Annual Report | 2023
We also accelerated our eorts to increase consideration for lululemon through global
brand campaigns and activations. For example, in Los Angeles, we hosted a Dupe Swap
event, where about 50% of the guests who traded in product dupes were new to our
brand. And in China Mainland, our World Mental Health Day activations brought
in over 9,000 participants across six cities.
We believe our community-building approach resonates across geographies,
generations, and cultures, and led to gains in brand awareness throughout key growth
markets around the world over the past year – the US increased from 25% to 31%, and
China Mainland increased from 9% to 14%. Relative to peers, our brand awareness
globally represents an opportunity for lululemon. We believe our runway for growth is
substantial, and I am optimistic about the future as we continue to expand our business.
Our Impact
We are committed to advancing our Impact Agenda goals and multi-year strategies for
the wellbeing of people and the planet. This work supports our growth strategy as a
critical business function, as our company continues to grow and serve more guests and
communities around the world.
For our people, we are committed to our goals of supporting physical, mental, and social
wellbeing for all, and creating environments that are equitable, inclusive, and welcoming
for every person within our global collective. We continued to advance our Inclusion,
Diversity, Equity, and Action (IDEA) commitments across our business and invest in the
wellbeing of the people who make our products.
We also released lululemon’s third annual Global Wellbeing Report uncovering the state of
wellbeing around the world, and announced the formation of our Mental Wellbeing Global
Advisory Board to help deepen the impact of wellbeing initiatives across our industry. And,
through our lululemon Centre for Social Impact, we expanded our partnerships with global
and community-led wellbeing organizations to accelerate their work, investing a total of
$44.8 million to date.
1
For our planet, we are on a journey to contribute to a climate-stable future through our
products and actions. We believe sustainable innovation will play a critical role, and we
continue to advance our material innovation through strategic industry partnerships, as we
know collaboration is essential to achieving a circular ecosystem and helping to address
global challenges. Looking to the future, we remain focused on driving innovations across
our business that contribute to supporting the health of our planet.
In Closing
On behalf of myself and the entire leadership team, I want to express our sincere gratitude
to the people across lululemon who champion our brand every day and made our strong
results possible.
To our shareholders, thank you for your continued support. As we drive the business
forward, we will remain agile and continue to adapt to all that is around us. My confidence
in our leadership and our people remains high, as we have consistently demonstrated the
strength and resilience of our brand.
We are pleased with our momentum and know that we remain in the early innings of our
growth story. We recognize the significant opportunity in front of us to elevate lululemon
to the next level around the world in 2024 and beyond, and I remain excited and energized
for what lies ahead for our brand.
Calvin McDonald
Chief Executive Oicer
In 2023, we celebrated our 25th anniversary and our teams continued to deliver strong
and balanced results. As our product innovations, guest experiences, and market
expansions connected us with our guests and communities, we saw growth across
each of our categories, channels, and regions, and ended the year with $9.6 billion in
net revenue, representing a year-over-year increase of 19%.
I am grateful to our teams around the world for driving our performance and our goals to
advance the wellbeing of people and the planet through our Impact Agenda. Community
has been at the core of lululemon since day one, and we believe the deep, genuine
connections across our global collective are a true dierentiator for our brand.
Our Growth Pillars
We remain committed to our Power of Three ×2 growth plan, which is grounded in our
goals to double our men’s business, double our digital business, and quadruple our
international business – to ultimately double our revenue from 2021 levels to $12.5 billion
by 2026. In 2023, we advanced our plan with progress across each of our three growth
pillars, and I am proud of all that we achieved as we continued to navigate a dynamic
consumer and macro environment.
Within product innovation, we continued to put product at the center of everything
we do, leveraging the latest research, technologies, and materials to solve for the unmet
needs of our guests. We grew our men’s business by 15%, our women’s business by 17%,
and net revenue from our other categories increased 36%.
We believe one of our competitive advantages is our ability to consistently bring newness
and innovation into our assortment, and that our proprietary fabrics, innovative designs,
and functional technology set us apart. With our focus on feel, functionality, fit, and
versatility, people of all ages and backgrounds can see themselves in lululemon.
Our core and new product launches continued to resonate with guests. We saw strength
in many of our key franchises including Align, Scuba, and ABC, and leveraged the
versatility of our core assortment to expand our oerings within our Play categories
including golf and tennis. We also engineered new sensations within collections such as
Wundermost bodywear for women, expanded our casual oerings for men with Steady
State and Soft Jersey loungewear, and launched updated and enhanced versions of our
Blissfeel and Chargefeel footwear styles.
Looking to 2024, I am excited by our impressive pipeline of product innovation, from our
first-ever men’s footwear collection to innovations created with and inspired by world-
class athletes from Team Canada and our FURTHER women’s ultramarathon.
Within guest experience, our omni-operating model continued to serve our guests both
in-store and online. We saw strength across both channels, with company-operated
store net revenue increasing 21% and e-commerce net revenue increasing 17%, as well
as our single biggest day of traic and revenue in company history on Black Friday.
We continued to leverage our successful grassroots approach to cultivating
relationships with our guests at the local level. By creating connection points across
both the physical and digital, we engage with guests in ways that go beyond a
transaction, creating an ecosystem of connection that helps build our brand
awareness and drive loyalty.
In-store and online, our Educators supported guests in learning about our products and
innovations. In our communities, our teams created unforgettable experiences at the
local and global level, from store events to larger-scale community activations such as
10K runs. Through our membership program, which has grown to more than 17 million
members in the first year, we gained deeper knowledge on what aspects of our brand
are most meaningful to them. And we announced a multi-year strategic partnership
between lululemon and Peloton, expanding our reach and awareness.
Within market expansion, our business remained strong across our global regions
with 12% growth in the Americas, 67% in China Mainland, and 43% in Rest of World. We
entered new markets in EMEA and APAC, including our first store in Bangkok, Thailand.
In China Mainland, we were proud to celebrate our 10-year anniversary and end the year
approaching $1 billion in revenue. In total, we opened 56 net new company-operated
stores across the globe contributing to 15% square footage growth, ending 2023 with
711 company-operated stores worldwide.
AR | 2023
To our shareholders
1
Included within our Impact Agenda is a goal to invest a total of $75.0 million USD to advance equity in wellbeing by 2025. As of January 28, 2024, we have contributed
$44.8 million to lululemon’s Centre for Social Impact, $32.4 million of which has been contributed directly to social impact organizations. The remaining $12.4 million
primarily consists of contributions toward a donor-advised fund for future grant making.
UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549
_______________________________________
Form10-K
_______________________________________
☑ ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934
ForthefiscalyearendedJanuary28,2024
OR
☐ TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934
Forthetransitionperiodfromto
Commissionfilenumber001-33608
_______________________________________
lululemonathleticainc.
(Exactnameofregistrantasspecifiedinitscharter)
_______________________________________
Delaware
20-3842867
(Stateorotherjurisdictionof
incorporationororganization)
(I.R.S.Employer
IdentificationNumber)
1818CornwallAvenue,Vancouver,BritishColumbiaV6J1C7
(Addressofprincipalexecutiveoffices)
Registrant'stelephonenumber,includingareacode:(604)732-6124
SecuritiesregisteredpursuanttoSection12(b)oftheAct:
Titleofeachclass Tradingsymbol(s) Nameofeachexchangeonwhichregistered
CommonStock,parvalue$0.005pershare
LULU
NasdaqGlobalSelectMarket
_______________________________________
Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.Yes☑No☐
IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.Yes☐No☑
Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding
12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast
90days.Yes☑No☐
IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-Tduringthe
preceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).Yes☑No☐
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowth
company.Seethedefinitionsof"largeacceleratedfiler,""acceleratedfiler,""smallerreportingcompany,"and"emerginggrowthcompany"inRule12b-2oftheExchangeAct.
