LULULEMON ATHLETICA INC.
EXECUTIVE BONUS PLAN
1. Purpose. This plan is intended to provide an incentive for our executives to help lululemon athletica inc. (the “Company”) achieve our annual performance objectives, to link their compensation to our business strategies and pay-for-performance philosophy, and to help us attract and retain the services of qualified and highly-skilled executives.
2. Plan Term. This plan will continue in effect until it is amended or terminated in accordance with the terms of this plan.
3. Administration. Subject to applicable law and regulation, the People, Culture and Compensation Committee of the board of directors of the Company, or another committee designated by the board of directors (the “Committee”), will have the sole discretion and authority to administer and interpret this plan. Subject to the express limitations of this plan, the Committee has the authority in its sole discretion to determine the time or times at which bonus payments are made, the selection of eligible executives, the determination of performance goals, form of payment, and all other terms of the bonus payment. The Committee has discretionary authority to interpret this plan, to make all factual determinations under this plan, to make all other determinations the Committee determines to be necessary or advisable for the administration of this plan, and to take all other actions the Committee determines to be necessary or desirable to administer this plan (the making of any such interpretations, and the taking of any such actions to be conclusive evidence of that determination). All interpretations, determinations, and actions, by the Committee will be final, conclusive, and binding upon all parties.
4. Eligibility. Employees eligible to participate in this plan include anyone serving the position of senior vice president and above, and any other senior officers of the Company designated by the Committee. The Company’s chief executive officer may recommend employees to be considered eligible to participate in the plan, but the Committee has sole discretion to determine eligible employees. Eligibility will cease upon termination of the participant’s employment, withdrawal of eligibility designation by the Committee, transfer to a position compensated otherwise than as provided in the plan, termination of the plan by the Company, or if the participant engages, directly or indirectly, in any activity which is competitive with any Company activity. If a Participant changes from an eligible position to an ineligible position, eligibility to participate in the plan will be at the discretion of the Committee.
5. Bonus Determinations.
(a) Performance Goals. The Committee may establish performance goals that relate to financial, operational or other performance of the Company or any of its subsidiaries or divisions, to individual performance objectives of the participant, or to any other performance goal established by the Committee in connection with a potential bonus payment (the “Performance Goals”). Performance Goals may relate to annual, semi-annual, quarterly or other performance periods established by the Committee, although it is generally expected that the Committee will establish annual performance periods under this plan. Following the completion of any performance period (at a time determined by the Committee in its sole discretion) the Committee will evaluate attainment of the Performance Goals. The Committee may revise or refine Performance Goals in its discretion.
(b) Bonus Formulas. Except as otherwise provided in this plan or determined by the Committee, any bonuses paid to participants under this plan will be based upon formulas that tie
those bonuses to the attainment of the Performance Goals. Formulas may include a target bonus amount that would be paid to a participant under the plan if 100% of the Performance Goals were met, which may be a percentage of the participant’s base cash salary, or according to any other formula or method established by the Committee. Notwithstanding the foregoing, the Company may pay bonuses (including discretionary bonuses) to participants under this plan based upon such other terms and conditions as the Committee may in its sole discretion determine.
6. Bonus Payouts.
(a) Unless otherwise determined by the Committee, bonuses paid under this plan will be made in a lump sum cash payment and in all events will be paid no later than the 15th day of the third calendar month following the end of the fiscal year in which the applicable performance period ended. The Committee is authorized to determine in its sole discretion the amount of any bonus payment to a plan participant, the percentage attainment of any applicable Performance Goals, and any other matter relating to the amount of a bonus payment. Except as otherwise provided in this plan or determined by the Committee, a bonus under this plan will be earned as of the end of the performance period and will be paid to the participant if, and only if, the participant remains an employee of the Company through the date on which the bonus payouts are made to participants under the plan, except in the case of termination due to disability or death. Any bonus payment to a participant whose employment terminated during a performance period due to disability or death will be made at the same time bonus payments are made to participants in such performance period generally.
