lululemon athletica inc. (NASDAQ:LULU) today announced financial
results for the second quarter ended July 31, 2016.
For the second quarter ended July 31, 2016:
- Net revenue increased by 14% to $514.5
million from $453.0 million in the second quarter of fiscal 2015,
or increased by 15% on a constant dollar basis.
- Total comparable sales, which includes
comparable store sales and direct to consumer, increased by 4%, or
by 5% on a constant dollar basis.
- Comparable store sales increased by 3%,
or by 4% on a constant dollar basis.
- Direct to consumer net revenue
increased by 6% to $87.4 million, or by 7% on a constant dollar
basis. In the second quarter of fiscal 2015 we held an online
warehouse sale. Excluding the impact of this online warehouse sale,
direct to consumer net revenue would have increased by 16%.
- Gross profit increased by 20% to $254.2
million, and as a percentage of net revenue gross profit was 49.4%
compared to 46.8% in the second quarter of fiscal 2015.
- Income from operations increased by 11%
to $74.0 million from $66.6 million in the second quarter of fiscal
2015, and as a percentage of net revenue was 14.4% compared to
14.7% of net revenue in the second quarter of fiscal 2015.
- Income tax expense was $20.9 million,
which included a net income tax recovery of $1.9 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 $0.3 million. The effective tax rate in the
second quarter of fiscal 2016 was 28.1% compared to 29.3% in the
second quarter of fiscal 2015. Excluding the above tax and related
interest adjustments, the effective tax rate was 30.5% in the
second quarter of fiscal 2016.
- Diluted earnings per share for the
second quarter of fiscal 2016 were $0.39 compared to $0.34 in the
second quarter of fiscal 2015. Excluding the above tax and related
interest adjustments, diluted earnings per share were $0.38 for the
second quarter of fiscal 2016.
- During the second quarter of fiscal
2016, the Company repurchased 0.2 million shares of the Company's
common stock at an average cost of $63.65 per share, completing our
approved stock repurchase program.
The Company ended the second quarter of fiscal 2016 with $535.3
million in cash and cash equivalents compared to $541.3 million at
the end of the second quarter of fiscal 2015. Inventories at the
end of the second quarter of fiscal 2016 decreased by 1% to $277.3
million compared to $280.6 million at the end of the second quarter
of fiscal 2015. The Company ended the quarter with 379 stores.
Laurent Potdevin, lululemon's CEO, stated: "The second quarter
demonstrated strong results as we delivered sales and EPS at the
high-end of our guidance and saw an important inflection in our
gross margin and earnings performance."
Mr. Potdevin continued: "Our progress in the second quarter,
especially in gross margin and inventory, marks the beginning of
our recovery in profitability and sustainable long term
growth."
Updated Outlook
For the third quarter of fiscal 2016, we expect net revenue to
be in the range of $535 million to $545 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 $0.42 to $0.44 for the quarter. This guidance assumes 137.5
million diluted weighted-average shares outstanding and a 30.5% tax
rate.
For the full fiscal 2016, we now expect net revenue to be in the
range of $2.325 billion to $2.350 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 $2.11 to
$2.19 for the full year, or $2.07 to $2.15 normalized for the tax
and related interest adjustments made during the first two quarters
of fiscal 2016. This guidance assumes 137.5 million diluted
weighted-average shares outstanding and a 28.7% tax rate, or 30.5%
excluding the above tax and related interest adjustments.
Conference Call Information
A conference call to discuss second quarter results is scheduled
for today, September 1, 2016, at 4:30 p.m. Eastern time. Those
interested in participating in the call are invited to dial
1-800-319-4610 or 1-604-638-5340, if calling internationally,
approximately 10 minutes prior to the start of the call. A live
webcast of the conference call will be available online at:
http://investor.lululemon.com/events.cfm. A replay will be made
available online approximately two hours following the live call
for a period of 30 days.
