lululemon athletica inc. [NASDAQ:LULU; TSX:LLL] today announced financial results for the second quarter ended July 31, 2011.
“Reconciliation of Non-GAAP Financial Measure - Constant dollar changes”
For the thirteen weeks ended July 31, 2011:
- Net revenue for the quarter increased 39% to $212.3 million from $152.2 million in the second quarter of fiscal 2010.
- Comparable stores sales for the second quarter increased by 20% on a constant dollar basis.
- Direct to consumer revenue increased 93% to $18.6 million, or 8.8% of total Company revenues, in the second quarter of fiscal 2011, an increase from 6.3% of total Company revenues in the second quarter of fiscal 2010.
- Gross profit for the quarter increased 52% to $122.1 million, and as a percentage of net revenue gross profit increased to 57.5% for the quarter from 52.8% in the second quarter of fiscal 2010.
- Income from operations for the quarter increased 74% to $59.5 million, and as a percentage of net revenue was 28.0% compared to 22.5% of net revenue in the second quarter of fiscal 2010.
- The tax rate for the quarter was 35.7% compared to 40.3% a year ago. The decrease resulted from a revision to management's 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 $0.26 on net income of $38.4 million, compared to diluted earnings per share of $0.15 on net income of $21.8 million in the second quarter of fiscal 2010.
For the twenty-six weeks ended July 31, 2011:
- Net revenue for the first two quarters increased 37% to $399.1 million from $290.5 million in the same period of fiscal 2010.
- Comparable stores sales for the first two quarters increased by 18% on a constant dollar basis.
- Direct to consumer revenue increased 72% to $32.4 million, or 8.1% of total Company revenues, in the first two quarters of fiscal 2011, an increase from 6.5% of total Company revenues in the first two quarters of fiscal 2010.
- Gross profit for the quarter increased 50% to $231.8 million, and as a percentage of net revenue gross profit increased to 58.1% for the first two quarters from 53.2% in the same period of fiscal 2010. The increase included 140 basis points from the non-recurring adjustment for the recognition of input tax credits in the first quarter of fiscal 2011.
- Income from operations for the first two quarters increased 67% to $111.2 million, and as a percentage of net revenue was 27.9% compared to 23.0% of net revenue in the same period of fiscal 2010.
- The tax rate for the first two quarters was 36.0% compared to 40.1% a year ago. The decrease resulted from a revision to management's plans for repatriation of unremitted earnings of the Canadian operating subsidiary.
- Presented on a post-split basis, diluted earnings per share for the first two quarters were $0.49 on net income of $71.8 million, compared to diluted earnings per share of $0.29 on net income of $41.4 million in the same period of fiscal 2010. The increase included $0.02 in diluted earnings per share from the non-recurring adjustment for the recognition of input tax credits in the first quarter of fiscal 2011.
The Company ended the second quarter of fiscal 2011 with $264.7 million in cash and cash equivalents compared to $178.2 million at the end of the second quarter of fiscal 2010. Inventory at the end of the second quarter of fiscal 2011 totaled $88.9 million compared to $66.5 million at the end of the second quarter of fiscal 2010. The Company ended the quarter with 151 stores in North America and Australia.
Christine Day, lululemon's CEO stated: "Our business remained very healthy through the second quarter, as strong sales productivity and operating margins grew pre-tax income by more than 60%. Our success is based on running a healthy brand focused business. We are confident that we are well positioned to manage successfully through the current economic environment while sensibly pursuing our future opportunities."
Updated Outlook
For the third quarter of fiscal 2011, we expect net revenue to be in the range of $225 million to $230 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 $0.22 to $0.24 for the quarter. This assumes 145.5 million diluted weighted-average shares outstanding and a 36% tax rate.
For the full fiscal 2011, we now expect net revenue to be in the range of $930 million to $950 million and diluted earnings per share are expected to be in the range of $1.10 to $1.14 for the full year. This assumes 145.4 million diluted weighted-average shares outstanding and a tax rate of 36%.