(b) Except as otherwise determined by the Committee, the bonus payout will be appropriately prorated for any participant (1) who meets eligibility criteria and becomes a plan participant after the start of the performance period but before 80% of the performance period has elapsed, or (2) whose employment with the Company is terminated before the completion of the performance period because of disability or death. If the participant is on a leave of absence for a portion of the performance period, the Committee may reduce the participant’s bonus payout on a
prorated basis. Unless the Committee determines otherwise, prorations will be based on the number of full months during which the participant participated in the plan during the performance period, with credit given for a full month if the participant is eligible for 15 or more calendar days during that month. If a participant changes positions with the Company during the performance period, the Committee may in its discretion prorate the participant’s bonus payout by the number of months served in each position.
(c) All payments under this plan are subject to deduction by the Company of all applicable income and employment withholding taxes. The Company does not guarantee the tax treatment of any payments under this plan. By accepting a bonus payout under this plan, each participant acknowledges and agrees that the participant (1) is responsible for any taxes owing with respect to the payments and benefits to be provided under this plan, (2) has not relied on any tax advice provided by the Company in connection with the payments and benefits to be provided under this plan, and (3) has been advised to consult with an independent tax advisor regarding any questions concerning tax matters related to any such payments and benefits.
7. Clawback Policy. By accepting a bonus payout under this plan, each participant acknowledges and agrees that all bonus payouts under this plan are subject to the terms and conditions
of the Company’s Policy for Recoupment of Incentive Compensation, as such policy may be amended
from time to time, or any successor policy adopted by the board of directors.
8. Amendment and Termination. The board of directors of the Company may amend or terminate this plan at any time in its sole discretion.
9. Miscellaneous.
(a) Neither the Company nor any of its directors, officers, or other employees will be liable to any person for any action taken or omitted in connection with the administration of this plan unless attributable to that person’s own fraud or willful misconduct.
(b) Nothing contained in this plan and no action taken under the provisions of this plan will create or be construed to create a trust of any kind. Any liability of the Company to pay a bonus under this plan stems solely from the terms of the plan and is subject to the terms and conditions of the plan. Any interest of a participant in plan benefits is an unsecured claim against the general assets of the Company. No participant has any interest in any fund or in any specific asset of the Company by reason of any plan benefits. Accordingly, plan benefits are not secured by any trust, pledge, lien or encumbrance on any property of the Company or on the assets of any benefit trust. The Company intends that the plan be unfunded for tax purposes and for purposes of Title I of Employee Retirement Income Security Act of 1974, as amended, if applicable.
(c) This plan does not give any employee or participant a right to remain in the employ of the Company or affect the right of the Company to terminate the employment of any employee or participant at any time, with or without cause.
(d) The rights of a participant to plan benefits are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the participant, and any attempt to assign, pledge or encumber that interest will be void. To the extent requested by the Company, each participant and the participant’s spouse must acknowledge in writing that the plan benefits are non-transferable, including in the event of death or marital separation.
(e) The terms and conditions of this plan will inure to the benefit of and bind the Company and the participants, and their successors, assigns and personal representatives. This plan will not confer on any person other than the Company and any participant any rights or remedies hereunder.
(f) This plan together with any agreement of participation in the plan constitute the entire understanding and agreement with respect to the subject matter contained herein, and there are no agreements, understandings, restrictions, representations or warranties among any participant and the Company other than those as expressly provided herein.
(g) This plan will be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of law rules.
LULULEMON ATHLETICA INC. ANNOUNCES FOURTH QUARTER
AND FULL YEAR FISCAL 2021 RESULTS
BOARD OF DIRECTORS AUTHORIZES $1.0 BILLION STOCK REPURCHASE PROGRAM
Fourth quarter revenue increased 23% to $2.1 billion
Comparable sales increased 22%
Diluted EPS of $3.36, Adjusted EPS of $3.37
Vancouver, British Columbia - March 29, 2022 - lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the fourth quarter and fiscal year ended January 30, 2022.
Calvin McDonald, Chief Executive Officer, stated: "2021 was another successful year for lululemon, which speaks to the enduring strength of our brand and our ability to deliver sustained growth across the business. We are proud that we passed the $6 billion in annual revenue milestone for the first time, and successfully achieved our Power of Three growth target ahead of schedule. This was especially impressive given the challenging macro backdrop. We are entering the new year from a position of strength, which we’ll build upon to continue delivering for our guests and shareholders in the years to come."
