lululemon athletica inc. Announces Fourth Quarter and Full Year Fiscal 2012 Results Business Wire VANCOUVER, British Columbia -- March 21, 2013 lululemon athletica inc. (NASDAQ:LULU) (TSX:LLL) today announced financial results for the fourth quarter and fiscal year ended February 3, 2013. For the fourth quarter ended February 3, 2013: *Net revenue for the quarter increased 31% to $485.5 million from $371.5 million in the fourth quarter of fiscal 2011. The fourth quarter of fiscal 2012 consisted of 14 weeks while the fourth quarter of fiscal 2011 consisted of 13 weeks. Net sales for the quarter include an additional week; however comparable stores sales calculations exclude the 14th week. *Comparable stores sales for the fourth quarter increased by 10% on a constant dollar basis. This increase excludes corporate store sales of $18.7 million for the 14th week of the quarter. *Direct to consumer revenue increased 56% to $78.3 million, or 16.1% of net revenue, in the fourth quarter of fiscal 2012, from 13.5% of net revenue in the same period last year. This increase includes $4.2 million of net revenue from the 14th week of the quarter. *Gross profit for the quarter increased by 31% to $274.5 million, and as a percentage of net revenue gross profit increased to 56.5% for the quarter from 56.3% in the fourth quarter of fiscal 2011. *Income from operations for the quarter increased by 31% to $152.6 million, and as a percentage of net revenue was 31.4% compared to 31.2% of net revenue in the fourth quarter of fiscal 2011. *The tax rate for the quarter was 29.0% compared to 36.5% a year ago. The lower effective rate reflects the ongoing impact of revised intercompany pricing agreements. *Diluted earnings per share for the quarter were $0.75 on net income of $109.4 million, compared to diluted earnings per share of $0.51 on net income of $73.5 million in the fourth quarter of fiscal 2011. For the fiscal year ended February 3, 2013: *Net revenue for the fiscal year increased 37% to $1.4 billion from $1.0 billion in fiscal 2011. Fiscal 2012 consisted of 53 weeks while fiscal 2011 consisted of 52 weeks. Net sales for the year include an additional week; however, comparable stores sales and sales per square foot calculations exclude the 53rd week. *Comparable stores sales for fiscal 2012 increased by 16% on a constant dollar basis, resulting in $2,058 annual sales per square foot for comparable stores for fiscal 2012. *Direct to consumer revenue increased 86% to $197.3 million, or 14.4% of net revenue in fiscal 2012, from 10.6% of net revenue in fiscal 2011. *Gross profit for fiscal 2012 increased by 34% to $762.8 million, from $569.4 million in fiscal 2011. As a percentage of net revenue, gross profit decreased to 55.7% compared to 56.9% in fiscal 2011. *Income from operations increased by 31% to $376.4 million, from $287.0 million in fiscal 2011. As a percentage of net revenue, income from operations decreased to 27.5% compared to 28.7% of net revenue in fiscal 2011. *The tax rate for fiscal 2012 was 28.8% compared to 36.1% for fiscal 2011. The lower effective rate reflects the ongoing impact of revised intercompany pricing agreements. *Diluted earnings per share in fiscal 2012 increased 46% to $1.85 on net income of $270.6 million, compared to diluted earnings per share of $1.27 on net income of $184.1 million in fiscal 2011. The Company ended fiscal 2012 with $590.2 million in cash and cash equivalents compared to $409.4 million at the end of fiscal 2011. Inventory at the end of fiscal 2012 was $155.2 million compared to $104.1 million at the end of fiscal 2011. The Company ended the quarter with 211 stores in North America and Australia. Christine Day, lululemon’s CEO, stated: “The fundamentals of our business are strong, we delivered excellent results in 2012, and we plan to continue to earn the loyalty of our customers and shareholders every day going forward. As previously announced on March 18^th, we pulled a selection of our black Luon pants from our stores. Delivering the top quality our guests expect is a critical factor in our differentiation in the market place. Our proprietary fabric, black Luon, is a very technical and sensitive product to manufacture. We have a long history with our manufacturers and as we have in the past, we are working closely with them to resolve the current issues. We have a team on site collaborating with them to identify the root cause. We have recently added strong leadership in Quality Control, our Liason Officeand our commercialization and development teams, and expect these people and other investments to solidify our quality consistency and our delivery capabilities.” Updated Outlook For the first quarter of fiscal 2013, we expect net revenue to be in the range of $333 million to $343 million based on a comparable-store sales percentage increase between 5% and 8% on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.28 to $0.30 for the quarter. This outlook reflects our current expectations of the impact from the black Luon issue, including lost revenue in the range of $12 million to $17 million, additional costs expected to be incurred and the write down of affected product on hand and expected to be received during the first half of 2013, resulting in a negative impact on EPS of $0.11 to $0.12. This guidance also assumes 146 million diluted weighted-average shares outstanding and a 30% tax rate. For fiscal 2013, we expect net revenue to be in the range of $1.615 billion to $1.640 billion and diluted earnings per share to be in the range of $1.95 to $1.99 for the full year. This outlook reflects our current expectations of the impact from the black Luon issue, including lost revenue in the range of $57 million to $67 million, additional costs expected to be incurred and the write down of affected product on hand and expected to be received during the first half of 2013, resulting in a negative impact on EPS of $0.25 to $0.27. This guidance also assumes a tax rate of 30% and 146.6 million diluted weighted-average shares outstanding. Conference Call Information A conference call to discuss fiscal 2012 results is scheduled for today, March 21, 2013, at 9:00 a.m. EDT. 