Lululemon athletica inc., in its first report since going public,
reported Q2 net income more than doubled to $5.1 million, or 7 cents a
share, from $1.9
million, or 3 cents, a year ago. Revenues in the period ended July 31
jumped 80% to $58.7 million from $32.5 million. Revenue from
corporate-owned stores increased 98% to $53.1 million from $26.8
million, with comparable
store sales growth of 30%.
Gross profit as a percentage of net revenue increased 430 basis points
to approximately 53% of net revenue from 49% of net revenue in the
second quarter of fiscal 2006. Income from operations increased 202% to
$9.8 million, or 17% of revenues, compared to $3.2 million, or 10% of
revenues, in the second quarter of fiscal 2006.
In the six months, net revenue increased 70% to $103.5 million compared
to $60.7 million for the same period in fiscal 2006. Net revenue from
corporate-owned stores increased 86% to $91.1 million compared to
$49.0 million for the same period in fiscal 2006, with comparable
store sales growth of 25%.
Gross profit as a percentage of net revenue increased 210 basis
points to approximately 52% of revenues from 50% of net revenue in the
first six months of fiscal 2006. Income from operations increased 78%
to $16.6 million, or 16% of revenues, compared to $9.4 million, or 15%
of revenues, in the first six months of fiscal 2006. Diluted earnings
per share were $0.12 on net income of $8.7 million, compared to
diluted earnings per share of $0.07 on net income of $5.1 million, for
the same period in fiscal 2006.
Robert Meers, lululemon's CEO stated: “We are pleased to report strong
results in our initial quarter as a public company. Our team has built
on the success of our unique winning formula – vertically retailing
technical apparel for men and women – in a rapidly growing global
market for healthy and active living. All of our managers, educators,
brand ambassadors and head office employees continue to pave the way
for the company's success.”
On August 2, Lululemon completed an initial public offering of
20,930,000 shares of common stock at a price of $18.00 per share, of
which 2,290,909 shares were sold by the company and 18,639,091 shares
were sold by certain selling stockholders. Upon completion of the
offering, the company and the selling stockholders received net
proceeds of approximately $31.8 million and $312.0 million,
respectively. The company intends to use the net proceeds from the
offering, together with cash flow from operations, to fund new store
openings and working capital, and for other general corporate purposes,
which may include general and administrative expenses and potential
acquisitions of franchises.
Mr. Meers continued, “We are very pleased with the successful
completion of our initial public offering, and looking ahead, we are
excited about the prospects for our unique brand and retailing model.
Our plan is to capitalize on our expansion opportunities, and we are
committed to generating returns for our stockholders.”
For fiscal 2007, lululemon plans to open 25 new stores in North
America, including the 8 new stores opened in the first two quarters.
The company is on plan to open the remaining 17 stores in the second
half of fiscal 2007 and continues to expect 30 to 35 new store openings
in fiscal 2008.
Based on results in the first half, the company expects diluted EPS of
$0.30 to $0.33 in fiscal year 2007 including $0.05 to $0.06 in our
third quarter. We also expect comparable store sales in the mid to
high-teen range for the full year. We anticipate diluted weighted
average shares outstanding of approximately 70.0 million for 2007. The
Company's long-term annual financial targets include comparable store
sales growth in the high-single digit range, net revenue growth of
approximately 25% and diluted EPS growth in excess of 25%.
lululemon athletica inc.
Consolidated Statements of Operations (unaudited)
Expressed in thousands of dollars except per share amounts
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
Net revenue $58,681 $32,517 $103,470 $60,701
Costs of goods sold
(including stock
based compensation of
$193, $70, $2,487 and
$1,543) 27,434 16,614 49,412 30,278
------------ ------------ ---------- ----------
Gross Profit 31,247 15,903 54,058 30,423
As a percent of
revenues 53.2% 48.9% 52.2% 50.1%
Selling, general and
administrative
expenses (including
stock based
compensation of
$1,368, $720, $2,606
and $982) 21,477 12,667 37,440 21,073
As a percent of
revenues 36.6% 39.0% 36.2% 34.7%
------------ ------------ ---------- ----------
Income from operations 9,770 3,236 16,618 9,350
As a percent of
revenues 16.6% 10.0% 16.1% 15.4%
Other expense
(income), net (70) (22) (177) (44)
------------ ------------ ---------- ----------
Income before income
taxes 9,840 3,258 16,795 9,394
Provision for income
taxes 4,798 1,318 8,247 4,273
Non-controlling
interest (80) - (116) -
------------ ------------ ---------- ----------
Net income $5,122 $1,940 $8,664 $5,121
Earnings per share:
Basic $0.08 $0.03 $0.13 $0.08
Diluted $0.07 $0.03 $0.12 $0.07
Weighted average
outstanding:
Basic 65,225,819 65,225,819 65,225,819 65,225,819
Diluted 68,891,237 68,881,241 68,878,832 68,868,836
