Lululemon Athletica Inc. reported net revenue jumped 56% in the third quarter to $175.8 million from $112.9 million a year ago. Net revenue from corporate-owned stores was $143.2 million for the quarter, an increase of 46% from $98.1 million in the third quarter of fiscal 2009, and comparable-store sales increased by 29% on a constant-dollar basis.

Net earnings grew 84.5% to $25.9 million, or 36 cents a share, from $14.1 million, or 20 cents, a year ago.

Other highlights in the quarter:

  • Gross profit for the quarter increased by 72% to $96.8 million, and as a percentage of net revenue gross profit increased to 55% for the quarter from 50% in the third quarter of fiscal 2009.
  • Income from operations for the quarter increased by 103% to $42.4 million, and as a percentage of net revenue was 24% compared to 19% of net revenue in the third quarter of fiscal 2009.

For the thirty-nine weeks ended October 31, 2010:

  • Net revenue for the first three quarters increased 60% to $466.3 million from $292.3 million in the same period of fiscal 2009. Net revenue from corporate-owned stores was $388.2 million for the first three quarters of fiscal 2010, an increase of 52% from $256.1 million in the first three quarters of fiscal 2009. Year to date comparable-store sales increased by 31% on a constant-dollar basis.
  • Gross profit for the first three quarters increased by 84% to $251.5 million from $136.5 million in the same period of fiscal 2009. As a percentage of net revenue, gross profit increased to 54% for the first three quarters of fiscal 2010 from 47% in the same period of fiscal 2009.
  • Income from operations for the first three quarters increased by 142% to $109.1 million, and as a percentage of net revenue was 23% compared to 15% of net revenue in the same period of fiscal 2009.
  • Diluted earnings per share on a year to date basis was $0.93 on net income of $67.1 million, compared to diluted earnings per share of $0.42 on net income of $29.8 million in the same period of fiscal 2009.
  • The tax rate for the first three quarters of fiscal 2010 was 40% versus 34% for the same period in the prior year. The tax rate has been increased to take into account the additional deferred income tax liability for estimated future taxes attributable to undistributed earnings of the Canadian operating subsidiary.

The company ended the third quarter of fiscal 2010 with $224.8 million in cash and cash equivalents compared to $101.8 million at the end of the third quarter of fiscal 2009. Inventory at the end of the third quarter of fiscal 2010 totaled $73.0 million compared to $52.1 million at the end of the third quarter of fiscal 2009. The company ended the quarter with 134 stores in North America and Australia.

Christine Day, lululemon�€�s CEO stated: “We are very pleased with our strong third quarter results. Our technical product continues to drive our top line growth, cementing our position as an innovative athletic wear company with yoga at our core. Looking ahead, we remain excited about the potential for lululemon and will continue to execute on our strategies and invest in our future for the significant growth opportunities still ahead of us.”

Updated Outlook

For the fourth quarter of fiscal 2010, we expect net revenue to be in the range of $210 million to $215 million based on a comparable-store sales percentage increase in the high teens on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.46 to $0.48 for the quarter. This assumes 72.2 million diluted weighted-average shares outstanding and a 40% tax rate.

lululemon athletica inc.
Condensed Consolidated Statements of Operations
Expressed in thousands, except per share amounts


 

 

 

 
 
 

 

 


Thirteen
Thirteen
Thirty-Nine
Thirty-Nine


Weeks
Weeks
Weeks
Weeks


Ended

Ended
Ended
Ended


October 31,
November 1,
October 31,
November 1,


2010
2009
2010
2009


(unaudited)
(unaudited)
(unaudited)
(unaudited)








 
Net revenue
$175,800
$112,891
$466,305
$292,292








 
Costs of goods sold
78,968
56,553
214,818
155,766








 
Gross profit
96,832
56,338
251,487
136,526
As a percent of net revenue
55.1%
49.9%
53.9%
46.7%








 
Selling, general and administrative expenses
54,456
35,412
142,394
91,415
As a percent of net revenue
31.0%
31.4%
30.5%
31.3%
Income from operations

42,376
20,926
109,093
45,111
As a percent of net revenue
24.1%
18.5%
23.4%
15.4%








 
Other income (expense), net
91
(3)
2,345
98








 
Income before provision for income taxes
42,467
20,923
111,438
45,209








 
Provision for income taxes
16,532
6,855
44,207
15,379
Net Income
25,935
14,068
67,231
29,830
Net income attributable to non-controlling interest

234
–
150
–








 
Net income attributable to lululemon athletica inc.
$25,701
$14,068
$67,081
$29,830








 
Basic earnings per share
$0.36
$0.20
$0.95
$0.42
Diluted earnings per share
$0.36
$0.20
$0.93
$0.42








 
Basic weighted-average shares outstanding
70,938
70,279
70,786
70,205
Diluted weighted-average shares outstanding
71,835
71,100
71,782
70,759