LargeAcceleratedFiler ☑ Acceleratedfiler ☐
Non-acceleratedfiler ☐ Smallerreportingcompany ☐
Emerginggrowthcompany ☐
Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancial
accountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.☐
Indicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagement'sassessmentoftheeffectivenessofitsinternalcontroloverfinancial
reportingunderSection404(b)oftheSarbanes-OxleyAct(15U.S.C.7262(b))bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.☑
IfsecuritiesareregisteredpursuanttoSection12(b)oftheAct,indicatebycheckmarkwhetherthefinancialstatementsoftheregistrantincludedinthefilingreflectthe
correctionofanerrortopreviouslyissuedfinancialstatements.☐
Indicatebycheckmarkwhetheranyofthoseerrorcorrectionsarerestatementsthatrequiredarecoveryanalysisofincentive-basedcompensationreceivedbyanyofthe
registrant’sexecutiveofficersduringtherelevantrecoveryperiodpursuantto§240.10D-1(b).☐
Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinrule12b-2oftheAct).Yes☐No☑
Theaggregatemarketvalueofthevotingstockheldbynon-affiliatesoftheregistrantonJuly28,2023wasapproximately$40,905,000,000.Suchaggregatemarketvaluewas
computedbyreferencetotheclosingpriceofthecommonstockasreportedontheNasdaqGlobalSelectMarketonJuly28,2023.Forpurposesofdeterminingthisamount
only,theregistranthasdefinedaffiliatesasincludingtheexecutiveofficers,directors,andownersof10%ormoreoftheoutstandingvotingstockoftheregistrantonJuly28,
2023.
CommonStock:AtMarch15,2024therewere120,892,132sharesoftheregistrant'scommonstock,parvalue$0.005pershare,outstanding.
ExchangeableandSpecialVotingShares:AtMarch15,2024,therewereoutstanding5,115,961exchangeablesharesofLuluCanadianHolding,Inc.,awholly-ownedsubsidiaryof
theregistrant.Exchangeablesharesareexchangeableforanequalnumberofsharesoftheregistrant'scommonstock.
Inaddition,atMarch15,2024,theregistranthadoutstanding5,115,961sharesofspecialvotingstock,throughwhichtheholdersofexchangeablesharesofLuluCanadian
Holding,Inc.mayexercisetheirvotingrightswithrespecttotheregistrant.Thespecialvotingstockandtheregistrant'scommonstockgenerallyvotetogetherasasingleclass
onallmattersonwhichthecommonstockisentitledtovote.
_______________________________________
DOCUMENTSINCORPORATEDBYREFERENCE
PortionsoftheProxyStatementforthe2024AnnualMeetingofStockholdershavebeenincorporatedbyreferenceintoPartIIIofthisAnnualReportonForm10-K.
TABLEOFCONTENTS
Page
PARTI
Item1.
Business 1
Item1A.
RiskFactors 10
Item1C.
Cybersecurity 22
Item2.
Properties 24
Item3.
LegalProceedings 24
Item4. MineSafetyDisclosures 24
PARTII
Item5.
MarketforRegistrant'sCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities 25
Item6.
SelectedConsolidatedFinancialData 26
Item7.
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations 27
Item7A.
QuantitativeandQualitativeDisclosuresAboutMarketRisk 44
Item8.
FinancialStatements 46
IndexforNotestotheConsolidatedFinancialStatements 54
Item9A.
ControlsandProcedures 79
Item9B.
OtherInformation 80
Item9C. DisclosureRegardingForeignJurisdictionsthatPreventInspections 81
PARTIII
Item10.
Directors,ExecutiveOfficersandCorporateGovernance 82
Item11.
ExecutiveCompensation 82
Item12.
SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters 82
Item13.
CertainRelationshipsandRelatedTransactions,andDirectorIndependence 83
Item14.
PrincipalAccountantFeesandServices 83
PARTIV
Item15.
ExhibitsandFinancialStatementSchedule 84
Item16. Form10-KSummary 86
Signatures
87
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PARTI
SpecialNoteRegardingForward-LookingStatements
Thisreportandsomedocumentsincorporatedhereinbyreferenceincludeestimates,projections,statementsrelating
toourbusinessplans,objectives,andexpectedoperatingresultsthatare"forward-lookingstatements"withinthemeaningof
thePrivateSecuritiesLitigationReformActof1995,Section27AoftheSecuritiesActof1933andSection21EoftheSecurities
ExchangeActof1934.Weusewordssuchas"anticipates,""believes,""estimates,""may,""intends,""expects,"andsimilar
expressionstoidentifyforward-lookingstatements.Discussionscontainingforward-lookingstatementsmaybefoundinthe
materialsetforthunder"Business","Management'sDiscussionandAnalysisofFinancialConditionandResultsof
Operations",andinothersectionsofthereport.Allforward-lookingstatementsareinherentlyuncertainastheyarebasedon
ourexpectationsandassumptionsconcerningfutureevents.Anyorallofourforward-lookingstatementsinthisreportmay
turnouttobeinaccurate.Wehavebasedtheseforward-lookingstatementslargelyonourcurrentexpectationsand
projectionsaboutfutureeventsandfinancialtrendsthatwebelievemayaffectourfinancialcondition,resultsofoperations,
businessstrategy,andfinancialneeds.Theymaybeaffectedbyinaccurateassumptionswemightmakeorbyknownor
unknownrisksanduncertainties,includingtherisks,uncertaintiesandassumptionsdescribedinthesectionentitled"Item1A.
RiskFactors"andelsewhereinthisreport.Inlightoftheserisks,uncertaintiesandassumptions,theforward-lookingevents
andcircumstancesdiscussedinthisreportmaynotoccurascontemplated,andouractualresultscoulddiffermateriallyfrom
thoseanticipatedorimpliedbytheforward-lookingstatements.Allforward-lookingstatementsinthisreportaremadeasof
thedatehereof,basedoninformationavailabletousasofthedatehereof,andweassumenoobligationtoupdateany
forward-lookingstatement.
Thisannualreportincludeswebsiteaddressesandreferencestoadditionalmaterialsfoundonthosewebsites.These
websitesandinformationcontainedonoraccessiblethroughthesewebsitesarenotincorporatedbyreferenceinto,anddo
notformapartof,thisAnnualReportoranyotherreportordocumentwefilewiththeSEC,andanyreferencestoany
websitesareintendedtobeinactivetextualreferencesonly.
ITEM1.BUSINESS
General
lululemonathleticainc.isprincipallyadesigner,distributor,andretaileroftechnicalathleticapparel,footwear,and
accessories.Wehaveavisiontocreatetransformativeproductsandexperiencesthatbuildmeaningfulconnections,unlocking
greaterpossibilityandwellbeingforall.Sinceourinception,wehavefosteredadistinctivecorporateculture;wepromotea
setofcorevaluesinourbusinesswhichincludetakingpersonalresponsibility,actingwithcourage,valuingconnectionand
inclusion,andchoosingtohavefun.Thesecorevaluesattractpassionateandmotivatedemployeeswhoaredriventoachieve
personalandprofessionalgoals,andshareourpurpose"toelevatehumanpotentialbyhelpingpeoplefeeltheirbest."
InthisAnnualReportonForm10-KforthefiscalyearendedJanuary28,2024,lululemonathleticainc.(togetherwithits
subsidiaries)isreferredtoas"lululemon,""theCompany,""we,""us,"or"our."WerefertothefiscalyearendedJanuary28,
2024as"2023,"thefiscalyearendedJanuary29,2023as"2022,"andthefiscalyearendedJanuary30,2022as"2021."Our
nextfiscalyearendsonFebruary2,2025andisreferredtoas"2024."
Componentsofthisdiscussionofourbusinessinclude:
• OurProducts
• OurMarketsandSegments
• IntegratedMarketing
• ProductDesignandDevelopment
• SourcingandManufacturing
• DistributionFacilities
• Competition
• Seasonality
• HumanCapital
• IntellectualProperty
• SecuritiesandExchangeCommissionFilings
OurProducts
Weofferacomprehensivelineofperformanceapparel,footwear,andaccessoriesmarketedunderthelululemon
brand.Ourapparelassortmentincludesitemssuchaspants,shorts,tops,andjacketsdesignedforahealthylifestyleincluding
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athleticactivitiessuchasyoga,running,training,andmostotheractivities.Wealsoofferappareldesignedforbeingonthe
moveandfitness-inspiredaccessories.Weexpecttocontinuetobroadenourmerchandiseofferingsthroughexpansionacross
theseproductareas.
Ourdesignanddevelopmentteamcontinuestosourcetechnicallyadvancedfabrics,withnewfeelandfit,andcraft
innovativefunctionalfeaturesforourproducts.Throughourverticalretailstrategyanddirectconnectionwithourcustomers,
whomwerefertoasguests,weareabletocollectfeedbackandincorporateuniqueperformanceandfashionneedsintoour
designprocess.Inthisway,webelievewearebetterpositionedtoaddresstheneedsofourguests,helpingusadvanceour
productlinesanddifferentiateusfromourcompetitors.
During2023,ourwomen'srangerepresented64%ofnetrevenueandourmen'srangerepresented23%ofnet
revenue.Ourcomprehensivemen'slineisakeypillarofourstrategicgrowthplans.Webelievenetrevenuefromourmen's
rangeisgrowingasmoreguestsdiscoverthetechnicalrigorandpremiumqualityofourmen'sproducts,andareattractedby
ourdistinctivebrand.
