Fourth quarter revenue up 20% to $1.4
billion Comparable sales increase 20% Diluted EPS of $2.28 for the
fourth quarter
Full year revenue of $4.0 billion
lululemon athletica inc. (NASDAQ:LULU) today announced financial
results for the fourth quarter and fiscal year ended February 2,
2020.
The summary below provides both GAAP and adjusted non-GAAP
financial measures. The adjusted financial measures exclude the
amounts recognized in connection with U.S. tax reform and taxes on
the repatriation of foreign earnings during fiscal 2018.
For the fourth quarter ended February 2, 2020:
- Net revenue was $1.4 billion, an increase of 20% compared to
the fourth quarter of fiscal 2018.
- Total comparable sales increased 20%.
- Comparable store sales increased 9%.
- Direct to consumer net revenue increased 41%.
- Gross profit was $810.8 million, an increase of 21% compared to
the fourth quarter of fiscal 2018.
- Gross margin was 58.0%, an increase of 70 basis points compared
to the fourth quarter of fiscal 2018.
- Income from operations was $416.5 million, an increase of 26%
compared to the fourth quarter of fiscal 2018.
- Operating margin was 29.8%, an increase of 140 basis points
compared to the fourth quarter of fiscal 2018.
- Income tax expense was $120.6 million compared to $115.8
million in the fourth quarter of fiscal 2018 and the effective tax
rate was 28.8% compared to 34.6% for the fourth quarter of fiscal
2018. The adjusted effective tax rate for the fourth quarter of
fiscal 2018 was 26.9%.
- Diluted earnings per share were $2.28 compared to $1.65 in the
fourth quarter of fiscal 2018. Adjusted diluted earnings per share
for the fourth quarter of fiscal 2018 were $1.85.
- The Company repurchased 1.6 thousand shares of its own common
stock at an average cost of $194.10 per share in the fourth quarter
of fiscal 2019.
For the fiscal year ended February 2, 2020:
- Net revenue was $4.0 billion, an increase of 21% compared to
fiscal 2018. On a constant dollar basis, net revenue increased
22%.
- Total comparable sales increased 17%, or increased 18% on a
constant dollar basis.
- Comparable store sales increased 9%, or increased 10% on a
constant dollar basis.
- Direct to consumer net revenue increased 35%.
- Gross profit was $2.2 billion, an increase of 22% compared to
fiscal 2018.
- Gross margin was 55.9%, an increase of 70 basis points compared
to fiscal 2018.
- Income from operations was $889.1 million, an increase of 26%
compared to fiscal 2018.
- Operating margin was 22.3%, an increase of 80 basis points
compared to fiscal 2018.
- Income tax expense was $251.8 million compared to $231.4
million in fiscal 2018 and the effective tax rate was 28.1%
compared to 32.4% for fiscal 2018. The adjusted effective tax rate
for fiscal 2018 was 28.0%.
- Diluted earnings per share were $4.93 compared to $3.61 in
fiscal 2018. Adjusted diluted earnings per share in fiscal 2018
were $3.84.
- The Company repurchased 1.1 million shares of its own common
stock at an average cost of $164.26 per share in fiscal 2019.
The Company ended fiscal 2019 with $1.1 billion in cash and cash
equivalents compared to $881.3 million at the end of fiscal 2018.
Inventories at the end of fiscal 2019 increased by 28% to $518.5
million compared to $404.8 million at the end of fiscal 2018. The
Company ended the year with 491 stores.
Calvin McDonald, Chief Executive Officer, commented: "2019 was a
strong year for lululemon, as our teams executed against our Power
of Three growth plan. We are now navigating an extraordinary
environment, which is currently impacting our business. The
strength of our brand and strong financial position will help us
manage through the day-to-day, while continuing to effectively plan
for and invest in our future." McDonald continued: "I want to thank
our people around the globe for the results they delivered in 2019,
and for their perseverance and commitment to our brand each and
every day."
COVID-19 Coronavirus
The outbreak of the COVID-19 coronavirus has been declared a
pandemic by the World Health Organization and continues to spread
in the United States, Canada, and in many other countries globally.
Subsequent to February 2, 2020, in line with recommendations by
public health officials and in accordance with governmental
authority orders, we have taken actions to close certain retail
locations and to reduce operating hours. We continue to monitor the
situation and work closely with local authorities to prioritize the
safety of our people and guests.
In February 2020, we temporarily closed all of our retail
locations in Mainland China. All but one of these locations have
since reopened. In March 2020, we temporarily closed all of our
retail locations in North America, Europe, Malaysia, New Zealand,
and we temporarily closed our distribution center in Sumner, WA.
These locations currently remain closed.
Fiscal 2020 Outlook
Due to the impact that COVID-19 is having across the globe, and
the rapid and continuous developments, we are not providing
guidance for fiscal 2020 at this time. We will provide additional
updates as the situation warrants.
