Lululemon Athletica Inc. reported revenues in the second quarter increased 14% to $97.7 million from $85.5 million a year ago. Sales from corporate-owned stores increased 9% to $85.1 million from $78.3 million although comps were down 2%. Earnings slid 17.1% to $9.2 million, 13 cents a share, from $11.1 million, or 16 cents, a year ago.

Gross profit as a percentage of net revenue decreased to 46.2% from 51.9% of net revenue in the second quarter of fiscal 2008.Income from operations was $14.3 million, or 14.7% of net revenue, compared to $15.5 million, or 18.2% of net revenue, in the second quarter of fiscal 2008.

For the twenty-six weeks ended August 2, 2009:

* Net revenue increased 10% to $179.4 million from $162.4 million for the same period of fiscal 2008. Net revenue from corporate-owned stores was $158.0 million, an increase of 7% from $147.7 million for the same period of fiscal 2008, with a comparable-store sales decline of 5% on a constant-dollar basis compared to the first two quarters of fiscal 2008.
* Gross profit as a percentage of net revenue decreased to 44.7% from 52.6% of net revenue in the first two quarters of fiscal 2008.
* Income from operations was $24.2 million, or 13.5% of net revenue, compared to $27.5 million, or 16.9% of net revenue, in the first two quarters of fiscal 2008.
* Diluted earnings per share was $0.22 on net income of $15.8 million, compared to diluted earnings per share of $0.27 on net income of $19.6 million in the first two quarters of fiscal 2008.

The Company ended the quarter with $83.8 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 $46.5 million as compared to $52.1 million at the end of fiscal 2008.

Christine Day, lululemon’s CEO stated: “At the halfway mark of 2009, we are very pleased with the improving sales momentum in our business, which we believe demonstrates the power of our brand as well as our innovative product offerings, effective market strategy and strength of our management team. Our strong community relationships and focus on healthy lives combined with a continuous flow of well designed, functional, high-quality merchandise is creating a justifiable purchase even to the cautious consumer.” Ms. Day continued, “We were also able to improve our gross margin sequentially over the first quarter. This rebound was a result of better same-store sales, our enhanced systems, and an operating model that is allowing us to operate with leaner inventory and therefore gain market share without resorting to markdowns.”

Updated Guidance

For the third quarter of fiscal 2009 we expect comparable-store sales to be relatively flat on a constant-dollar basis compared to the third quarter of fiscal 2008. We anticipate reported net revenue to be in the range of $95 million to $100 million for the quarter, and diluted earnings per share in the range of $0.11 to $0.13 for the quarter. This assumes a tax rate of 35% and 70.6 million diluted weighted-average shares outstanding.































































































































































































































































































































































































































Thirteen
Weeks Ended



Thirteen
Weeks Ended



Twenty-Six
Weeks Ended



Twenty-Six
Weeks Ended

August 2, 2009 August 3, 2008 August 2, 2009
August 3, 2008









Net revenue
$97,721
$85,484
$179,401
$162,424









Costs of goods sold
52,557
41,108
99,213
76,947









Gross profit
45,164
44,376
80,188
85,477
As a percent of net revenue
46.2%
51.9%
44.7%
52.6%









Selling, general and administrative expenses
30,832
28,832
56,003
57,987
As a percent of net revenue
31.6%
33.7%
31.2%
35.7%
Income from operations
14,332
15,544
24,185
27,490
As a percent of net revenue
14.7%
18.2%
13.5%
16.9%









Other income, net
23
211
101
489









Income before income taxes
14,355
15,755
24,286
27,979









Provision for income taxes
5,111
3,415
8,524
7,169









Net income from continuing operations
$9,244
$12,340
$15,762
$20,810









Net loss from discontinued operations

(1,192)

(1,186)









Net income
$9,244
$11,148
$15,762
$19,624









Basic earnings (loss) per share:







Continuing operations
$0.13
$0.18
$0.22
$0.31
Discontinued operations

(0.02)

(0.02)
Net basic earnings per share
$0.13
$0.16
$0.22
$0.29









Diluted earnings (loss) per share:







Continuing operations
$0.13
$0.18
$0.22
$0.29
Discontinued operations

(0.02)

(0.02)
Net diluted earnings per share
$0.13
$0.16
$0.22
$0.27









Weighted-average outstanding:







Basic
69,948
68,107
70,176

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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