Wecontinuetoinnovateandintroducenewproductsforourguests.Thisincludesintroducingnewproductcategories
andexpandingouraccessoriesassortment.Webelievethisisanotherwayinwhichwecanattractnewguestsandenable
themtoexperienceourproducts.Netrevenuefromourotherproductcategoriesrepresented13%ofnetrevenuein2023.
OurMarketsandSegments
Weoperateinover25countriesaroundtheworldandorganizeouroperationsintofourregionalmarkets:Americas,
ChinaMainland,AsiaPacific("APAC"),andEuropeandtheMiddleEast("EMEA").
Wereportthreesegments,Americas,ChinaMainland,andRestofWorld,whichiscomprisedoftheAPACandEMEA
regionsonacombinedbasis.
2023NetRevenue
Americas
79%
China
Mainland
10%
Restof
World
11%
2022NetRevenue
Americas
84%
China
Mainland
7%
Restof
World
9%
2021NetRevenue
Americas
85%
China
Mainland
7%
Restof
World
8%
Duringthefourthquarterof2023,werevisedthefinancialinformationwhichourChiefExecutiveOfficer,whoisour
chiefoperatingdecisionmaker("CODM"),usestoevaluateperformanceandallocateresources.Thisresultedinachangein
ouridentifiedoperatingsegments.Aswehavefurtherexecutedonouromni-channelretailstrategy,andcontinuedtoexpand
ouroperationsininternationalmarkets,ourperformancereviewsandresourceallocationdecisionshaveevolvedtobemade
onaregionalmarketbasis.Oursegmentresultshavebeenrecasttoreflectourregionalmarket-basedstructure.Historically,
oursegmentswerebasedonsellingchannel.Wecontinuetomonitorourrevenueperformancebyoursellingchannelswhich
arefurtherdescribedbelow.
Weoperateanomni-channelretailmodelandaimtoefficientlyandeffectivelyserveourguestsinthewaysmost
convenienttothem.Wecontinuetoevolveandintegrateourdigitalandphysicalchannelsinordertoenrichourinteractions
withourguests,andtoprovideaseamlessomni-channelexperience.Wehaveinvestedintechnologieswhichenableour
omni-channelretailingmodel.Ourcapabilitiesdifferbymarketandinclude:
• Buyonlinepick-upinstore-guestscanpurchaseourproductsviaourwebsiteordigitalappandthencollectthat
productfromaretaillocation;
• Back-backroom-ourstoreeducatorscanaccessinventorylocatedatourotherlocationsandhaveproductshipped
directlytoaguest'saddressorastore;
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• Shipfromstore–weareabletofulfille-commerceordersbyaccessinginventoryatbothourdistributioncentersand
atourretaillocations,expandingthepoolofaccessibleinventory;
• Returnsprocessing–e-commerceguestsareabletoreturnproductseitheronlineorin-store;and
• Oneinventorypool–weareabletoviewandallocatetheproductheldatourdistributioncenterstoeitherour
physicalretaillocations,ormakeitavailabletofulfillonlinedemand.
Weoperateacombinationofphysicalretaillocationsande-commerceservicesviaourwebsites,otherregion-specific
websites,digitalmarketplaces,andmobileapps.Ourphysicalretaillocationsremainakeypartofourgrowthstrategyandwe
viewthemasavaluabletoolinhelpingusbuildourbrandandproductlineaswellasenablingouromni-channelcapabilities.
Weplantocontinuetoexpandsquarefootageandopennewcompany-operatedstorestosupportourgrowthobjectives.
Americas
WehaveoperatedintheAmericasforover25years.WeopenedourfirsteverstoreinVancouver,Canadain1998.In
2023,thenetrevenuewegeneratedintheAmericasrepresented79%ofourtotalnetrevenue.
2023 2022 2021
(Inthousands)
Netrevenue $ 7,631,647 $ 6,817,454 $ 5,299,906
Netrevenuegrowth 11.9% 28.6% 40.3%
OuroperationsintheAmericasarecoretoourbusinessandweaimtocontinuetogrowournetrevenueinthismarket
throughongoingproductinnovationandbybuildingbrandawareness.Wealsoplantocontinuetoinvestinouromni-channel
capabilities,toopennewretaillocations,andtorelocate,optimize,andrenovateourexistinglocationsasneeded.
WegeneratenetrevenueintheAmericasthroughourlululemonbrandedretaillocationswhichincludedifferentsizes
ofcompany-operatedstores,outlets,pop-ups,othertemporarylocations,andstoresoperatedbyathird-partyunderasupply
andlicenseagreementinMexico.Wealsoserveourguestsviaoure-commercewebsitewww.lululemon.com,ourmobile
app,our“LikeNew”re-commerceprogram,andthroughcertainwholesalearrangementsincludingcertainyogaandfitness
studios,universitycampusretailers,andotherselectpartners.
ChinaMainland
WeopenedourfirststoreinChinaMainlandinfiscal2014.In2023,thenetrevenuewegeneratedinChinaMainland
represented10%ofourtotalnetrevenue.
2023 2022 2021
(Inthousands)
Netrevenue $ 963,760 $ 576,503 $ 434,261
Netrevenuegrowth 67.2% 32.8% 80.3%
WehaveexperiencedsignificantnetrevenuegrowthinChinaMainlandandbelievethataswecontinuetoexpandour
operationsandbuildourbrandawareness,netrevenuewillcontinuetoincreaseinthismarket.WebelieveChinaMainland
netrevenuegrowthwilldriveanincreaseinouroverallinternationalnetrevenue.WeplantocontinuetoinvestinChina
Mainlandandexpectthatthemajorityofourcompany-operatedstoreopeningsin2024willbeinthismarket.
WeoperatelululemonbrandedretaillocationsinChinaMainlandinavarietyofdifferentformatsincludingdifferent
sizesofcompany-operatedstores,outlets,pop-ups,andothertemporarylocations.WealsoserveourguestsviaourWeChat
storeandonthirdpartymarketplacessuchasT-MallandJD.com.
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RestofWorld
In2023,thenetrevenuewegeneratedinAPACandEMEArepresented11%ofourtotalnetrevenue.
2023 2022 2021
(Inthousands)
Netrevenue $ 1,023,871 $ 716,561 $ 522,450
Netrevenuegrowth 42.9% 37.2% 36.3%
WehaveexperiencedsignificantnetrevenuegrowthinAPACandEMEAandintendtocontinuetoinvestinthese
marketstobuildbrandawareness.Whereweidentifygrowthopportunities,weplantoopennewretaillocations,includingin
newmarketsacrosstheEMEAandAPACregions.
Weoperatelululemonbrandedretaillocationsinthesemarketsinavarietyofdifferentformatsincludingdifferentsizes
ofcompany-operatedstores,outlets,pop-ups,andstoresoperatedbythird-partiesundersupplyandlicenseagreementsin
theMiddleEastandIsrael.Wealsoserveourguestsviaourcountryspecificwebsites,ourmobileapp,andthroughthirdparty
regionalmarketplaces,suchasZalando,Lazada,andSSG.
OurSellingChannels
Weconductourbusinessthroughanumberofdifferentchannelsineachmarket:
Company-operatedstores:Inadditiontoservingasavenuetosellourproducts,ourstoresgiveusadirectconnection
toourguests,whichweviewasavaluabletoolinhelpingusbuildourbrandandproductlinesaswellasenablingouromni-
channelcapabilities.Ourretailstoresarelocatedprimarilyonstreetlocations,inlifestylecenters,andinmalls.Oursalesper
squarefootwas$1,609,$1,580,and$1,443for2023,2022,and2021respectively.
UnitedStates 367 350
Canada 71 69
Americas 438 419
ChinaMainland 127 99
Australia 33 32
SouthKorea 19 16
HongKongSAR 9 9
Japan 8 7
NewZealand 8 8
Taiwan 8 7
Singapore 7 8
Malaysia 3 2
MacauSAR 2 2
Thailand 1 —
APAC 98 91
Numberofcompany-operatedstoresbymarket
January28,
2024
January29,
2023
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UnitedKingdom 20 20
Germany 9 10
France 6 4
Ireland 4 4
Spain 3 3
Netherlands 2 1
Sweden 2 2
Norway 1 1
Switzerland 1 1
EMEA 48 46
Totalcompany-operatedstores 711 655
Numberofcompany-operatedstoresbymarket
January28,
2024
January29,
2023
E-commerce:Webelievee-commerceisconvenientforourguestsandalsoallowsustoreachandserveguestsin
marketsbeyondwhereourphysicalretaillocationsarebased.Webelievethischanneliseffectiveinbuildingbrand
awareness,especiallyinnewmarkets.Weserveourguestsviaoure-commercewebsites,othercountryandregion-specific
websites,digitalmarketplaces,andmobileapps.E-commercenetrevenueincludesourbuyonlinepick-upinstore,back-back
room,andshipfromstoreomni-channelretailingcapabilities.
