lululemon athletica inc. announces fourth quarter and full year fiscal 2011 results

Company Achieves Cool Revenue Milestone Starting with a "B" and having Nine Zeros

VANCOUVER, British Columbia--(BUSINESS WIRE)-- lululemon athletica inc. (NASDAQ:LULU) (TSX:LLL) today announced financial results for the fourth quarter and fiscal year ended January 29, 2012.

Christine Day, lululemon's CEO, stated: "Reaching a billion dollars in revenue is clearly an important milestone that as a company we can all be very proud of. But far more important than the number itself are the beliefs, values, culture and people that achieved it. We really are so much more than our numbers; it is the everyday actions of our dedicated team that translates into an unparalleled guest experience and allows us to achieve our ultimate goal of elevating the world."

For the fourth quarter ended January 29, 2012:

• Net revenue for the quarter increased 51.4% to $371.5 million from $245.4 million in the fourth quarter of fiscal 2010.
• Comparable stores sales for the fourth quarter increased by 26% on a constant dollar basis.
• Direct to consumer revenue increased 103.6% to $50.1 million, or 13.5% of net revenue, in the fourth quarter of fiscal 2011, from 10.0% of net revenue in the same period last year.
• Gross profit for the quarter increased by 45.7% to $209.0 million, and as a percentage of net revenue gross profit decreased to 56.3% for the quarter from 58.5% in the fourth quarter of fiscal 2010.
• Income from operations for the quarter increased by 62.8% to $116.1 million, and as a percentage of net revenue was 31.2% compared to 29.1% of net revenue in the fourth quarter of fiscal 2010.
• The tax rate for the quarter was 36.5% compared to 23.5% a year ago. The change in rate resulted from the prior year revision to managements plans for repatriation of unremitted earnings of the Canadian operating subsidiary.
• Presented on a post-split basis, diluted earnings per share for the quarter were $0.51 on net income of $73.5 million, compared to diluted earnings per share of $0.38 on net income of $54.8 million in the fourth quarter of fiscal 2010.

For the fiscal year ended January 29, 2012:

• Net revenue for the fiscal year increased 40.6% to $1.0 billion from $711.7 million in fiscal 2010.
• Comparable stores sales for fiscal 2011 increased by 20% on a constant dollar basis, resulting in a record $2,004 annual sales per square foot for comp stores as at January 29, 2012.
• Direct to consumer revenue increased 85.4% to $106.3 million, or 10.6% of net revenue in fiscal 2011, from 8.1% of net revenue in fiscal 2010.
• Gross profit for fiscal 2011 increased by 44.1% to $569.3 million, from $394.9 million in fiscal 2010. As a percentage of net revenue, gross profit increased to 56.9% compared to 55.5% in fiscal 2010.
• Income from operations increased by 59.1% to $287.0 million, from $180.4 million in fiscal 2010. As a percentage of net revenue, income from operations increased to 28.7% compared to 25.3% of net revenue in fiscal 2010.
• The tax rate for fiscal 2011 was 36.1% compared to 33.3% for fiscal 2010. The change in tax rate was due to the proportional increase of taxable income in the United States compared to taxable income in Canada.
• Presented on a post-split basis, diluted earnings per share in fiscal 2011 increased 49.4% to $1.27 on net income of $184.1 million, compared to diluted earnings per share of $0.85 on net income of $121.8 million in fiscal 2010.

The Company ended fiscal 2011 with $409.4 million in cash and cash equivalents compared to $316.3 million at the end of fiscal 2010. Inventory at the end of fiscal 2011 totaled $104.1 million compared to $57.5 million at the end of fiscal 2010. The Company ended the quarter with 174 stores in North America and Australia.

Updated Outlook

For the first quarter of fiscal 2012, we expect net revenue to be in the range of $265 million to $270 million based on a comparable-store sales percentage increase in the low 20s on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.28 to $0.29 for the quarter. This assumes 145.4 million diluted weighted-average shares outstanding and a 36.5% tax rate.

For fiscal 2012, we expect net revenue to be in the range of $1.3 billion to $1.325 billion and diluted earnings per share are expected to be in the range of $1.50 to $1.57 for the full year. This assumes a tax rate of 36.5% and 145.6 million diluted weighted-average shares outstanding.

