Revenue increased 88% to $1.2
billion Diluted EPS of $1.11, Adjusted EPS of $1.16
lululemon athletica inc. (NASDAQ:LULU) today announced financial
results for the first quarter of fiscal 2021.
Calvin McDonald, Chief Executive Officer, stated: "Our first
quarter results reflected strength across all drivers of growth,
fueled by the continued expansion in our e-commerce business and a
rebound in brick and mortar stores. Our strong performance across
categories, channels and geographies demonstrates the momentum and
strength of lululemon as we shift into the new normal. All of us on
the leadership team are grateful to our teams around the world who
enabled these results, and who continue to focus on realizing
growth."
The fiscal year ending January 30, 2022 is referred to as "2021"
and the fiscal year ended January 31, 2021 is referred to as
"2020". The adjusted non-GAAP financial measures below exclude
certain costs incurred in connection with the acquisition of
MIRROR, and the related tax effects.
For the first quarter of 2021, compared to the first quarter of
2020:
- Net revenue increased 88% to $1.2 billion. On a constant dollar
basis, net revenue increased 83%.
- Company-operated stores net revenue increased 106% to $536.6
million.
- Direct to consumer net revenue increased 55% to $545.1 million.
On a constant dollar basis, direct to consumer net revenue
increased 50%.
- Net revenue increased 82% in North America, and increased 125%
internationally.
- Direct to consumer net revenue represented 44.4% of total net
revenue compared to 54.0% for the first quarter of 2020.
- Gross profit increased 109% to $700.3 million and gross margin
increased 580 basis points to 57.1%.
- Income from operations increased 492% to $193.8 million.
Adjusted income from operations increased 479% to $201.5
million.
- Operating margin increased 1,080 basis points to 15.8%.
Adjusted operating margin increased 1,110 basis points to
16.4%.
- Income tax expense increased 827% to $49.1 million. The
effective tax rate for the first quarter of 2021 was 25.3% compared
to 15.6% for the first quarter of 2020. The adjusted effective tax
rate was 24.5% for the first quarter of 2021 compared to 14.7% for
the first quarter of 2020.
- Diluted earnings per share were $1.11 compared to $0.22 in the
first quarter of 2020. Adjusted diluted earnings per share were
$1.16 compared to $0.23 in the first quarter of 2020.
- The Company repurchased 0.3 million shares of its own common
stock at an average cost of $311.02 per share.
- The Company opened two net new company-operated stores during
the quarter, ending with 523 stores.
The consolidated statement of operations for the first quarter
of 2019 is included in the tables at the end of this release for
reference. For the first quarter of 2021, compared to the first
quarter of 2019:
- Net revenue increased by $444.2 million, or 57%, representing a
two-year compound annual growth rate of 25%.
- Gross margin increased 320 basis points.
- Operating margin decreased 70 basis points. Adjusted operating
margin decreased 10 basis points.
- Diluted earnings per share were $1.11 compared to $0.74 in the
first quarter of 2019. Adjusted diluted earnings per share were
$1.16 in the first quarter of 2021.
Meghan Frank, Chief Financial Officer, stated: "We are very
pleased with our Q1 results, which reflect significant growth in
the business compared to both 2020 and 2019. Our momentum remains
strong as we enter the second quarter, and we are raising our
estimates for the year accordingly. The strength of our financial
position allows us to continue to deliver against the Power of
Three growth strategies, while we leverage both near- and long-term
opportunities."
Balance sheet highlights
The Company ended the first quarter of 2021 with $1.2 billion in
cash and cash equivalents and the capacity under its committed
revolving credit facilities was $397.3 million. Inventories at the
end of the first quarter of 2021 increased 17% to $732.9 million
compared to $625.8 million at the end of the first quarter of
2020.
2021 Outlook
For the second quarter of 2021, we expect net revenue to be in
the range of $1.300 billion to $1.330 billion. Diluted earnings per
share are expected to be in the range of $1.05 to $1.10 for the
quarter and adjusted diluted earnings per share are expected to be
in the range of $1.10 to $1.15.
For 2021, we expect net revenue to be in the range of $5.825
billion to $5.905 billion. Diluted earnings per share are expected
to be in the range of $6.52 to $6.65 for the year and adjusted
diluted earnings per share are expected to be in the range of $6.73
to $6.86.
The guidance does not reflect potential future repurchases of
the Company's shares.
The guidance and outlook forward-looking statements made in this
press release are based on management's expectations as of the date
of this press release and does not incorporate future unknown
impacts from the spread of COVID-19. While most of the Company's
retail locations are currently open, the Company continues to
operate its distribution centers and retail locations with
restrictive and precautionary measures in place. These measures are
market dependent and can include restricted occupancy levels,
physical distancing, enhanced cleaning and sanitation, and reduced
operating hours. Further resurgences in COVID-19, including from
variants could cause additional restrictions, including temporarily
closing all or some of our retail locations again, result in lower
consumer demand, and cause disruption in our supply chain. The
Company undertakes no duty to update or to continue to provide
information with respect to any forward-looking statements or risk
factors, whether as a result of new information or future events or
circumstances or otherwise. Actual results and the timing of events
could differ materially from those anticipated in these
forward-looking statements as a result of risks and uncertainties,
including those stated below.
