lululemon athletica inc 10-Q for FY2022 Q2

lululemon athletica inc. (LULU)

10-Q 2021-09-08 For: 2021-08-01

Added on April 07, 2026

About this 10-Q

lululemon athletica inc filed this 10-Q on September 8, 2021, covering the quarter ended August 1, 2021 (FY2022 Q2).

Headline figures

Quarter ended August 1, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.45B; up 60.7% from $902.94M a year earlier
Net income: $208.07M; up 139.7% from net income of $86.8M a year earlier
Diluted EPS: $1.59; up 140.9% from $0.66 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware			20-3842867
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


Large Accelerated Filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Income	4
	Consolidated Statements of Stockholders' Equity	5
	Consolidated Statements of Cash Flows	7
	Index for Notes to the Unaudited Interim Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6.	Exhibits	49

Signatures		50


	August 1, 2021		January 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	1,170,041	$	1,150,517
Accounts receivable	56,150		62,399
Inventories	789,836		647,230
Prepaid and receivable income taxes	117,807		139,126
Prepaid expenses and other current assets	141,473		125,107
	2,275,307		2,124,379
Property and equipment, net	806,387		745,687
Right-of-use lease assets	729,621		734,835
Goodwill	387,024		386,877
Intangible assets, net	75,690		80,080
Deferred income tax assets	6,564		6,731
Other non-current assets	124,505		106,626
	$	4,405,098	$	4,185,215
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	203,546	$	172,246
Accrued inventory liabilities	33,316		14,956
Other accrued liabilities	269,024		211,911
Accrued compensation and related expenses	150,331		130,171
Current lease liabilities	150,087		166,091
Current income taxes payable	13,743		8,357
Unredeemed gift card liability	137,021		155,848
Other current liabilities	24,286		23,598
	981,354		883,178
Non-current lease liabilities	644,734		632,590
Non-current income taxes payable	38,073		43,150
Deferred income tax liabilities	60,010		58,755
Other non-current liabilities	9,761		8,976
	1,733,932		1,626,649
Commitments and contingencies
Stockholders' equity
Undesignated preferred stock, $0.01 par value: 5,000 shares authorized; none issued and outstanding	—		—
Exchangeable stock, no par value: 60,000 shares authorized; 5,203 and 5,203 issued and outstanding	—		—
Special voting stock, $0.000005 par value: 60,000 shares authorized; 5,203 and 5,203 issued and outstanding	—		—
Common stock, $0.005 par value: 400,000 shares authorized; 124,644 and 125,150 issued and outstanding	623		626
Additional paid-in capital	381,737		388,667
Retained earnings	2,445,845		2,346,428
Accumulated other comprehensive loss	(157,039)		(177,155)
	2,671,166		2,558,566
	$	4,405,098	$	4,185,215


	Quarter Ended				Two Quarters Ended
	August 1, 2021		August 2, 2020		August 1, 2021		August 2, 2020
Net revenue	$	1,450,618	$	902,942	$	2,677,083	$	1,554,904
Cost of goods sold	607,932		413,441		1,134,083		731,001
Gross profit	842,686		489,501		1,543,000		823,903
Selling, general and administrative expenses	541,317		352,881		1,037,951		652,464
Amortization of intangible assets	2,195		747		4,390		770
Acquisition-related expenses	8,143		11,464		15,807		13,509
Income from operations	291,031		124,409		484,852		157,160
Other income (expense), net	96		(344)		323		830
Income before income tax expense	291,127		124,065		485,175		157,990
Income tax expense	83,053		37,264		132,145		42,557
Net income	$	208,074	$	86,801	$	353,030	$	115,433

Other comprehensive income (loss):
Foreign currency translation adjustment	(23,520)		54,300		20,116		(6,304)
Comprehensive income	$	184,554	$	141,101	$	373,146	$	109,129

