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lululemon athletica inc. Announces Fourth Quarter and Full Year Fiscal 2017 Results
The Company reported diluted earnings per share of
The summary below provides both GAAP and adjusted non-GAAP financial
measures. The adjusted financial measures exclude the impact of the
ivivva restructuring, the provisional amounts recognized in connection
with the
For the fourth quarter ended
-
Net revenue was
$928.8 million , an increase of 18% compared to the fourth quarter of fiscal 2016. On a constant dollar basis, net revenue increased 16%. -
Total comparable sales increased 12%, or increased 11% on a constant
dollar basis.
- Comparable store sales increased 2%, or increased 1% on a constant dollar basis.
- Direct to consumer net revenue increased 44%, or increased 42% on a constant dollar basis.
-
Gross profit was
$522.5 million , an increase of 22% compared to the fourth quarter of fiscal 2016. Adjusted gross profit was$522.4 million , an increase of 22%. - Gross margin was 56.3%, an increase of 210 basis points compared to the fourth quarter of fiscal 2016. Adjusted gross margin was 56.2%, an increase of 200 basis points.
-
Income from operations was
$256.3 million , an increase of 30% compared to the fourth quarter of fiscal 2016. Adjusted income from operations increased$61.5 million , or 31%, to$258.1 million . - Operating margin was 27.6%, an increase of 270 basis points compared to the fourth quarter of fiscal 2016. Adjusted operating margin was 27.8%, an increase of 290 basis points.
-
Income tax expense was
$137.7 million compared to$61.4 million in the fourth quarter of fiscal 2016 and the effective tax rate was 53.5% compared to 31.1%. The adjusted effective tax rate was 30.6% compared to 30.6% in the fourth quarter of fiscal 2016. -
Diluted earnings per share were
$0.88 compared to$0.99 in the fourth quarter of fiscal 2016. Adjusted diluted earnings per share were$1.33 compared to$1.00 for the fourth quarter of fiscal 2016.
For the fiscal year ended
-
Net revenue was
$2.6 billion , an increase of 13% compared to fiscal 2016. On a constant dollar basis, net revenue increased 12%. -
Total comparable sales increased 7%, or increased 7% on a constant
dollar basis.
- Comparable store sales increased 1%, or increased 1% on a constant dollar basis.
-
Direct to consumer net revenue increased 27% or increased 27% on a
constant dollar basis. Company-operated stores which have been
open for at least one year averaged sales of
$1,554 per square foot.
-
Company-operated stores which have been open for at least one year
averaged sales of
$1,554 per square foot.
-
Gross profit was
$1.4 billion , an increase of 17% compared to fiscal 2016. Adjusted gross profit was$1.4 billion , an increase of 17%. - Gross margin was 52.8%, an increase of 160 basis points compared to fiscal 2016. Adjusted gross margin was 53.1%, an increase of 190 basis points.
-
Income from operations was
$456.0 million , an increase of 8% compared to fiscal 2016. Adjusted income from operations increased$82.1 million , or 19%, to$503.2 million . - Operating margin was 17.2%, a decrease of 80 basis points compared to fiscal 2016. Adjusted operating margin was 19.0%, an increase of 100 basis points.
-
Income tax expense was
$201.3 million compared to$119.3 million in fiscal 2016 and the effective tax rate was 43.8% compared to 28.2% for fiscal 2016. The adjusted effective tax rate was 30.5% compared to 30.7% for fiscal 2016. -
Diluted earnings per share were
$1.90 compared to$2.21 in fiscal 2016. Adjusted diluted earnings per share were$2.59 compared to$2.14 in fiscal 2016. -
The Company repurchased 1.9 million shares of its own common stock at
an average cost of $53.85 per share in fiscal 2017. These shares were
repurchased under both the previous
$100 million stock repurchase program which was completed in the third quarter of fiscal 2017 and the$200 million stock repurchase program which commenced inNovember 2017 .