Conference Call Information
A conference call to discuss first quarter results is scheduled
for today, June 3, 2021, 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 and 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. The Company provides constant dollar changes in its
results to help investors understand the underlying growth rate of
net revenue excluding the impact of changes in foreign exchange
rates.
Adjusted income from operations, operating margin, income tax
expense, effective tax rates, net income, and diluted earnings per
share exclude items related to the MIRROR acquisition. We exclude
transaction, integration costs, the gain on lululemon's previous
investment in MIRROR, certain acquisition-related compensation
costs, and the related income tax effects of these items. We
believe these adjusted financial measures are useful to investors
as they provide supplemental information that enable evaluation of
the underlying trend in our operating performance, and enable a
more consistent comparison to our historical financial information.
Further, due to the finite and discrete nature of these costs, we
do not consider them to be normal operating expenses that are
necessary to operate the MIRROR business and we do not expect them
to recur beyond the expiry of the related vesting periods.
Management uses these adjusted financial measures and constant
currency metrics internally when reviewing and assessing financial
performance.
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 the Company's 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 the Company's 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: the Company's ability to maintain the value and
reputation of its brand; the current COVID-19 coronavirus pandemic
and related government, private sector, and individual consumer
responsive actions; its highly competitive market and increasing
competition; increasing product costs and decreasing selling
prices; its ability to anticipate consumer preferences and
successfully develop and introduce new, innovative and updated
products; the acceptability of its products to guests; its ability
to accurately forecast guest demand for its products; changes in
consumer shopping preferences and shifts in distribution channels;
its ability to expand internationally in light of its limited
operating experience and limited brand recognition in new
international markets; its ability to realize the potential
benefits and synergies sought with the acquisition of MIRROR; its
ability to manage its growth and the increased complexity of its
business effectively; its ability to successfully open new store
locations in a timely manner; seasonality; its reliance on and
limited control over third-party suppliers to provide fabrics for
and to produce its products; the operations of many of its
suppliers are subject to international and other risks; suppliers
or manufacturers not complying with its Vendor Code of Ethics or
applicable laws; its ability to deliver its products to the market
and to meet guest expectations if it has problems with its
distribution system; increasing labor costs and other factors
associated with the production of its products in South Asia and
South East Asia; its ability to safeguard against security breaches
with respect to its information technology systems; its compliance
with privacy and data protection laws; any material disruption of
its information systems; its ability to have technology-based
systems function effectively and grow its e-commerce business
globally; climate change, and related legislative and regulatory
responses; increased scrutiny regarding its environmental, social,
and governance, or sustainability responsibilities; an economic
recession, depression, or downturn or economic uncertainty in its
key markets; global economic and political conditions and global
events such as health pandemics; its ability to source and sell its
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; its ability
to comply with trade and other regulations; fluctuations in foreign
currency exchange rates; imitation by its competitors; its ability
to protect its intellectual property rights; conflicting trademarks
and the prevention of sale of certain products; its exposure to
various types of litigation; 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, its 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 the Company
undertakes 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
First Quarter
2021
2020
2019
Net revenue
$
1,226,465
$
651,962
$
782,315
Costs of goods sold
526,151
317,560
360,595
Gross profit
700,314
334,402
421,720
As a percent of net revenue
57.1
%
51.3
%
53.9
%
Selling, general and administrative
expenses
496,634
299,583
292,908
As a percent of net revenue
40.5
%
46.0
%
37.4
%
Amortization of intangible assets
2,195
23
—
Acquisition-related expenses
7,664
2,045
—
Income from operations
193,821
32,751
128,812
As a percent of net revenue
15.8
%
5.0
%
16.5
%
Other income (expense), net
227
1,174
2,379
Income before income tax expense
194,048
33,925
131,191
Income tax expense
49,092
5,293
34,588
Net income
$
144,956
$
28,632
$
96,603
Basic earnings per share
$
1.11
$
0.22
$
0.74
Diluted earnings per share
$
1.11
$
0.22
$
0.74
Basic weighted-average shares
outstanding
130,358
130,251
130,694
Diluted weighted-average shares
outstanding
130,984
130,803
131,337
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Unaudited; Expressed in thousands
May 2, 2021
January 31,
2021
May 3, 2020
ASSETS
Current assets
Cash and cash equivalents
$
1,179,739
$
1,150,517
$
823,006
Inventories
732,890
647,230
625,849
Prepaid and receivable income taxes
139,123
139,126
89,316
Other current assets
201,700
187,506
156,374
Total current assets
2,253,452
2,124,379
1,694,545
Property and equipment, net
774,685
745,687
659,265
Right-of-use lease assets
719,139
734,835
731,883
Goodwill and intangible assets, net
465,000
466,957
24,044
Deferred income taxes and other
non-current assets
117,555
113,357
92,049
Total assets
$
4,329,831
$
4,185,215
$
3,201,786
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
196,934
$
172,246
$
78,940
Accrued inventory liabilities
9,356
14,956
9,860
Other accrued liabilities
258,642
211,911
166,994
Accrued compensation and related
expenses
154,729
130,171
69,455
Current lease liabilities
168,145
166,091
144,646
Current income taxes payable
7,997
8,357
28,729
Unredeemed gift card liability
141,149
155,848
105,286
Other current liabilities
27,862
23,598
27,586
Total current liabilities
964,814
883,178
631,496
Non-current lease liabilities
616,917
632,590
639,242
Non-current income taxes payable
38,073
43,150
48,226
Deferred income tax liability
60,807
58,755
40,764
Other non-current liabilities
9,365
8,976
6,271
Stockholders' equity
2,639,855
2,558,566
1,835,787
Total liabilities and stockholders'
equity
$
4,329,831
$
4,185,215
$
3,201,786
lululemon athletica inc.