Basic earnings per share	$	1.60	$	0.67	$	2.71	$	0.89
Diluted earnings per share	$	1.59	$	0.66	$	2.70	$	0.88
Basic weighted-average number of shares outstanding	130,007		130,245		130,187		130,248
Diluted weighted-average number of shares outstanding	130,490		130,799		130,742		130,802


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Quarter Ended August 1, 2021
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Shares	Par Value		Shares	Par Value
Balance as of May 2, 2021	5,203	5,203	$	—	125,069	$	625	$	364,743	$	2,408,006	$	(133,519)	$	2,639,855
Net income										208,074				208,074
Foreign currency translation adjustment												(23,520)		(23,520)

Stock-based compensation expense								15,289						15,289
Common stock issued upon settlement of stock-based compensation					88	—		5,218						5,218
Shares withheld related to net share settlement of stock-based compensation					(8)	—		(2,668)						(2,668)
Repurchase of common stock					(505)	(2)		(845)		(170,235)				(171,082)
Balance as of August 1, 2021	5,203	5,203	$	—	124,644	$	623	$	381,737	$	2,445,845	$	(157,039)	$	2,671,166


	Quarter Ended August 2, 2020
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Shares	Par Value		Shares	Par Value
Balance as of May 3, 2020	5,482	5,482	$	—	124,717	$	624	$	334,201	$	1,786,147	$	(285,185)	$	1,835,787
Net income										86,801				86,801
Foreign currency translation adjustment												54,300		54,300
Common stock issued upon exchange of exchangeable shares	(89)	(89)	—		89	—		—						—
Stock-based compensation expense								15,784						15,784
Common stock issued upon settlement of stock-based compensation					114	—		9,328						9,328
Shares withheld related to net share settlement of stock-based compensation					(3)	1		(899)						(898)

Balance as of August 2, 2020	5,393	5,393	$	—	124,917	$	625	$	358,414	$	1,872,948	$	(230,885)	$	2,001,102


	Two Quarters Ended August 1, 2021
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Shares	Par Value		Shares	Par Value
Balance as of January 31, 2021	5,203	5,203	$	—	125,150	$	626	$	388,667	$	2,346,428	$	(177,155)	$	2,558,566
Net income										353,030				353,030
Foreign currency translation adjustment												20,116		20,116

Stock-based compensation expense								30,221						30,221
Common stock issued upon settlement of stock-based compensation					412	2		9,711						9,713
Shares withheld related to net share settlement of stock-based compensation					(143)	(1)		(45,566)						(45,567)
Repurchase of common stock					(775)	(4)		(1,296)		(253,613)				(254,913)
Balance as of August 1, 2021	5,203	5,203	$	—	124,644	$	623	$	381,737	$	2,445,845	$	(157,039)	$	2,671,166


	Two Quarters Ended August 2, 2020
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Shares	Par Value		Shares	Par Value
Balance as of February 2, 2020	6,227	6,227	$	—	124,122	$	621	$	355,541	$	1,820,637	$	(224,581)	$	1,952,218
Net income										115,433				115,433
Foreign currency translation adjustment												(6,304)		(6,304)
Common stock issued upon exchange of exchangeable shares	(834)	(834)	—		834	4		(4)						—
Stock-based compensation expense								21,912						21,912
Common stock issued upon settlement of stock-based compensation					485	2		12,461						12,463
Shares withheld related to net share settlement of stock-based compensation					(155)	—		(30,957)						(30,957)
Repurchase of common stock					(369)	(2)		(539)		(63,122)				(63,663)
Balance as of August 2, 2020	5,393	5,393	$	—	124,917	$	625	$	358,414	$	1,872,948	$	(230,885)	$	2,001,102


	Two Quarters Ended
	August 1, 2021		August 2, 2020
Cash flows from operating activities
Net income	$	353,030	$	115,433
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	104,123		84,176

