Lululemon Athletica Q2 revenues increase 14 percent

Lululemon Athletica said that for the second quarter ended July 31, 2016, its net revenue increased by 14 percent to 514.5 million dollars from 453 million dollars in the second quarter of fiscal 2015, or increased by 15 percent on a constant dollar basis. Total comparable sales, which includes comparable store sales and direct to consumer, increased by 4 percent, or by 5 percent on a constant dollar basis.

Commenting on the Q2 update, Laurent Potdevin, Lululemon's CEO, stated, “The second quarter demonstrated strong results as we delivered sales and EPS at the high-end of our guidance and saw an important inflection in our gross margin and earnings performance. Our progress in the second quarter, especially in gross margin and inventory, marks the beginning of our recovery in profitability and sustainable long term growth.”

Detailed review of the second quarter

Comparable store sales increased by 3percent, or by 4 percent on a constant dollar basis. Direct to consumer net revenue increased by 6 percent to 87.4 million dollars or by 7 percent on a constant dollar basis. Excluding the impact of online warehouse sale, the company said, direct to consumer net revenue would have increased by 16 percent.

Gross profit increased by 20 percent to 254.2 million dollars, and as a percentage of net revenue gross profit was 49.4 percent compared to 46.8 percent in the second quarter of fiscal 2015. Income from operations increased by 11percent to 74 million dollars and as a percentage of net revenue was 14.4 percent compared to 14.7 percent in the second quarter of fiscal 2015.

Diluted earnings per share were 0.39 dollar compared to 0.34 dollars in the second quarter of fiscal 2015. Excluding the tax and related interest adjustments, diluted earnings per share were 0.38 dollar for the quarter. The company ended the quarter with 379 stores.

Updates Q3 and FY16 outlook

For the third quarter of fiscal 2016, Lululemon Athletica expects net revenue to be in the range of 535 million dollars to 545 million dollars based on total comparable sales in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of 0.42 dollar to 0.44 dollar for the quarter.

For the full fiscal 2016, the company now expects net revenue to be in the range of 2.325 billion dollars to 2.350 billion dollars based on total comparable sales in the mid-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of 2.11 dollars to 2.19 dollars for the full year, or 2.07 dollars to 2.15 dollars normalized for the tax and related interest adjustments made during the first two quarters of fiscal 2016.

Picture:Lululemon