lululemon athletica inc. Announces Third Quarter Fiscal 2012 Results

  lululemon athletica inc. Announces Third Quarter Fiscal 2012 Results

Business Wire

VANCOUVER, British Columbia -- December 06, 2012

lululemon athletica inc. (NASDAQ:LULU)(TSX:LLL) today announced financial
results for the third quarter ended October 28, 2012.

For the thirteen weeks ended October 28, 2012:

  *Net revenue for the quarter increased 37% to $316.5 million from $230.2
    million in the third quarter of fiscal 2011.
  *Comparable stores sales for the third quarter increased by 18% on a
    constant dollar basis.
  *Direct to consumer revenue increased 89% to $45.1 million, or 14.3% of
    total Company revenues, in the third quarter of fiscal 2012, an increase
    from 10.4% of total Company revenues in the third quarter of fiscal 2011.
  *Gross profit for the quarter increased 36% to $175.3 million, and as a
    percentage of net revenue gross profit decreased to 55.4% for the quarter
    from 55.8% in the third quarter of fiscal 2011.
  *Income from operations for the quarter increased 35% to $80.6 million, and
    as a percentage of net revenue was 25.5% compared to 25.9% of net revenue
    in the third quarter of fiscal 2011.
  *The tax rate for the quarter was 30.1% compared to 35.5% a year ago. The
    lower effective rate reflects the ongoing impact of revised intercompany
    pricing agreements.
  *Diluted earnings per share for the quarter were $0.39 on net income of
    $57.3 million, compared to diluted earnings per share of $0.27 on net
    income of $38.8 million in the third quarter of fiscal 2011.

For the thirty-nine weeks ended October 28, 2012:

  *Net revenue for the first three quarters increased 41% to $884.9 million
    from $629.3 million in the same period of fiscal 2011.
  *Comparable stores sales for the first three quarters increased by 19% on a
    constant dollar basis.
  *Direct to consumer revenue increased 112% to $119.0 million, or 13.4% of
    total Company revenues, in the first three quarters of fiscal 2012, an
    increase from 8.9% of total Company revenues in the first three quarters
    of fiscal 2011.
  *Gross profit for the first three quarters increased 36% to $488.3 million,
    and as a percentage of net revenue gross profit decreased to 55.2% for the
    first three quarters from 57.3% in the same period of fiscal 2011.
  *Income from operations for the first three quarters increased 31% to
    $223.9 million, and as a percentage of net revenue was 25.3% compared to
    27.2% of net revenue in the same period of fiscal 2011.
  *The tax rate for the first three quarters was 28.7% compared to 35.8% a
    year ago. The lower effective rate reflects the ongoing impact of revised
    intercompany pricing agreements.
  *Diluted earnings per share for the first three quarters were $1.11 on net
    income of $161.2 million, compared to diluted earnings per share of $0.76
    on net income of $110.5 million in the same period of fiscal 2011.

The Company ended the third quarter of fiscal 2012 with $439.4 million in cash
and cash equivalents compared to $276.9 million at the end of the third
quarter of fiscal 2011. Inventory at the end of the third quarter of fiscal
2012 totaled $164.7 million compared to $129.2 million at the end of the third
quarter of fiscal 2011. The Company ended the quarter with 201 stores in North
America and Australia.

Christine Day, lululemon’s CEO stated: “I am very proud of the team for
achieving yet another strong quarter coming in ahead of our expectations. Our
stellar results were driven by first-rate execution, strong community
engagement, beautiful product and continued strength in our ecommerce
business.”

Updated Outlook

For the fourth quarter of fiscal 2012, we expect net revenue to be in the
range of $475 million to $480 million based on a comparable-store sales
percentage increase in the high single digits on a constant-dollar basis.
Diluted earnings per share are expected to be in the range of $0.71 to $0.73
for the quarter. This assumes 145.9 million diluted weighted-average shares
outstanding and a 29.4% tax rate.

For the full fiscal 2012, we now expect net revenue to be in the range of
$1.360 billion to $1.365 billion and diluted earnings per share are expected
to be in the range of $1.81 to $1.83 for the full year. This assumes 145.8
million diluted weighted-average shares outstanding and a tax rate of 29.0%.

Conference Call Information

A conference call to discuss third quarter results is scheduled for today,
December 6, 2012, at 9:00 a.m. EST. 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 (NASDAQ:LULU; TSX:LLL) is a yoga-inspired athletic apparel
company that creates components for people to live long, healthy and fun
lives. 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
Section27A of the Securities Act of 1933 and Section21E 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 laws related to our human resources policies or other
procedures; 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 January29, 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      Thirteen      Thirty-nine   Thirty-nine
                         Weeks Ended   Weeks Ended   Weeks Ended   Weeks Ended
                         October 28,   October 30,   October 28,   October 30,
                         2012          2011          2012          2011
                         (unaudited)   (unaudited)   (unaudited)   (unaudited)
                                                                   
