Revenue surges 33% at lululemon athletica in Q2 FY'12

• Income from operations for the first two quarters increased 29% to $143.3 million, and as a percentage of net revenue was 25.2% as compared to 27.9% of net revenue in the same period of fiscal 2011.
• The effective tax rate for the first two quarters was 28.0% after an adjustment of $2.0 million, reversing taxes provided for in Q4 of fiscal 2011. This resulted from the finalization of management’s review of the tax impact of intercompany pricing agreements entered into in Q4 of fiscal 2011. Normalized for this adjustment, the tax rate for the first two quarters of fiscal 2012 was 29.3% compared to 36.0% in the first two quarters of fiscal 2011. The tax rate for the first two quarters of fiscal 2012 reflects the ongoing impact of the revised intercompany pricing agreements.
• Diluted earnings per share for the first two quarters of fiscal 2012 were $0.71 on net income of $103.9 million, compared to diluted earnings per share of $0.49 on net income of $71.8 million in the same period of fiscal 2011. First two quarters diluted earnings per share normalized for the tax adjustment were $0.70 and would have been $0.63 at our previously estimated effective tax rate of 36.5%.
• The company ended the second quarter of fiscal 2012 with $444.3 million in cash and cash equivalents compared to $264.7 million at the end of the second quarter of fiscal 2011. Inventory at the end of the second quarter of fiscal 2012 totaled $125.4 million compared to $88.9 million at the end of the second quarter of fiscal 2011. The company ended the quarter with 189 stores in North America and Australia.

Christine Day, lululemon’s CEO stated: “We continue to strive for the right balance between strong growth and maintaining our market leader focus on execution, innovation and investments in infrastructure and while doing so delivered another strong quarter.”

Updated Outlook

For the third quarter of fiscal 2012, we expect net revenue to be in the range of $300 million to $305 million based on a comparable-store sales percentage increase in the low to mid teens on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.34 to $0.36 for the quarter. This assumes 145.8 million diluted weighted-average shares outstanding and a 29.5% tax rate.

For the full fiscal 2012, we now expect net revenue to be in the range of $1.345 billion to $1.360 billion and diluted earnings per share are expected to be in the range of $1.76 to $1.81 for the full year. This assumes 145.8 million diluted weighted-average shares outstanding and a tax rate of 28.9%, which includes the effects of the $2.0 million adjustment to reverse taxes provided for in Q4 of fiscal 2011.

lululemon athletica is a yoga-inspired athletic apparel company that creates components for people to live a 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.

Lululemon Athletica