Shifted Calendar for Comparable Sales
Due to the 53rd week in fiscal 2018, comparable sales are
calculated on a one week shifted basis in fiscal 2019. Changes in
total comparable sales, comparable store sales, and direct to
consumer net revenue are calculated on a one week shifted basis
such that the 13 and 52 weeks ended February 2, 2020 are compared
to the 13 and 52 weeks ended February 3, 2019 rather than January
27, 2019.
Conference Call Information
A conference call to discuss fiscal 2019 results is scheduled
for today, March 26, 2020, at 4:30 p.m. Eastern time. Those
interested in participating in the call are invited to dial
1-800-319-4610 or 1-604-638-5340, if calling internationally,
approximately 10 minutes prior to the start of the call. A live
webcast of the conference call will be available online at:
http://investor.lululemon.com/events.cfm. A replay will be made
available online approximately two hours following the live call
for a period of 30 days.
About lululemon athletica inc.
lululemon athletica inc. (NASDAQ:LULU) is a healthy lifestyle
inspired athletic apparel company for yoga, running, training, and
most other sweaty pursuits, creating transformational products and
experiences which enable people to live a life they love. Setting
the bar in technical fabrics and functional designs, lululemon
works with yogis and athletes in local communities for continuous
research and product feedback. For more information, visit
www.lululemon.com.
Non-GAAP Financial Measures
Constant dollar changes in net revenue, total comparable sales,
comparable store sales, and direct to consumer net revenue, and the
adjusted financial results are non-GAAP financial measures.
A constant dollar basis assumes the average foreign exchange
rates for the period remained constant with the average foreign
exchange rates for the same period of the prior year. We provide
constant dollar changes in net revenue, total comparable sales,
comparable store sales, and direct to consumer net revenue because
we use these measures to understand the underlying growth rate of
net revenue excluding the impact of changes in foreign exchange
rates. We believe that disclosing these measures on a constant
dollar basis is useful to investors because it enables them to
understand the level of growth of our business.
Adjusted income tax expense, effective tax rates, and diluted
earnings per share exclude the amounts recognized in connection
with U.S. tax reform and taxes on repatriation of foreign earnings.
We believe these adjusted financial measures are useful to
investors in evaluating the trend in our operating performance as
the adjustments do not directly relate to our ongoing business
operations. Furthermore, we do not believe the adjustments are
reflective of our expectations of our future operating performance
and believe these non-GAAP measures are useful to investors because
of their comparability to our historical information.
The presentation of this financial information is not intended
to be considered in isolation or as a substitute for, or with
greater prominence to, the financial information prepared and
presented in accordance with GAAP. For more information on these
non-GAAP financial measures, please see the section captioned
"Reconciliation of Non-GAAP Financial Measures" included in the
accompanying financial tables, which includes more detail on the
GAAP financial measure that is most directly comparable to each
non-GAAP financial measure, and the related reconciliations between
these financial measures.
Forward-Looking Statements:
This press release includes estimates, projections, statements
relating to our business plans, objectives, and expected operating
results that are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. In many cases, you can identify
forward-looking statements by terms such as "may," "will,"
"should," "expects," "plans," "anticipates," "outlook," "believes,"
"intends," "estimates," "predicts," "potential" or the negative of
these terms or other comparable terminology. These forward-looking
statements also include our guidance and outlook statements. These
statements are based on management's current expectations but they
involve a number of risks and uncertainties. Actual results and the
timing of events could differ materially from those anticipated in
the forward-looking statements as a result of risks and
uncertainties, which include, without limitation: our ability to
maintain the value and reputation of our brand; the acceptability
of our products to our guests; the recent COVID-19 coronavirus
outbreak and related government, private sector, and individual
consumer responsive actions; our highly competitive market and
increasing competition; our reliance on and limited control over
third-party suppliers to provide fabrics for and to produce our
products; suppliers or manufacturers not complying with our Vendor
Code of Ethics or applicable laws; the operations of many of our
suppliers are subject to international and other risks; an economic
downturn or economic uncertainty in our key markets; increasing
product costs and decreasing selling prices; our ability to
anticipate consumer preferences and successfully develop and
introduce new, innovative and updated products; our ability to
accurately forecast guest demand for our products; our ability to
safeguard against security breaches with respect to our information
technology systems; any material disruption of our information
systems; our ability to have technology-based systems function
effectively and grow our e-commerce business globally; changes in
consumer shopping preferences and shifts in distribution channels;
the fluctuating costs of raw materials; our ability to expand
internationally in light of our limited operating experience and
limited brand recognition in new international markets; global
economic and political conditions and global events such as health
pandemics; our ability to deliver our products to the market and to
meet guest expectations if we have problems with our distribution
system; imitation by our competitors; our ability to protect our
intellectual property rights; our ability to source and sell our
merchandise profitably or at all if new trade restrictions are
imposed or existing trade restrictions become more burdensome;
changes in tax laws or unanticipated tax liabilities; our ability
to manage our growth and the increased complexity of our business
effectively; our ability to cancel store leases if an existing or
new store is not profitable; increasing labor costs and other
factors associated with the production of our products in South and
South East Asia; our ability to successfully open new store
locations in a timely manner; our ability to comply with trade and
other regulations; the service of our senior management;
seasonality; fluctuations in foreign currency exchange rates;
conflicting trademarks and the prevention of sale of certain
products; our exposure to various types of litigation; actions of
activist stockholders; anti-takeover provisions in our certificate
of incorporation and bylaws; and other risks and uncertainties set
out in filings made from time to time with the United States
Securities and Exchange Commission and available at www.sec.gov,
including, without limitation, our most recent reports on Form 10-K
and Form 10-Q. You are urged to consider these factors carefully in
evaluating the forward-looking statements contained herein and are
cautioned not to place undue reliance on such forward-looking
statements, which are qualified in their entirety by these
cautionary statements. The forward-looking statements made herein
speak only as of the date of this press release and we undertake no
obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances, except as may be
required by law.
