lululemon athletica inc. (LULU) has reported a 28.47 percent rise in profit for the quarter ended Oct. 30, 2016. The company has earned $68.28 million, or $0.50 a share in the quarter, compared with $53.15 million, or $0.38 a share for the same period last year.
Revenue during the quarter grew 13.49 percent to $544.42 million from $479.69 million in the previous year period. Gross margin for the quarter expanded 428 basis points over the previous year period to 51.14 percent. Total expenses were 82.92 percent of quarterly revenues, down from 85.79 percent for the same period last year. This has led to an improvement of 287 basis points in operating margin to 17.08 percent.
Operating income for the quarter was $92.98 million, compared with $68.18 million in the previous year period.
Laurent Potdevin, lululemon's chief executive officer, stated: "Our third quarter results demonstrated strong execution across all areas of our business as we delivered continued topline momentum, outperformed in gross margin and inflected meaningfully in EPS. This success is a result of our team's ongoing effort and commitment to delivering on our long term strategies." Mr. Potdevin continued: "As we entered the fourth quarter, we experienced mixed sales results that have since improved. I am inspired by the team's response and passion towards making this another successful holiday season, and I am confident that we will continue to deliver an unparalleled guest experience across all our channels and regions around the globe."
For financial year 2016, lululemon athletica inc. projects revenue to be in the range of $2,320 million to $2,340 million. The company forecasts diluted earnings per share to be in the range of $2.18 to $2.23.
For the fourth-quarter 2016, lululemon athletica inc. projects revenue to be in the range of $765 million to $785 million. The company forecasts diluted earnings per share to be in the range of $0.96 to $1.01.
Operating cash flow improves significantly
lululemon athletica inc. has generated cash of $97.33 million from operating activities during the nine month period, up 275.22 percent or $71.39 million, when compared with the last year period. The company has spent $106.17 million cash to meet investing activities during the nine month period as against cash outgo of $108.06 million in the last year period.
The company has spent $23.96 million cash to carry out financing activities during the nine month period as against cash outgo of $167.45 million in the last year period.
Cash and cash equivalents stood at $480.39 million as on Oct. 30, 2016, up 19.07 percent or $76.94 million from $403.45 million on Nov. 01, 2015.
Working capital increases
lululemon athletica inc. has recorded an increase in the working capital over the last year. It stood at $810.20 million as at Oct. 30, 2016, up 12.50 percent or $90.03 million from $720.18 million on Nov. 01, 2015. Current ratio was at 4.81 as on Oct. 30, 2016, up from 4.46 on Nov. 01, 2015.
Cash conversion cycle (CCC) has decreased to 61 days for the quarter from 114 days for the last year period. Days sales outstanding went down to 1 days for the quarter compared with 2 days for the same period last year.
Days inventory outstanding has decreased to 62 days for the quarter compared with 114 days for the previous year period. At the same time, days payable outstanding was almost stable at 3 days for the quarter, when compared with the previous year period.
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