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lululemon athletica inc. Announces Second Quarter Fiscal 2014 Results
For the second quarter ended
-
Net revenue for the quarter increased 13% to
$390.7 million from$344.5 million in the second quarter of fiscal 2013. - Total comparable sales, which includes comparable store sales and direct to consumer, remained flat for the second quarter on a constant dollar basis. Comparable store sales for the second quarter decreased by 5% on a constant dollar basis and direct to consumer revenue increased 30% on a constant dollar basis.
-
Direct to consumer revenue increased to
$63.5 million , or 16.2% of total Company revenues, in the second quarter of fiscal 2014, an increase from 14.3% of total Company revenues in the second quarter of fiscal 2013. -
Gross profit for the quarter increased 6% to
$197.3 million , and as a percentage of net revenue gross profit decreased to 50.5% for the quarter from 54.0% in the second quarter of fiscal 2013. -
Income from operations for the quarter decreased 14% to
$67.9 million , and as a percentage of net revenue was 17.4% compared to 22.9% of net revenue in the second quarter of fiscal 2013. - The effective tax rate for the second quarter of fiscal 2014 was 30.1% compared to 29.7% a year ago.
-
Diluted earnings per share for the quarter were
$0.33 on net income of$48.7 million , compared to diluted earnings per share of$0.39 on net income of$56.5 million in the second quarter of fiscal 2013.
For the twenty-six weeks ended
-
Net revenue for the first two quarters of fiscal 2014 increased 12% to
$775.3 million from$690.3 million in the same period of fiscal 2013. - Total comparable sales increased 1% for the first two quarters on a constant dollar basis. Comparable store sales for the first two quarters decreased by 5% on a constant dollar basis and direct to consumer revenue increased 27% on a constant dollar basis.
-
Direct to consumer revenue increased 25% to
$129.5 million , or 16.7% of total company revenues, in the first two quarters of fiscal 2014, an increase from 15.0% of total company revenues in the first two quarters of fiscal 2013. -
Gross profit for the first two quarters of fiscal 2014 increased 10%
to
$393.1 million , and as a percentage of net revenue gross profit was 50.7% for the first two quarters as compared to 51.7% in the same period of fiscal 2013. -
Income from operations for the first two quarters of fiscal 2014
decreased 5% to
$137.7 million , and as a percentage of net revenue was 17.8% as compared to 21.0% of net revenue in the same period of fiscal 2013. -
Tax expense for the first two quarters was
$73.5 million , which included a non-recurring adjustment of$31.3 million related to the repatriation of foreign earnings that will be used to fund the share buyback program. The normalized tax rate before the$31.3 million non-recurring tax adjustment would have been 29.9%, compared to 29.7% a year ago. The tax rate for the first two quarters of fiscal 2014, including the non-recurring tax adjustment, was 52.0%. -
Excluding the non-recurring tax adjustment, diluted earnings per share
were
$0.68 in the first two quarters of fiscal 2014. Including the non-recurring tax adjustment, diluted earnings per share for the first two quarters of fiscal 2014 were$0.46 , which included a$0.22 per share impact from the non-recurring tax adjustment.
The Company ended the second quarter of fiscal 2014 with
Updated Outlook
For the third quarter of fiscal 2014, we expect net revenue to be in the
range of
For the full fiscal 2014, we now expect net revenue to be in the range
of
Conference Call Information
A conference call to discuss second quarter results is scheduled for
today,
About lululemon athletica inc.
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 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 exposure to various types of litigation; 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; any unforeseen disruption of our information 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 highly competitive
market and increasing competition; our ability to deliver our products
to the market and to meet customer expectations if we have problems with
our distribution system; our ability to protect our intellectual
property rights; 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
lululemon athletica inc. |
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Condensed Consolidated Statements of Operations |
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Expressed in thousands, except per share amounts |
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Thirteen Weeks |
Thirteen Weeks | Twenty-Six | Twenty-Six | |||||||||||||
Ended |
Ended | Weeks Ended | Weeks Ended | |||||||||||||
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(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Net revenue | $ | 390,708 | $ | 344,513 | $ | 775,326 | $ | 690,295 | ||||||||
Costs of goods sold | 193,401 | 158,558 | 382,275 | 333,616 | ||||||||||||
Gross profit | 197,307 | 185,955 | 393,051 | 356,679 | ||||||||||||
As a percent of net revenue | 50.5 | % | 54.0 | % | 50.7 | % | 51.7 | % | ||||||||
Selling, general and administrative expenses | 129,419 | 106,969 | 255,362 | 211,804 | ||||||||||||
As a percent of net revenue | 33.1 | % | 31.1 | % | 32.9 | % | 30.7 | % | ||||||||
Income from operations | 67,888 | 78,986 | 137,689 | 144,875 | ||||||||||||
As a percent of net revenue | 17.4 | % | 22.9 | % | 17.8 | % | 21.0 | % | ||||||||
Other income (expense), net | 1,890 | 1,295 | 3,533 | 2,796 | ||||||||||||
Income before provision for income taxes | 69,778 | 80,281 | 141,222 | 147,671 | ||||||||||||
Provision for income taxes | 21,030 | 23,816 | 73,493 | 43,928 | ||||||||||||
Net income | $ | 48,748 | $ | 56,465 | $ | 67,729 | $ | 103,743 | ||||||||
Basic earnings per share | $ | 0.34 | $ | 0.39 | $ | 0.47 | $ | 0.72 | ||||||||
Diluted earnings per share | $ | 0.33 | $ | 0.39 | $ | 0.46 | $ | 0.71 | ||||||||
Basic weighted-average shares outstanding | 145,180 | 144,818 | 145,282 | 144,650 | ||||||||||||
