lululemon athletica inc. Announces Fourth Quarter and Full Year Fiscal 2021 Results; Board of Directors Authorizes $1.0 Billion Stock Repurchase Program

March 29, 2022

ANCOUVER, British Columbia – 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.