Otherchannels:Wealsousecertainotherdistributionchannels,generallywiththegoalofbuildingbrandawareness
andprovidingbroaderaccesstoourproducts.Theseotherchannelsinclude:
• Temporarylocations-Ourseasonalstoresandpop-upsaretypicallyopenedforashortperiodoftimeenablingusto
serveguestsduringpeakshoppingperiodsinmarketswherewedonotordinarilyhaveaphysicallocation,orto
expandaccessinmarketswhereweseehighdemandatourexistinglocations.
• Wholesale-Weselltopartnersthatofferconvenientaccessforbothcoreandnewguests,includingyogaandfitness
studios,universitycampusretailers,andotherselectpartners.
• Outlets-Weutilizeoutletstosellslowermovinginventoryandinventoryfrompriorseasonsatdiscountedprices.As
ofJanuary28,2024,weoperated47outlets,themajorityofwhichwereintheAmericas.
• LikeNew-Ourre-commerceprogramallowsgueststoexchangetheirgentlyusedlululemonproductsfor
merchandisecredit.Thoseproductsarethenverifiedandqualitycheckedbeforebeingresoldonlineat
likenew.lululemon.com.Webelievethisprogramisasteptowardsacirculareco-systemandhelpsreduceour
environmentalfootprint.
• Licenseandsupplyarrangements-Weenterintolicenseandsupplyarrangementswhenwebelieveitwillbetoour
advantagetopartnerwiththirdpartieswithsignificantexperienceandprovensuccessincertaintargetmarkets.
Underthesearrangementswehavegrantedcertainthirdpartiestherighttooperatelululemonbrandedretail
locationsandtoselllululemonproductsonwebsitesinspecificcountries.
Numberofretaillocationsoperatedbythirdpartiesbymarket
January28,
2024
January29,
2023
Mexico 15 12
UnitedArabEmirates 8 7
SaudiArabia 6 3
Israel 3 —
Kuwait 3 1
Qatar 3 3
Bahrain 1 —
Totallocationsoperatedbythirdpartiesunderlicenseandsupplyarrangements 39 26
5
IntegratedMarketing
Webelievethatourbrandawarenessisrelativelylow,especiallyoutsideoftheAmericas,andalsowithourmale
guests.Thisrepresentsanopportunityforusandwehaveamulti-facetedstrategytobuildbrandawareness,affinity,and
guestloyalty.Thisstrategyisdesignedtoleverageownedandpaidchannels,ourambassadornetwork,brandpartners,
events,andcontent–todriveawareness,consideration,engagement,conversion,andultimatelyloyaltyandengagementat
theglobal,regional,andlocallevels.
ProductDesignandDevelopment
Ourproductdesignanddevelopmenteffortsareledbyateamofresearchers,scientists,engineers,anddesigners.Our
teamiscomprisedofathletesandusersofourproductswhoembodyourdesignphilosophyanddedicationtopremium
quality.Ourdesignanddevelopmentteamidentifiestrendsbasedonmarketintelligenceandresearch,proactivelyseeksthe
inputofourguestsandourambassadors,andbroadlyseeksinspirationconsistentwithourgoalsoffunction,style,and
technicalsuperiority.
Aswestrivetocontinuetoprovideourguestswithtechnicallyadvancedfabrics,ourteamworkscloselywithour
supplierstoincorporatethelatestintechnicalinnovation,bringingparticularspecificationstoourproducts.Wepartnerwith
independentinspection,verification,andtestingcompanies,whoconductavarietyoftestsonourfabrics,testing
performancecharacteristicsincludingpilling,shrinkage,abrasionresistance,andcolorfastness.Wedevelopproprietary
fabricsandcollaboratewithleadingfabricandtrimssupplierstomanufacturefabricsandtrimsthatwegenerallyseekto
protectthroughagreements,trademarks,andastrade-secrets.
SourcingandManufacturing
Wedonotownoroperateanymanufacturingfacilities.Werelyonalimitednumberofsupplierstoprovidefabricsfor,
andtoproduce,ourproducts.Thefollowingstatisticsarebasedoncost.
Weworkwithagroupofapproximately49vendorsthatmanufactureourproducts,fiveofwhichproduced55%ofour
productsin2023,withthelargestmanufacturerproducing17%.During2023,42%ofourproductsweremanufacturedin
Vietnam,16%inCambodia,11%inSriLanka,10%inIndonesia,and8%inBangladesh,andtheremainderinotherregions.
Weworkwithagroupofapproximately67supplierstoprovidethefabricsforourproducts.In2023,52%ofourfabrics
wereproducedbyourtopfivefabricsuppliers,withthelargestmanufacturerproducing19%.During2023,40%ofourfabrics
originatedfromTaiwan,26%fromChinaMainland,and12%fromSriLanka,andtheremainderfromotherregions.
Wealsosourceotherrawmaterialswhichareusedinourproducts,includingitemssuchascontentlabels,elastics,
buttons,clasps,anddrawcordsfromsupplierslocatedpredominantlyinAPACandChinaMainland.
Wehavedevelopedlong-standingrelationshipswithanumberofourvendorsandtakecaretoensurethattheyshare
ourcommitmenttoqualityandethics.Wedonot,however,haveanylong-termcontractswiththemajorityofoursuppliers
ormanufacturingsourcesfortheproductionandsupplyofourfabricsandgarments,andwecompetewithothercompanies
forfabrics,rawmaterials,andproduction.WerequirethatallofoursuppliersandmanufacturersadheretoourVendorCode
ofEthicsregardingsocialandenvironmentalsustainabilitypractices.Ourproductqualityandsustainabilityteamsclosely
assessandmonitoreachsupplier'scompliancewithapplicablelawsandourVendorCodeofEthics,includingbypartnering
withleadinginspectionandverificationfirms.
DistributionFacilities
WeoperateanddistributefinishedproductsfromourdistributionfacilitiesintheUnitedStates,Canada,andAustralia.
WeownourdistributioncenterinGroveport,Ohio,andleaseourotherdistributionfacilities.Wealsoutilizethird-party
logisticsprovidersinanumberofcountriesinwhichweoperatetowarehouseanddistributefinishedproductsfromtheir
warehouselocations.Weregularlyevaluateourdistributioninfrastructureandconsolidateorexpandourdistribution
capacityaswebelieveappropriateforouroperationsandtomeetanticipatedneeds.
Competition
Competitionintheathleticapparelindustryisbasedprincipallyonbrandimageandrecognitionaswellasproduct
quality,innovation,style,distribution,andprice.Webelievewesuccessfullycompeteonthebasisofourpremiumbrand
imageandourtechnicalproductinnovation.Wealsobelieveourabilitytointroducenewproductinnovations,combine
functionandfashion,andconnectthroughin-store,online,andcommunityexperiencessetsusapartfromourcompetition.In
6
addition,webelieveourverticalretaildistributionstrategyandcommunity-basedmarketingdifferentiatesusfurther,
allowingustomoreeffectivelycontrolourbrandimageandconnectwithourguests.
Themarketforathleticapparelishighlycompetitive.Itincludesincreasingcompetitionfromestablishedcompanies
thatareexpandingtheirproductionandmarketingofperformanceproducts,aswellasfromfrequentnewentrantstothe
market.Weareindirectcompetitionwithwholesalersanddirectsellersofathleticapparelandfootwear,suchasNike,Inc.,
adidasAG,PUMA,UnderArmour,Inc.,andColumbiaSportswearCompany.Wealsocompetewithretailerswhohave
expandedtoincludewomen'sathleticapparelincludingTheGap,Inc.(includingtheAthletabrand),Victoria'sSecretwithits
sportandloungeoffering,andUrbanOutfitters,Inc.
Seasonality
Ourbusinessisaffectedbythegeneralseasonaltrendscommontotheretailapparelindustry.Ourannualnetrevenue
istypicallyweightedmoreheavilytowardourfourthfiscalquarter,reflectingourhistoricalstrengthinsalesduringtheholiday
seasonintheAmericas,whileouroperatingexpensesaregenerallymoreequallydistributedthroughouttheyear.Asaresult,
asubstantialportionofouroperatingprofitsaretypicallygeneratedinthefourthquarterofourfiscalyear.Forexample,we
generatedapproximately43%ofourfullyearoperatingprofitduringthefourthquarterof2023.