lululemon athletica inc.
Condensed Consolidated Statements of
Operations
Unaudited; Expressed in thousands, except
per share amounts
Quarter Ended
Fiscal Year Ended
February 2, 2020
February 3, 2019
February 2, 2020
February 3, 2019
Net revenue
$
1,397,491
$
1,167,458
$
3,979,296
$
3,288,319
Costs of goods sold
586,665
498,875
1,755,910
1,472,032
Gross profit
810,826
668,583
2,223,386
1,816,287
As a percent of net revenue
58.0
%
57.3
%
55.9
%
55.2
%
Selling, general and administrative
expenses
394,339
337,163
1,334,276
1,110,451
As a percent of net revenue
28.2
%
28.9
%
33.5
%
33.8
%
Income from operations
416,487
331,420
889,110
705,836
As a percent of net revenue
29.8
%
28.4
%
22.3
%
21.5
%
Other income (expense), net
2,129
2,861
8,283
9,414
Income before income tax expense
418,616
334,281
897,393
715,250
Income tax expense
120,595
115,816
251,797
231,449
Net income
$
298,021
$
218,465
$
645,596
$
483,801
Basic earnings per share
$
2.29
$
1.66
$
4.95
$
3.63
Diluted earnings per share
$
2.28
$
1.65
$
4.93
$
3.61
Basic weighted-average shares
outstanding
130,311
131,878
130,393
133,413
Diluted weighted-average shares
outstanding
130,896
132,466
130,955
133,971
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Unaudited; Expressed in thousands
February 2, 2020
February 3, 2019
ASSETS
Current assets
Cash and cash equivalents
$
1,093,505
$
881,320
Inventories
518,513
404,842
Prepaid and receivable income taxes
85,159
49,385
Other current assets
110,761
93,735
Total current assets
1,807,938
1,429,282
Property and equipment, net
671,693
567,237
Right-of-use lease assets
689,664
—
Goodwill and intangible assets, net
24,423
24,239
Deferred income taxes and other
non-current assets
87,636
63,953
Total assets
$
3,281,354
$
2,084,711
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
79,997
$
95,533
Accrued inventory liabilities
6,344
16,241
Accrued compensation and related
expenses
133,688
109,181
Current lease liabilities
128,497
—
Current income taxes payable
26,436
67,412
Unredeemed gift card liability
120,413
99,412
Other current liabilities
125,043
112,698
Total current liabilities
620,418
500,477
Non-current lease liabilities
611,464
—
Non-current income taxes payable
48,226
42,099
Deferred income tax liability
43,432
14,249
Other non-current liabilities
5,596
81,911
Stockholders' equity
1,952,218
1,445,975
Total liabilities and stockholders'
equity
$
3,281,354
$
2,084,711
lululemon athletica inc.
Condensed Consolidated Statements of Cash
Flows
Unaudited; Expressed in thousands
Fiscal Year Ended
February 2, 2020
February 3, 2019
Cash flows from operating activities
Net income
$
645,596
$
483,801
Adjustments to reconcile net income to net
cash provided by operating activities
23,720
258,978
Net cash provided by operating
activities
669,316
742,779
Net cash used in investing activities
(278,408
)
(242,794
)
Net cash used in financing activities
(177,173
)
(590,214
)
Effect of exchange rate changes on
cash
(1,550
)
(18,952
)
Increase (decrease) in cash and cash
equivalents
212,185
(109,181
)
Cash and cash equivalents, beginning of
year
$
881,320
$
990,501
Cash and cash equivalents, end of year
$
1,093,505
$
881,320
lululemon athletica inc. Reconciliation of Non-GAAP
Financial Measures Unaudited; Expressed in thousands, except per
share amounts
Constant dollar changes in net revenue, total comparable sales,
comparable store sales, and direct to consumer net revenue
The below changes in net revenue show the net change for the
fourth quarter of fiscal 2019 compared to the fourth quarter of
fiscal 2018. Due to the 53rd week in fiscal 2018, the below changes
in total comparable sales, comparable store sales, and direct to
consumer net revenue are calculated on a one week shifted basis
such that the 13 weeks ended February 2, 2020 are compared to the
13 weeks ended February 3, 2019 rather than January 27, 2019.