Condensed Consolidated Statements of Cash
Flows
Unaudited; Expressed in thousands
First Quarter
2021
2020
Cash flows from operating activities
Net income
$
144,956
$
28,632
Adjustments to reconcile net income to net
cash provided by operating activities
69,153
(149,875
)
Net cash provided by (used in) operating
activities
214,109
(121,243
)
Net cash used in investing activities
(85,464
)
(45,626
)
Net cash used in financing activities
(122,235
)
(90,587
)
Effect of exchange rate changes on
cash
22,812
(13,043
)
Increase (decrease) in cash and cash
equivalents
29,222
(270,499
)
Cash and cash equivalents, beginning of
period
1,150,517
1,093,505
Cash and cash equivalents, end of
period
$
1,179,739
$
823,006
lululemon athletica inc. Reconciliation of Non-GAAP
Financial Measures Unaudited; Expressed in thousands, except per
share amounts
Constant dollar changes in net revenue, and direct to consumer
net revenue
The below changes show the change for the first quarter of 2021
compared to the first quarter of 2020.
Net Revenue
Direct to Consumer Net
Revenue
Change
88
%
55
%
Adjustments due to foreign exchange rate
changes
(5
)
(5
)
Change in constant dollars
83
%
50
%
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 acquisition of MIRROR and its
related tax effects. Please refer to Note 3. Acquisition included
in Item 1 of Part I of our Report on Form 10-Q to be filed with the
SEC on or about June 3, 2021 for further information on these
adjustments.
First Quarter 2021
Income from Operations
Operating Margin
Income Tax Expense
Effective Tax Rate
Net Income
Diluted Earnings Per
Share
GAAP results
$
193,821
15.8
%
$
49,092
25.3
%
$
144,956
$
1.11
Transaction and integration costs
496
—
496
—
Acquisition-related compensation
7,168
0.6
7,168
0.05
Tax effect of the above
372
(0.8
)
(372
)
—
Adjusted results (non-GAAP)
$
201,485
16.4
%
$
49,464
24.5
%
$
152,248
$
1.16
First Quarter 2020
Income from Operations
Operating Margin
Income Tax Expense
Effective Tax Rate
Net Income
Diluted Earnings Per
Share
GAAP results
$
32,751
5.0
%
$
5,293
15.6
%
$
28,632
$
0.22
Transaction and integration costs
2,045
0.3
2,045
0.01
Tax effect of the above
—
(0.9
)
—
—
Adjusted results (non-GAAP)
$
34,796
5.3
%
$
5,293
14.7
%
$
30,677
$
0.23
Expected adjusted earnings per share
Second Quarter Fiscal
2021
Fiscal 2021
Expected diluted earnings per share
range
$1.05 to $1.10
$6.52 to $6.65
MIRROR integration and acquisition-related
costs, net of tax
$0.05
$0.21
Expected adjusted earnings per share range
(non-GAAP)
$1.10 to $1.15
$6.73 to $6.86
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
2nd Quarter 2020
489
17
—
506
3rd Quarter 2020
506
11
2
515
4th Quarter 2020
515
8
2
521
1st Quarter 2021
521
3
1
523
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
2nd Quarter 2020
1,692
65
—
1,757
3rd Quarter 2020
1,757
54
3
1,808
4th Quarter 2020
1,808
55
5
1,858
1st Quarter 2021
1,858
12
8
1,862
__________
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/20210603005932/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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