HumanCapital
OurImpactAgendasetsoutoursocialandenvironmentalgoalsandstrategyacrossthreepillars-BeHuman,BeWell,
andBePlanet.DetailscanbefoundinourImpactReportonourwebsite(https://corporate.lululemon.com/our-impact).
IncludedwithinourImpactAgendaisagoaltoinvestatotalof$75.0milliontoadvanceequityinwell-beingbytheend
of2025.AsofJanuary28,2024,wehaveinvestedatotalof$44.8million
(1)
towardsthisgoal.
TheBeHumanpillarofourImpactAgendasetsoutourfocusareaswithrespecttohumancapital,including:
• Inclusion,Diversity,Equity,andAction(“IDEA”);
• Employeeempowerment;and
• Fairlaborpracticesandthewell-beingofthepeoplewhomakeourproducts.
Inclusion,Diversity,EquityandAction
WebelieveIDEAisfundamentalforshapingandbuildingourcompany,industry,andcommunities,andforcreatinga
sharedsenseofrespectandbelonging.Bycontinuouslystrivingtobeaninclusive,diverse,andequitableorganization,weaim
toreflectavarietyofperspectivesandmeettheneedsoftheglobalcommunitiesweserve.Weareproudthatasof
January28,2024,approximately50%ofourboardofdirectors,70%ofourseniorexecutiveleadershipteam,and50%ofour
vicepresidentsandabovearewomen,whileapproximately75%ofouroverallworkforcearewomen.
(2)
7
(1)
Wehavecontributed$44.8milliontolululemon'sCentreforSocialImpact,$32.4millionofwhichhasbeencontributeddirectlytosocialimpact
organizations.Theremaining$12.4millionprimarilyconsistsofcontributionstowardadonor-advisedfundforfuturegrantmaking.
(2)
Whilewetrackmaleandfemalegenders,weacknowledgethisisnotfullyencompassingofallgenderidentities.
Weuseanannualvoluntaryglobalsurveytohelpusunderstandthedemographicsofouremployeebaseandprovide
uswithaccesstotangiblemetricstohelpusunderstandouremployees’senseofinclusionandbelonging.
(3)
In2023,the
participationratewasapproximately85%.Ouroverallgoalistoreflecttheracialdiversity
(4)
ofthecommunitiesweserveand
inwhichweoperate.

DirectorandAssistantStoreManagerand
AboveRacialDiversity
—%
5%
10%
15%
20%
25%
30%
35%
StoreEmployeeRacialDiversity
—%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Weseektomaintain100%genderpayequitywithinourentireglobalemployeepopulation,meaningequalpayfor
equalworkacrossgenders,bygeography.Wehaveachievedfullpayequity,includinggenderandrace,intheUnitedStates,
whichistheonlycountrywherewecurrentlycollectindividuallyattributableracedata.
WeofferallemployeesIDEAeducation,training,andguidedconversationsonavarietyoftopics,includinganti-racism,
anti-discrimination,andinclusiveleadershipbehaviors.WehaveestablishedPeopleNetworks,whichareemployeeresource
groupsforemployeeswhohavemarginalizedandhistoricallyunderrepresentedidentities.Weseesignificantengagementin
IDEAeducationandtrainingacrossourglobalemployeebase.WeaimtofosteracultureofinclusionbymakingIDEApartof
oureverydayconversation,andfrequentlyreviewourpolicies,programs,andpracticestoidentifywaystobemoreinclusive
andequitable.
EmployeeEmpowerment
Webelieveourpeoplearekeytothesuccessofourbusiness.AsofJanuary28,2024weemployedapproximately
38,000peopleworldwide.Westrivetofosteradistinctiveculturerootedinourcorevaluesthatattractsandretains
passionateandmotivatedemployeeswhoaredriventoachievepersonalandprofessionalgoals.Webelieveourpeople
succeedbecausewecreateanenvironmentthatfostersgrowthandisdiverseandequitable.
2023EmployeesbyRegion
United
States
52%
Canada
24%
China
Mainland
10%
Restof
World
14%
2022EmployeesbyRegion
United
States
54%
Canada
26%
China
Mainland
8%
Restof
World
12%
2021EmployeesbyRegion
United
States
57%
Canada
26%
China
Mainland
6%
Restof
World
11%
8
(3)
ThevoluntarydemographicsurveyresultspresentedaboverelatetoallofouremployeesintheAmericas,Europe,Australia,andNewZealand.
(4)
"Racialdiversity"isusedtomeasurethenon-whitepopulation.
Weassessourperformanceandidentifyopportunitiesforimprovementthroughanannualemployeeengagement
survey.In2023,theparticipationratewasapproximately85%andouremployeeengagementscoreexceededtheretail
industryaverage.
(5)
Ourengagementscoresuggestsourpeopleareproudtoworkforlululemon,theyaremotivatedto
contributetoworkthatalignswiththeirpurpose,andtheyrecommendlululemonasagreatplacetowork.
Weunderstandthathealthandwealthprogramsneedtoofferchoiceatallstagesoflife.Ourcurrentofferingssupport
ourgoalofbecomingthenumberoneplacewherepeoplecometodevelopandgrowasinclusiveleaders,andweregularly
usefeedbacktoinformopportunitiestosupportthisgoal.Theseofferingsinclude,amongotherthings:
• Competitivecompensationwhichrewardsexceptionalperformance;
• AFundyourFutureprogramforeligibleemployeeswhichofferspartialcontributionmatchestoapensionplanand
employeesharepurchaseplan;
• AnannualpaidVALUES(Volunteer,Awareness,Life,Unity,Empowerment,Support)Day,competitivepaidtimeoff,
andsickleave;
• Anemployeediscountprogram,whichincludesalifetimediscounttocelebratethecontributionofourlong-tenured
employeestokeepthemwithinourcollective,evenwhentheyhavemovedontopursuegoalsoutsideoflululemon;
• Reimbursementprogramswhichrewardphysicalactivity;
• Aparenthoodprogramwhichisagender-neutralbenefitthatprovidesalleligibleemployeesuptosixmonthsofpaid
leave;
• Anemployeeassistanceprogramwhichprovidesfreeconfidentialsupporttoallouremployeesandtheirfamiliesina
varietyofareasfrommentalwell-beingtofinancialservicestoadvicefornewparents;and
• Traininganddevelopmentofallofouremployeesincluding,butnotlimitedto,mentorshipprograms,IDEA
internships,leadershipdevelopment,visionandgoals,andcoaching.
FairLaborPracticesandtheWell-BeingofthePeoplewhoMakeourProducts
Weworkwithsupplierswhowebelieveshareourvaluesandcollaboratewithustoupholdrobuststandards,address
systemicchallenges,andsupportthewell-beingofpeoplewhomakeourproducts.OurResponsibleSupplyChainprogramis
builtonthreepillars:
• Monitoring-Assessingandimprovingworkingconditionsinfactories.
• Integration-Integratingresponsiblepurchasingpracticesacrossenterprisestrategies,processes,andtools.
• Collaboration-Workingwithmulti-stakeholderorganizations,industry,suppliers,andbrandstosupportsystemic
changeandimpact.
OurVendorCodeofEthicsoutlinesourcommitmenttorespecthumanandlaborrights,andpromotesafeandfair
workingconditionsforpeopleinoursupplychain.Thecode,whichisbasedoninternationalstandards,setstheminimum
standardsforoursupplierpartnersandisacomponentofoursupplierandmanufactureragreements.Ourfinishedgoodsand
fabricsuppliersareassessedagainsttheVendorCodeofEthicspriortoformingabusinessrelationship,andregularly
thereafter;weworkwithfactoriesthatcanupholdourstrictrequirements.
OurForeignMigrantWorkerStandardsetsoutourminimumrequirementsforwhatwebelievearetheappropriateand
ethicalrecruitment,employment,andrepatriationofforeignmigrantworkers.
IntellectualProperty
Wehavetrademarkrightsonmanyofourproductsandbelievehavingdistinctivemarksthatarereadilyidentifiableis
animportantfactorinbuildingourbrandimageandindistinguishingourproductsfromtheproductsofothers.Weconsider
ourlululemonandwavedesigntrademarkstobeamongourmostvaluableassets.Inaddition,weownmanyother
trademarksforthenamesofseveralofourbrands,slogans,fabricsandproducts.WeownregisteredandpendingU.S.and
foreignutilityanddesignpatents,industrialdesignsinCanada,andregisteredcommunitydesignsinEuropethatprotectour
productinnovations,distinctiveapparel,andaccessorydesigns.
