Lululemon athletica inc. announces third quarter fiscal 2013 results
Vancouver, british colombia--(business wire)--lululemon athletica inc. [nasdaq:lulu] today announced financial results for the third quarter ended november 3, 2013. for the thirteen weeks ended november 3, 2013: net revenue for the quarter increased 20% to $379.9 million from $316.5 million in the third quarter of fiscal 2012. comparable stores sales for the third quarter increased by 5% on a constant dollar basis. direct to consumer revenue increased 37% to $62.0 million, or 16.3% of total company revenues, in the third quarter of fiscal 2013, an increase from 14.3% of total company revenues in the third quarter of fiscal 2012. gross profit for the quarter increased 17% to $204.6 million, and as a percentage of net revenue gross profit decreased to 53.9% for the quarter from 55.4% in the third quarter of fiscal 2012. income from operations for the quarter increased 14.6% to $92.3 million, and as a percentage of net revenue was 24.3% compared to 25.5% of net revenue in the third quarter of fiscal 2012. the tax rate for the quarter was 29.5% compared to 30.1% a year ago. diluted earnings per share for the quarter were $0.45 on net income of $66.1 million, compared to diluted earnings per share of $0.39 on net income of $57.3 million in the third quarter of fiscal 2012. for the thirty-nine weeks ended november 3, 2013: net revenue for the first three quarters of fiscal 2013 increased 21% to $1,070.2 million from $884.9 million in the same period of fiscal 2012. comparable stores sales for the first three quarters of fiscal 2013 increased by 7% on a constant dollar basis. direct to consumer revenue increased 39% to $165.3 million, or 15.5% of total company revenues, in the first three quarters of fiscal 2013, an increase from 13.4% of total company revenues in the first three quarters of fiscal 2012. gross profit for the first three quarters of fiscal 2013 increased 15% to $561.3 million, and as a percentage of net revenue gross profit was 52.4% for the first three quarters as compared to 55.2% in the same period of fiscal 2012. income from operations for the first three quarters of fiscal 2013 increased 6% to $237.2 million, and as a percentage of net revenue was 22.2% as compared to 25.3% of net revenue in the same period of fiscal 2012. the effective tax rate for the first three quarters of fiscal 2013 was 29.7% compared to 28.7% a year ago. diluted earnings per share for the first three quarters of fiscal 2013 were $1.16 on net income of $169.9 million, compared to diluted earnings per share of $1.11 on net income of $161.2 million the same period of fiscal 2012. the company ended the third quarter of fiscal 2013 with $600.7 million in cash and cash equivalents compared to $439.4 million at the end of the third quarter of fiscal 2012. inventory at the end of the third quarter of fiscal 2013 totaled $206.2 million compared to $164.7 million at the end of the third quarter of fiscal 2012. the company ended the quarter with 247 stores in north america and australia. christine day, lululemon's ceo, stated: "we are proud of our third quarter results, with sales in line with our expectation and earnings ahead of our guidance and rebounding to a double digit growth rate." ms. day continued: "this so far has been a year of challenges, learning, and growth for lululemon, and while our outlook for the fourth quarter is being impacted by both macro and execution issues, i believe that the investments we are making in the business combined with the team in place create a strong platform for growth in the years ahead." updated outlook for the fourth quarter of fiscal 2013, we expect net revenue to be in the range of $535 million to $540 million based on flat comparable-store sales on a constant-dollar basis. diluted earnings per share are expected to be in the range of $0.78 to $0.80 for the quarter. this assumes 146.0 million diluted weighted-average shares outstanding and a tax rate of 30.0%. for the full fiscal 2013, we now expect net revenue to be in the range of $1.605 billion to $1.610 billion and diluted earnings per share are expected to be in the range of $1.94 to $1.96 for the full year. this assumes 146.0 million diluted weighted-average shares outstanding and a tax rate of 30.0%. conference call information a conference call to discuss third quarter results is scheduled for today, december 12, 2013, at 9:00 a.m. est. those interested in participating in the call are invited to dial 1-877-303-3203 approximately 10 minutes prior to the start of the call. the conference call will also be webcast live at www.lululemon.com. the webcast will be accessible on our website for approximately 30 days after the call. about lululemon athletica inc. lululemon athletica (nasdaq:lulu) is a yoga-inspired athletic apparel company that creates components for people to live long, healthy and fun lives. by producing products that help keep people active and stress free, lululemon believes that the world will be a better place. 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 measure constant-dollar net revenue changes, which exclude the impact of changes in foreign exchange rates, is not a united states generally accepted accounting principle (“gaap”) performance measure. we provide constant-dollar net revenue changes because we use the measure to understand the underlying growth rate of revenue excluding the impact on a quarter-by-quarter basis of changes in foreign exchange rates, which are not under management’s direct control. we believe that disclosing net revenue changes on a constant-dollar basis is useful to investors because it enables them to better understand the level of growth of our business. the presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with gaap. for more information on this non-gaap financial measure, please see the table captioned “reconciliation of non-gaap financial measure – constant dollar changes” included in the accompanying financial tables, which includes more detail on the gaap financial measure that is most directly comparable to non-gaap financial measures and the related reconciliations between these financial measures. forward-looking statements: this press release contains “forward-looking statements” within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934 that involve risks, uncertainties and assumptions, such as statements regarding the effect of shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards, the duration of any shortage of products available for sale in our stores or for delivery to guests or our ability to obtain replacement products in a timely manner, any expected loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs, and our future financial condition or results of operations. 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 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 reliance on and limited control over third-party suppliers to provide fabrics for and to produce our products; negative publicity regarding any of our products or our the production methods of any of our suppliers or manufacturers; the effects of shipments of products that fail to comply with our technical specifications or that fail to conform to our quality standards; the effects of a shortage of products available for sale in our stores or for delivery to guests; an economic downturn or economic uncertainty in our key markets; increasing product costs and decreasing selling prices; our inability to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products; our inability to accurately forecast customer demand for our products; our inability to manage our growth and the increased complexity of our business effectively; the fluctuating costs of raw materials; our highly competitive market and increasing competition; an unforeseen disruption of our information systems; our inability to deliver our products to the market and to meet customer expectations due to problems with our distribution system; our inability 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 china; our inability to successfully open new store locations in a timely manner; our failure to maintain the value and reputation of our brand; our failure to comply with laws related to our human resources policies or other procedures; our failure to comply with trade and other regulations; our search for a new ceo and the possibility of losing the services of other key personnel; our competitors manufacturing and selling products based on our fabrics and manufacturing technology at lower prices than we can; our failure to protect our intellectual property rights; 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 the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. condensed consolidated statements of operations expressed in thousands, except per share amounts lululemon athletica inc. condensed consolidated balance sheets expressed in thousands condensed consolidated statements of cash flows expressed in thousands reconciliation of non-gaap financial measure constant-dollar changes (unaudited) store count and square footage1 thirty-nine weeks ended november 3, 2013 square footage expressed in thousands 1 store count and square footage summary includes corporate-owned stores which are branded lululemon athletica and ivivva athletica. 2 number of stores opened during the quarter that are branded lululemon athletica and ivivva athletica. 3 gross square feet added/lost during the quarter includes net square foot additions for corporate-owned stores which have been renovated or relocated in the quarter.