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 the effect of shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards, the duration of any shortage of products available for sale in our stores or for delivery to guests or our ability to obtain replacement products in a timely manner, any expected loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs, and our future financial condition or results of operations. 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 reliance on and limited control over third-party suppliers to provide fabrics for and to produce our products; negative publicity regarding any of our products or our the production methods of any of our suppliers or manufacturers; the effects of shipments of products that fail to comply with our technical specifications or that fail to conform to our quality standards; the effects of a shortage of products available for sale in our stores or for delivery to guests; 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 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 risks and uncertainties detailed in our Annual Report on Form 10-K for the fiscal year ended February 3, 2013 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 Fourteen Thirteen Fifty-Three Fifty-Two Weeks Weeks Weeks Weeks Ended Ended Ended Ended February 3, January 29, February 3, January 29, 2013 2012 2013 2012 (unaudited) (unaudited) Net revenue $485,489 $371,520 $1,370,358 $1,000,839 Costs of goods sold 210,982 162,476 607,532 431,488 Gross profit 274,507 209,044 762,826 569,351 As a percent of net 56.5% 56.3% 55.7% 56.9% revenue Selling, general and administrative 121,932 92,977 386,387 282,393 expenses As a percent of net 25.1% 25.1% 28.2% 28.2% revenue Income from operations 152,575 116,067 376,439 286,958 As a percent of net 31.4% 31.2% 27.5% 28.7% revenue Other income 1,457 380 4,957 2,500 (expense), net Income before provision for income 154,032 116,447 381,396 289,458 taxes Provision for income 44,657 42,558 109,965 104,494 taxes Net Income 109,375 73,889 271,431 184,964 Net income attributable to - 371 875 901 non-controlling interest Net income attributable to $109,375 $73,518 $270,556 $184,063 lululemon athletica inc. Net Basic earnings per $0.76 $0.51 $1.88 $1.29 share Net Diluted earnings $0.75 $0.51 $1.85 $1.27 per share Basic weighted-average 144,285 143,501 144,000 143,196 shares outstanding Diluted weighted-average 145,846 145,344 145,806 145,278 shares outstanding lululemon athletica inc. Condensed Consolidated Balance Sheets Expressed in thousands February 3, January 29, 2013 2012 ASSETS Current assets Cash and cash equivalents $590,179 $409,437 Inventories 155,222 104,097 Other current assets 41,652 13,559 Total current assets 787,053 527,093 Property and equipment, net 214,639 162,941 Goodwill and intangible assets, net 30,201 31,872 Deferred income taxes and other assets 19,185 12,728 Total assets $1,051,078 $734,634 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $1,045 $14,536 Other current liabilities 92,675 80,183 Income taxes payable 39,637 8,720 Total current liabilities 133,357 103,439 Non-current liabilities 30,422 25,014 Stockholders’ equity 887,299 606,181 Total liabilities and stockholders’ equity $1,051,078 $734,634 lululemon athletica inc. Condensed Consolidated Statements of Cash Flows Expressed in thousands Fifty-Three Weeks Fifty-Two Weeks Ended Ended February 3, 2013 January 29, 2012 Cash flows from operating activities Net income $271,431 $184,964 Items not affecting cash 40,940 32,381 Other, including net changes in (32,258) (13,730) other non-cash balances Net cash provided by operating 280,113 203,615 activities Net cash used in investing (93,229) (122,311) activities Net cash (used in) provided by (5,491) 15,364 financing activities Effect of exchange rate changes on (651) (3,517) cash Increase in cash and cash 180,742 93,151 equivalents Cash and cash equivalents, $409,437 $316,286 beginning of year Cash and cash equivalents, end of $590,179 $409,437 year lululemon athletica inc. Reconciliation of Non-GAAP Financial Measure Constant-dollar changes (unaudited) Thirteen Weeks Thirteen Weeks Ended Ended January 27, January 29, 2012 2013^1 % Change % Change Comparable-store sales (GAAP) 11% 25% Adjustments due to changes in foreign (1)% 1% exchange rates Comparable-store sales in constant 10% 26% dollars ^1 The fourteenth week’s sales of the fourth quarter of fiscal 2012 are not included in the calculation of the comparable-store sales changes. lululemon athletica inc. Store Count and Square Footage^1 Fifty-Three Weeks Ended February 3, 2013 Square Footage Expressed in Thousands Number of Number of Number of Number of Stores Open Stores Stores Stores Open at the Opened Closed at the End Beginning of During the During the of the Quarter Quarter^2 Quarter the Quarter 1^st 174 6 0 180 Quarter 2^nd 180 9 0 189 Quarter 3^rd 189 12 0 201 Quarter 4^th 201 10 0 211 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^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 4^th 573 29 0 602 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
lululemon athletica inc. Announces Fourth Quarter and Full Year Fiscal 2012 Results
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