9
(5)
Basedonanindustrybenchmarkprovidedbythethirdpartythatadministersthissurveytoouremployees.
SecuritiesandExchangeCommissionFilings
Ourwebsiteaddressiswww.lululemon.com.Weprovidefreeaccesstovariousreportsthatwefilewith,orfurnishto,
theUnitedStatesSecuritiesandExchangeCommission,ortheSEC,throughourwebsite,assoonasreasonablypracticable
aftertheyhavebeenfiledorfurnished.Thesereportsinclude,butarenotlimitedto,ourannualreportsonForm10-K,
quarterlyreportsonForm10-Q,currentreportsonForm8-K,andanyamendmentstothosereports.OurSECreportscanalso
beaccessedthroughtheSEC'swebsiteatwww.sec.gov.AlsoavailableonourwebsiteareprintableversionsofourGlobal
CodeofBusinessConductandEthicsandchartersofthestandingcommitteesofourboardofdirectors.Information
containedonoraccessiblethroughourwebsitesisnotincorporatedinto,anddoesnotformapartof,thisAnnualReportor
anyotherreportordocumentwefilewiththeSEC,andanyreferencestoourwebsitesareintendedtobeinactivetextual
referencesonly.
ITEM1A.RISKFACTORS
InadditiontotheotherinformationcontainedinthisForm10-K,thefollowingriskfactorsshouldbeconsideredin
evaluatingourbusiness.Ourbusiness,financialcondition,orresultsofoperationscouldbemateriallyadverselyaffectedasa
resultofanyoftheserisks.
Risksrelatedtoourbusinessandindustry
Oursuccessdependsonourabilitytomaintainthevalueandreputationofourbrand.
Thelululemonnameisintegraltoourbusinessaswellastotheimplementationofourexpansionstrategies.
Maintaining,promoting,andpositioningourbrandwilldependlargelyonthesuccessofourmarketingandmerchandising
effortsandourabilitytoprovideaconsistent,highqualityproduct,andguestexperience.Werelyonsocialmedia,asoneof
ourmarketingstrategies,tohaveapositiveimpactonbothourbrandvalueandreputation.Ourbrandandreputationcould
beadverselyaffectedifwefailtoachievetheseobjectives,ifourpublicimagewastobetarnishedbynegativepublicity,
whichcouldbeamplifiedbysocialmedia,ifwefailtodeliverinnovativeandhighqualityproductsacceptabletoourguests,or
ifwefaceormishandleaproductrecall.Ourreputationcouldalsobeimpactedbyadversepublicity,whetherornotvalid,
regardingallegationsthatwe,orpersonsassociatedwithusorformerlyassociatedwithus,haveviolatedapplicablelawsor
regulations,includingbutnotlimitedtothoserelatedtosafety,employment,discrimination,harassment,whistle-blowing,
privacy,corporatecitizenship,improperbusinesspractices,orcybersecurity.Certainactivitiesonthepartofstakeholders,
includingnongovernmentalorganizationsandgovernmentalinstitutions,couldcausereputationaldamage,distractsenior
management,anddisruptourbusiness.Additionally,whilewedevoteconsiderableeffortandresourcestoprotectingour
intellectualproperty,iftheseeffortsarenotsuccessfulthevalueofourbrandmaybeharmed.Anyharmtoourbrandand
reputationcouldhaveamaterialadverseeffectonourfinancialcondition.
Changesinconsumershoppingpreferences,andshiftsindistributionchannelscouldmateriallyimpactourresultsof
operations.
Weoperateanomni-channelretailmodelandaimtoefficientlyandeffectivelyserveourguestsinthewaysmost
convenienttothem.Weoperateacombinationofphysicalretaillocationsande-commerceservicesviaourwebsites,other
region-specificwebsites,digitalmarketplaces,andmobileapps.Ourphysicalretaillocationsremainakeypartofourgrowth
strategyandweviewthemasavaluabletoolinhelpingusbuildourbrandandproductlineaswellasenablingouromni-
channelcapabilities.Weplantocontinuetoexpandsquarefootageandopennewcompany-operatedstorestosupportour
growthobjectives.Thediversionofsalesfromourcompany-operatedstorescouldadverselyimpactourreturnoninvestment
andcouldleadtoimpairmentchargesandstoreclosures,includingleaseexitcosts.Wecouldhavedifficultyinrecreatingthe
in-storeexperiencethroughdirectchannels.Ourfailuretosuccessfullyintegrateourdigitalandphysicalchannelsand
respondtotheserisksmightadverselyimpactourbusinessandresultsofoperations,aswellasdamageourreputationand
brand.
Ifanyofourproductshavemanufacturingordesigndefectsorareotherwiseunacceptabletousorourguests,ourbusiness
couldbeharmed.
Wehaveoccasionallyreceived,andmayinthefuturereceive,shipmentsofproductsthatfailtocomplywithour
technicalspecificationsorthatfailtoconformtoourqualitycontrolstandards.Wehavealsoreceived,andmayinthefuture
receive,productsthatareotherwiseunacceptabletousorourguests.Underthesecircumstances,unlessweareableto
obtainreplacementproductsinatimelymanner,weriskthelossofnetrevenueresultingfromtheinabilitytosellthose
productsandrelatedincreasedadministrativeandshippingcosts.Additionally,iftheunacceptabilityofourproductsisnot
discovereduntilaftersuchproductsaresold,ourguestscouldloseconfidenceinourproductsorwecouldfaceaproduct
recallandourresultsofoperationscouldsufferandourbusiness,reputation,andbrandcouldbeharmed.
10
OurlululemonStudiosubsidiaryofferscomplexhardwareandsoftwareproductsandservicesthatcanbeaffectedby
designandmanufacturingdefects.Sophisticatedoperatingsystemsoftwareandapplications,suchasthoseofferedby
lululemonStudio,oftenhaveissuesthatcanunexpectedlyinterferewiththeintendedoperationofhardwareorsoftware
products.Defectsmayalsoexistincomponentsandproductsthatwesourcefromthirdparties.Anydefectscouldmakeour
productsandservicesunsafeandcreateariskofenvironmentalorpropertydamageorpersonalinjuryandwemaybecome
subjecttothehazardsanduncertaintiesofproductliabilityclaimsandrelatedlitigation.Theoccurrenceofrealorperceived
defectsinanyofourproducts,noworinthefuture,couldresultinadditionalnegativepublicity,regulatoryinvestigations,or
lawsuitsfiledagainstus,particularlyifguestsorotherswhouseorpurchaseourlululemonStudioproductsareinjured.Even
ifinjuriesarenottheresultofanydefects,iftheyareperceivedtobe,wemayincurexpensestodefendorsettleanyclaims
andourbrandandreputationmaybeharmed.
Weoperateinahighlycompetitivemarketandourcompetitorsmaycompetemoreeffectivelythanwecan,resultingina
lossofourmarketshareandadecreaseinournetrevenueandprofitability.
Themarketfortechnicalathleticapparelishighlycompetitive.Competitionmayresultinpricingpressures,reduced
profitmarginsorlostmarketshare,orafailuretogrowormaintainourmarketshare,anyofwhichcouldsubstantiallyharm
ourbusinessandresultsofoperations.Wecompetedirectlyagainstwholesalersanddirectretailersofathleticapparel,
includinglarge,diversifiedapparelcompanieswithsubstantialmarketshare,andestablishedcompaniesexpandingtheir
productionandmarketingoftechnicalathleticapparel,aswellasagainstretailersspecificallyfocusedonwomen'sathletic
apparel.Wealsofacecompetitionfromwholesalersanddirectretailersoftraditionalcommodityathleticapparel,suchas
cottonT-shirtsandsweatshirts.Manyofourcompetitorsarelargeapparelandsportinggoodscompanieswithstrong
worldwidebrandrecognition.Becauseofthefragmentednatureoftheindustry,wealsocompetewithotherapparelsellers,
includingthosespecializinginyogaapparelandotheractivewear.Manyofourcompetitorshavesignificantcompetitive
advantages,includinglongeroperatinghistories,largerandbroadercustomerbases,moreestablishedrelationshipswitha
broadersetofsuppliers,greaterbrandrecognitionandgreaterfinancial,researchanddevelopment,storedevelopment,
marketing,distribution,andotherresourcesthanwedo.Ourcompetitorsmaybeabletoachieveandmaintainbrand
awarenessandmarketsharemorequicklyandeffectivelythanwecan.