Stock-based compensation expense	30,221		21,912
Settlement of derivatives not designated in a hedging relationship	45,010		(13,538)
Changes in operating assets and liabilities:
Inventories	(137,364)		(138,194)
Prepaid and receivable income taxes	21,763		(39,860)
Prepaid expenses and other current assets	(8,337)		(56,381)
Other non-current assets	(5,487)		(20,430)
Accounts payable	28,232		35,967
Accrued inventory liabilities	18,091		25,322
Other accrued liabilities	47,403		53,868
Accrued compensation and related expenses	19,260		(49,037)
Current and non-current income taxes payable	456		43,926
Unredeemed gift card liability	(19,377)		(13,848)
Right-of-use lease assets and current and non-current lease liabilities	1,265		7,388
Other current and non-current liabilities	1,483		3,358
Net cash provided by operating activities	499,772		60,062
Cash flows from investing activities
Purchase of property and equipment	(144,494)		(104,723)
Settlement of net investment hedges	(46,999)		10,981
Acquisition, net of cash acquired	—		(452,581)
Other investing activities	(10,000)		1,000
Net cash used in investing activities	(201,493)		(545,323)
Cash flows from financing activities
Proceeds from settlement of stock-based compensation	9,713		12,463
Shares withheld related to net share settlement of stock-based compensation	(45,567)		(30,957)
Repurchase of common stock	(254,913)		(63,663)


Net cash used in financing activities	(290,767)		(82,157)
Effect of foreign currency exchange rate changes on cash and cash equivalents	12,012		(3,089)
Increase (decrease) in cash and cash equivalents	19,524		(570,507)
Cash and cash equivalents, beginning of period	$	1,150,517	$	1,093,505
Cash and cash equivalents, end of period	$	1,170,041	$	522,998


Note 1	Nature of Operations and Basis of Presentation	9
Note 2	Recent Accounting Pronouncements	10
Note 3	Acquisition	10
Note 4	Revolving Credit Facilities	10
Note 5	Stock-Based Compensation and Benefit Plans	11
Note 6	Fair Value Measurement	13
Note 7	Derivative Financial Instruments	14
Note 8	Earnings Per Share	16
Note 9	Supplementary Financial Information	16
Note 10	Segmented Information	18
Note 11	Net Revenue by Geography and Category	18
Note 12	Legal Proceedings and Other Contingencies	19


	Second Quarter				First Two Quarters
	2021		2020		2021		2020
	(in thousands)
Acquisition-related expenses:
Transaction and integration costs	$	1,035	$	7,201	$	1,531	$	9,246
Gain on existing investment	—		(782)		—		(782)
Acquisition-related compensation	7,108		5,045		14,276		5,045
	$	8,143	$	11,464	$	15,807	$	13,509

Income tax effects of acquisition-related expenses	$	(434)	$	(1,967)	$	(806)	$	(1,967)


	Stock Options			Performance-Based Restricted Stock Units			Restricted Shares			Restricted Stock Units			Restricted Stock Units (Liability Accounting)
	Number	Weighted-Average Exercise Price		Number	Weighted-Average Grant Date Fair Value		Number	Weighted-Average Grant Date Fair Value		Number	Weighted-Average Grant Date Fair Value		Number	Weighted-Average Fair Value
	(In thousands, except per share amounts)
Balance as of January 31, 2021	804	$	139.27	199	$	149.20	4	$	299.09	275	$	166.50	15	$	328.68
Granted	188	307.34		135	180.65		4	327.22		96	308.78		—	—
Exercised/released	104	93.59		166	100.89		4	299.09		138	135.08		—	—
Forfeited/expired	20	189.53		3	212.67		—	—		12	230.55		—	—
Balance as of August 1, 2021	868	$	180.00	165	$	222.30	4	$	327.22	221	$	244.47	15	$	400.17
Exercisable as of August 1, 2021	301	$	124.41


	First Two Quarters
	2021
Expected term	3.75 years
Expected volatility	39.32	%
Risk-free interest rate	0.50	%
Dividend yield	—	%