We refer to the fiscal year ended January 30, 2022 as "2021", the fiscal year ended January 31, 2021 as "2020", and the fiscal year ended February 2, 2020 as 2019. The adjusted non-GAAP financial measures below exclude certain costs incurred in connection with the acquisition of MIRROR, and the related tax effects.
For the fourth quarter of 2021, compared to the fourth quarter of 2020:
•Net revenue increased 23% to $2.1 billion. On a constant dollar basis, net revenue increased 23%.
–Net revenue increased 21% in North America and increased 35% internationally.
•Total comparable sales increased 22%.
–Comparable store sales increased 32%.
–Direct to consumer net revenue increased 17%, or increased 16% on a constant dollar basis.
•Direct to consumer net revenue represented 49% of total net revenue compared to 52% for the fourth quarter of 2020.
•Gross profit increased 22% to $1.2 billion, and gross margin decreased 50 basis points to 58.1%.
•Income from operations increased 29% to $590.6 million. Adjusted income from operations increased 27% to $592.0 million.
•Operating margin increased 120 basis points to 27.7%. Adjusted operating margin increased 90 basis points to 27.8%.
•Income tax expense increased 23% to $156.2 million. The effective tax rate for the fourth quarter of 2021 was 26.4% compared to 27.8% for the fourth quarter of 2020. The adjusted effective tax rate was 26.4% for the fourth quarter of 2021 compared to 27.4% for the fourth quarter of 2020.
•Diluted earnings per share were $3.36 compared to $2.52 in the fourth quarter of 2020. Adjusted diluted earnings per share for the fourth quarter of 2021 were $3.37 compared to $2.58 in the fourth quarter of 2020.
•The Company opened 22 net new company-operated stores during the quarter, ending with 574 stores.
For 2021 compared to 2020:
•Net revenue increased 42% to $6.3 billion. On a constant dollar basis, net revenue increased 40%.
–Direct to consumer net revenue increased 22%, and increased 20% on a constant dollar basis.
–Company operated store net revenue increased 70%.
–Net revenue increased 40% in North America and increased 53% internationally.
•Direct to consumer net revenue represented 44% of total net revenue compared to 52% for 2020.
•Gross profit increased 46% to $3.6 billion, and gross margin increased 170 basis points to 57.7%.
•Income from operations increased 63% to $1.3 billion. Adjusted income from operations increased 62% to $1.4 billion.
•Operating margin increased 270 basis points to 21.3%. Adjusted operating margin increased 270 basis points to 22.0%.
•Income tax expense increased 56% to $358.5 million. The effective tax rate was 26.9% and 28.1% for 2021 and 2020, respectively. The adjusted effective tax rate was 26.2% for 2021 compared to 27.5% for 2020.
•Diluted earnings per share were $7.49 compared to $4.50 in 2020. Adjusted diluted earnings per share were $7.79 in 2021 compared to $4.70 in 2020.
•The Company opened 53 net new company-operated stores during the year, ending with 574 stores.
For the fourth quarter of 2021, compared to the fourth quarter of 2019:
•Net revenue increased by $731.6 million, or 52%, representing a two-year compound annual growth rate of 23%.
•Gross margin increased 10 basis points.
•Operating margin decreased 210 basis points. Adjusted operating margin decreased 200 basis points.
•Diluted earnings per share were $3.36 compared to $2.28 in the fourth quarter of 2019. Adjusted diluted earnings per share were $3.37 in the fourth quarter of 2021.
For 2021 compared to 2019:
•Net revenue increased by $2.3 billion, or 57%, representing a two-year compound annual growth rate of 25%.
•Gross margin increased 180 basis points.
•Operating margin decreased 100 basis points. Adjusted operating margin decreased 30 basis points.
•Diluted earnings per share were $7.49 compared to $4.93 in 2019. Adjusted diluted earnings per share were $7.79 in 2021.
Meghan Frank, Chief Financial Officer, stated: "Our results were driven by consistently strong performance across our products, channels, and regions. In addition, for both the fourth quarter and full year, we delivered revenue growth above our Power of Three goals, despite the continued impact of COVID-19 and global supply chain issues. We are pleased to see our momentum continue at the start of 2022 and are optimistic about our performance for the year ahead."