Wemayfailtoacknowledgeorreactappropriatelytotheentryorgrowthofaviablecompetitorordisruptiveforce,and
couldstruggletocontinuetoinnovate,differentiate,andsustainthegrowthofourbrand.Theincreasingdominanceand
presenceofourbrandmayalsodrivegueststowardsalternativeemergingcompetitors.
Inaddition,becauseweholdlimitedpatentsandexclusiveintellectualpropertyrightsinthetechnology,fabricsor
processesunderlyingourproducts,ourcurrentandfuturecompetitorsareabletomanufactureandsellproductswith
performancecharacteristics,fabricationtechniques,andstylingsimilartoourproducts.
Oursalesandprofitabilitymaydeclineasaresultofincreasingcostsanddecreasingsellingprices.
Ourbusinessissubjecttosignificantpressureoncostsandpricingcausedbymanyfactors,includingintense
competition,constrainedsourcingcapacityandrelatedinflationarypressure,theavailabilityofqualifiedlaborandwage
inflation,pressurefromconsumerstoreducethepriceswechargeforourproducts,andchangesinconsumerdemand.These
andotherfactorshave,andmayinthefuture,causeustoexperienceincreasedcosts,reduceourpricestoconsumersor
experiencereducedsalesinresponsetoincreasedprices,anyofwhichcouldcauseouroperatingmargintodeclineifweare
unabletooffsetthesefactorswithreductionsinoperatingcostsandcouldhaveamaterialadverseeffectonourfinancial
condition,operatingresults,andcashflows.
Ifweareunabletoanticipateconsumerpreferencesandsuccessfullydevelopandintroducenew,innovative,and
differentiatedproducts,wemaynotbeabletomaintainorincreaseoursalesandprofitability.
Oursuccessdependsonourabilitytoidentifyandoriginateproducttrendsaswellastoanticipateandreactto
changingconsumerdemandsinatimelymanner.Allofourproductsaresubjecttochangingconsumerpreferencesthat
cannotbepredictedwithcertainty.Ifweareunabletointroducenewproductsornoveltechnologiesinatimelymanneror
ournewproductsortechnologiesarenotacceptedbyourguests,ourcompetitorsmayintroducesimilarproductsinamore
timelyfashion,whichcouldhurtourgoaltobeviewedasaleaderintechnicalathleticapparelinnovation.Ournewproducts
maynotreceiveconsumeracceptanceasconsumerpreferencescouldshiftrapidlytodifferenttypesofathleticapparelor
awayfromthesetypesofproductsaltogether,andourfuturesuccessdependsinpartonourabilitytoanticipateandrespond
tothesechanges.Ourfailuretoanticipateandrespondinatimelymannertochangingconsumerpreferencescouldleadto,
amongotherthings,lowersalesandexcessinventorylevels.Wemaynothaverelevantdatatoeffectivelyunderstandand
reacttoconsumerpreferencesandexpectations.Evenifwearesuccessfulinanticipatingconsumerpreferences,ourabilityto
adequatelyreacttoandaddressthosepreferenceswillinpartdependuponourcontinuedabilitytodevelopandintroduce
innovative,high-qualityproducts.Ourfailuretoeffectivelyintroducenewproductsthatareacceptedbyconsumerscould
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resultinadecreaseinnetrevenueandexcessinventorylevels,whichcouldhaveamaterialadverseeffectonourfinancial
condition.
Ourresultsofoperationscouldbemateriallyharmedifweareunabletoaccuratelyforecastguestdemandforour
products.
Toensureadequateinventorysupply,wemustforecastinventoryneedsandplaceorderswithourmanufacturers
basedonourestimatesoffuturedemandforparticularproducts.Ourabilitytoaccuratelyforecastdemandforourproducts
couldbeaffectedbymanyfactors,includinganincreaseordecreaseinguestdemandforourproductsorforproductsofour
competitors,ourfailuretoaccuratelyforecastguestacceptanceofnewproducts,productintroductionsbycompetitors,
unanticipatedchangesingeneralmarketconditions(forexample,becauseofglobaleconomicconcernssuchasinflation,an
economicdownturn,ordelaysanddisruptionsresultingfromlocalandinternationalshippingdelaysandlaborshortages),and
weakeningofeconomicconditionsorconsumerconfidenceinfutureeconomicconditions(forexample,becauseof
inflationarypressures,orbecauseofsanctions,restrictions,andotherresponsesrelatedtogeopoliticalevents).Ifwefailto
accuratelyforecastguestdemand,wemayexperienceexcessinventorylevelsorashortageofproductsavailableforsalein
ourstoresorfordeliverytoguests.
Inventorylevelsinexcessofguestdemandmayresultininventorywrite-downsorwrite-offsandthesaleofexcess
inventoryatdiscountedprices,whichwouldcauseourgrossmargintosufferandcouldimpairthestrengthandexclusivityof
ourbrand.Conversely,ifweunderestimateguestdemandforourproducts,ourmanufacturersmaynotbeabletodeliver
productstomeetourrequirements,andthiscouldresultindamagetoourreputationandguestrelationships.
Ourlimitedoperatingexperienceandlimitedbrandrecognitioninnewinternationalmarketsandnewproductcategories
maylimitourexpansionandcauseourbusinessandgrowthtosuffer.
OurfuturegrowthdependsinpartonourexpansioneffortsoutsideoftheAmericas.Wehavelimitedexperiencewith
regulatoryenvironmentsandmarketpracticesinternationally,andwemaynotbeabletopenetrateorsuccessfullyoperatein
anynewmarket.InconnectionwithourexpansioneffortswemayencounterobstacleswedidnotfaceintheAmericas,
includingculturalandlinguisticdifferences,differencesinregulatoryenvironments,laborpracticesandmarketpractices,
difficultiesinkeepingabreastofmarket,businessandtechnicaldevelopments,andinternationalguests'tastesand
preferences.Wemayalsoencounterdifficultyexpandingintonewinternationalmarketsbecauseoflimitedbrandrecognition
leadingtodelayedacceptanceofourtechnicalathleticapparelbyguestsinthesenewinternationalmarkets.Ourfailureto
developourbusinessinnewinternationalmarketsordisappointinggrowthoutsideofexistingmarketscouldharmour
businessandresultsofoperations.
Inaddition,ourcontinuedgrowthdependsinpartonourabilitytoexpandourproductcategoriesandintroducenew
productlines.Wemaynotbeabletosuccessfullymanageintegrationofnewproductcategoriesorthenewproductlines
withourexistingproducts.Sellingnewproductcategoriesandlineswillrequireourmanagementtotestanddevelop
differentstrategiesinordertobesuccessful.Wemaybeunsuccessfulinenteringnewproductcategoriesanddevelopingor
launchingnewproductlines,whichrequiresmanagementofnewsuppliers,potentialnewcustomers,andnewbusiness
models.Ourmanagementmaynothavetheexperienceofsellinginthesenewproductcategoriesandwemaynotbeableto
growourbusinessasplanned.Forexample,inJuly2020,weacquiredMIRROR,anin-homefitnesscompanywithan
interactiveworkoutplatformthatfeaturesliveandon-demandclasses.Ifweareunabletoeffectivelyandsuccessfullyfurther
developtheseandfuturenewproductcategoriesandlines,wemaynotbeabletoincreaseormaintainoursalesandour
operatingmarginsmaybeadverselyaffected.Thismayalsodiverttheattentionofmanagementandcauseadditional
expenses.
Wemay,fromtimetotime,evaluateandpursueotherstrategicinvestmentsoracquisitions.Theseinvolvevarious
inherentrisksandthebenefitssoughtmaynotberealized.
Ifwecontinuetogrowatarapidpace,wemaynotbeabletoeffectivelymanageourgrowthandtheincreasedcomplexity
ofourbusinessandasaresultourbrandimageandfinancialperformancemaysuffer.
Ifouroperationscontinuetogrowatarapidpace,wemayexperiencedifficultiesinobtainingsufficientrawmaterials
andmanufacturingcapacitytoproduceourproducts,aswellasdelaysinproductionandshipments,asourproductsare
subjecttorisksassociatedwithoverseassourcingandmanufacturing.Wecouldberequiredtocontinuetoexpandoursales
andmarketing,productdevelopmentanddistributionfunctions,toupgradeourmanagementinformationsystemsandother
processesandtechnology,andtoobtainmorespaceforourexpandingworkforce.Thisexpansioncouldincreasethestrainon
ourresources,andwecouldexperienceoperatingdifficulties,includingdifficultiesinhiring,training,andmanagingan
increasingnumberofemployees.Thesedifficultiescouldresultintheerosionofourbrandimagewhichcouldhaveamaterial
adverseeffectonourfinancialcondition.
