Continuing with its solid top-line performance along with
leveraged operating expenses,
Lululemon Athletica Inc.
(
LULU
), the leading yoga-inspired athletic apparel and accessories
retailer, yet again posted a better-than-expected quarterly result.
The company's recently reported fourth-quarter 2011 earnings of 51
cents per share surged 34.2% from the prior period, handily beating
the Zacks Consensus Estimate of 49 cents per share.
Quarter in detail
The company's 26% increase in comparable-store sales and 103.6%
rise in Direct-to-Consumer revenue resulted in 51.4% year-over-year
surge in fourth-quarter 2011 total revenue, climbing $371.5 million
from $245.4 million reported in the year-ago quarter. Moreover,
quarterly revenue also beats the Zacks Consensus Estimate of $360
million.
Gross profit during the quarter increased 45.7% to $209 million
from the prior period, reflecting a high double-digit growth in its
top line. However, gross margin contracted 220 basis points to
56.3% compared with 58.5% in the prior period, primarily due to
increased cost of goods sold as a percentage of total revenue.
Operating income increased 62.8% to $116.1 million compared with
$71.3 million a year ago while operating margin expanded 210 basis
points to 31.2%, reflecting operational efficiencies achieved by
the company.
Fiscal 2011, a synopsis
Fiscal 2011 was a great year for Lululemon, as the company
achieved $1 billion sales mark. With its continuous outstanding
quarterly performance throughout the fiscal, Lululemon was able to
achieve this landmark.
During the fiscal, Lululemon's total revenue jumped 40.6% to
$1000.8 million from the prior-period, beating the Zacks Consensus
Estimate of $987 million. The solid top-line performance was
primarily driven by an increase of 20% and 85.4% in comparable
sales and Direct-to-consumer revenue, respectively. Consequently,
the company's earnings grew approximately 49.4% to $1.27 per share
from the previous fiscal, surpassing the Zacks Consensus Estimate
of $1.24.
Balance Sheet
Cash and cash equivalents at the end of the fiscal were $409.4
million, an improvement of more than 29.5% from fiscal 2010 level
of $316.3 million. Stockholders' equity came in at $606.2 million.
Besides, the company is free from any long-term debts. Cash flow
from operating activities for the year came in at $203.6 million
compared with $180 million in the previous fiscal.
Management Guidance
Management estimates that existing store upgrades and new store
openings have the potential to generate net revenues of $265 to
$270 million for the first quarter of fiscal 2012. Comps are
expected to be in the low twenties for the reported quarter. Based
on these expectations, the company expects its earnings for the
first quarter of fiscal 2012 to be in the range of 28 to 29 cents
per share. The current Zacks Consensus Estimate stands at 29 cents
per share, in line with the company's higher guidance range.
For fiscal 2012, management expects revenue in the range of $1.3
billion to $1.325 billion. Based on this assumption, the company
anticipates earnings in between $1.50 and $1.57 per share for
fiscal 2012. Currently, the Zacks Consensus Estimate stands at
$1.51 per share, which is at the lower end of the company's
guidance range.
Our Take
We believe that Lululemon's strategic initiatives coupled with
e-commerce business will boost both its top and bottom lines.
Lululemon mainly competes with
Nike Inc.
(
NKE
) and
Under Armour Inc.
(
UA
). The company has a Zacks #1 Rank, which translates into a
short-term 'Strong Buy' rating. Currently, we are retaining our
long-term 'Outperform' recommendation on the stock.
LULULEMON ATHLT (
LULU
): Free Stock Analysis Report
NIKE INC-B (
NKE
): Free Stock Analysis Report
UNDER ARMOUR-A (
UA
): Free Stock Analysis Report
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