lululemon athletica inc. Announces Third Quarter Fiscal 2008 Results
VANCOUVER, Canada, Dec 11, 2008 (BUSINESS WIRE) --
lululemon athletica inc. [NASDAQ: LULU; TSX: LLL] today announced financial results for the thirteen weeks ended November 2, 2008.
For the thirteen weeks ended November 2, 2008:
For the thirty-nine weeks ended November 2, 2008:
Christine Day, lululemon's CEO stated: "While we are pleased that we met our earnings expectations in the third quarter, we recognize that we are operating in an increasingly difficult environment. During this current downturn we will operate our business prudently through careful inventory management, expense controls and conservative capital investments. We believe that our business model will prove resilient throughout this challenging time and we will emerge from these conditions with strong growth potential for our brand."
Based on the trends in the macro environment and the weaker Canadian dollar, which are both negatively impacting our business results, we are revising our outlook for the balance of the year. For fourth quarter 2008, we now anticipate reported net revenue to be in the range of $90 million to $95 million. This is based on a comparable store sales decline in the low double digits on a constant-dollar basis and six new store openings during the quarter. We now expect diluted earnings per share for the fourth quarter of 2008 to be in the range of $0.15 to $0.17; incorporating a 34% tax rate and 70.7 million diluted weighted average shares outstanding.
For fiscal 2008, the Company now expects diluted earnings per share in the range of $0.55-$0.57 as compared to its previous range of $0.68-$0.71. Revised guidance for the full year includes net revenue between $340 million and $345 million and 35 planned new store openings in North America.
We continue to expect an average effective tax rate in the low 30% range for the full year and anticipate diluted weighted average shares outstanding of approximately 71 million for 2008. Fiscal 2008 earnings guidance includes a loss of $0.02 per share recorded in the second quarter resulting from the Company's closure of its four stores that operated in Japan.
Conference Call Information
A conference call to discuss third quarter results is scheduled for today, December 11, 2008, at 9:00 AM Eastern Time. Investors interested in participating in the call are invited to dial (877) 681-3372 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.lululemon.com.
About lululemon athletica inc.
lululemon athletica (NASDAQ: LULU; TSX: LLL) is a yoga-inspired athletic apparel company that creates components for people to live longer, healthier and more 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, http://www.lululemon.com.
Non-GAAP Financial Measure:
Constant dollar net revenue changes, which exclude the impact of changes in foreign exchange rates, are not Generally Accepted Accounting Principle ("GAAP") performance measure. We provide constant dollar 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 items that are not under management's direct control, such as changes in foreign exchange rates.
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, financial results or results of operations, our prospects and strategies for future growth, both in North America and internationally, 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," "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: the possibility that we may not be able to manage operations at our current size or manage growth effectively; the possibility that we may not be able to identify suitable locations to open new stores or attract customers to our stores; the possibility that we may not be able to successfully expand in the United States or in other markets, or expand into new markets; the possibility that we may not be able to finance our growth and maintain sufficient levels of cash flow; the probability that a general economic slowdown will adversely affect our results of operations and growth plans; increasing competition, which may cause us to reduce the prices of our products or to increase significantly our marketing efforts to avoid losing market share; the possibility that we may not be able to effectively market and maintain a positive brand image; the possibility that we may not be able to continually innovate and provide our consumers with improved products; and other risk factors detailed in our filings with the Securities and Exchange Commission, including the risk factors contained in our fiscal 2007 Annual Report on Form 10-K filed with the SEC and other filings we make with the SEC. Our filings with the SEC are available at http://www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. 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.
Consolidated Statements of Operations (unaudited)
Expressed in thousands of dollars except per share amounts
|Thirteen Weeks Ended||Three Months Ended||Thirty-Nine Weeks Ended||Nine Months Ended|
|November 2, 2008||October 31, 2007||November 2, 2008||October 31, 2007|
|Costs of goods sold||45,154||29,409||122,159||77,602|
|As a percent of net revenue||48.1%||54.7%||51.1%||53.2%|
|Selling, general and administrative expenses||28,838||23,269||86,886||59,141|
|As a percent of net revenue||33.1%||35.8%||34.8%||35.6%|
|Income from operations||13,055||12,247||40,520||29,206|
|As a percent of net revenue||15.0%||18.9%||16.2%||17.6%|
|Other expense (income), net||(145)||(419)||(612)||(596)|
|Income before provision for income taxes||13,200||12,666||41,132||29,802|
|Provision for income taxes||4,370||4,763||11,572||13,010|
|Net income from continuing operations||8,830||7,903||29,561||16,792|
|Net income (loss) from discontinued operations||4||(334)||(1,136)||(649)|
|Basic earnings (loss) per share:|
|Net basic earnings per share||$0.13||$0.11||$0.42||$0.25|
|Diluted earnings (loss) per share:|
|Net diluted earnings per share||$0.13||$0.11||$0.40||$0.23|
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands of dollars
|November 2, 2008||February 3, 2008|
|Cash and cash equivalents||$52,039||$52,545|
|Prepaid expenses and other current assets||2,379||4,082|
|Total current assets||107,487||98,861|
|Property and equipment, net||59,893||43,605|
|Intangible assets, net||8,639||8,118|
|Deferred income taxes and other assets||22,000||4,508|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Other current liabilities||38,322||25,023|
|Income taxes payable||---||5,720|
|Total current liabilities||46,770||36,140|
|Deferred income taxes and other non-current liabilities||10,989||6,918|
|Total liabilities and stockholders' equity||$198,019||$155,092|
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant dollar changes
|Thirteen Weeks Ended||Thirty-Nine Weeks Ended|
|November 2, 2008||November 2, 2008|
|% Change||% Change|
|Comparable-store sales (GAAP)||(2)%||13%|
|Increase (decrease) due to foreign exchange rate changes||6%||(3)%|
|Comparable-store sales in constant dollars||4%||10%|
SOURCE: lululemon athletica inc.
Joseph Teklits, 203-682-8258
Evan Goetz, Diane Zappas
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