About lululemon athletica inc.
lululemon athletica inc. (NASDAQ:LULU) is a healthy lifestyle
inspired athletic apparel company for yoga, running, training, and
most other sweaty pursuits, 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 with
greater prominence to, the financial information prepared and
presented in accordance with GAAP. For more information on these
non-GAAP financial measures, please see the section 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 highly competitive market and increasing
competition; 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;
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 or unanticipated tax liabilities,
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 July
31, 2016
Thirteen Weeks Ended
August 2, 2015
Twenty-Six Weeks Ended
July 31, 2016
Twenty-Six Weeks Ended
August 2, 2015
Net revenue $ 514,520 $ 453,010 $ 1,010,036 $ 876,554 Costs of
goods sold 260,359 240,985 516,744 458,652
Gross profit 254,161 212,025 493,292 417,902 As a percent of
net revenue 49.4 % 46.8 % 48.8 % 47.7 % Selling, general and
administrative expenses 180,202 145,446 361,744 283,287 As a
percent of net revenue 35.0 % 32.1 % 35.8 % 32.3 % Income from
operations 73,959 66,579 131,548 134,615 As a percent of net
revenue 14.4 % 14.7 % 13.0 % 15.4 % Other income (expense), net 578
842 92 1,371 Income before income tax
expense 74,537 67,421 131,640 135,986 Income tax expense 20,912
19,753 32,679 40,508 Net income $
53,625 $ 47,668 $ 98,961 $ 95,478
Basic earnings per share $ 0.39 $ 0.34 $ 0.72 $ 0.67 Diluted
earnings per share $ 0.39 $ 0.34 $ 0.72 $ 0.67 Basic
weighted-average shares outstanding 136,987 141,372 137,071 141,656
Diluted weighted-average shares outstanding 137,229 141,644 137,309
141,977
lululemon athletica
inc.
Condensed Consolidated Balance Sheets
Unaudited; Expressed in thousands
July 31, 2016 January 31, 2016
ASSETS Current assets Cash and cash equivalents $ 535,350 $
501,482 Inventories 277,279 284,009 Prepaid and receivable income
taxes 98,678 91,453 Other current assets 51,376 40,095 Total
current assets 962,683 917,039 Property and equipment, net 395,010
349,605 Goodwill and intangible assets, net 24,897 24,777 Deferred
income taxes and other non-current assets 32,911 22,656 Total
assets $ 1,415,501 $ 1,314,077
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Accounts payable $ 8,295 $ 10,381
Accrued inventory liabilities 19,287 25,451 Accrued compensation
and related expenses 39,495 43,524 Income taxes payable 33,592
37,736 Unredeemed gift card liability 46,181 57,736 Other accrued
liabilities 50,588 50,676 Total current liabilities 197,438 225,504
Deferred income tax liability 11,198 10,759 Other non-current
liabilities 50,663 50,332 Stockholders' equity 1,156,202 1,027,482
Total liabilities and stockholders' equity $ 1,415,501 $ 1,314,077
lululemon athletica inc.
Condensed Consolidated Statements of Cash
Flows
Unaudited; Expressed in thousands
Twenty-Six Weeks Ended
July 31, 2016
Twenty-Six Weeks Ended
August 2, 2015
Cash flows from operating activities Net income $ 98,961 $ 95,478
Items not affecting cash 46,604 38,163 Changes in operating assets
and liabilities (45,577 ) (101,480 ) Net cash provided by operating
activities 99,988 32,161 Net cash used in investing activities
(71,261 ) (65,118 ) Net cash used in financing activities (23,877 )
(78,837 ) Effect of exchange rate changes on cash 29,018
(11,423 ) Increase (decrease) in cash and cash equivalents 33,868
(123,217 ) Cash and cash equivalents, beginning of period 501,482
664,479 Cash and cash equivalents, end of period $
535,350 $ 541,262
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
change compared to the corresponding period in the prior year.
Constant dollar changes in net revenue
Thirteen Weeks Ended July 31,
2016
Thirteen Weeks Ended August 2, 2015 (In thousands)
(Percentage) (In thousands) (Percentage) Net revenue
increase $ 61,510 14 % $ 62,302 16 % Adjustments due to foreign
exchange rate changes 5,251 1 20,293 5
Net revenue increase in constant dollars $ 66,761 15 % $ 82,595 21
%
Constant dollar changes in total
comparable sales
Thirteen Weeks Ended July
31, 2016
Thirteen Weeks Ended
August 2, 2015
Increase in total comparable sales1 4 % 6 % Adjustments due to
foreign exchange rate changes 1 5 Increase in total
comparable sales in constant dollars1 5 % 11 %
__________
1Total comparable sales includes comparable store sales and direct
to consumer sales. Comparable store sales reflects net revenue from
company-operated stores that have been open for at least 12 months,
or open for at least 12 months after being significantly expanded.
Constant dollar changes in comparable
store sales
Thirteen Weeks Ended July
31, 2016
Thirteen Weeks Ended
August 2, 2015
Increase in comparable store sales1 3 % 1 % Adjustments due to
foreign exchange rate changes 1 5 Increase in
comparable store sales in constant dollars1 4 % 6 %
__________
1Comparable store sales reflects net revenue from company-operated
stores that have been open for at least 12 months, or open for at
least 12 months after being significantly expanded.
Constant dollar changes in direct to
consumer net revenue
Thirteen Weeks Ended July
31, 2016
Thirteen Weeks Ended
August 2, 2015
Increase in direct to consumer net revenue 6 % 30 % Adjustments due
to foreign exchange rate changes 1 5 Increase in
direct to consumer net revenue in constant dollars 7 % 35 %
Effective tax rate, excluding tax and
related interest adjustments
Thirteen Weeks Ended July
31, 2016
Thirteen Weeks Ended
August 2, 2015
Twenty-Six Weeks Ended
July 31, 2016
Twenty-Six Weeks Ended
August 2, 2015
Effective tax rate 28.1 % 29.3 % 24.8 % 29.8 % Tax and related
interest adjustments1 2.4 — 5.4 —
Effective tax rate, excluding tax and related interest adjustments
30.5 % 29.3 % 30.2 % 29.8 %
__________
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 September 1, 2016 for an explanation as to the nature of
these items.
Diluted earnings per share, excluding tax
and related interest adjustments
Thirteen Weeks Ended July
31, 2016
Thirteen Weeks Ended
August 2, 2015
Twenty-Six Weeks Ended
July 31, 2016
Twenty-Six Weeks Ended
August 2, 2015
Diluted earnings per share $ 0.39 $ 0.34 $ 0.72 $ 0.67 Tax and
related interest adjustments1 (0.01 ) — (0.04 ) — Diluted
earnings per share, excluding tax and related interest adjustments
$ 0.38 $ 0.34 $ 0.68 $ 0.67
__________
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 September 1, 2016 for an explanation as to the nature of
these items.
lululemon athletica inc.
Store Count and Square Footage1
Twenty-Six Weeks Ended July 31, 2016
Square Footage Expressed in Thousands
Number of Stores Open at
the Beginning of the Quarter
Number of Stores Opened
During the Quarter
Number of Stores Closed
During the Quarter
Number of Stores Open at
the End of the Quarter
1st Quarter 363 11 1 373 2nd Quarter 373 6 — 379
Total Gross Square Feet at
the Beginning of the Quarter
Gross Square Feet Added
During the Quarter2
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 2nd Quarter 1,095 22 — 1,117
__________
1Store count and square footage summary includes company-operated
stores which are branded lululemon athletica or ivivva athletica.
Excludes retail locations operated by a third party under a license
and supply arrangement. 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160901006429/en/
Investor:ICR, Inc.Joseph Teklits/Caitlin Morahan,
203-682-8200orMedia:ICR, Inc.Alecia Pulman, 203-682-8224
Lululemon Athletica (NASDAQ:LULU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Lululemon Athletica (NASDAQ:LULU)
Historical Stock Chart
From Apr 2023 to Apr 2024