Conference Call Information

A conference call to discuss fiscal 2011 results is scheduled for today, March 22, 2012, 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

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 29, 2012, 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		Fifty-Two Weeks Ended		Fifty-Two Weeks Ended
			January 29, 2012 (unaudited)		January 30, 2011 (unaudited)		January 29, 2012		January 30, 2011
Net revenue			$371,520		$245,399		$1,000,839		$711,704
Costs of goods sold			162,502		101,939		431,569		316,757
Gross profit			209,018		143,460		569,270		394,947
As a percent of net revenue			56.3%		58.5%		56.9%		55.5%
Selling, general and administrative expenses			92,951		71,483		282,312		212,784
As a percent of net revenue			25.0%		29.1%		28.2%		29.9%
Provision for impairment and lease exit costs			—		679		—		1,772
Income from operations			116,067		71,298		286,958		180,391
As a percent of net revenue			31.2%		29.1%		28.7%		25.3%
Other income (expense), net			380		542		2,500		2,886
Income before provision for income taxes			116,447		71,840		289,458		183,277
Provision for income taxes			42,558		16,873		104,494		61,080
Net Income			73,889		54,967		184,964		122,197
Net income attributable to non-controlling interest			371		201		901		350
Net income attributable to lululemon athletica inc.			$73,518		$54,766		$184,063		$121,847
Net Basic earnings per share			$0.51		$0.39		$1.29		$0.86
Net Diluted earnings per share			$0.51		$0.38		$1.27		$0.85
Basic weighted-average shares outstanding			143,501		142,174		143,196		141,720
Diluted weighted-average shares outstanding			145,344		144,362		145,278		143,858

lululemon athletica inc. Condensed Consolidated Balance Sheets Expressed in thousands
				January 29, 2012		January 30, 2011
ASSETS
Current assets
Cash and cash equivalents				$409,437		$316,286
Inventories				104,097		57,469
Other current assets				13,559		15,524
Total current assets				527,093		389,279
Property and equipment, net				162,941		70,954
Goodwill and intangible assets, net				31,872		27,112
Deferred income taxes and other assets				12,728		11,957
Total assets				$734,634		$499,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable				$14,536		$6,659
Other current liabilities				80,183		60,306
Income taxes payable				8,720		18,399
Total current liabilities				103,439		85,364
Non-current liabilities				25,014		19,645
Stockholders' equity				606,181		394,293
Total liabilities and stockholders' equity				$734,634		$499,302

lululemon athletica inc. Condensed Consolidated Statements of Cash Flows Expressed in thousands
				Fifty-Two Weeks Ended January 29, 2012		Fifty-Two Weeks Ended January 30, 2011
Cash flows from operating activities
Net income				$184,964		$122,197
Items not affecting cash				32,381		33,832
Other, including net changes in other non-cash balances				(13,730)		23,966
Net cash provided by operating activities				203,615		179,995
Net cash used in investing activities				(122,311)		(42,839)
Net cash provided by financing activities				15,364		13,699
Effect of exchange rate changes on cash				(3,517)		5,858
Increase in cash and cash equivalents				93,151		156,713
Cash and cash equivalents, beginning of year				$316,286		$159,573
Cash and cash equivalents, end of year				$409,437		$316,286

lululemon athletica inc. Reconciliation of Non-GAAP Financial Measure Constant-dollar changes (unaudited)
				Thirteen Weeks Ended January 29, 2012		Thirteen Weeks Ended January 30, 2011
				% Change		% Change
Comparable-store sales (GAAP)				25%		32%
Increase (decrease) due to foreign exchange rate changes				1%		(4)%
Comparable-store sales in constant dollars				26%		28%

lululemon athletica inc. Store Count and Square Footage1 Year ended January 29, 2012 Square Footage Expressed in Thousands
		Number of Stores Open at the Beginning of the Quarter		Number of Stores Opened / Acquired During the Quarter2		Number of Stores Closed During the Quarter		Number of Stores Open at the End of the Quarter
1st Quarter		133		5		0		138
2nd Quarter		138		9		0		147
3rd Quarter		147		18		0		165
4th Quarter		165		9		0		174
		Total Gross Square Feet at the Beginning of the Quarter		Gross Square Feet Added During the Quarter2,3		Gross Square Feet Lost During the Quarter2,3		Total Gross Square Feet at the End of the Quarter
1st Quarter		374		12		0		386
2nd Quarter		386		31		1		416
3rd Quarter		416		56		2		470
4th Quarter		470		24		0		494

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 2011 are branded lululemon athletica and ivivva athletica and include four reacquired franchise stores in the United States, in the third quarter.

³ 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.

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

Source: lululemon athletica inc.

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