lululemon athletica inc. announces third quarter fiscal 2016 Results
lululemon athletica inc. announced third quarter Fiscal 2016 Results and Board of Directors authorizes USD 100 Million stock Repurchase Programme
For the third quarter ended October 30, 2016:
• Net revenue increased by 13 % to USD 544.4 million from USD 479.7 million in the third quarter of fiscal 2015.
• Total comparable sales, which includes comparable store sales and direct to consumer, increased by 7 %.
• Comparable store sales increased by 4 %.
• Direct to consumer net revenue increased by 16 % to USD 104.0 million.
• Gross profit increased by 24 % to USD 278.4 million, and as a percentage of net revenue gross profit was 51.1 % compared to 46.9 % in the third quarter of fiscal 2015.
• Income from operations increased by 36 % to USD 93.0 million from USD 68.2 million in the third quarter of fiscal 2015, and as a percentage of net revenue was 17.1 % compared to 14.2 % of net revenue in the third quarter of fiscal 2015.
• Income tax expense increased to USD 25.3 million from USD 12.1 million in the third quarter of fiscal 2015, and the effective tax rate was 27.0 % compared to 18.6 %. Excluding certain tax and related interest adjustments, the effective tax rate was 31.3 % compared to 28.8 % in the third quarter of fiscal 2015.
• Diluted earnings per share for the third quarter of fiscal 2016 were USD 0.50 compared to USD 0.38 in the third quarter of fiscal 2015. Excluding certain tax and related interest adjustments, diluted earnings per share were USD 0.47 for the third quarter of fiscal 2016 compared to USD 0.35 for the third quarter of fiscal 2015.
The Company ended the third quarter of fiscal 2016 with USD 480.4 million in cash and cash equivalents compared to USD 403.4 million at the end of the third quarter of fiscal 2015. Inventories at the end of the third quarter of fiscal 2016 increased by 2 % to USD 364.5 million compared to USD 357.8 million at the end of the third quarter of fiscal 2015. The Company ended the quarter with 389 stores.
The Company also announced that its board of directors has approved a stock repurchase programme for up to USD 100 million of its common shares in the open market at prevailing market prices. The timing and actual number of common shares to be repurchased will depend upon market conditions and other factors, in accordance with Securities and Exchange Commission requirements. The stock repurchase programme is intended to create shareholder value by making opportunistic repurchases during periods of favourable market conditions. Shares may be repurchased from time to time on the open market, through block trades or otherwise. Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.
Laurent Potdevin, lululemon’s CEO, stated: “Our third quarter results demonstrated strong execution across all areas of our business as we delivered continued top-line momentum, outperformed in gross margin and inflected meaningfully in EPS. This success is a result of our team’s ongoing effort and commitment to delivering on our long term strategies.”
Potdevin continued: “As we entered the fourth quarter, we experienced mixed sales results that have since improved. I am inspired by the team’s response and passion towards making this another successful holiday season, and I am confident that we will continue to deliver an unparalleled guest experience across all our channels and regions around the globe.”
Updated Outlook
For the fourth quarter of fiscal 2016, we expect net revenue to be in the range of USD 765 million to USD 785 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 USD 0.96 to USD 1.01 for the quarter. This guidance assumes 137.3 million diluted weighted-average shares outstanding and a 31.2 % tax rate.
For the full fiscal 2016, we now expect net revenue to be in the range of USD 2.320 billion to USD 2.340 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 USD 2.18 to USD 2.23 for the full year, or USD 2.11 to USD 2.16 normalized for the tax and related interest adjustments made during the first three quarters of fiscal 2016. This guidance assumes 137.3 million diluted weighted-average shares outstanding and a 28.2 % tax rate, or 30.9 % excluding the above tax and related interest adjustments.
lululemon athletica inc. is a Canadian 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.