The Company ended fiscal 2017 with
Fiscal 2018 Outlook
For the first quarter of fiscal 2018, we expect net revenue to be in the
range of
For the full fiscal 2018, we expect net revenue to be in the range of
Conference Call Information
A conference call to discuss fiscal 2017 results is scheduled for today,
About
Non-GAAP Financial Measures
Constant dollar changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue, and the adjusted financial results are non-GAAP financial measures.
A constant dollar basis assumes the average foreign exchange rates for the period remained constant with the average foreign exchange rates for the same period of the prior year. We provide constant dollar changes in net revenue, total comparable sales, comparable store sales, and 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. 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.
Adjusted gross profit, gross margin, income from operations, operating
margin, income tax expense, effective tax rates, and diluted earnings
per share exclude the costs recognized in connection with the
restructuring of our ivivva operations and its related tax effects, the
amounts recognized in connection with the
The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or with greater prominence to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the section 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 includes estimates, projections, statements relating
to our business plans, objectives, and expected operating results that
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 also include our guidance and outlook
statements. These 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; the acceptability of our
products to our guests; our highly competitive market and increasing
competition; 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; 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
guest 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 have
technology-based systems function effectively and grow our e-commerce
business globally; 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 guest expectations if
we have problems with our distribution system; imitation by our
competitors; our ability to protect our intellectual property rights;
the continued service of our senior management and our ability to
identify and attract our next Chief Executive Officer; changes in tax
laws or unanticipated tax liabilities; our ability to manage our growth
and the increased complexity of our business effectively; our ability to
cancel store leases if an existing or new store is not profitable; our
ability to source our merchandise profitably or at all if new trade
restrictions are imposed or existing trade restrictions become more
burdensome; increasing labor costs and other factors associated with the
production of our products in South and
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Condensed Consolidated Statements of Operations |
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Quarter Ended | Fiscal Year Ended | ||||||||||||||||
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Net revenue | $ | 928,802 | $ | 789,940 | $ | 2,649,181 | $ | 2,344,392 | |||||||||
Costs of goods sold | 406,291 | 362,041 | 1,250,391 | 1,144,775 | |||||||||||||
Gross profit | 522,511 | 427,899 | 1,398,790 | 1,199,617 | |||||||||||||
As a percent of net revenue | 56.3 | % | 54.2 | % | 52.8 | % | 51.2 | % | |||||||||
Selling, general and administrative expenses | 264,232 | 231,270 | 904,264 | 778,465 | |||||||||||||
As a percent of net revenue | 28.4 | % | 29.3 | % | 34.1 | % | 33.2 | % | |||||||||
Asset impairments and restructuring costs | 2,001 | — | 38,525 | — | |||||||||||||
As a percent of net revenue | 0.2 | % | — | % | 1.5 | % | — | % | |||||||||
Income from operations | 256,278 | 196,629 | 456,001 | 421,152 | |||||||||||||