	August 1, 2021						January 31, 2021
	Gross Notional		Assets		Liabilities		Gross Notional		Assets		Liabilities
	(In thousands)
Derivatives designated as net investment hedges:
Forward currency contracts	$	1,010,000	$	13,845	$	—	$	985,000	$	—	$	18,099
Derivatives not designated in a hedging relationship:
Forward currency contracts	1,125,505		111		16,176		1,055,000		17,364		668
Net derivatives recognized on consolidated balance sheets:
Forward currency contracts			$	13,956	$	16,176			$	17,364	$	18,767


	August 1, 2021		January 31, 2021
	(In thousands)
Inventories:
Inventories, at cost	$	830,926	$	678,200
Provision to reduce inventories to net realizable value	(41,090)		(30,970)
	$	789,836	$	647,230


	August 1, 2021		January 31, 2021
	(In thousands)
Prepaid expenses and other current assets:
Prepaid expenses	$	105,641	$	82,164
Forward currency contract assets	13,956		17,364
Other current assets	21,876		25,579
	$	141,473	$	125,107
Property and equipment, net:
Land	$	76,029	$	74,261
Buildings	31,366		30,870
Leasehold improvements	623,074		583,305
Furniture and fixtures	118,598		117,334
Computer hardware	126,455		116,239
Computer software	476,690		427,313
Equipment and vehicles	19,228		17,105
Work in progress	108,998		69,847
Property and equipment, gross	1,580,438		1,436,274
Accumulated depreciation	(774,051)		(690,587)
	$	806,387	$	745,687
Other non-current assets:
Cloud computing arrangement implementation costs	$	82,150	$	74,631
Security deposits	23,707		23,154
Other	18,648		8,841
	$	124,505	$	106,626
Other accrued liabilities
Accrued freight and other operating expenses	$	140,783	$	97,335
Accrued duty	24,769		17,404
Sales return allowances	25,393		32,560
Sales tax collected	19,075		15,246
Accrued capital expenditures	17,639		8,653
Forward currency contract liabilities	16,176		18,766
Accrued rent	10,420		8,559
Other	14,769		13,388
	$	269,024	$	211,911


	August 1, 2021		Level 1		Level 2		Level 3		Balance Sheet Classification
	(In thousands)
Money market funds	$	605,059	$	605,059	$	—	$	—	Cash and cash equivalents

Term deposits	220,572		—		220,572		—		Cash and cash equivalents
Forward currency contract assets	13,956		—		13,956		—		Prepaid expenses and other current assets
Forward currency contract liabilities	16,176		—		16,176		—		Other current liabilities


	Second Quarter 2021						First Two Quarters 2021
	Net Revenue				Direct to Consumer Net Revenue		Net Revenue				Direct to Consumer Net Revenue
	(In thousands)		(Percentages)		(Percentages)		(In thousands)		(Percentages)		(Percentages)
Change	$	547,676	61	%	8	%	$	1,122,179	72	%	26	%
Adjustments due to foreign currency exchange rate changes	(40,339)		(5)		(4)		(73,730)		(5)	%	(4)	%
Change in constant dollars	$	507,337	56	%	4	%	$	1,048,449	67	%	22	%


Number of company-operated stores by country	August 1, 2021	January 31, 2021
United States	318	315
Canada	62	62
People's Republic of China(1)	63	55
Australia	30	31
United Kingdom	16	16
South Korea	9	7
Germany	7	7
New Zealand	7	7
Japan	6	6
Singapore	4	4
France	3	3
Malaysia	2	2
Sweden	2	2
Ireland	2	1
Netherlands	1	1
Norway	1	1
Switzerland	1	1
Total company-operated stores	534	521


Period(1)	Total Number of Shares Purchased(2)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
May 3, 2021 - May 30, 2021	126,219	$	319.68	126,219	$	375,825,940
May 31, 2021 - July 4, 2021	309,725	337.80		309,725	271,201,714
July 5, 2021 - August 1, 2021	69,573	375.15		69,573	245,101,151
Total	505,517			505,517


						lululemon athletica inc.

By:						/s/ MEGHAN FRANK
						Meghan Frank
						Chief Financial Officer
						(principal financial and accounting officer)