lululemon athletica inc. announces second quarter fiscal 2016 results
For the second quarter ended July 31, 2016 Canadian lululemon athletica presents the following highlights and key figures:
• Net revenue increased by 14 % to CAD 514.5 million from CAD 453.0 million in the second quarter of fiscal 2015, or increased by 15 % on a constant dollar basis.
• Total comparable sales, which includes comparable store sales and direct to consumer, increased by 4 %, or by 5 % on a constant dollar basis.
• Comparable store sales increased by 3 %, or by 4 % on a constant dollar basis.
• Direct to consumer net revenue increased by 6 % to CAD 87.4 million, or by 7% on a constant dollar basis. In the second quarter of fiscal 2015 we held an online warehouse sale. Excluding the impact of this online warehouse sale, direct to consumer net revenue would have increased by 16%.
• Gross profit increased by 20 % to CAD 254.2 million, and as a percentage of net revenue gross profit was 49.4 % compared to 46.8 % in the second quarter of fiscal 2015.
• Income from operations increased by 11 % to CAD 74.0 million from CAD 66.6 million in the second quarter of fiscal 2015, and as a percentage of net revenue was 14.4 % compared to 14.7 % of net revenue in the second quarter of fiscal 2015.
• Income tax expense was CAD 20.9 million, which included a net income tax recovery of CAD 1.9 million related to the Company’s transfer pricing arrangements and the associated plan to repatriate foreign earnings. In addition, there was a related net interest expense of CAD 0.3 million. The effective tax rate in the second quarter of fiscal 2016 was 28.1 % compared to 29.3 % in the second quarter of fiscal 2015. Excluding the above tax and related interest adjustments, the effective tax rate was 30.5% in the second quarter of fiscal 2016.
• Diluted earnings per share for the second quarter of fiscal 2016 were CAD 0.39 compared to CAD 0.34 in the second quarter of fiscal 2015. Excluding the above tax and related interest adjustments, diluted earnings per share were CAD 0.38 for the second quarter of fiscal 2016.
• During the second quarter of fiscal 2016, the Company repurchased 0.2 million shares of the Company’s common stock at an average cost of CAD 63.65 per share, completing our approved stock repurchase program.
The Company ended the second quarter of fiscal 2016 with CAD 535.3 million in cash and cash equivalents compared to CAD 541.3 million at the end of the second quarter of fiscal 2015. Inventories at the end of the second quarter of fiscal 2016 decreased by 1% to CAD 277.3 million compared to CAD 280.6 million at the end of the second quarter of fiscal 2015. The Company ended the quarter with 379 stores.
Laurent Potdevin, lululemon’s CEO, stated: “The second quarter demonstrated strong results as we delivered sales and EPS at the high-end of our guidance and saw an important inflection in our gross margin and earnings performance.”
Potdevin continued: “Our progress in the second quarter, especially in gross margin and inventory, marks the beginning of our recovery in profitability and sustainable long term growth.”
Updated Outlook
For the third quarter of fiscal 2016, we expect net revenue to be in the range of CAD 535 million to CAD 545 million based on total comparable sales in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of CAD 0.42 to CAD 0.44 for the quarter. This guidance assumes 137.5 million diluted weighted-average shares outstanding and a 30.5 % tax rate.
For the full fiscal 2016, we now expect net revenue to be in the range of CAD 2.325 billion to CAD 2.350 billion based on total comparable sales in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of CAD 2.11 to CAD 2.19 for the full year, or CAD 2.07 to CAD 2.15 normalized for the tax and related interest adjustments made during the first two quarters of fiscal 2016. This guidance assumes 137.5 million diluted weighted-average shares outstanding and a 28.7 % tax rate, or 30.5 % excluding the above tax and related interest adjustments.
lululemon athletica inc. is a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits, with products that create transformational experiences for people to live happy, healthy, fun lives. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback.