Lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the fourth quarter and fiscal year ended January 31, 2021.

Calvin McDonald, Chief Executive Officer, stated: “I’m proud of how we navigated this past year and delivered for our employees, guests and shareholders. Our continued growth demonstrates the strength of lululemon — before, during and as the pandemic subsides. We are still in the early innings of our growth, fueled by exciting innovations that create even more opportunity into the future. All of us on the leadership team have so much gratitude for our teams and their agility during these unprecedented times.”

We refer to 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 2020, compared to the fourth quarter of 2019:

   -- Net revenue increased 24% to $1.7 billion. On a constant dollar basis, 
      net revenue increased 22%. 
 
          -- Net revenue increased 21% in North America and increased 47% 
             internationally. 
 
   -- Total comparable sales increased 21%, or increased 20% on a constant 
      dollar basis. 
 
          -- Direct to consumer net revenue increased 94%, or increased 92% on 
             a constant dollar basis. 
 
          -- Comparable store productivity was 72%, or 71% on a constant dollar 
             basis, representing a comparable store sales decrease of 28%, or a 
             decrease of 29% on a constant dollar basis. 
 
   -- Direct to consumer net revenue represented 52% of total net revenue 
      compared to 33% for the fourth quarter of 2019. 
 
   -- Gross profit increased 25% to $1.0 billion, and gross margin increased 60 
      basis points to 58.6%. 
 
   -- Income from operations increased 10% to $457.9 million. Adjusted income 
      from operations increased 12% to $465.7 million. 
 
   -- Operating margin decreased 330 basis points to 26.5%. Adjusted operating 
      margin decreased 290 basis points to 26.9%. 
 
   -- Income tax expense increased 5% to $127.2 million. The effective tax rate 
      for the fourth quarter of 2020 was 27.8% compared to 28.8% for the fourth 
      quarter of 2019. The adjusted effective tax rate was 27.4% for the fourth 
      quarter of 2020. 
 
   -- Diluted earnings per share were $2.52 compared to $2.28 in the fourth 
      quarter of 2019. Adjusted diluted earnings per share for the fourth 
      quarter of 2020 were $2.58. 
 
   -- The Company opened six net new company-operated stores during the quarter, 
      ending with 521 stores.

For 2020 compared to 2019:

   -- Net revenue increased 11% to $4.4 billion. On a constant dollar basis, 
      net revenue increased 10%. 
 
          -- Direct to consumer net revenue increased 101%, and increased 101% 
             on a constant dollar basis. 
 
          -- Company operated store net revenue decreased 34%. 
 
          -- Net revenue increased 8% in North America and increased 31% 
             internationally. 
 
   -- Direct to consumer net revenue represented 52% of total net revenue 
      compared to 29% for 2019. 
 
   -- Gross profit increased of 11% to $2.5 billion, and gross margin increased 
      of 10 basis points to 56.0%. 
 
   -- Income from operations decreased 8% to $820.0 million. Adjusted income 
      from operations decreased 4% to $849.8 million. 
 
   -- Operating margin decreased 370 basis points to 18.6%. Adjusted operating 
      margin decreased 300 basis points to 19.3%. 
 
   -- Income tax expense decreased 8% to $230.4 million. The effective tax rate 
      was 28.1% for each of 2020 and 2019. The adjusted effective tax rate was 
      27.5% for 2020. 
 
   -- Diluted earnings per share were $4.50 compared to $4.93 in 2019. Adjusted 
      diluted earnings per share were $4.70 in 2020. 
 
   -- The Company repurchased 0.4 million shares of its own common stock at an 
      average cost of $172.70 per share in 2020. 
 
   -- The Company opened 30 net new company-operated stores during the year, 
      ending with 521 stores.

Meghan Frank, Chief Financial Officer, stated: “In response to the COVID-19 pandemic, our teams reacted quickly to ensure we met the evolving needs of our guests. We pulled forward investments in our direct-to-consumer channel, completed our first acquisition, and tightly managed expenses while also supporting our people. These measures contributed to our strong fourth quarter results, including growing revenue by 24%, and are helping fuel our even stronger top-line growth projections for 2021. I’d like to thank our teams around the globe for their dedication to lululemon and I’m confident in the long-term trajectory of our business.”

Balance sheet highlights

The Company ended 2020 with $1.2 billion in cash and cash equivalents compared to $1.1 billion at the end of 2019. It had $397.6 million of capacity under its committed revolving credit facility at the end of 2020. Inventories at the end of 2020 increased by 25% to $647.2 million compared to $518.5 million at the end of 2019.

Fiscal 2021 Outlook

For the first quarter of fiscal 2021, we expect net revenue to be in the range of $1.100 billion to $1.130 billion. Diluted earnings per share are expected to be in the range of $0.81 to $0.85 for the quarter and adjusted earnings per share are expected to be in the range of $0.86 to $0.90.

For fiscal 2021, we expect net revenue to be in the range of $5.550 billion to $5.650 billion. Diluted earnings per share are expected to be in the range of $6.10 to $6.25 for the year and adjusted earnings per share are expected to be in the range of $6.30 to $6.45.

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 from the spread of COVID-19. While most of the Company’s retail locations are currently open, tighter capacity restrictions and other precautionary measures are in place in most markets. 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 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.