lululemon athletica, inc.
Dec 9, 2010

lululemon athletica inc. Announces Third Quarter Fiscal 2010 Results

Third Quarter Net Revenue Increases 56% to $175.8 million

Third Quarter Diluted EPS of $0.36

VANCOUVER, British Columbia--(BUSINESS WIRE)-- lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced financial results for the third quarter ended October 31, 2010.

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For the thirteen weeks ended October 31, 2010:

For the thirty-nine weeks ended October 31, 2010:

The Company ended the third quarter of fiscal 2010 with $224.8 million in cash and cash equivalents compared to $101.8 million at the end of the third quarter of fiscal 2009. Inventory at the end of the third quarter of fiscal 2010 totaled $73.0 million compared to $52.1 million at the end of the third quarter of fiscal 2009. The Company ended the quarter with 134 stores in North America and Australia.

Christine Day, lululemon's CEO stated: "We are very pleased with our strong third quarter results. Our technical product continues to drive our top line growth, cementing our position as an innovative athletic wear company with yoga at our core. Looking ahead, we remain excited about the potential for lululemon and will continue to execute on our strategies and invest in our future for the significant growth opportunities still ahead of us."

Updated Outlook

For the fourth quarter of fiscal 2010, we expect net revenue to be in the range of $210 million to $215 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 $0.46 to $0.48 for the quarter. This assumes 72.2 million diluted weighted-average shares outstanding and a 40% tax rate.

Conference Call Information

A conference call to discuss third quarter results is scheduled for today, December 9, 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 Thirteen Thirty-Nine Thirty-Nine
Weeks Weeks Weeks Weeks

Ended

Ended Ended Ended
October 31, November 1, October 31, November 1,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)

 

Net revenue $175,800 $112,891 $466,305 $292,292
 
Costs of goods sold 78,968 56,553 214,818 155,766
 
Gross profit 96,832 56,338 251,487 136,526
As a percent of net revenue 55.1% 49.9% 53.9% 46.7%
 
Selling, general and administrative expenses 54,456 35,412 142,394 91,415
As a percent of net revenue 31.0% 31.4% 30.5% 31.3%

Income from operations

42,376 20,926 109,093 45,111
As a percent of net revenue 24.1% 18.5% 23.4% 15.4%
 
Other income (expense), net 91 (3) 2,345 98
 
Income before provision for income taxes 42,467 20,923 111,438 45,209
 
Provision for income taxes 16,532 6,855 44,207 15,379
Net Income 25,935 14,068 67,231 29,830

Net income attributable to non-controlling interest

234 - 150 -
 
Net income attributable to lululemon athletica inc. $25,701 $14,068 $67,081 $29,830
 
Basic earnings per share $0.36 $0.20 $0.95 $0.42
Diluted earnings per share $0.36 $0.20 $0.93 $0.42
 
Basic weighted-average shares outstanding 70,938 70,279 70,786 70,205
Diluted weighted-average shares outstanding 71,835 71,100 71,782 70,759
 
   

lululemon athletica inc.

Condensed Consolidated Balance Sheets

Expressed in thousands

 
October 31, January 31,
  2010 2010
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $224,775 $159,573
Inventories 73,023 44,070
Other current assets 13,919 12,767
Total current assets 311,717 216,410
 
Property and equipment, net 67,457 61,591
 
Intangible assets, net 26,488 8,050
 
Deferred income taxes and other assets 13,310 21,207
Total assets $418,972 $307,258
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $9,275 $11,027
Other current liabilities 49,483 39,909
Income taxes payable 5,518 7,742
Total current liabilities 64,276 58,678
 
Deferred income taxes and other non-current liabilities 28,023 15,472
 
Stockholders' equity 326,673 233,108
Total liabilities and stockholders' equity $418,972 $307,258
 
   
lululemon athletica inc.

Condensed Consolidated Statements of Cash Flows

Expressed in thousands

 
Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended
October 31, 2010 November 1, 2009
(unaudited) (unaudited)
Cash flows from operating activities
Net income $67,231 $29,830
Items not affecting cash 36,201 21,109
Other, including net changes in other non-cash balances (15,515) 834
Net cash provided by operating activities 87,917 51,773
Net cash used in investing activities (34,433) (10,214)
 
Net cash provided by financing activities 7,945 (27)
 
Effect of exchange rate changes on cash 3,773 3,503
 
Increase in cash and cash equivalents 65,202 45,035
Cash and cash equivalents, beginning of period $159,573 $56,797
Cash and cash equivalents, end of period $224,775 $101,832
 
       
lululemon athletica inc.

Store Count and Square Footage1

Year ended January 30, 2011

Square Footage Expressed in Thousands

 
Number of
Number of Stores Number of
Stores Open Opened / Stores Number of
at the Acquired Closed Stores Open
Beginning of During the During the at the End of
the Quarter

Quarter2

Quarter the Quarter
 
1st Quarter 110 4 0 114
2nd Quarter 114 12 0 126
3rd Quarter 126 4 0 130
 
       
Gross Square
Total Gross Feet Lost
Square Feet Gross Square due to Store Total Gross
at the Feet Added Closures Square Feet
Beginning of During the During the at the End of
the Quarter

Quarter2,3

Quarter the Quarter
 
1st Quarter 316 9 0 325
2nd Quarter 325 25 0 350
3rd Quarter 350 14 0 364
 

1 Store count and square footage summary includes corporate-owned stores which are branded lululemon athletica and ivivva athletica.

2 Number of stores opened during fiscal 2010 are branded lululemon athletica and include nine locations repurchased from our Australian franchise operator and one reacquired franchise in Canada, in the second quarter.

3 Gross square feet added during the quarter includes net square foot additions for corporate-owned stores which have been renovated or relocated in the quarter.

   
lululemon athletica inc.

Reconciliation of Non-GAAP Financial Measure

Constant-dollar changes

(unaudited)

 
Thirteen Weeks Thirteen Weeks
Ended Ended
October 31, 2010 November 1, 2009
% Change % Change
Comparable-store sales (GAAP) 32% 11%
 
Increase (decrease) due to foreign exchange rate changes (3)% (1)%
 
Comparable-store sales in constant dollars 29% 10%
 

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