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Lululemon Athletica Inc. Announces Second Quarter Fiscal 2012 Results

Stocks in this article: LLL LULU

lululemon athletica inc. (NASDAQ:LULU) (TSX:LLL) today announced financial results for the second quarter ended July 29, 2012.

For the thirteen weeks ended July 29, 2012:

  • Net revenue for the quarter increased 33% to $282.6 million from $212.3 million in the second quarter of fiscal 2011.
  • Comparable stores sales for the second quarter increased by 15% on a constant dollar basis.
  • Direct to consumer revenue increased 91% to $35.4 million, or 12.5% of total company revenues, in the second quarter of fiscal 2012, an increase from 8.8% of total company revenues in the second quarter of fiscal 2011.
  • Gross profit for the quarter increased 28% to $155.8 million, and as a percentage of net revenue gross profit was 55.1% for the quarter as compared to 57.5% in the second quarter of fiscal 2011.
  • Income from operations for the quarter increased 18% to $70.2 million, and as a percentage of net revenue was 24.8% as compared to 28.0% of net revenue in the second quarter of fiscal 2011.
  • The effective tax rate for the second quarter of fiscal 2012 was 19.1% after an adjustment of $7.2 million, reversing taxes provided for in Q4 of fiscal 2011 through Q1 of fiscal 2012. This adjustment resulted from the finalization of management’s review of the tax impact of intercompany pricing agreements entered into in Q4 of fiscal 2011. Normalized for this adjustment, the tax rate for the second quarter of fiscal 2012 was 29.2% compared to 35.7% in the second quarter of fiscal 2011. The tax rate in the second quarter of fiscal 2012 reflects the ongoing impact of the revised intercompany pricing agreements.
  • Diluted earnings per share for the quarter were $0.39 on net income of $57.2 million, compared to diluted earnings per share of $0.26 on net income of $38.4 million in the second quarter of fiscal 2011. Second quarter diluted earnings per share normalized for the tax adjustment were $0.34 and would have been $0.31 at our previously estimated effective tax rate of 36.5%.

For the twenty-six weeks ended July 29, 2012:

  • Net revenue for the first two quarters of fiscal 2012 increased 42% to $568.3 million from $399.1 million in the same period of fiscal 2011.
  • Comparable stores sales for the first two quarters of fiscal 2012 increased by 20% on a constant dollar basis.
  • Direct to consumer revenue increased 128% to $73.9 million, or 13.0% of total company revenues, in the first two quarters of fiscal 2012, an increase from 8.1% of total company revenues in the first two quarters of fiscal 2011.
  • Gross profit for the first two quarters of fiscal 2012 increased 35% to $313.0 million, and as a percentage of net revenue gross profit was 55.1% for the first two quarters as compared to 58.1% in the same period of fiscal 2011.
  • Income from operations for the first two quarters increased 29% to $143.3 million, and as a percentage of net revenue was 25.2% as compared to 27.9% of net revenue in the same period of fiscal 2011.
  • The effective tax rate for the first two quarters was 28.0% after an adjustment of $2.0 million, reversing taxes provided for in Q4 of fiscal 2011. This resulted from the finalization of management’s review of the tax impact of intercompany pricing agreements entered into in Q4 of fiscal 2011. Normalized for this adjustment, the tax rate for the first two quarters of fiscal 2012 was 29.3% compared to 36.0% in the first two quarters of fiscal 2011. The tax rate for the first two quarters of fiscal 2012 reflects the ongoing impact of the revised intercompany pricing agreements.
  • Diluted earnings per share for the first two quarters of fiscal 2012 were $0.71 on net income of $103.9 million, compared to diluted earnings per share of $0.49 on net income of $71.8 million in the same period of fiscal 2011. First two quarters diluted earnings per share normalized for the tax adjustment were $0.70 and would have been $0.63 at our previously estimated effective tax rate of 36.5%.

The company ended the second quarter of fiscal 2012 with $444.3 million in cash and cash equivalents compared to $264.7 million at the end of the second quarter of fiscal 2011. Inventory at the end of the second quarter of fiscal 2012 totaled $125.4 million compared to $88.9 million at the end of the second quarter of fiscal 2011. The company ended the quarter with 189 stores in North America and Australia.

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