Stock repurchase program
During 2021 the Company repurchased 2.2 million shares of its own common stock at an average price of $369.16 per share for a total cost of $812.6 million.
As at January 30, 2022 the Company had $187.5 million of authorization remaining on its stock repurchase program. During the first quarter of fiscal 2022, the Company completed the remaining stock repurchases under this program.
On March 23, 2022, the board of directors approved a new stock repurchase program for up to $1.0 billion of the Company's common shares.
Balance sheet highlights
The Company ended 2021 with $1.3 billion in cash and cash equivalents compared to $1.2 billion at the end of 2020. It had $397.0 million of capacity under its committed revolving credit facility at the end of 2021.
Inventories at the end of 2021 increased by 49% to $966.5 million compared to $647.2 million at the end of 2020. On a number of units basis, inventory increased 33%.
Fiscal 2022 Outlook
For the first quarter of fiscal 2022, we expect net revenue to be in the range of $1.525 billion to $1.550 billion, representing growth of 24% to 26%. Diluted earnings per share are expected to be in the range of $1.38 to $1.43 for the quarter.
For fiscal 2022, we expect net revenue to be in the range of $7.490 billion to $7.615 billion, representing growth of 20% to 22%. Diluted earnings per share are expected to be in the range of $9.15 to $9.35 for the year.
The guidance does not reflect potential future repurchases of the Company's shares.
The guidance and outlook forward-looking statements made in this press release are based on management's expectations as of the date of this press release and does not incorporate future unknown impacts, including from the spread of COVID-19. While most of the Company's retail locations are currently open; further resurgences in COVID-19, including from variants, could cause additional restrictions, including temporarily closing all or some of our retail locations again, result in lower consumer demand, and cause further disruption in our supply chain. The Company undertakes no duty to update or to continue to provide information with respect to any forward-looking statements or risk factors, whether as a result of new information or future events or circumstances or otherwise. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of risks and uncertainties, including those stated below.
Conference Call Information
A conference call to discuss 2021 results is scheduled for today, March 29, 2022, at 4:30 p.m. Eastern time. Those interested in participating in the call are invited to dial 1-800-319-4610 or 1-604-638-5340, if calling internationally, approximately 10 minutes prior to the start of the call. A live webcast of the conference call will be available online at: http://investor.lululemon.com/events.cfm. A replay will be made available online approximately two hours following the live call for a period of 30 days.
About lululemon athletica inc.
lululemon athletica inc. (NASDAQ:LULU) is a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits, creating transformational products and experiences which enable people to live a life they love. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback. For more information, visit www.lululemon.com.
Comparable Store Sales and Total Comparable Sales
The Company believes that investors would typically find comparable store sales and total comparable sales useful in assessing the performance of its business. As the temporary store closures from COVID-19 have resulted in a significant number of stores being removed from its comparable store base during the first two quarters of 2020, the Company believes total comparable sales and comparable store sales on a full year basis are not currently representative of the underlying trends of its business. The Company does not believe these metrics are currently useful to investors in understanding performance, therefore it has not included these metrics for the full fiscal year in this press release.
Non-GAAP Financial Measures
Constant dollar changes and adjusted financial results are non-GAAP financial measures. A constant dollar basis assumes the average foreign currency exchange rates for the period remained constant with the average foreign currency exchange rates for the same period of the prior year. The Company provides constant dollar changes in its results to help investors understand the underlying growth rate of net revenue excluding the impact of changes in foreign currency exchange rates.
Adjusted income from operations, operating margin, income tax expense, effective tax rates, net income, and diluted earnings per share exclude items related to the MIRROR acquisition. We exclude transaction, integration costs, the gain on lululemon's previous investment in MIRROR, certain acquisition-related compensation costs, and the related income tax effects of these items. The acquisition-related compensation costs include accelerated expenses related to the transition of the former MIRROR Chief Executive Officer to an advisory role. We believe these adjusted financial measures are useful to investors as they provide supplemental information that enable evaluation of the underlying trend in our operating performance, and enable a more consistent comparison to our historical financial information. Further, due to the finite and discrete nature of these costs, we do not consider them to be normal operating expenses that are necessary to operate the MIRROR business
and we do not expect them to recur beyond the expiry of the related vesting periods. Management uses these adjusted financial measures and constant currency metrics internally when reviewing and assessing financial performance.
