lululemon athletica inc.
), the athletic apparel retailer reported net revenues in the first quarter ending on Aril 29 surged 53% to $285.7 million compared to $186.8 million in the same period last year. Comparable store sales increased 25%.
Net income in the quarter surged 36% to $47 million or 32 cents a diluted share compared to $33.5 million or 23 cents a share in the quarter a year ago.
First Quarter Financial Performance
- Our investment in increased inventory levels led to strong growth in earnings performance in the first quarter, as our spring styles sold well. In the first quarter of last year, we were very light in inventory because we were oversold in the fourth quarter of the prior year. One of our key goals for 2011 was to balance our inventory to meet the demand in order to focus our resources on innovation versus chasing product.
We announced during our last call that we entered 2012 with a strong inventory position to break the cycle of chase. This translated into a 53% increase in revenue to $285.7 million.
- The company continues to open new stores in the quarter. New stores openings included first store in Salt Lake City, Utah, Milwaukee, Wisconsin, Tampa, Florida. The company added London, UK showroom and launched Australian e-commerce site.
- Net revenues surged 53% from a year ago to $285.7 million and comparable store sales increased 25% on a constant dollar basis.
- The company added since first quarter of 2011 27 net new corporate owned stores in the U.S. plus 4 franchise stores that were reacquired last year, 4 ivivva stores in Canada and 6 stores in Australia and 1 in New Zealand.
There are now 127 stores in our comparable sale base, 41 are in Canada, including 2 ivivva, 75 in the U.S. and 11 in Australia.
- Direct to consumer revenue increased 179% to $24.7 million and the impact of foreign exchange lowered revenues by 0.9% to $1.8 million.
- Corporate-owned stores represented 80.1% of total revenue or $228.8 million versus 83.6% or $156.2 million in the first quarter of last year.
- Total revenue of corporate owned stores rose 80.1% to $228.8 million compared to 83.6% or $156.2 million in the same quarter of last year.
- Direct-to-consumer channel total revenue was 13.5% of total at $38.4 million compared to 7.4% to $13.8 million in the quarter a year ago.
- In the quarter the company added net new 27 corporate-owned stores in the U.S., reacquired 4 franchise stores, 4 ivivva stores in Canada, 6 stores in Australia and 1 in New Zealand.
- Other revenues in the quarter that includes wholesale showrooms, outlets and franchise stores were 6.4% or $18.5 million compared to 9% to $16.8 million in the quarter a year ago.
- Gross profit in the quarter decreased to 55% of net revenues to $157.3 million compared to 58.7% or $109.7 million in same quarter last year.
The gross margin declined in the quarter because of a prior year favorable non recurring adjustment of 140 basis points, product margin decline of 340 basis points on the increase in material and labor cost and inflation, and a more normalized rate of markdowns as a result of balanced inventory levels. These were partially offset by leverage on occupancy and depreciation which contributed to 110 basis points in improvement.
- SG&A expenses in the quarter was 29.4% of net revenues or $84.2 million compared to $58 million or 31% of net revenues a year ago quarter. The SG&A dollar increase of 45.1% because an increase in store labor and operating expenses associated with new stores, showrooms and growth at existing locations, and also an increase in store support center costs, admitting salaries, professional fees, management incentive based compensation and stock based compensation.
- During first quarter SG&A gained 160 basis points of leverage due primarily to e-commerce business, as the company lowered operating cost as a percentage of sales by in-sourcing strategic platform. Because of that, operating income in the quarter was 25.6% of net revenues or $73.1 million compared to 27.7% of net revenues or $51.7 million in the same quarter last year.
- The effective tax expense for the quarter was 36.5% to $27 million compared to 36.3% or $19.1 million in a year ago period.
- Net income in the quarter was $46.6 million or 32 cents a share compared to $33.4 million or 23 cents a share in the quarter a year ago period and weighted average diluted shares in the quarter 145.7 million compared to 144.9 million a year ago.