As a percent of net revenue | 27.6 | % | 24.9 | % | 17.2 | % | 18.0 | % | |||||||||
Other income (expense), net | 1,226 | 857 | 3,997 | 1,577 | |||||||||||||
Income before income tax expense | 257,504 | 197,486 | 459,998 | 422,729 | |||||||||||||
Income tax expense | 137,743 | 61,351 | 201,336 | 119,348 | |||||||||||||
Net income | $ | 119,761 | $ | 136,135 | $ | 258,662 | $ | 303,381 | |||||||||
Basic earnings per share | $ | 0.88 | $ | 0.99 | $ | 1.90 | $ | 2.21 | |||||||||
Diluted earnings per share | $ | 0.88 | $ | 0.99 | $ | 1.90 | $ | 2.21 | |||||||||
Basic weighted-average shares outstanding | 135,381 | 137,059 | 135,988 | 137,086 | |||||||||||||
Diluted weighted-average shares outstanding | 135,723 | 137,245 | 136,198 | 137,302 | |||||||||||||
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Condensed Consolidated Balance Sheets |
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ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 990,501 | $ | 734,846 | ||||
Inventories | 329,562 | 298,432 | ||||||
Prepaid and receivable income taxes | 48,948 | 81,190 | ||||||
Other current assets | 67,271 | 48,269 | ||||||
Total current assets | 1,436,282 | 1,162,737 | ||||||
Property and equipment, net | 473,642 | 423,499 | ||||||
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24,679 | 24,557 | ||||||
Deferred income taxes and other non-current assets | 63,880 | 46,748 | ||||||
Total assets | $ | 1,998,483 | $ | 1,657,541 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 24,646 | $ | 24,846 | ||||
Accrued inventory liabilities | 13,027 | 8,601 | ||||||
Accrued compensation and related expenses | 70,141 | 55,238 | ||||||
Current income taxes payable | 15,700 | 30,290 | ||||||
Unredeemed gift card liability | 82,668 | 70,454 | ||||||
Lease termination liabilities | 6,427 | — | ||||||
Other current liabilities | 79,989 | 52,561 | ||||||
Total current liabilities | 292,598 | 241,990 | ||||||
Non-current income taxes payable | 48,268 | — | ||||||
Deferred income tax liability | 1,336 | 7,262 | ||||||
Other non-current liabilities | 59,321 | 48,316 | ||||||
Stockholders' equity | 1,596,960 | 1,359,973 | ||||||
Total liabilities and stockholders' equity | $ | 1,998,483 | $ | 1,657,541 | ||||
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Condensed Consolidated Statements of Cash Flows |
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Fiscal Year Ended | |||||||||
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Cash flows from operating activities | |||||||||
Net income | $ | 258,662 | $ | 303,381 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | 230,675 | 83,011 | |||||||
Net cash provided by operating activities | 489,337 | 386,392 | |||||||
Net cash used in investing activities | (173,392 | ) | (149,511 | ) | |||||
Net cash used in financing activities | (97,862 | ) | (26,611 | ) | |||||
Effect of exchange rate changes on cash | 37,572 | 23,094 | |||||||
Increase (decrease) in cash and cash equivalents | 255,655 | 233,364 | |||||||
Cash and cash equivalents, beginning of year | $ | 734,846 | $ | 501,482 | |||||
Cash and cash equivalents, end of year | $ | 990,501 | $ | 734,846 | |||||
Reconciliation of Non-GAAP Financial Measures
Unaudited
Constant dollar changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue
The below changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue show the net change for the fourth quarter of fiscal 2017 compared to the fourth quarter of fiscal 2016.
Change in Net |
Change in |
Change in |
Change in |
||||||
Increase | 18% | 12% | 2% | 44% | |||||
Adjustments due to foreign exchange rate changes | (2) | (1) | (1) | (2) | |||||
Increase in constant dollars | 16% | 11% | 1% | 42% | |||||
The below changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue show the net change for fiscal 2017 compared to fiscal 2016.
