Lululemon Athletica Inc. reported net revenue  increased 10 percent to $423.5 million in the first quarter ended May 3 thanks in part to total comparable sales growth of 6 percent on a currency-neutral basis.

The Canadian apparel company said comparable store sales for the first quarter decreased by 1 percent on a constant dollar basis and direct-to-consumer revenue increased 31 percent on a constant dollar basis.

Other highlights from the quarter included:

  • Direct-to-consumer net revenue increased 27 percent to $83.6 million, or 19.7 percent of total company revenue, in the first quarter of fiscal 2015, an increase from 17.2 percent of total company revenues in the first quarter of fiscal 2014.
  • Gross profit for the quarter increased by 5 percent to $205.9 million, and as a percentage of net revenue gross profit was 48.6 percent for the quarter compared to 50.9 percent in the first quarter of fiscal 2014.
  • Income from operations for the quarter decreased by 3 percent to $68.0 million, and as a percentage of net revenue was 16.1 percent compared to 18.2 percent of net revenue in the first quarter of fiscal 2014.
  • The effective tax rate for the quarter was 30.3 percent compared to 73.4 percent in the first quarter of fiscal 2014. The first quarter of fiscal 2014 included a tax expense of $30.9 million related to the  repatriation of foreign earnings to fund a share buyback program. The tax rate for the first quarter of fiscal 2014 excluding the $30.9 million tax expense on the repatriation of foreign earnings would have been 30.1 percent.
  • Diluted earnings per share for the quarter were $0.34 on net income of $47.8 million, compared to diluted earnings per share of $0.13 on net income of $19.0 million in the first quarter of fiscal 2014, which included a $0.21 per share impact from the tax expense on the repatriation of foreign earnings. Excluding the tax expense on the repatriation of foreign earnings, diluted earnings per share were $0.34 in the first quarter of fiscal 2014.
  • During the first quarter of fiscal 2015, the company repurchased 0.3 million shares of the company's common stock at an average cost of $66.51 per share.

The company ended the first quarter of fiscal 2015 with $655.9 million in cash and cash equivalents compared to $752.0 million at the end of the first quarter of fiscal 2014. Inventory at the end of the first quarter of fiscal 2015 totaled $236.5 million compared to $180.4 million at the end of the first quarter of fiscal 2014. The company ended the quarter with 316 stores.

“Our team’s solid performance resulted in another improving quarter – coming in ahead of our revenue expectations,” said Lululemon's CEO Laurent Potdevin, “We drove positive trends in traffic, conversion, and brand engagement, along with a continued acceleration of our e-commerce business. To support our long-term goals, we are intentionally striking a strategic balance between strong growth and investments within innovation and infrastructure.”

Updated Outlook
For the second quarter of fiscal 2015, Lululemon expects net revenue to be in the range of $440 million to $445 million based on total comparable sales in the high single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $0.31 to $0.33 for the quarter. This guidance assumes 142.3 million diluted weighted-average shares outstanding and a 30.2 percent tax rate. The guidance does not reflect potential future repurchases of the company's shares.

For the full fiscal 2015, Lululemon now expects net revenue to be in the range of $2.00 billion to $2.05 billion based on total comparable sales in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $1.86 to $1.91 for the full year. This guidance assumes 142.4 million diluted weighted-average shares outstanding and a 30.2 percent tax rate. The guidance does not reflect potential future repurchases of the company's shares.

Lululemon Athletica Inc.

Condensed Consolidated Statements of Operations
Unaudited;
Expressed in thousands, except per share amounts








 
 


Thirteen Weeks
Thirteen Weeks


Ended
Ended


May 3, 2015
May 4, 2014

Net revenue

$
423,544


$
384,618

Costs of goods sold

217,667
 

188,874
 

Gross profit

205,877


195,744
As a percent of net revenue
48.6 %
50.9 %

Selling, general and administrative expenses

137,841


125,943
As a percent of net revenue
32.5 %
32.7 %

Income from operations

68,036


69,801
As a percent of net revenue
16.1 %
18.2 %

Other income, net

529
 

1,643
 

Income before provision for income taxes

68,565


71,444

Provision for income taxes

20,755
 

52,463
 

Net income

$
47,810
 

$
18,981
 





 

Basic earnings per share

$
0.34


$
0.13

Diluted earnings per share

$
0.34


$
0.13