lululemon athletica, inc.
Sep 10, 2010

lululemon athletica inc. Announces Second Quarter Fiscal 2010 Results

Second Quarter Net Revenue Increases 56% to $152.2 million
Second Quarter Diluted EPS of $0.30

VANCOUVER, British Columbia, Sep 10, 2010 (BUSINESS WIRE) -- lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced financial results for the second quarter ended August 1, 2010.

For the thirteen weeks ended August 1, 2010:

For the twenty-six weeks ended August 1, 2010:

The Company ended the second quarter of fiscal 2010 with $178.2 million in cash and cash equivalents compared to $83.8 million at the end of the second quarter of fiscal 2009. Inventory at the end of the second quarter of fiscal 2010 totaled $66.5 million compared to $46.5 million at the end of the second quarter of fiscal 2009. The Company ended the quarter with 130 stores in North America and Australia.

Christine Day, lululemon's CEO stated: "Our strong sales momentum reflects increased brand awareness driven by the strength of our product innovation, guest experience and community engagement. We achieved $1,532 in sales per square foot for the second quarter driven by the exceptional performance of our newest stores. We are intently focused on our existing growth strategies which include fueling our rapidly growing e-commerce business and leveraging our showrooms into 20 to 25 store openings in 2011."

Updated Outlook

For the third quarter of fiscal 2010, we expect net revenue to be in the range of $155 million to $160 million based on a comparable-store sales percentage increase in the high-teens on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.22 to $0.24 for the quarter. This assumes 72.5 million diluted weighted-average shares outstanding.

For the full fiscal 2010, we now expect net revenue to be in the range of $645 million to $650 million and diluted earnings per share are expected to be in the range of $1.18 to $1.22 for the full year. This assumes 72.3 million diluted weighted-average shares outstanding.

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.

Conference Call Information

A conference call to discuss second quarter results is scheduled for today, September 10, 2010, at 9:00 am Eastern Time. Those interested in participating in the call are invited to dial (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 (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

Twenty-Six
Weeks Ended

Twenty-Six
Weeks Ended

August 1,
2010
(unaudited)

August 2,
2009
(unaudited)

August 1,
2010
(unaudited)

August 2,
2009
(unaudited)

Net revenue $152,208 $97,721 $290,505 $179,401
Costs of goods sold 71,910 52,557 135,850 99,213
Gross profit 80,298 45,164 154,655 80,188
As a percent of net revenue 52.8% 46.2% 53.2% 44.7%
Selling, general and administrative expenses 46,055 30,832 87,938 56,003
As a percent of net revenue 30.2% 31.6% 30.3% 31.2%

Income from operations

34,243 14,332 66,717 24,185
As a percent of net revenue 22.5% 14.7% 23.0% 13.5%
Other income (expense), net 2,092 23 2,254 101
Income before provision for income taxes 36,335 14,355 68,971 24,286
Provision for income taxes 14,628 5,111 27,676 8,524
Net Income 21,707 9,244 41,295 15,762

Net loss attributable to non-controlling interest

(85) - (85) -
Net income attributable to lululemon athletica inc. $21,792 $9,244 $41,380 $15,762
Basic earnings per share $0.31 $0.13 $0.59 $0.22
Diluted earnings per share $0.30 $0.13 $0.58 $0.22
Basic weighted-average shares outstanding 70,820 69,948 70,708 70,176
Diluted weighted-average shares outstanding 71,750 70,401 71,692 70,473
lululemon athletica inc.

Condensed Consolidated Balance Sheets

Expressed in thousands

August 1, 2010 January 31, 2010
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $178,172 $159,573
Inventories 66,520 44,070
Other current assets 14,358 12,767
Total current assets 259,050 216,410
Property and equipment, net 64,609 61,591
Intangible assets, net 24,735 8,050
Deferred income taxes and other assets 15,302 21,207
Total assets $363,696 $307,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $7,275 $11,027
Other current liabilities 37,019 39,908
Income taxes payable 2,419 7,742
Total current liabilities 46,713 58,678
Deferred income taxes and other non-current liabilities 23,669 15,472
Stockholders' equity 293,314 233,108
Total liabilities and stockholders' equity $363,696 $307,258
lululemon athletica inc.

Condensed Consolidated Statements of Cash Flows

Expressed in thousands

Twenty-Six Weeks Ended
August 1, 2010

Twenty-Six Weeks Ended
August 2, 2009

(unaudited) (unaudited)
Cash flows from operating activities
Net income $41,295 $15,762
Items not affecting cash 22,436 12,489
Other, including net changes in other non-cash balances (29,179) 482
Net cash provided by operating activities 34,552 28,733
Net cash used in investing activities (24,053) (6,303)
Net cash provided by financing activities 6,138 568
Effect of exchange rate changes on cash 1,962 4,002
Increase in cash and cash equivalents 18,599 27,000
Cash and cash equivalents, beginning of period $159,573 $56,797
Cash and cash equivalents, end of period $178,172 $83,797
lululemon athletica inc.

Reconciliation of Non-GAAP Financial Measure

Constant-dollar changes

(unaudited)

Thirteen Weeks Ended Thirteen Weeks Ended
August 1, 2010 August 2, 2009
% Change % Change
Comparable-store sales (GAAP) 38% (10)%
Increase (decrease) due to foreign exchange rate changes (7)% 8%
Comparable-store sales in constant dollars 31% (2)%

SOURCE: lululemon athletica inc.

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