The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or with greater prominence to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the section captioned "Reconciliation of Non-GAAP Financial Measures" included in the accompanying financial tables, which includes more detail on the GAAP financial measure that is most directly comparable to each non-GAAP financial measure, and the related reconciliations between these financial measures.
Forward-Looking Statements:
This press release includes estimates, projections, statements relating to the Company's business plans, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "outlook," "believes," "intends," "estimates," "predicts," "potential" or the negative of these terms or other comparable terminology. These forward-looking statements also include the Company's guidance and outlook statements. These statements are based on management's current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation: the Company's ability to maintain the value and reputation of its brand; the current COVID-19 coronavirus pandemic and related government, private sector, and individual consumer responsive actions; its highly competitive market and increasing competition; increasing costs and decreasing selling prices; its ability to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products; the acceptability of its products to guests; its ability to accurately forecast guest demand for its products; changes in consumer shopping preferences and shifts in distribution channels; its ability to expand in light of its limited operating experience and limited brand recognition in new international markets and new product categories; its ability to realize the potential benefits and synergies sought with the acquisition of MIRROR; its ability to manage its growth and the increased complexity of its business effectively; its ability to successfully open new store locations in a timely manner; seasonality; disruptions of its supply chain; its reliance on and limited control over third-party suppliers to provide fabrics for and to produce its products; suppliers or manufacturers not complying with its Vendor Code of Ethics or applicable laws; its ability to deliver its products to the market and to meet guest expectations if it has problems with its distribution system; increasing labor costs and other factors associated with the production of its products in South Asia and South East Asia; its ability to safeguard against security breaches with respect to its technology systems; its compliance with privacy and data protection laws; any material disruption of its information systems; its ability to have technology-based systems function effectively and grow its e-commerce business globally; climate change, and related legislative and regulatory responses; increased scrutiny regarding its environmental, social, and governance, or sustainability responsibilities; an economic recession, depression, or downturn or economic uncertainty in its key markets; global economic and political conditions and global events such as health pandemics; its ability to source and sell its merchandise profitably or at all if new trade restrictions are imposed or existing trade restrictions become more burdensome; changes in tax laws or unanticipated tax liabilities; its ability to comply with trade and other regulations; fluctuations in foreign currency exchange rates; imitation by its competitors; its ability to protect its intellectual property rights; conflicting trademarks and patents and the prevention of sale of certain products; its exposure to various types of litigation; and other risks and uncertainties set out in filings made from time to time with the United States Securities and Exchange Commission and available at www.sec.gov, including, without limitation, its most recent reports on Form 10-K and Form 10-Q. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.
Contacts:
Investor Contact:
lululemon athletica inc.
Howard Tubin
1-604-732-6124
or
ICR, Inc.
Joseph Teklits/Caitlin Churchill
1-203-682-8200
Media Contact:
lululemon athletica inc.
Erin Hankinson
1-604-732-6124
or
Brunswick Group
Eleanor French
1-415-671-7676
lululemon athletica inc.
