lululemon athletica inc today announced financial results for the thirteen weeks ended August 2, 2009.

For the thirteen weeks ended August 2, 2009:

• Net revenue increased 14% to $97.7 million from $85.5 million for the second quarter of fiscal 2008. Net revenue from corporate-owned stores was $85.1 million, an increase of 9% from $78.3 million for the second quarter of fiscal 2008, with a comparable-store sales decline of 2% on a constant-dollar basis compared to the second quarter of fiscal 2008.
• Gross profit as a percentage of net revenue decreased to 46.2% from 51.9% of net revenue in the second quarter of fiscal 2008.
• Income from operations was $14.3 million, or 14.7% of net revenue, compared to $15.5 million, or 18.2% of net revenue, in the second quarter of fiscal 2008.
• Diluted earnings per share was $0.13 on net income of $9.2 million, compared to diluted earnings per share of $0.16 on net income of $11.1 million in the second quarter of fiscal 2008.

For the twenty-six weeks ended August 2, 2009:

• Net revenue increased 10% to $179.4 million from $162.4 million for the same period of fiscal 2008. Net revenue from corporate-owned stores was $158.0 million, an increase of 7% from $147.7 million for the same period of fiscal 2008, with a comparable-store sales decline of 5% on a constant-dollar basis compared to the first two quarters of fiscal 2008.
• Gross profit as a percentage of net revenue decreased to 44.7% from 52.6% of net revenue in the first two quarters of fiscal 2008.
• Income from operations was $24.2 million, or 13.5% of net revenue, compared to $27.5 million, or 16.9% of net revenue, in the first two quarters of fiscal 2008.
• Diluted earnings per share was $0.22 on net income of $15.8 million, compared to diluted earnings per share of $0.27 on net income of $19.6 million in the first two quarters of fiscal 2008.

The Company ended the quarter with $83.8 million in cash and cash equivalents as compared to $56.8 million at the end of fiscal 2008. Inventory at the end of the quarter totaled $46.5 million as compared to $52.1 million at the end of fiscal 2008.

Christine Day, lululemon’s CEO stated: “At the halfway mark of 2009, we are very pleased with the improving sales momentum in our business, which we believe demonstrates the power of our brand as well as our innovative product offerings, effective market strategy and strength of our management team. Our strong community relationships and focus on healthy lives combined with a continuous flow of well designed, functional, high-quality merchandise is creating a justifiable purchase even to the cautious consumer.” Ms. Day continued, “We were also able to improve our gross margin sequentially over the first quarter. This rebound was a result of better same-store sales, our enhanced systems, and an operating model that is allowing us to operate with leaner inventory and therefore gain market share without resorting to markdowns.”

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Updated Guidance

For the third quarter of fiscal 2009 we expect comparable-store sales to be relatively flat on a constant-dollar basis compared to the third quarter of fiscal 2008. We anticipate reported net revenue to be in the range of $95 million to $100 million for the quarter, and diluted earnings per share in the range of $0.11 to $0.13 for the quarter. This assumes a tax rate of 35% and 70.6 million diluted weighted-average shares outstanding.

Conference Call Information

A conference call to discuss second quarter results is scheduled for today, September 10, 2009, at 9:00 AM Eastern Time. Investors interested in participating in the call are invited to dial (888) 417-8516 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.lululemon.com. The webcast will be accessible on our website for approximately 30 days after the call.

About lululemon athletica inc.

lululemon athletica (NASDAQ:LULU; TSX:LLL) is a yoga-inspired athletic apparel company that creates components for people to live longer, healthier and more fun lives. By producing products that help keep people active and stress free, lululemon believes that the world will be a better place. 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.

Non-GAAP Financial Measure

Constant-dollar net revenue changes, which exclude the impact of changes in foreign exchange rates, is not a U.S. Generally Accepted Accounting Principle (“GAAP”) performance measure. We provide constant-dollar net revenue changes because we use the measure to understand the underlying growth rate of revenue excluding the impact on a quarter by quarter basis of changes in foreign exchange rates, which are not under management’s direct control. We believe that disclosing net revenue changes on a constant-dollar basis is useful to investors because it enables them to better understand the level of growth of our business.

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