lululemon athletica inc. Announces Fourth Quarter and Full Year Fiscal 2012 Results

  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
 
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