lululemon athletica, inc.
Dec 1, 2011

lululemon athletica inc. Announces Third Quarter Fiscal 2011 Results

Third Quarter Net Revenue Increased 31% to $230.2 million

Third Quarter Diluted EPS of $0.27

VANCOUVER, British Columbia--(BUSINESS WIRE)-- lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced financial results for the third quarter ended October 30, 2011.

For the thirteen weeks ended October 30, 2011:

For the thirty-nine weeks ended October 30, 2011:

The Company ended the third quarter of fiscal 2011 with $276.9 million in cash and cash equivalents compared to $224.8 million at the end of the third quarter of fiscal 2010. Inventory at the end of the third quarter of fiscal 2011 totaled $129.2 million compared to $73.0 million at the end of the third quarter of fiscal 2010. The Company ended the quarter with 165 stores in North America and Australia.

Christine Day, lululemon's CEO stated: "We are proud to have produced another very healthy quarter of financial results. In the third quarter we achieved year over year revenue growth of 31%, EPS growth of 50% and comparable sales per square foot of $1,880. We are set to finish 2011 with a stronger brand, a stronger organization and we remain focused on our strategic growth opportunities."

Updated Outlook

For the fourth quarter of fiscal 2011, we expect net revenue to be in the range of $327 million to $332 million based on a comparable-store sales percentage increase in the low to mid-teens on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.40 to $0.42 for the quarter. This assumes 145.3 million diluted weighted-average shares outstanding and a 36% tax rate.

Conference Call Information

A conference call to discuss third quarter results is scheduled for today, December 1, 2011, at 9:00 a.m. EST. Those interested in participating in the call are invited to dial 1-877-303-3203 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 a long, healthy and fun life. 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.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on this non-GAAP financial measure, please see the table captioned "Reconciliation of Non-GAAP Financial Measure — Constant dollar changes" included in the accompanying financial tables, which includes more detail on the GAAP financial measure that is most directly comparable to non-GAAP financial measures 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, 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: an economic downturn or economic uncertainty in our key markets; increasing product costs and decreasing selling prices; our inability to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products; our inability to accurately forecast customer demand for our products; our inability to manage our growth and the increased complexity of our business effectively; the fluctuating costs of raw materials; our reliance on and limited control over third-party suppliers to provide fabrics for and to produce our products; our highly competitive market and increasing competition; an unforeseen disruption of our information systems; our inability to deliver our products to the market and to meet customer expectations due to problems with our distribution system; our inability 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 China; our inability to successfully open new store locations in a timely manner; our failure to maintain the value and reputation of our brand; our failure to comply with trade and other regulations; our competitors manufacturing and selling products based on our fabrics and manufacturing technology at lower prices than we can; our failure to protect our intellectual property rights; and other risk factors detailed in our Annual Report on Form 10-K for the fiscal year ended January 30, 2011 and our Quarterly Reports on Form 10-Q for fiscal 2011, 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

Thirty-nine
Weeks Ended

Thirty-nine
Weeks Ended

October 30,
2011
(unaudited)

October 31,
2010
(unaudited)

October 30,
2011
(unaudited)

October 31,
2010
(unaudited)

 
Net revenue $ 230,216 $ 175,800 $ 629,319 $ 466,305
 
Costs of goods sold   101,720     78,968     269,067     214,818  
 
Gross profit 128,496 96,832 360,252 251,487

As a percent of net revenue

55.8 % 55.1 % 57.2 % 53.9 %
 
Selling, general and administrative
expenses 68,775 54,456 189,361 142,394
As a percent of net revenue   29.9 %   31.0 %   30.1 %   30.5 %
 

Income from operations

59,721 42,376 170,891 109,093
As a percent of net revenue 25.9 % 24.1 % 27.2 % 23.4 %
 
Other income (expense), net   619     91     2,120     2,345  
 
Income before provision for income
taxes 60,340 42,467 173,011 111,438
 
Provision for income taxes   21,399     16,532     61,935     44,207  
Net income 38,941 25,935 111,076 67,231
 
Net income attributable to non-
controlling interest   147     234     531     150  
 
Net income attributable to
lululemon athletica inc. $ 38,794   $ 25,701   $ 110,545   $ 67,081  
 
Basic earnings per share $ 0.27 $ 0.18 $ 0.77 $ 0.48
Diluted earnings per share $ 0.27 $ 0.18 $ 0.76 $ 0.47
 
Basic weighted-average shares
outstanding 143,370 141,876 143,096 141,572
Diluted weighted-average shares
outstanding 145,349 143,670 145,230 143,564
 
           

lululemon athletica inc.

Condensed Consolidated Balance Sheets

Expressed in thousands

 
 
October 30, 2011 January 30, 2011
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $ 276,946 $ 316,286
Inventories 129,169 57,469
Other current assets   21,701   15,524
Total current assets 427,816 389,279
 
Property and equipment, net 153,119 70,954
 
Goodwill and intangible assets, net 32,351 27,112
 
Deferred income taxes and other assets   22,784   11,957
 
Total assets $ 636,070 $ 499,302
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,040 $ 6,659
Other current liabilities 76,474 60,306
Income taxes payable   -   18,399
Total current liabilities 82,514 85,364
 
Non-current liabilities 24,466 19,645
 
Stockholders' equity   529,090   394,293
Total liabilities and stockholders' equity $ 636,070 $ 499,302
           
lululemon athletica inc.

Condensed Consolidated Statements of Cash Flows

Expressed in thousands

 
Thirty-nine Weeks Ended Thirty-nine Weeks Ended
October 30, 2011 October 31, 2010
(unaudited) (unaudited)
Cash flows from operating activities
Net income $ 111,076 $ 67,231
Items not affecting cash 12,564 36,201
Other, including net changes in other non-cash balances   (70,120 )   (15,515 )
Net cash provided by operating activities 53,520 87,917
Net cash used in investing activities (106,344 ) (34,433 )
 
Net cash provided by financing activities 14,474 7,945
 
Effect of exchange rate changes on cash   (990 )   3,773  
 
Increase (decrease) in cash and cash equivalents (39,340 ) 65,202
Cash and cash equivalents, beginning of period $ 316,286   $ 159,573  
Cash and cash equivalents, end of period $ 276,946   $ 224,775  
 
           

lululemon athletica inc.

Reconciliation of Non-GAAP Financial Measure

Constant-dollar changes

 
Thirteen Weeks Ended Thirteen Weeks Ended
October 30, 2011 October 31, 2010
% Change % Change
Comparable-store sales (GAAP) 18% 32%
 
Adjustments due to changes in foreign
exchange rates (2)% (3)%
 
Comparable-store sales in constant dollars 16% 29%
 
                       
lululemon athletica inc.

Store Count and Square Footage1

Quarter ended October 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
the Quarter Quarter Quarter of the
      Quarter
 
1st Quarter 133 5 0 138
2nd Quarter 138 9 0 147
3rd Quarter 147 18 0 165
 
 
Total Gross
Square Feet Gross Square Gross Square Total Gross
at the Feet Added Feet Lost Square Feet
Beginning of During the During the at the End of
the Quarter

Quarter2

Quarter2

the Quarter
 
1st Quarter 374 12 0 386
2nd Quarter 386 31 1 416
3rd Quarter 416 56 2 470
 

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

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

ICR, Inc.
Investors:
Joseph Teklits or Jean Fontana, 203-682-8200
or
Media:
Alecia Pulman, 203-682-8224

Source: lululemon athletica inc.

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