lululemon athletica, inc.
Mar 30, 2016

lululemon athletica inc. Announces Fourth Quarter and Full Year Fiscal 2015 Results

lululemon achieves $2 billion revenue milestone

VANCOUVER, British Columbia--(BUSINESS WIRE)-- lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the fourth quarter and fiscal year ended January 31, 2016.

Laurent Potdevin, lululemon's CEO, stated: "I'm very pleased with our strong finish to the year with positive momentum across all channels. Our Q4 results are a reflection of our ability to deliver a truly unique experience to our guests, led, as always, by our outstanding store educators."

Mr. Potdevin continued: "In 2015, we made bold moves across the organization, elevating design and innovation and developing our infrastructure to position us for the future. As I look forward to 2016 and beyond, I am excited and confident that we have the right team in place to execute on our long term strategies."

For the fourth quarter ended January 31, 2016:

For the fiscal year ended January 31, 2016:

The Company ended fiscal 2015 with $501.5 million in cash and cash equivalents compared to $664.5 million at the end of fiscal 2014. Inventory at the end of fiscal 2015 was $284.0 million compared to $208.1 million at the end of fiscal 2014. The Company ended the year with 363 stores.

Updated Outlook

For the first quarter of fiscal 2016, we expect net revenue to be in the range of $483 million to $488 million based on a total comparable sales increase in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $0.28 to $0.30 for the quarter. This guidance assumes 138.0 million diluted weighted-average shares outstanding and a 30.2% tax rate. The guidance does not reflect potential future repurchases of the Company's shares.

For the full fiscal 2016, we expect net revenue to be in the range of $2.285 billion to $2.335 billion based on a total comparable sales increase in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $2.05 to $2.15 for the full year. This guidance assumes 138.0 million diluted weighted-average shares outstanding and a 30.2% tax rate. The guidance does not reflect potential future repurchases of the Company's shares.

Conference Call Information

A conference call to discuss fiscal 2015 results is scheduled for today, March 30, 2016, at 9:00 a.m. Eastern time. 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 inc. (NASDAQ:LULU) is a yoga-inspired athletic apparel company with products that create transformational experiences for people to live happy, healthy, fun lives. 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 Measures

Net revenue changes in constant dollars, total comparable sales in constant dollars, comparable store sales in constant dollars, changes in direct to consumer net revenue in constant dollars, the effective tax rate excluding certain tax and related interest adjustments, and diluted earnings per share excluding certain tax adjustments are not United States generally accepted accounting principle ("GAAP") performance measures.

We provide constant dollar changes in net revenue, total comparable sales, comparable store sales, and changes in direct to consumer net revenue because we use these measures to understand the underlying growth rate of net revenue excluding the impact of changes in foreign exchange rates, which are not under management's control. We believe that disclosing these measures on a constant dollar basis is useful to investors because it enables them to better understand the level of growth of our business.

We disclose the effective tax rate and diluted earnings per share excluding certain tax and related interest adjustments because of their comparability to our historical information as well as our diluted earnings per share guidance, which we believe is useful to investors.

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 these non-GAAP financial measures, please see the table captioned "Reconciliation of Non-GAAP Financial Measures" included in the accompanying financial tables, which includes more detail on the GAAP financial measure that is most directly comparable to each non-GAAP financial measure, 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 and our prospects and strategies for future growth. 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: our ability to maintain the value and reputation of our brand, including any negative publicity regarding our products or the production methods of our suppliers or manufacturers; the acceptability of our products to our guests, including receiving products that comply with our technical specifications and quality standards; our reliance on and limited control over third-party suppliers to provide fabrics for and to produce our products; an economic downturn or economic uncertainty in our key markets; our highly competitive market and increasing competition; increasing product costs and decreasing selling prices; our ability to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products; our ability to accurately forecast customer demand for our products; our ability to safeguard against security breaches with respect to our information technology systems; any material disruption of our information systems; our ability to manage our growth and the increased complexity of our business effectively; the fluctuating costs of raw materials; our ability to expand internationally in light of our limited operating experience and limited brand recognition in new international markets; our ability to deliver our products to the market and to meet customer expectations if we have problems with our distribution system; imitation by our competitors; our ability to protect our intellectual property rights; changes in tax laws, capital or financing needs in the United States, or our intentions with respect to the reinvestment of foreign earnings; our ability 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 South and South East Asia; our ability to successfully open new store locations in a timely manner; our ability to comply with trade and other regulations; the continued service of our senior management; seasonality; fluctuations in foreign currency exchange rates; the operations of many of our suppliers are subject to international and other risks; our ability to source our merchandise profitably or at all; our exposure to various types of litigation; actions of activist stockholders; and other risks and uncertainties set out in filings made from time to time with the United States Securities and Exchange Commission and available at www.sec.gov, including, without limitation, our most recent reports on Form 10-K and Form 10-Q. 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 we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.