Change in Net |
Change in |
Change in |
Change in |
||||||
Increase | 13% | 7% | 1% | 27% | |||||
Adjustments due to foreign exchange rate changes | (1) | — | — | — | |||||
Increase in constant dollars | 12% | 7% | 1% | 27% | |||||
__________ | ||
1 | Total comparable sales includes comparable store sales and direct to consumer sales. | |
2 | Comparable store sales reflects net revenue from company-operated stores that have been open for at least 12 months, or open for at least 12 months after being significantly expanded. | |
Adjusted Financial Measures
The following tables reconcile adjusted financial measures with the most
directly comparable measures calculated in accordance with GAAP. The
adjustments relate to the restructuring of our ivivva operations and its
related tax effects, the amounts recognized in connection with the
Quarter Ended |
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GAAP Results |
Adjustments |
Adjusted |
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Restructuring |
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(In thousands, except per share amounts) | |||||||||||||||||
Gross profit | $ | 522,511 | $ | (143 | ) | $ | — | $ | 522,368 | ||||||||
Gross margin | 56.3 | % | (0.1 | )% | — | % | 56.2 | % | |||||||||
Income from operations | 256,278 | 1,858 | — | 258,136 | |||||||||||||
Operating margin | 27.6 | % | 0.2 | % | — | % | 27.8 | % | |||||||||
Income before income tax expense | 257,504 | 1,858 | — | 259,362 | |||||||||||||
Income tax expense | 137,743 | 855 | (59,294 | ) | 79,304 | ||||||||||||
Effective tax rate | 53.5 | % | 0.1 | % | (23.0 | )% | 30.6 | % | |||||||||
Diluted earnings per share | $ | 0.88 | $ | 0.01 | $ | 0.44 | $ | 1.33 | |||||||||
Quarter Ended |
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GAAP Results |
Transfer |
Adjusted |
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(In thousands, except per share amounts) | |||||||||||||||||
Income before income tax expense | 197,486 | (557 | ) | 196,929 | |||||||||||||
Income tax expense | 61,351 | (928 | ) | 60,423 | |||||||||||||
Effective tax rate | 31.1 | % | (0.5 | )% | 30.6 | % | |||||||||||
Diluted earnings per share | $ | 0.99 | $ | 0.01 | $ | 1.00 | |||||||||||
Fiscal Year Ended |
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GAAP Results |
Adjustments |
Adjusted |
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Restructuring |
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(In thousands, except per share amounts) | ||||||||||||||||||
Gross profit | $ | 1,398,790 | $ | 8,698 | $ | — | $ | 1,407,488 | ||||||||||
Gross margin | 52.8 | % | 0.3 | % | — | % | 53.1 | % | ||||||||||
Income from operations | 456,001 | 47,223 | — | 503,224 | ||||||||||||||
Operating margin | 17.2 | % | 1.8 | % | — | % | 19.0 | % | ||||||||||
Income before income tax expense | 459,998 | 47,223 | — | 507,221 | ||||||||||||||
Income tax expense | 201,336 | 12,741 | (59,294 | ) | 154,783 | |||||||||||||
Effective tax rate | 43.8 | % | (0.4 | )% | (12.9 | )% | 30.5 | % | ||||||||||
Diluted earnings per share | $ | 1.90 | $ | 0.25 | $ | 0.44 | $ | 2.59 | ||||||||||
Fiscal Year Ended |
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GAAP Results |
Transfer |
Adjusted |
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(In thousands, except per share amounts) | ||||||||||||||||||
Income before income tax expense | $ | 422,729 | $ | 1,695 | $ | 424,424 | ||||||||||||
Income tax expense | 119,348 | 10,744 | 130,092 | |||||||||||||||
Effective tax rate | 28.2 | % | 2.5 | % | 30.7 | % | ||||||||||||
Diluted earnings per share | $ | 2.21 | $ | (0.07 | ) | $ | 2.14 | |||||||||||
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Store Count and Square Footage1 |
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Number of |
Number of |
Number of |
Number of |
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1st Quarter | 406 | 5 | — | 411 | |||||
2nd Quarter | 411 | 11 | 1 | 421 | |||||
3rd Quarter | 421 | 17 | 50 | 388 | |||||
4th Quarter | 388 | 16 | — | 404 | |||||
Total Gross |
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Total Gross |
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1st Quarter | 1,190 | 14 | — | 1,204 | |||||
2nd Quarter | 1,204 | 37 | 3 | 1,238 | |||||
3rd Quarter | 1,238 | 43 | 89 | 1,192 | |||||
4th Quarter | 1,192 | 70 | — | 1,262 | |||||
__________ | ||
1 |
Store count and square footage summary includes company-operated
stores which are branded |
|
2 | Gross 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. | |
3 |
On |
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