Net revenue              $316,537      $230,216      $884,869      $629,319
                                                                   
Costs of goods sold      141,237       101,703       396,550       269,013
                                                                   
Gross profit             175,300       128,513       488,319       360,306
As a percent of net      55.4%         55.8%         55.2%         57.3%
revenue
                                                                   
Selling, general and
administrative           94,689        68,792        264,455       189,415
expenses
As a percent of net      29.9%         29.9%         29.9%         30.1%
revenue
Income from operations   80,611        59,721        223,864       170,891
As a percent of net      25.5%         25.9%         25.3%         27.2%
revenue
                                                                   
Other income             1,424         619           3,500         2,120
(expense), net
                                                                   
Income before
provision for income     82,035        60,340        227,364       173,011
taxes
                                                                   
Provision for income     24,655        21,399        65,308        61,935
taxes
Net income               57,380        38,941        162,056       111,076
Net income
attributable to          64            147           875           531
non-controlling
interest
                                                                   
Net income
attributable to          $57,316       $38,794       $161,181      $110,545
lululemon athletica
inc.
                                                                   
Basic earnings per       $0.40         $0.27         $1.12         $0.77
share
Diluted earnings per     $0.39         $0.27         $1.11         $0.76
share
                                                                   
Basic weighted-average   144,057       143,370       143,903       143,096
shares outstanding
Diluted
weighted-average         145,748       145,349       145,750       145,230
shares outstanding

                                                           

lululemon athletica inc.
Condensed Consolidated Balance Sheets
Expressed in thousands
                                                              
                                           October28, 2012   January29, 2012
                                           (unaudited)        (audited)
ASSETS
Current assets
Cash and cash equivalents                  $   439,423       $   409,437   
Inventories                                    164,726            104,097
Other current assets                          36,935           13,559    
                                                                            
Total current assets                           641,084            527,093
                                                              
Property and equipment, net                    204,052            162,941
                                                              
Goodwill and intangible assets, net            30,530             31,872
                                                              
Deferred income taxes and other assets        13,115           12,728    
Total assets                               $   888,781       $   734,634   
                                                              
                                                              
                                                              
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable                           $   6,569          $   14,536
Other current liabilities                      77,790             80,183
Income taxes payable                          6,831            8,720     
                                                                            
Total current liabilities                      91,190             103,439
                                                              
Non-current liabilities                        29,770             25,014
                                                              
Stockholders’ equity                          767,821          606,181   
Total liabilities and stockholders’        $   888,781       $   734,634   
equity



lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Expressed in thousands
                                                        
                                   Thirty-nine Weeks Ended   Thirty-nine Weeks
                                                             Ended
                                   October 28, 2012
                                                             October 30, 2011
                                   (unaudited)               (unaudited)
Cash flows from operating
activities
Net income                         $     162,056             $   111,076
Items not affecting cash                 35,271                  12,564
Other, including net changes            (84,087     )          (70,120    )
in other non-cash balances
Net cash provided by                     113,240                 53,520
operating activities
Net cash used in investing               (72,041     )           (106,344   )
activities
                                                             
Net cash (used in) provided              (11,863     )           14,474
by financing activities
                                                             
Effect of exchange rate                 650                   (990       )
changes on cash
                                                             
Increase (decrease) in cash              29,986                  (39,340    )
and cash equivalents
Cash and cash equivalents,         $     409,437            $   316,286    
beginning of period
Cash and cash equivalents,         $     439,423            $   276,946    
end of period

                                                           

lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measure
Constant-dollar changes
                                                              
                                       Thirteen Weeks Ended   Thirteen Weeks
                                       October28, 2012       Ended
                                                              October30, 2011
                                       % Change               % Change
Comparable-store sales (GAAP)          18%                    18%
                                                              
Adjustments due to changes in          0%                     (2)%
foreign exchange rates
                                                              
Comparable-store sales in constant     18%                    16%
dollars

                                                        
                                                                  
lululemon athletica inc.
Store Count and Square Footage^1
Thirty-Nine Weeks Ended October 28, 2012
Square Footage Expressed in Thousands
                                                                  
                               Number of
                                Stores           Number of        Number of
               Number of        Opened /         Stores           Stores Open
               Stores Open      Acquired         Closed           at the End
               at the           During the       During the       of
               Beginning of     Quarter^2        Quarter          the Quarter
               the Quarter
                                                                  
1^st           174              6                0                180
Quarter
2^nd           180              9                0                189
Quarter
3^rd           189              12               0                201
Quarter
                                                                  
               Total Gross      Gross Square     Gross Square     Total Gross
               Square Feet      Feet Added       Feet Lost        Square Feet
               at the           During the       During the       at the End
               Beginning of     Quarter^2,3      Quarter^2,3      of
               the Quarter                                        the Quarter
                                                                  
1^st           494              14               0                508
Quarter
2^nd           508              30               0                538
Quarter
3^rd           538              35               0                573
Quarter

^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 the quarters which are branded lululemon
athletica and ivivva athletica.

^3 Gross square feet added/lost during the quarters includes net square foot
additions for corporate-owned stores which have been renovated or relocated in
the quarter.

Contact:

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