Condensed Consolidated Statements of Operations
Unaudited; Expressed in thousands, except per share amounts
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fourth Quarter | | Fiscal Year |
| | 2021 | | 2020 | | 2019 | | 2021 | | 2020 | | 2019 |
| Net revenue | | $ | 2,129,113 | | | $ | 1,729,550 | | | $ | 1,397,491 | | | $ | 6,256,617 | | | $ | 4,401,879 | | | $ | 3,979,296 | |
| Costs of goods sold | | 892,941 | | | 716,816 | | | 586,665 | | | 2,648,052 | | | 1,937,888 | | | 1,755,910 | |
| Gross profit | | 1,236,172 | | | 1,012,734 | | | 810,825 | | | 3,608,565 | | | 2,463,991 | | | 2,223,386 | |
| As a percent of net revenue | | 58.1 | % | | 58.6 | % | | 58.0 | % | | 57.7 | % | | 56.0 | % | | 55.9 | % |
| Selling, general and administrative expenses | | 641,959 | | | 544,831 | | | 394,316 | | | 2,225,034 | | | 1,609,003 | | | 1,334,247 | |
| As a percent of net revenue | | 30.2 | % | | 31.5 | % | | 28.2 | % | | 35.6 | % | | 36.6 | % | | 33.5 | % |
| Amortization of intangible assets | | 2,197 | | | 2,195 | | | 23 | | | 8,782 | | | 5,160 | | | 29 | |
| Acquisition-related expenses | | 1,460 | | | 7,802 | | | — | | | 41,394 | | | 29,842 | | | — | |
| Income from operations | | 590,556 | | | 457,905 | | | 416,487 | | | 1,333,355 | | | 819,986 | | | 889,110 | |
| As a percent of net revenue | | 27.7 | % | | 26.5 | % | | 29.8 | % | | 21.3 | % | | 18.6 | % | | 22.3 | % |
| Other income (expense), net | | 176 | | | (886) | | | 2,129 | | | 514 | | | (636) | | | 8,283 | |
| Income before income tax expense | | 590,732 | | | 457,018 | | | 418,616 | | | 1,333,869 | | | 819,350 | | | 897,393 | |
| Income tax expense | | 156,228 | | | 127,181 | | | 120,595 | | | 358,547 | | | 230,437 | | | 251,797 | |
| Net income | | $ | 434,504 | | | $ | 329,837 | | | $ | 298,021 | | | $ | 975,322 | | | $ | 588,913 | | | $ | 645,596 | |
| | | | | | | | | | | | |
| Basic earnings per share | | $ | 3.37 | | | $ | 2.53 | | | $ | 2.29 | | | $ | 7.52 | | | $ | 4.52 | | | $ | 4.95 | |
| Diluted earnings per share | | $ | 3.36 | | | $ | 2.52 | | | $ | 2.28 | | | $ | 7.49 | | | $ | 4.50 | | | $ | 4.93 | |
| Basic weighted-average shares outstanding | | 129,015 | | | 130,340 | | | 130,311 | | | 129,768 | | | 130,289 | | | 130,393 | |
| Diluted weighted-average shares outstanding | | 129,508 | | | 130,956 | | | 130,896 | | | 130,295 | | | 130,871 | | | 130,955 | |
lululemon athletica inc.
Condensed Consolidated Balance Sheets
Unaudited; Expressed in thousands
| | | | | | | | | | | | | | |
| | January 30, 2022 | | January 31, 2021 |
| ASSETS | | | | |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 1,259,871 | | | $ | 1,150,517 | |
| Inventories | | 966,481 | | | 647,230 | |
| Prepaid and receivable income taxes | | 118,928 | | | 139,126 | |
| Other current assets | | 269,573 | | | 187,506 | |
| Total current assets | | 2,614,853 | | | 2,124,379 | |
| Property and equipment, net | | 927,710 | | | 745,687 | |
| Right-of-use lease assets | | 803,543 | | | 734,835 | |
| Goodwill and intangible assets, net | | 458,179 | | | 466,957 | |
| Deferred income taxes and other non-current assets | | 138,193 | | | 113,357 | |
| Total assets | | $ | 4,942,478 | | | $ | 4,185,215 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | |
| Current liabilities | | | | |
| Accounts payable | | $ | 289,728 | | | $ | 172,246 | |
| Accrued liabilities and other | | 330,800 | | | 226,867 | |
| Accrued compensation and related expenses | | 204,921 | | | 130,171 | |
| Current lease liabilities | | 188,996 | | | 166,091 | |
| Current income taxes payable | | 133,852 | | | 8,357 | |
| Unredeemed gift card liability | | 208,195 | | | 155,848 | |
| Other current liabilities | | 48,842 | | | 23,598 | |
| Total current liabilities | | 1,405,334 | | | 883,178 | |
| Non-current lease liabilities | | 692,056 | | | 632,590 | |
| Non-current income taxes payable | | 38,074 | | | 43,150 | |
| Deferred income tax liability | | 53,352 | | | 58,755 | |
| Other non-current liabilities | | 13,616 | | | 8,976 | |
| Stockholders' equity | | 2,740,046 | | | 2,558,566 | |
| Total liabilities and stockholders' equity | | $ | 4,942,478 | | | $ | 4,185,215 | |
lululemon athletica inc.
