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Lululemon Athletica announces financial results

lululemon

Lululemon Athletica Inc. announced financial results for the second quarter of fiscal 2020.

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As a result of the COVID-19 pandemic, all of the company’s stores in North America, Europe, and certain countries in Asia Pacific were temporarily closed during the first quarter of fiscal 2020. The company began reopening its retail locations in these markets during the second quarter of fiscal 2020. As of 2nd August, 2020, 492 of its 506 company-operated stores were open.

Net revenue was $902.9 million inn nthe second quarter ended 2nd August, 2020, an increase of 2% compared to the second quarter of fiscal 2019. On a constant dollar basis, net revenue increased 3%. Company-operated stores net revenue was $287.2 million, a decrease of 51% compared to the second quarter of fiscal 2019. Direct to consumer net revenue was $554.3 million, an increase of 155% compared to the second quarter of fiscal 2019. On constant dollar basis, direct to consumer net revenue increased 157%.

Direct to consumer net revenue represented 61.4% of total net revenue compared to 24.6% for the second quarter of fiscal 2019. Gross profit was $489.5 million, an increase of 1% compared to the second quarter of fiscal 2019. Gross margin was 54.2%, a decrease of 80 basis points compared to the second quarter of fiscal 2019.

Income from operations was $124.4 million, a decrease of 26% compared to the second quarter of fiscal 2019. Adjusted income from operations decreased by 19% to $135.9 million. Operating margin was 13.8%, a decrease of 520 basis points compared to the second quarter of fiscal 2019. Adjusted operating margin was 15.0%, a decrease of 400 basis points.

Income tax expense was $37.3 million compared to $44.8 million in the second quarter of fiscal 2019 and the effective tax rate was 30.0% compared to 26.4% for the second quarter of fiscal 2019. The adjusted effective tax rate was 28.9% for the second quarter of fiscal 2020.

Diluted earnings per share were $0.66 compared to $0.96 in the second quarter of fiscal 2019. Adjusted diluted earnings per share were $0.74 for the second quarter of fiscal 2020.

The company ended the second quarter of fiscal 2020 with $523.0 million in cash and cash equivalents and the capacity under its committed revolving credit facilities was $697.7 million. The company had $623.7 million in cash and cash equivalents at the end of the second quarter of fiscal 2019. Inventories at the end of the second quarter of fiscal 2020 increased 36% to $672.8 million compared to $494.3 million at the end of the second quarter of fiscal 2019. The company ended the quarter with 506 stores.

Calvin McDonald, CEO of lululemon stated: “We are pleased with our overall business results for the second quarter, as lululemon increasingly lives into its Omni potential. As trends around the world are shifting to working and sweating from home with an increased focus on health and wellness, we believe 2020 is likely an inflection point for retail and for lululemon.”

SEE ALSO : Lululemon acquires Mirror

McDonald continued: “We are cautiously optimistic with regard to the second half of the year as we continue to navigate the uncertain environment.”

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