 

lululemon athletica inc.

 

Condensed Consolidated Statements of Operations

Unaudited; Expressed in thousands, except per share amounts

       

Thirteen Weeks
Ended January
31, 2016

     

Thirteen Weeks
Ended
February 1,
2015

     

Fifty-Two
Weeks Ended
January 31,
2016

     

Fifty-Two
Weeks Ended
February 1,
2015

Net revenue $ 704,276 $ 602,491 $ 2,060,523 $ 1,797,213
Costs of goods sold 349,809   292,450   1,063,357   883,033  
Gross profit 354,467 310,041 997,166 914,180
As a percent of net revenue 50.3 % 51.5 % 48.4 % 50.9 %
Selling, general and administrative expenses 188,184 152,853 628,090 538,147
As a percent of net revenue 26.7 % 25.4 % 30.5 % 30.0 %
Income from operations 166,283 157,188 369,076 376,033
As a percent of net revenue 23.6 % 26.1 % 17.9 % 20.9 %
Other income (expense), net 938   1,755   (581 ) 7,102  
Income before income tax expense 167,221 158,943 368,495 383,135
Income tax expense 49,805   48,090   102,448   144,102  
Net income $ 117,416   $ 110,853   $ 266,047   $ 239,033  
 
Basic earnings per share $ 0.85 $ 0.78 $ 1.90 $ 1.66
Diluted earnings per share $ 0.85 $ 0.78 $ 1.89 $ 1.66
Basic weighted-average shares outstanding 138,076 141,999 140,365 143,935
Diluted weighted-average shares outstanding 138,240 142,346 140,610 144,298
 
 
lululemon athletica inc.
 

Condensed Consolidated Balance Sheets

Unaudited; Expressed in thousands

 
       

January 31,
2016

     

February 1,
2015

ASSETS
Current assets
Cash and cash equivalents $ 501,482 $ 664,479
Inventories 284,009 208,116
Prepaid and receivable income taxes 91,453 40,547
Other current assets 40,095   37,870
Total current assets 917,039 951,012
Property and equipment, net 349,605 296,008
Goodwill and intangible assets, net 24,777 26,163
Deferred income taxes and other non-current assets 22,656   23,030
Total assets $ 1,314,077   $ 1,296,213
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 10,381 $ 9,339
Accrued inventory liabilities 25,451 22,296
Accrued compensation and related expenses 43,524 29,932
Income taxes payable 37,736 20,073
Unredeemed gift card liability 57,736 46,252
Other accrued liabilities 50,676   31,989
Total current liabilities 225,504 159,881
Deferred income tax liability 10,759 3,633
Other non-current liabilities 50,332 43,131
Stockholders' equity 1,027,482   1,089,568
Total liabilities and stockholders' equity $ 1,314,077   $ 1,296,213
 
 
lululemon athletica inc.
 

Condensed Consolidated Statements of Cash Flows

Unaudited; Expressed in thousands

 
       

Fifty-Two
Weeks Ended
January 31,
2016

     

Fifty-Two
Weeks Ended
February 1,
2015

Cash flows from operating activities
Net income $ 266,047 $ 239,033
Items not affecting cash 92,436 66,839
Changes in operating assets and liabilities (59,743 ) 8,577  
Net cash provided by operating activities 298,740 314,449
Net cash used in investing activities (143,487 ) (119,733 )
Net cash used in financing activities (273,693 ) (149,077 )
Effect of exchange rate changes on cash (44,557 ) (79,809 )
Decrease in cash and cash equivalents (162,997 ) (34,170 )
Cash and cash equivalents, beginning of year $ 664,479   $ 698,649  
Cash and cash equivalents, end of year $ 501,482   $ 664,479  
 
 

lululemon athletica inc.

 

Reconciliation of Non-GAAP Financial Measures

Unaudited

 

Constant dollar changes in net revenue

 
       

Thirteen Weeks Ended January
31, 2016

     

Fifty-Two Weeks Ended January
31, 2016

(In thousands)   (Percentage) (In thousands)   (Percentage)
Net revenue increase $ 101,786 17 % $ 263,310 15 %
Adjustments due to foreign exchange rate changes 28,343   5   88,877   5  
Net revenue increase in constant dollars $ 130,129 22 % $ 352,187 20 %
 

Constant dollar total comparable sales

                           

Thirteen Weeks
Ended January
31, 2016

Thirteen Weeks
Ended
February 1,
2015

Fifty-Two
Weeks Ended
January 31,
2016

Fifty-Two
Weeks Ended
February 1,
2015

Total comparable sales1 7 % 6 % 5 % 1 %
Adjustments due to foreign exchange rate changes 4   2   5   2  
Total comparable sales in constant dollars1 11 % 8 % 10 % 3 %
__________
1Total comparable sales includes comparable store sales and direct to consumer sales. Comparable store sales reflects net revenue at company-operated stores that have been open for at least 12 months.
 