Condensed Consolidated Statements of Cash Flows
Unaudited; Expressed in thousands
| | | | | | | | | | | | | | |
| | Fiscal Year |
| | 2021 | | 2020 |
| Cash flows from operating activities | | | | |
| Net income | | $ | 975,322 | | | $ | 588,913 | |
| Adjustments to reconcile net income to net cash provided by operating activities | | 413,786 | | | 214,423 | |
| Net cash provided by operating activities | | 1,389,108 | | | 803,336 | |
| Net cash used in investing activities | | (427,891) | | | (695,532) | |
| Net cash used in financing activities | | (844,987) | | | (80,788) | |
| Effect of foreign currency exchange rate changes on cash and cash equivalents | | (6,876) | | | 29,996 | |
| Increase in cash and cash equivalents | | 109,354 | | | 57,012 | |
| Cash and cash equivalents, beginning of year | | $ | 1,150,517 | | | $ | 1,093,505 | |
| Cash and cash equivalents, end of year | | $ | 1,259,871 | | | $ | 1,150,517 | |
lululemon athletica inc.
Reconciliation of Non-GAAP Financial Measures
Unaudited; Expressed in thousands, except per share amounts
Constant dollar changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue.
The below changes show the change for the fourth quarter of 2021 compared to fourth quarter of 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net Revenue | | Total Comparable Sales(1),(2) | | Comparable Store Sales(2) | | Direct to Consumer Net Revenue |
| Change | | 23 | % | | 22 | % | | 32 | % | | 17 | % |
| Adjustments due to foreign currency exchange rate changes | | — | | | — | | | — | % | | (1) | |
| Change in constant dollars | | 23 | % | | 22 | % | | 32 | % | | 16 | % |
__________
(1) Total comparable sales includes comparable store sales and direct to consumer net revenue.
(2) Comparable store sales reflects net revenue from company-operated stores that have been open for at least 12 full fiscal months, or open for at least 12 full fiscal months after being significantly expanded. Comparable store sales exclude sales from stores which have been temporarily relocated for renovations or have been temporarily closed.
The below changes show the change for 2021 compared to 2020.
| | | | | | | | | | | | | | |
| | Net Revenue | | Direct to Consumer Net Revenue |
| Change | | 42 | % | | 22 | % |
| Adjustments due to foreign currency exchange rate changes | | (2) | | | (2) | |
| Change in constant dollars | | 40 | % | | 20 | % |
Adjusted financial measures
The following tables reconcile adjusted financial measures with the most directly comparable measures calculated in accordance with GAAP. The adjustments relate to the acquisition of MIRROR, including accelerated expenses related to the transition of the former MIRROR Chief Executive Officer to an advisory role, and its related tax effects. Please refer to Note 6. Acquisition included in Item 8 of Part II of our Report on Form 10-K to be filed with the SEC on or about March 29, 2022 for further information on these adjustments.
