lululemon athletica inc. announces Second Quarter Fiscal 2019 Results

  • Revenue up 22 % to CAD 883 million
  • Comparable sales increase 15 %, or 17 % on a constant dollar basis
  • Diluted EPS of CAD 0.96 for the second quarter

lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the second quarter of fiscal 2019.

For the second quarter ended August 4, 2019:

  • Net revenue was CAD 883.4 million, an increase of 22 % compared to the second quarter of fiscal 2018. On a constant dollar basis, net revenue increased 23 %.
  • Total comparable sales increased 15 %, or increased 17 % on a constant dollar basis.
  • Comparable store sales increased 10 %, or increased 11 % on a constant dollar basis.
  • Direct to consumer net revenue increased 30 %, or increased 31 % on a constant dollar basis.
  • Direct to consumer net revenue represented 24.6 % of total net revenue compared to 23.1 % for the second quarter of fiscal 2018.
  • Gross profit was CAD 485.8 million, an increase of 23 % compared to the second quarter of fiscal 2018.
  • Gross margin was 55.0 %, an increase of 20 basis points compared to the second quarter of fiscal 2018.
  • Income from operations was CAD 168.0 million, an increase of 25 % compared to the second quarter of fiscal 2018.
  • Operating margin was 19.0 %, an increase of 50 basis points compared to the second quarter of fiscal 2018.
  • Income tax expense was CAD 44.8 million compared to CAD 40.0 million in the second quarter of fiscal 2018 and the effective tax rate was 26.4 % compared to 29.5 %.
  • Diluted earnings per share were CAD 0.96 compared to CAD 0.71 in the second quarter of fiscal 2018.
  • The Company repurchased 9.6 thousand shares of its own common stock at an average cost of CAD164.05 per share.

The Company ended the second quarter of fiscal 2019 with CAD 623.7 million in cash and cash equivalents compared to CAD 777.8 million at the end of the second quarter of fiscal 2018. Inventories at the end of the second quarter of fiscal 2019 increased 26% to CAD 494.3 million compared to CAD 392.7 million at the end of the second quarter of fiscal 2018. The Company ended the quarter with 460 stores.

Calvin McDonald, Chief Executive Officer, commented: “We’re pleased with the ongoing strength across our business. We continue to make progress in delivering against our Power of Three growth pillars – product innovation, omni-guest experience, and market expansion. Our success demonstrates the significant runway in front of lululemon and I’m grateful to our teams for bringing our vision to life.”

Updated Outlook

For the third quarter of fiscal 2019, we expect net revenue to be in the range of CAD 880 million to CAD 890 million based on a total comparable sales increase in the low teens on a constant dollar basis. Diluted earnings per share are expected to be in the range of CAD 0.90 to CAD 0.92 for the quarter. This guidance assumes 131 million diluted weighted-average shares outstanding and a 28 % tax rate. The guidance does not reflect potential future repurchases of the Company’s shares.

For the full fiscal 2019, we now expect net revenue to be in the range of CAD 3.800 billion to CAD 3.840 billion based on a total comparable sales increase in the low teens on a constant dollar basis. Diluted earnings per share are expected to be in the range of CAD4.63 to CAD4.70 for the full year, based on a 27.5 % effective tax rate. The guidance assumes 131 million diluted weighted-average shares outstanding. 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 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.

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. For the second quarter of fiscal 2019, the 13 weeks ended August 4, 2019 are compared to the 13 weeks ended August 5, 2018 rather than July 29, 2018.

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.

www.lululemon.com