Diluted weighted-average shares outstanding | 145,544 | 145,916 | 145,715 | 145,901 | ||||||||||||
lululemon athletica inc. | |||||||
Condensed Consolidated Balance Sheets |
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Expressed in thousands |
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(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 725,073 | $ | 698,649 | |||
Inventories | 176,502 | 186,090 | |||||
Other current assets | 72,527 | 58,100 | |||||
Total current assets | 974,102 | 942,839 | |||||
Property and equipment, net | 285,849 | 255,603 | |||||
Goodwill and intangible assets, net | 27,938 | 28,201 | |||||
Deferred income taxes and other non-current assets | 10,031 | 23,045 | |||||
Total assets | $ | 1,297,920 | $ | 1,249,688 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 7,100 | $ | 12,647 | |||
Other current liabilities | 107,238 | 100,098 | |||||
Income taxes payable | 562 | 769 | |||||
Total current liabilities | 114,900 | 113,514 | |||||
Non-current liabilities | 56,353 | 39,492 | |||||
Stockholders' equity | 1,126,667 | 1,096,682 | |||||
Total liabilities and stockholders' equity | $ | 1,297,920 | $ | 1,249,688 | |||
lululemon athletica inc. | ||||||||
Condensed Consolidated Statements of Cash Flows |
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Expressed in thousands |
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Twenty-Six Weeks | Twenty-Six Weeks | |||||||
Ended | Ended | |||||||
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(unaudited) | (unaudited) | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 67,729 | $ | 103,743 | ||||
Items not affecting cash | 57,908 | 43,244 | ||||||
Other, including net changes in other non-cash balances | (1,652 | ) | (76,056 | ) | ||||
Net cash provided by operating activities | 123,985 | 70,931 | ||||||
Net cash used in investing activities | (52,102 | ) | (44,014 | ) | ||||
Net cash (used in) provided by financing activities | (57,167 | ) | 6,305 | |||||
Effect of exchange rate changes on cash | 11,708 | (13,128 | ) | |||||
Increase in cash and cash equivalents | 26,424 | 20,094 | ||||||
Cash and cash equivalents, beginning of period | $ | 698,649 | $ | 590,179 | ||||
Cash and cash equivalents, end of period | $ | 725,073 | $ | 610,273 | ||||
lululemon athletica inc. | ||||||||||||
Reconciliation of Non-GAAP Financial Measure |
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Constant-dollar changes in total comparable sales |
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(unaudited) |
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Thirteen Weeks | Thirteen Weeks | Twenty-Six | Twenty-Six | |||||||||
Ended | Ended | Weeks Ended | Weeks Ended | |||||||||
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% Change | ||||||||||||
Total comparable sales (GAAP)1 | (1 | )% | 12 | % | (1 | )% | 12 | % | ||||
Adjustments due to foreign exchange rate changes | 1 | % | 1 | % | 2 | % |
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% | ||||
Total comparable sales in constant dollars1 |
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% | 13 | % | 1 | % | 12 | % | ||||
1 Total comparable sales includes comparable corporate-store sales and direct to consumer sales.
Reconciliation of Non-GAAP Financial Measure |
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Constant-dollar changes in comparable store sales |
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(unaudited) |
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Thirteen Weeks | Thirteen Weeks | Twenty-Six | Twenty-Six | |||||||||
Ended | Ended | Weeks Ended | Weeks Ended | |||||||||
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% Change | ||||||||||||
Comparable store sales (GAAP) | (7 | )% | 7 | % | (7 | )% | 7 | % | ||||
Adjustments due to foreign exchange rate changes | 2 | % | 1 | % | 2 | % | 1 | % | ||||
Comparable store sales in constant dollars | (5 | )% | 8 | % | (5 | )% | 8 | % | ||||
Reconciliation of Non-GAAP Financial Measure |
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Constant-dollar changes in direct to consumer revenue |
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(unaudited) |
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Thirteen Weeks | Thirteen Weeks | Twenty-Six | Twenty-Six | |||||||||
Ended | Ended | Weeks Ended | Weeks Ended | |||||||||
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% Change | ||||||||||||
Change in direct to consumer revenue (GAAP) | 29 | % | 39 | % | 25 | % | 40 | % | ||||
Adjustments due to foreign exchange rate changes | 1 | % | 1 | % | 2 | % | 1 | % | ||||
Change in direct to consumer revenue in constant dollars | 30 | % | 40 | % | 27 | % | 41 | % | ||||
lululemon athletica inc. | |||||||||||
Store Count and Square Footage1 |
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Twenty-Six Weeks Ended |
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Square Footage Expressed in Thousands |
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Number of | Number of | ||||||||||
Stores Open at the | Number of Stores | Number of Stores | Stores Open | ||||||||
Beginning of the | Opened During the | Closed During the | at the End of the | ||||||||
Quarter | Quarter(2) | Quarter(2) | Quarter | ||||||||
1st Quarter | 254 | 9 |
- |
263 | |||||||
2nd Quarter | 263 | 8 | 1 | 270 | |||||||
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Feet at the | Gross Square Feet | Gross Square Feet |
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Beginning of the | Added During the | Lost During the | Feet at the End of | ||||||||
Quarter | Quarter(2,3) | Quarter(2,3) | the Quarter | ||||||||
1st Quarter | 740 | 24 |
- |
764 | |||||||
2nd Quarter | 764 | 26 | 3 | 787 | |||||||
1 Store count and square footage summary includes corporate-owned stores which are branded lululemon athletica or ivivva athletica.
2 Number of stores opened/closed during the quarter that are branded lululemon athletica or ivivva athletica.
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.
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