the quarter were $0.34 on net income of
$47.7 million, compared to diluted earnings per share of $0.33 on net
income of $48.7 million in the second quarter of fiscal 2014.
-
During the second quarter of fiscal 2015, the Company repurchased 1.0
million shares of the Company's common stock at an average cost of
$63.96 per share.
The Company ended the second quarter of fiscal 2015 with $541.3 million
in cash and cash equivalents compared to $725.1 million at the end of
the second quarter of fiscal 2014. Inventory at the end of the second
quarter of fiscal 2015 totaled $280.6 million compared to $180.5 million
at the end of the second quarter of fiscal 2014. The Company ended the
quarter with 336 stores.
Laurent Potdevin, lululemon's CEO, stated: "We exceeded our revenue
targets for the past quarter, supported by strong performance from both
our store and e-commerce channels. Looking to the remainder of the year,
our team is laser focused on meeting our strategic key goals: grow our
global collective, relentlessly innovate our product lines and continue
to create transformational experiences for our guests." Mr. Potdevin
continued: "As our momentum continues to build, we are excited by the
progress made with our international expansion, the launch of our new
women’s pant wall last week, and successful brand-building events
occurring around the globe."
Updated Outlook
For the third quarter of fiscal 2015, we expect net revenue to be in the
range of $477 million to $482 million 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 $0.35 to $0.37 for the quarter.
This guidance assumes 141.6 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 2015, we now expect net revenue to be in the range
of $2.025 billion to $2.055 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 $1.87 to $1.92 for the full
year. This guidance assumes 141.8 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.
Conference Call Information
A conference call to discuss second quarter results is scheduled for
today, September 10, 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 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.
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.
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lululemon athletica inc.
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Condensed Consolidated Statements of Operations
|
Unaudited; Expressed in thousands, except per share amounts
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
|
|
Thirteen Weeks
|
|
Twenty-Six
|
|
Twenty-Six
|
|
|
Ended
|
|
Ended
|
|
Weeks Ended
|
|
Weeks Ended
|
|
|
August 2, 2015
|
|
August 3, 2014
|
|
August 2, 2015
|
|
August 3, 2014
|
Net revenue
|
|
$
|
453,010
|
|
|
$
|
390,708
|
|
|
$
|
876,554
|
|
|
$
|
775,326
|
|
Costs of goods sold
|
|
240,985
|
|
|
193,401
|
|
|
458,652
|
|
|
382,275
|
|
Gross profit
|
|
212,025
|
|
|
197,307
|
|
|
417,902
|
|
|
393,051
|
|
As a percent of net revenue
|
|
46.8
|
%
|
|
50.5
|
%
|
|
47.7
|
%
|
|
50.7
|
%
|
Selling, general and administrative expenses
|
|
145,446
|
|
|
129,419
|
|
|
283,287
|
|
|
255,362
|
|
As a percent of net revenue
|
|
32.1
|
%
|
|
33.1
|
%
|
|
32.3
|
%
|
|
32.9
|
%
|
Income from operations
|
|
66,579
|
|
|
67,888
|
|
|
134,615
|
|
|
137,689
|
|
As a percent of net revenue
|
|
14.7
|
%
|
|
17.4
|
%
|
|
15.4
|
%
|
|
17.8
|
%
|
Other income, net
|
|
842
|
|
|
1,890
|
|
|
1,371
|
|
|
3,533
|
|
Income before provision for income taxes
|
|
67,421
|
|
|
69,778
|
|
|
135,986
|
|
|
141,222
|
|
Provision for income taxes
|
|
19,753
|
|
|
21,030
|
|
|
40,508
|
|
|
73,493
|
|
Net income
|
|
$
|
47,668
|
|
|
$
|
48,748
|
|
|
$
|
95,478
|
|
|
$
|
67,729
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.34
|
|
|
$
|
0.34
|
|
|
$
|
0.67
|
|
|
$
|
0.47
|
|
Diluted earnings per share
|
|
$
|
0.34
|
|
|
$
|
0.33
|
|
|
$
|
0.67
|
|
|
$
|
0.46
|
|
Basic weighted-average shares outstanding
|
|
141,372
|
|
|
145,180
|
|
|
141,656
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|
|
145,282
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|
Diluted weighted-average shares outstanding
|
|
141,644
|
|
|
145,544
|
|
|
141,977
|
|
|
145,715
|
|
|
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|
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|
|
|
|
|
|
|
|
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lululemon athletica inc.