Constant dollar comparable store sales

                           

Thirteen Weeks
Ended January
31, 2016

Thirteen Weeks
Ended
February 1,
2015

Fifty-Two
Weeks Ended
January 31,
2016

Fifty-Two
Weeks Ended
February 1,
2015

Comparable store sales1 1 % 2 % % (3 )%
Adjustments due to foreign exchange rate changes 4   3   4   2  
Comparable store sales in constant dollars1 5 % 5 % 4 % (1 )%
__________
1Comparable store sales reflects net revenue at company-operated stores that have been open for at least 12 months.
 
 

Constant dollar changes in direct to consumer net revenue

       

Thirteen Weeks
Ended January
31, 2016

     

Thirteen Weeks
Ended
February 1,
2015

     

Fifty-Two
Weeks Ended
January 31,
2016

     

Fifty-Two
Weeks Ended
February 1,
2015

Increase in direct to consumer net revenue 28 % 17 % 25 % 22 %
Adjustments due to foreign exchange rate changes 5   3   5   2  
Increase in direct to consumer net revenue in constant dollars 33 % 20 % 30 % 24 %
 
 

Effective tax rate, excluding tax and related interest adjustments

       

Thirteen Weeks
Ended January
31, 2016

     

Thirteen Weeks
Ended
February 1,
2015

     

Fifty-Two
Weeks Ended
January 31,
2016

     

Fifty-Two
Weeks Ended
February 1,
2015

Effective tax rate 29.8 % 30.3 % 27.8 % 37.6 %
Tax and related interest adjustments1 (0.2 )   1.7   (8.8 )
Effective tax rate, excluding tax and related interest adjustments 29.6 % 30.3 % 29.5 % 28.8 %
__________
1These adjustments relate to the Company's transfer pricing arrangements and taxes associated with the repatriation of foreign earnings. Please refer to Note 15 to the audited consolidated financial statements included in Item 8 of Part II of the Company's Report on Form 10-K to be filed with the SEC on or about March 30, 2016 for an explanation as to the nature of these items.
 

Diluted earnings per share, excluding tax and related interest adjustments

 
       

Thirteen Weeks
Ended January 31,
2016

     

Thirteen Weeks
Ended
February 1,
2015

     

Fifty-Two
Weeks Ended
January 31,
2016

     

Fifty-Two
Weeks Ended
February 1,
2015

Diluted earnings per share $ 0.85 $ 0.78 $ 1.89 $ 1.66
Tax and related interest adjustments1     (0.03 ) 0.23
Diluted earnings per share, excluding tax and related interest adjustments $ 0.85 $ 0.78 $ 1.86 $ 1.89
__________
1These adjustments relate to the Company's transfer pricing arrangements and taxes associated with the repatriation of foreign earnings. Please refer to Note 15 to the audited consolidated financial statements included in Item 8 of Part II of the Company's Report on Form 10-K to be filed with the SEC on or about March 30, 2016 for an explanation as to the nature of these items.
 
lululemon athletica inc.  
 

Store Count and Square Footage(1)

Fifty-Two Weeks Ended January 31, 2016

Square Footage Expressed in Thousands

 
       

Number of
Stores Open at
the
Beginning of
the Quarter

     

Number of
Stores Opened
During the
Quarter2

     

Number of
Stores Closed
During the
Quarter

     

Number of
Stores Open
at the End of
the Quarter

1st Quarter 302 14 316
2nd Quarter 316 20 336
3rd Quarter 336 18 354
4th Quarter 354 10 1 363
 

Total Gross
Square Feet at
the Beginning
of the Quarter

Gross Square
Feet Added
During the
Quarter2,3

Gross Square
Feet Lost
During the
Quarter3

Total Gross
Square Feet at
the End of the
Quarter

1st Quarter 894 37 931
2nd Quarter 931 54 985
3rd Quarter 985 51 1,036
4th Quarter 1,036 38 3 1,071
__________
1Store count and square footage summary includes company-operated stores which are branded lululemon athletica and ivivva athletica.
2Number of stores opened during the quarter that are branded lululemon athletica and ivivva athletica.
3Gross square feet added/lost during the quarter includes net square foot additions for company-operated stores which have been renovated or relocated in the quarter.
 

Investor Contact:
ICR, Inc.
Joseph Teklits/Caitlin Morahan, 203-682-8200
or
Media Contact:
ICR, Inc.
Alecia Pulman, 203-682-8224

Source: lululemon athletica inc.

News Provided by Acquire Media