Lululemon athletica inc. said its net revenue increased 29.7% to $112.9 million in the third quarter ended Nov. 1, from $87.0 million for the third quarter of fiscal 2008.

Net revenue from corporate-owned stores was $98.1 million, an increase of 26.4% from $77.6 million for the third quarter of fiscal 2008, and comparable-store sales increased by 10% on a constant-dollar basis compared to the third quarter of fiscal 2008.
 
Gross profit for the quarter increased by 34.4% to $56.3 million, and as a percentage of net revenue gross profit increased to 49.9% for the third quarter of fiscal 2009 from 48.1% in the third quarter of fiscal 2008.
Income from operations increased by 60.3% to $20.9 million, and as a percentage of net revenue was 18.5% compared to 15.0% of net revenue in the third quarter of fiscal 2008.
Diluted earnings per share was 20 cents on net income of $14.1 million, compared to diluted earnings per share of 13 cents on net income of $8.8 million in the third quarter of fiscal 2008. The tax rate for the quarter was 32.8% versus 33.1% a year ago.

For the first three fiscal quarters of 2009:

  • Net revenue increased 17.1% to $292.3 million from $249.6 million for the same period of fiscal 2008. Net revenue from corporate-owned stores was $256.1 million, an increase of 13.7% from $225.2 million for the same period of fiscal 2008, and comparable-store sales were even on a constant-dollar basis compared to the same period of fiscal 2008.
  • Gross profit as a percentage of net revenue decreased to 46.7% from 51.1% of net revenue in the first three quarters of fiscal 2008.
  • Income from operations was $45.1 million, or 15.4% of net revenue, compared to $40.5 million, or 16.2% of net revenue, in the first three quarters of fiscal 2008.
  • Diluted earnings per share was $0.42 on net income of $29.8 million, compared to diluted earnings per share of $0.40 on net income of $28.4 million in the first three quarters of fiscal 2008.

The company ended the quarter with $101.8 million in cash and cash equivalents as compared to $56.8 million at the end of fiscal 2008. Inventory at the end of the quarter totaled $52.1 million as compared to $49.1 million at the end of the third quarter in fiscal 2008.

Christine Day, lululemon’s CEO stated: “Sales momentum continued to build in the third quarter as consumers responded to our distinctive product, community connections and in store guest experience. Our hard work on our supply chain initiatives and strong relationships with our suppliers allowed us to meet our growing demand.” Ms. Day continued, “We also made significant progress in improving our gross margin with a return to the 50% level, and are very pleased to deliver these results in a challenging retail environment.”

Updated Outlook

For the fourth quarter of fiscal 2009, we expect net revenue to be in the range of $140 million to $145 million based on a comparable-store sales increase in the mid teens on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.26 to $0.28 for the quarter. This assumes a tax rate of 35% and 71.3 million diluted weighted-average shares outstanding.

 

lululemon athletica inc.

Condensed Consolidated Statements of Operations

Expressed in thousands, except per share amounts

(Unaudited)

 
 

Thirteen
Weeks Ended

 

Thirteen
Weeks Ended

 

Thirty-Nine
Weeks Ended

 

Thirty-Nine
Weeks Ended

November 1,
2009

November 2,
2008

November 1,
2009

November 2,
2008

 
Net revenue $112,891 $87,047 $292,292 $249,565
 
Costs of goods sold 56,553 45,154 155,766 122,159
 
Gross profit 56,338 41,893 136,526 127,406
As a percent of net revenue 49.9% 48.1% 46.7% 51.1%
 
Selling, general and administrative expenses 35,412 28,838 91,415 86,886
As a percent of net revenue 31.4% 33.1% 31.3% 34.8%
Income from operations 20,926 13,055 45,111 40,520
As a percent of net revenue 18.5% 15.0% 15.4% 16.2%
 
Other income (expense), net (3) 145 98 612
 
Income before income taxes 20,923 13,200 45,209 41,132
 
Provision for income taxes 6,855 4,370 15,379 11,571
 
Net income from continuing operations $14,068 $8,830 $29,830 $29,561
 
Net income (loss) from discontinued operations — 4 — (1,136)
 
Net income $14,068 $8,834 $29,830 $28,425
 
Basic earnings (loss) per share:
Continuing operations $0.20 $0.13 $0.42 $0.44
Discontinued operations — — — (0.02)
Net basic earnings per share $0.20 $0.13 $0.42 $0.42
 
Diluted earnings (loss) per share:
Continuing operations $0.20 $0.13 $0.42 $0.42
Discontinued operations — — — (0.02)
Net diluted earnings per share $0.20 $0.13 $0.42 $0.40