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Condensed Consolidated Balance Sheets
|
Unaudited; Expressed in thousands
|
|
|
|
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|
August 2, 2015
|
|
February 1, 2015
|
ASSETS
|
|
|
|
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Current assets
|
|
|
|
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Cash and cash equivalents
|
|
$
|
541,262
|
|
|
$
|
664,479
|
Inventories
|
|
280,607
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|
|
208,116
|
Other current assets
|
|
96,400
|
|
|
78,417
|
Total current assets
|
|
918,269
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|
|
951,012
|
Property and equipment, net
|
|
324,093
|
|
|
296,008
|
Goodwill and intangible assets, net
|
|
25,611
|
|
|
26,163
|
Deferred income tax assets and other non-current assets
|
|
26,248
|
|
|
23,030
|
Total assets
|
|
$
|
1,294,221
|
|
|
$
|
1,296,213
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
7,488
|
|
|
$
|
9,339
|
Accrued inventory liabilities
|
|
35,545
|
|
|
22,296
|
Accrued compensation and related expenses
|
|
33,050
|
|
|
29,932
|
Income taxes payable
|
|
1,239
|
|
|
20,073
|
Unredeemed gift card liability
|
|
36,148
|
|
|
46,252
|
Other accrued liabilities
|
|
34,638
|
|
|
31,989
|
Total current liabilities
|
|
148,108
|
|
|
159,881
|
Deferred income tax liabilities
|
|
3,545
|
|
|
3,633
|
Other non-current liabilities
|
|
47,100
|
|
|
43,131
|
Stockholders' equity
|
|
1,095,468
|
|
|
1,089,568
|
Total liabilities and stockholders' equity
|
|
$
|
1,294,221
|
|
|
$
|
1,296,213
|
|
|
|
|
|
|
|
|
|
|
|
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|
lululemon athletica inc.
|
Condensed Consolidated Statements of Cash Flows
|
Unaudited; Expressed in thousands
|
|
|
|
|
|
|
|
Twenty-Six Weeks
|
|
Twenty-Six Weeks
|
|
|
Ended
|
|
Ended
|
|
|
August 2, 2015
|
|
August 3, 2014
|
Cash flows from operating activities
|
|
|
|
|
Net income
|
|
$
|
95,478
|
|
|
$
|
67,729
|
|
Items not affecting cash
|
|
38,152
|
|
|
57,209
|
|
Other, including net changes in other non-cash balances
|
|
(101,469
|
)
|
|
(953
|
)
|
Net cash provided by operating activities
|
|
32,161
|
|
|
123,985
|
|
Net cash used in investing activities
|
|
(65,118
|
)
|
|
(52,102
|
)
|
Net cash used in financing activities
|
|
(78,837
|
)
|
|
(57,167
|
)
|
Effect of exchange rate changes on cash
|
|
(11,423
|
)
|
|
11,708
|
|
(Decrease) increase in cash and cash equivalents
|
|
(123,217
|
)
|
|
26,424
|
|
Cash and cash equivalents, beginning of period
|
|
$
|
664,479
|
|
|
$
|
698,649
|
|
Cash and cash equivalents, end of period
|
|
$
|
541,262
|
|
|
$
|
725,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
lululemon athletica inc.
|
Reconciliation of Non-GAAP Financial Measures
|
|
Constant dollar total comparable sales (unaudited)
|
|
|
|
|
|
|
|
Thirteen Weeks Ended August 2, 2015
|
|
Thirteen Weeks Ended August 3, 2014
|
Total comparable sales1
|
|
6
|
%
|
|
(1
|
)%
|
Adjustments due to foreign exchange rate changes
|
|
5
|
|
|
1
|
|
Total comparable sales in constant dollars1
|
|
11
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
__________
1 Total 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
|
|
Thirteen Weeks
|
|
|
Ended
|
|
Ended
|
|
|
August 2, 2015
|
|
August 3, 2014
|
Comparable store sales1
|
|
1
|
%
|
|
(7
|
)%
|
Adjustments due to foreign exchange rate changes
|
|
5
|
|
|
2
|
|
Comparable store sales in constant dollars1
|
|
6
|
%
|
|
(5
|
)%
|
|
|
|
|
|
|
|
__________
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 August 2, 2015
|
|
Thirteen Weeks Ended August 3, 2014
|
Change in direct to consumer revenue
|
|
30
|
%
|
|
29
|
%
|
Adjustments due to foreign exchange rate changes
|
|
5
|
|
|
1
|
|
Change in direct to consumer revenue in constant dollars
|
|
35
|
%
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
lululemon athletica inc.
|
Store Count and Square Footage1
|
Twenty-Six Weeks Ended August 2, 2015
|
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
Quarter2
|
|
Number of Stores Open at the End of the
Quarter
|
1st Quarter
|
|
302
|
|
|
14
|
|
|
—
|
|
|
316
|
2nd Quarter
|
|
316
|
|
|
20
|
|
|
—
|
|
|
336
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross Square Feet at the Beginning of
the Quarter
|
|
Gross Square Feet Added During the Quarter2,3
|
|
Gross Square Feet Lost During the Quarter2,3
|
|
Total Gross Square Feet at the End of
the Quarter
|
1st Quarter
|
|
894
|
|
|
37
|
|
|
—
|
|
|
931
|
2nd Quarter
|
|
931
|
|
|
54
|
|
|
—
|
|
|
985
|
__________
1 Store count and square footage summary includes
company-operated 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 company-operated stores which have been
renovated or relocated in the quarter.
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