lululemon athletica, inc.
Jun 10, 2010

lululemon athletica inc. Announces First Quarter Fiscal 2010 Results

First Quarter Net Revenue Increases 69% to $138.3 million
First Quarter Diluted EPS of $0.27

VANCOUVER, Canada, Jun 10, 2010 (BUSINESS WIRE) -- lululemon athletica inc. (NASDAQ:LULU; TSX:LLL) today announced financial results for the first quarter ended May 2, 2010.

For the first quarter ended May 2, 2010:

The Company ended the first quarter of fiscal 2010 with $173.6 million in cash and cash equivalents compared to $59.3 million at the end of the first quarter of fiscal 2009. Inventory at the end of the first quarter of fiscal 2010 totaled $50.8 million compared to $44.6 million at the end of the first quarter of fiscal 2009.

Christine Day, lululemon's CEO stated: "This was our company's best-ever first quarter as we were able to generate very strong same store sales growth in both the U.S. and Canada. In the first quarter, we saw our trailing 12 month average sales per square foot reach $1,428, an improvement from last quarter's $1,318."

Updated Outlook

The previous outlook had reflected a tax rate of 35%. Consistent with the adjustment to the tax rate in the first quarter of fiscal 2010 the updated outlook assumes a tax rate of 40% for fiscal 2010.

For the second quarter of fiscal 2010, we expect net revenue to be in the range of $140 million to $145 million based on a comparable-store sales percentage increase in the mid 20s on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.21 to $0.23 for the quarter. This assumes 72.1 million diluted weighted-average shares outstanding.

For the full fiscal 2010, we now expect net revenue to be in the range of $620 million to $635 million and diluted earnings per share are expected to be in the range of $1.05 to $1.10 for the full year. This assumes 72.2 million diluted weighted-average shares outstanding.

Conference Call Information

A conference call to discuss first quarter results is scheduled for today, June 10, 2010, at 9:00 am Eastern Time. Those interested in participating in the call are invited to dial (877) 312-8622 approximately ten 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 (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, 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.

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: the possibility that we may not be able to manage operations at our current size or manage growth effectively; risks that consumer spending may continue to decline and that U.S. and global macroeconomic conditions may worsen; the possibility that levels of comparable-store sales or average sales per square foot will decline; the possibility that we may not be able to successfully expand in the United States and other new markets; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; the possibility that we may not be able to continually innovate and provide our consumers with improved products; the possibility that our suppliers or manufacturers may not produce or deliver our products in a timely or cost-effective manner; and other risk factors detailed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2010 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 Weeks Ended Thirteen Weeks Ended
May 2, 2010

(unaudited)

May 3, 2009

(unaudited)

Net revenue $ 138,297 $ 81,680
Costs of goods sold 63,940 46,656
Gross profit 74,357 35,024
As a percent of net revenue 53.8 % 42.9 %
Selling, general and administrative expenses 41,883 25,171
As a percent of net revenue 30.3 % 30.8 %

Income from operations

32,474 9,853
As a percent of net revenue 23.5 % 12.1 %
Other income (expense), net 161 78
Income before provision for income taxes 32,635 9,931
Provision for income taxes 13,047 3,413
Net income $ 19,588 $ 6,518
Basic earnings per share $ 0.28 $ 0.09
Diluted earnings per share $ 0.27 $ 0.09
Basic weighted-average shares outstanding 70,599 70,131
Diluted weighted-average shares outstanding 71,582 70,331

lululemon athletica inc.

Condensed Consolidated Balance Sheets

Expressed in thousands

May 2, 2010 May 3, 2009
ASSETS
Current assets
Cash and cash equivalents $ 173,640 $ 59,271
Inventories 50,750 44,635
Other current assets 15,053 10,003
Total current assets 239,443 113,909
Property and equipment, net 63,844 60,960
Intangible assets, net 8,096 8,166
Deferred income taxes and other assets 21,707 24,751
Total assets $ 333,090 $ 207,786
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 8,019 $ 5,218
Other current liabilities 36,817 22,157
Income taxes payable 1,961 --
Total current liabilities 46,797 27,375
Deferred income taxes and other non-current liabilities 18,504 12,141
Stockholders' equity 267,796 168,270
Total liabilities and stockholders' equity $ 333,090 $ 207,786

lululemon athletica inc.

Condensed Consolidated Statements of Cash Flows

Expressed in thousands

Thirteen Weeks Ended

May 2, 2010

Thirteen Weeks Ended

May 3, 2009

Cash flows from operating activities
Net income $ 19,588 $ 6,518
Items not affecting cash 9,026 5,963
Other, including net changes in other non-cash balances (16,042 ) (9,662 )
Net cash provided by operating activities 12,572 2,819
Net cash used in investing activities (6,157 ) (2,555 )
Net cash provided by financing activities 4,982 350
Effect of exchange rate changes on cash 2,670 1,860
Increase in cash and cash equivalents 14,067 2,474
Cash and cash equivalents, beginning of period $ 159,573 $ 56,797
Cash and cash equivalents, end of period $ 173,640 $ 59,271

lululemon athletica inc.

Reconciliation of Non-GAAP Financial Measure

Constant-dollar changes

Thirteen Weeks Ended Thirteen Weeks Ended
May 2, 2010 May 3, 2009
% Change % Change
Comparable-store sales (GAAP) 51 % (21 )%
Increase (decrease) due to foreign exchange rate changes (16 )% 13 %
Comparable-store sales in constant dollars 35 % (8 )%

SOURCE: lululemon athletica inc.

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