Change in Net Revenue
Change in Total Comparable
Sales1,2
Change in Comparable Store
Sales2
Change in Direct to Consumer
Net Revenue
Change
20
%
20
%
9
%
41
%
Adjustments due to foreign exchange rate
changes
—
—
—
—
Change in constant dollars
20
%
20
%
9
%
41
%
The below changes in net revenue show the net change for fiscal
2019 compared to fiscal 2018. Due to the 53rd week in fiscal 2018,
the below changes in total comparable sales, comparable store
sales, and direct to consumer net revenue are calculated on a one
week shifted basis such that the 52 weeks ended February 2, 2020
are compared to the 52 weeks ended February 3, 2019 rather than
January 27, 2019.
Change in Net Revenue
Change in Total Comparable
Sales1,2
Change in Comparable Store
Sales2
Change in Direct to Consumer
Net Revenue
Change
21
%
17
%
9
%
35
%
Adjustments due to foreign exchange rate
changes
1
1
1
—
Change in constant dollars
22
%
18
%
10
%
35
%
__________
1
Total comparable sales includes comparable
store sales and direct to consumer sales.
2
Comparable store sales reflects net
revenue from company-operated stores that have been open for at
least 12 full fiscal months, or open for at least 12 full fiscal
months after being significantly expanded.
Adjusted financial measures
The following tables reconcile adjusted financial measures with
the most directly comparable measures calculated in accordance with
GAAP. The adjustments relate to the amounts recognized in
connection with U.S. tax reform and taxes on repatriation of
foreign earnings. Please refer to Note 15 to the audited
consolidated financial statements included in Item 8 of Part II of
our Report on Form 10-K to be filed with the SEC on or about March
26, 2020 for further information on these adjustments.
Quarter Ended February 3,
2019
GAAP Amounts
Adjustments
Adjusted Amounts
(Non-GAAP)
Tax on Repatriation of Foreign
Earnings
U.S. Tax Reform
(In thousands, except per share
amounts)
Income tax expense
$
115,816
$
(23,714
)
$
(2,301
)
$
89,801
Effective tax rate
34.6
%
(7.0
)%
(0.7
)%
26.9
%
Diluted earnings per share
$
1.65
$
0.18
$
0.02
$
1.85
Fiscal Year Ended February 3,
2019
GAAP Amounts
Adjustments
Adjusted Amounts
(Non-GAAP)
Tax on Repatriation of Foreign
Earnings
U.S. Tax Reform
(In thousands, except per share
amounts)
Income tax expense
$
231,449
$
(23,714
)
$
(7,464
)
$
200,271
Effective tax rate
32.4
%
(3.3
)%
(1.1
)%
28.0
%
Diluted earnings per share
$
3.61
$
0.18
$
0.05
$
3.84
lululemon athletica inc. Company-operated Store Count and
Square Footage1 Square Footage Expressed in Thousands
Number of Stores Open at the
Beginning of the Quarter
Number of Stores Opened During
the Quarter
Number of Stores Closed During
the Quarter
Number of Stores Open at the
End of the Quarter
1st Quarter
440
15
—
455
2nd Quarter
455
5
—
460
3rd Quarter
460
21
2
479
4th Quarter
479
16
4
491
Total Gross Square Feet at the
Beginning of the Quarter
Gross Square Feet Added During
the Quarter2
Gross Square Feet Lost During
the Quarter2
Total Gross Square Feet at the
End of the Quarter
1st Quarter
1,426
40
—
1,466
2nd Quarter
1,466
56
—
1,522
3rd Quarter
1,522
87
5
1,604
4th Quarter
1,604
87
11
1,680
__________
1
Company-operated store count and square
footage summary excludes retail locations operated by third parties
under license and supply arrangements.
2
Gross square feet added/lost during the
quarter includes net square foot additions for company-operated
stores which have been renovated or relocated in the quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200326005653/en/
Investors: lululemon athletica inc. Howard Tubin
1-604-732-6124 or ICR, Inc. Joseph Teklits/Caitlin Churchill
1-203-682-8200
Media: lululemon athletica inc. Erin Hankinson
1-604-732-6124 or Brunswick Group Eleanor French 1-415-671-7676
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