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| | Fourth Quarter 2021 |
| | Income from Operations | | Operating Margin | | Income Tax Expense | | Effective Tax Rate | | Net Income | | Diluted Earnings Per Share |
| GAAP results | | $ | 590,556 | | | 27.7% | | $ | 156,228 | | | 26.4 | % | | $ | 434,504 | | | $ | 3.36 | |
| Transaction and integration costs | | 1,130 | | | 0.1 | | | | | | | 1,130 | | | 0.01 | |
| Acquisition-related compensation | | 330 | | | — | | | | | | | 330 | | | — | |
| Tax effect of the above | | | | | | — | | | — | | | — | | | — | |
| Adjusted results (non-GAAP) | | $ | 592,016 | | | 27.8 | % | | $ | 156,228 | | | 26.4 | % | | $ | 435,964 | | | $ | 3.37 | |
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| | Fiscal 2021 |
| | Income from Operations | | Operating Margin | | Income Tax Expense | | Effective Tax Rate | | Net Income | | Diluted Earnings Per Share |
| GAAP results | | $ | 1,333,355 | | | 21.3 | % | | $ | 358,547 | | | 26.9 | % | | $ | 975,322 | | | $ | 7.49 | |
| Transaction and integration costs | | 2,989 | | | — | | | | | | | 2,989 | | | 0.02 | |
| | | | | | | | | | | | |
| Acquisition-related compensation | | 38,405 | | | 0.7 | | | | | | | 38,405 | | | 0.29 | |
| Tax effect of the above | | | | | | 1,417 | | | (0.7) | | | (1,417) | | | (0.01) | |
| Adjusted results (non-GAAP) | | $ | 1,374,749 | | | 22.0 | % | | $ | 359,964 | | | 26.2 | % | | $ | 1,015,299 | | | $ | 7.79 | |
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| | Fourth Quarter 2020 |
| | Income from Operations | | Operating Margin | | Income Tax Expense | | Effective Tax Rate | | Net Income | | Diluted Earnings Per Share |
| GAAP results | | $ | 457,905 | | | 26.5% | | $ | 127,181 | | | 27.8 | % | | $ | 329,837 | | | $ | 2.52 | |
| Transaction and integration costs | | 285 | | | — | | | | | | | 285 | | | — | |
| Acquisition-related compensation | | 7,517 | | | 0.4 | | | | | | | 7,517 | | | 0.06 | |
| Tax effect of the above | | | | | | 270 | | | (0.4) | | | (270) | | | — | |
| Adjusted results (non-GAAP) | | $ | 465,707 | | | 26.9 | % | | $ | 127,451 | | | 27.4 | % | | $ | 337,369 | | | $ | 2.58 | |
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| | Fiscal 2020 |
| | Income from Operations | | Operating Margin | | Income Tax Expense | | Effective Tax Rate | | Net Income | | Diluted Earnings Per Share |
| GAAP results | | $ | 819,986 | | | 18.6 | % | | $ | 230,437 | | | 28.1 | % | | $ | 588,913 | | | $ | 4.50 | |
| Transaction and integration costs | | 10,548 | | | 0.2 | | | | | | | 10,548 | | | 0.08 | |
| Gain on existing investment | | (782) | | | — | | | | | | | (782) | | | (0.01) | |
| Acquisition-related compensation | | 20,076 | | | 0.5 | | | | | | | 20,076 | | | 0.15 | |
| Tax effect of the above | | | | | | 3,133 | | | (0.6) | | | (3,133) | | | (0.02) | |
| Adjusted results (non-GAAP) | | $ | 849,828 | | | 19.3 | % | | $ | 233,570 | | | 27.5 | % | | $ | 615,622 | | | $ | 4.70 | |
lululemon athletica inc.
Company-operated Store Count and Square Footage(1)
Square Footage Expressed in Thousands
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| | Number of Stores Open at the Beginning of the Quarter | | Number of Stores Opened During the Quarter | | Number of Stores Closed During the Quarter | | Number of Stores Open at the End of the Quarter |
| First Quarter | | 521 | | | 3 | | | 1 | | | 523 | |
| Second Quarter | | 523 | | | 11 | | | — | | | 534 | |
| Third Quarter | | 534 | | | 19 | | | 1 | | | 552 | |
| Fourth Quarter | | 552 | | | 23 | | | 1 | | | 574 | |
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| | | Total Gross Square Feet at the Beginning of the Quarter | | Gross Square Feet Added During the Quarter(2) | | Gross Square Feet Lost During the Quarter(2) | | Total Gross Square Feet at the End of the Quarter |
| First Quarter | | 1,858 | | | 12 | | | 8 | | | 1,862 | |
| Second Quarter | | 1,862 | | | 43 | | | — | | | 1,905 | |
| Third Quarter | | 1,905 | | | 99 | | | 2 | | | 2,002 | |
| Fourth Quarter | | 2,002 | | | 126 | | | 3 | | | 2,125 | |
__________
(1) Company-operated store count and square footage summary excludes retail locations operated by third parties under license and supply arrangements.
(2) Gross square feet added/lost during the quarter includes net square foot additions for company-operated stores which have been renovated or relocated in the quarter.
