Revenue up 25% to $724 million
Comparable sales increase 20%, or 19% on a constant dollar basis
Diluted EPS of $0.71 for the second quarter
VANCOUVER, British Columbia–(BUSINESS WIRE)–Aug. 30, 2018– lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the second quarter ended July 29, 2018.
Glenn Murphy, Chairman of the Board, commented: “We are very pleased with the consistent performance of our business. On behalf of the Board, I want to welcome Calvin McDonald to lululemon and thank our management team for delivering these incredible results.”
The summary below provides both GAAP and adjusted non-GAAP financial measures. The adjusted financial measures exclude the costs incurred in connection with the restructuring of the Company’s ivivva operations in second quarter of fiscal 2017, and their related tax effects.
For the second quarter ended July 29, 2018:
- Net revenue was $723.5 million, an increase of 25% compared to the second quarter of fiscal 2017. On a constant dollar basis, net revenue increased 24%.
- Total comparable sales increased 20%, or increased 19% on a constant dollar basis.
- Comparable store sales increased 10%, or increased 10% on a constant dollar basis.
- Direct to consumer net revenue increased 48%, or increased 47% on a constant dollar basis. During the second quarter of fiscal 2017, we held an online warehouse sale. Excluding the impact of this sale, direct to consumer net revenue increased 66%, or increased 65% on a constant dollar basis.
- Gross profit was $396.2 million, an increase of 33% compared to the second quarter of fiscal 2017. Gross profit increased 32% compared to adjusted gross profit for the second quarter of fiscal 2017.
- Gross margin was 54.8%, an increase of 360 basis points compared to the second quarter of fiscal 2017. Gross margin increased 320 basis points compared to adjusted gross margin for the second quarter of fiscal 2017.
- Income from operations was $134.2 million, an increase of 95% compared to the second quarter of fiscal 2017. Income from operations increased 81% compared to adjusted income from operations for the second quarter of fiscal 2017.
- Operating margin was 18.5%, an increase of 670 basis points compared to the second quarter of fiscal 2017. Operating margin increased 570 basis points compared to adjusted operating margin for the second quarter of fiscal 2017.
- Income tax expense was $40.0 million compared to $20.8 million in the second quarter of fiscal 2017 and the effective tax rate was 29.5% compared to 29.9%. The adjusted effective tax rate in the second quarter of fiscal 2017 was 29.6%.
- Diluted earnings per share were $0.71 compared to $0.36 in the second quarter of fiscal 2017. Adjusted diluted earnings per share for the second quarter of fiscal 2017 were $0.39.
- The Company repurchased 3.4 million shares of its own common stock at an average cost of $121.08 per share.
The Company ended the second quarter of fiscal 2018 with $777.8 million in cash and cash equivalents compared to $721.2 million at the end of the second quarter of fiscal 2017. Inventories at the end of the second quarter of fiscal 2018 increased 24% to $392.7 million compared to $316.4 million at the end of the second quarter of fiscal 2017. The Company ended the quarter with 415 stores.
Stuart Haselden, Chief Operating Officer, commented: “We’re pleased to see the great results of Q2 across all parts of our business now extending into the current quarter. This ongoing success positions us to achieve our 2020 goals and beyond. Above all, we want to thank our educators and teams around the world who make this possible.”
Calvin McDonald, Chief Executive Officer, also noted: “I’m excited to work with the leadership team to build upon this considerable success. We have an incredible growth trajectory in front of us, given the strength of the brand and our people.”
Updated Outlook
For the third quarter of fiscal 2018, we expect net revenue to be in the range of $720 million to $730 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 $0.65 to $0.67 for the quarter. This guidance assumes 133.0 million diluted weighted-average shares outstanding and a 30% tax rate. The guidance does not reflect potential future repurchases of the Company’s shares or any adjustments which may be recognized in connection with the U.S. tax reform.
For the full fiscal 2018, we now expect net revenue to be in the range of $3.185 billion to $3.235 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 $3.45 to $3.53 for the full year. This guidance assumes 134.0 million diluted weighted-average shares outstanding and a 30% tax rate. The guidance does not reflect potential future repurchases of the Company’s shares or any adjustments which may be recognized in connection with the U.S. tax reform. Fiscal 2018 is a 53 week year.
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.
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.