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Wearesubjecttorisksassociatedwithleasingretailanddistributionspacesubjecttolong-termandnon-cancelableleases.
Weleasethemajorityofourstoresunderoperatingleasesandourinabilitytosecureappropriaterealestateorlease
termscouldimpactourabilitytogrow.Ourleasesgenerallyhaveinitialtermsofbetweentwoand15years,andgenerallycan
beextendedinincrementsbetweentwoandfiveyears,ifatall.Wegenerallycannotcanceltheseleasesatouroption.Ifan
existingornewstoreisnotprofitable,andwedecidetocloseit,aswehavedoneinthepastandmaydointhefuture,we
maynonethelessbecommittedtoperformourobligationsundertheapplicableleaseincluding,amongotherthings,paying
thebaserentforthebalanceoftheleaseterm.Similarly,wemaybecommittedtoperformourobligationsunderthe
applicableleasesevenifcurrentlocationsofourstoresbecomeunattractiveasdemographicpatternschange.Inaddition,as
eachofourleasesexpire,wemayfailtonegotiaterenewals,eitheroncommerciallyacceptabletermsoratall,whichcould
requireustoclosestoresindesirablelocations.
Wealsoleasethemajorityofourdistributioncentersandourinabilitytosecureappropriaterealestateorleaseterms
couldimpactourabilitytodeliverourproductstothemarket.
Ourfuturesuccessissubstantiallydependentontheserviceofourseniormanagementandourabilitytomaintainour
cultureandtoattract,manage,andretainhighlyqualifiedindividuals.
Theperformanceofourseniormanagementteamandotherkeyemployeesmaynotmeetourneedsandexpectations.
Also,thelossofservicesofanyofthesekeyemployees,oranynegativepublicperceptionwithrespecttotheseindividuals,
maybedisruptiveto,orcauseuncertaintyin,ourbusinessandcouldhaveanegativeimpactonourabilitytomanageand
growourbusinesseffectively.Suchdisruptioncouldhaveamaterialadverseimpactonourfinancialperformance,financial
condition,andthemarketpriceofourstock.
Ifweareunabletosuccessfullymaintainandevolveouruniqueculture,offercompetitivecompensationandbenefits,
andadesirableworkmodel,wemaybeunabletoattractandretainhighlyqualifiedindividualstosupportourbusinessand
continuedgrowth.Ourworkmodelmaynotmeettheneedsandexpectationsofouremployeesandmaynotbeperceivedas
favorablecomparedtoothercompanies.Unionizationeffortsorotheremployeeorganizingactivitiescouldleadtohigher
peoplecostsorreduceourflexibilitytomanageouremployeeswhichmaynegativelydisruptouroperations.Wealsoface
risksrelatedtoemployeeengagementandproductivitywhichcouldresultinincreasedheadcountandleadtoincreasedlabor
costs.
Ourbusinessisaffectedbyseasonality,whichcouldresultinfluctuationsinouroperatingresults.
Ourbusinessisaffectedbythegeneralseasonaltrendscommontotheretailapparelindustry.Ourannualnetrevenue
istypicallyweightedmoreheavilytowardourfourthfiscalquarter,reflectingourhistoricalstrengthinsalesduringtheholiday
season,whileouroperatingexpensesaremoreequallydistributedthroughouttheyear.Thisseasonality,alongwithother
factorsthatarebeyondourcontrol,includingweatherconditionsandtheeffectsofclimatechange,couldadverselyaffectour
businessandcauseourresultsofoperationstofluctuate.
Risksrelatedtooursupplychain
Disruptionsofoursupplychaincouldhaveamaterialadverseeffectonouroperatingandfinancialresults.
Disruptionofoursupplychaincapabilitiesduetotraderestrictions,politicalinstability,severeweather,natural
disasters,publichealthcrises,war,terrorism,productrecalls,laborsupplyshortagesorstoppages,thefinancialoroperational
instabilityofkeysuppliersandcarriers,changesindiplomaticortraderelationships(includinganysanctions,restrictions,and
otherresponsessuchasthoserelatedtocurrentgeopoliticalevents),orotherreasonscouldimpairourabilitytodistribute
ourproducts.Totheextentweareunabletomitigatethelikelihoodorpotentialimpactofsuchevents,therecouldbea
materialadverseeffectonouroperatingandfinancialresults.
Werelyoninternationalsuppliersandanysignificantdisruptiontooursupplychaincouldimpairourabilitytoprocureor
distributeourproducts.
Wedonotmanufactureourproductsorrawmaterialsandrelyonsuppliersandmanufacturerslocatedpredominantly
inAPACandChinaMainland.Wealsosourceothermaterialsusedinourproducts,includingitemssuchascontentlabels,
elastics,buttons,clasps,anddrawcords,fromsupplierslocatedprimarilyinthisregion.Basedoncost,during2023:
• Approximately42%ofourproductsweremanufacturedinVietnam,16%inCambodia,11%inSriLanka,10%in
Indonesia,and8%inBangladesh,andtheremainderinotherregions.
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• Approximately40%ofthefabricusedinourproductsoriginatedfromTaiwan,26%fromChinaMainland,12%from
SriLanka,andtheremainderfromotherregions.
Theentireapparelindustry,includingourcompany,couldfacesupplychainchallengesasaresultoftheimpactsof
globalpublichealthcrises,politicalinstability,inflationarypressures,macroeconomicconditions,andotherfactors,including
reducedfreightavailabilityandincreasedcosts,portdisruption,manufacturingfacilityclosures,andrelatedlaborshortages
andothersupplychaindisruptions.
Oursupplychaincapabilitiesmaybedisruptedduetotheseorotherfactors,suchassevereweather,naturaldisasters,
warorothermilitaryconflicts,terrorism,laborsupplyshortagesorstoppages,thefinancialoroperationalinstabilityofkey
suppliersorthecountriesinwhichtheyoperate,orchangesindiplomaticortraderelationships(includinganysanctions,
restrictions,andotherresponsestogeopoliticalevents).Anysignificantdisruptioninoursupplychaincapabilitiescould
impairourabilitytoprocureordistributeourproducts,whichwouldadverselyaffectourbusinessandresultsofoperations.
Arelativelysmallnumberofvendorssupplyandmanufactureasignificantportionofourproducts,andlosingoneormore
ofthesevendorscouldadverselyaffectourbusinessandresultsofoperations.
Manyofthespecialtyfabricsusedinourproductsaretechnicallyadvancedtextileproductsdevelopedand
manufacturedbythirdpartiesandmaybeavailable,intheshort-term,fromonlyoneoralimitednumberofsources.We
havenolong-termcontractswithanyofoursuppliersormanufacturersfortheproductionandsupplyofourrawmaterials
andproducts,andwecompetewithothercompaniesforfabrics,otherrawmaterials,andproduction.During2023,we
workedwithapproximately49vendorstomanufactureourproductsand67supplierstoprovidethefabricforourproducts.
Basedoncost,during2023:
• Approximately55%ofourproductsweremanufacturedbyourtopfivevendors,thelargestofwhichproduced
approximately17%ofourproducts;and
• Approximately52%ofourfabricswereproducedbyourtopfivefabricsuppliers,thelargestofwhichproduced
approximately19%offabricused.
Wehaveexperienced,andmayinthefutureexperience,asignificantdisruptioninthesupplyoffabricsorrawmaterials
andmaybeunabletolocatealternativesuppliersofcomparablequalityatanacceptableprice,oratall.Inaddition,ifwe
experiencesignificantincreaseddemand,orifweneedtoreplaceanexistingsupplierormanufacturer,wemaybeunableto
locateadditionalsuppliesoffabricsorrawmaterialsoradditionalmanufacturingcapacityontermsthatareacceptabletous,
oratall,orwemaybeunabletolocateanysupplierormanufacturerwithsufficientcapacitytomeetourrequirementsorfill
ourordersinatimelymanner.Identifyingasuitablesupplierisaninvolvedprocessthatrequiresustobecomesatisfiedwith
itsqualitycontrol,responsivenessandservice,financialstability,andlaborandotherethicalpractices.Evenifweareableto
expandexistingorfindnewmanufacturingorfabricsources,wemayencounterdelaysinproductionandaddedcostsasa
resultofthetimeittakestotrainoursuppliersandmanufacturersinourmethods,products,andqualitycontrolstandards.
Oursupplyoffabricormanufactureofourproductscouldbedisruptedordelayedbyeconomicorpoliticalorglobal
healthconditions,andtherelatedgovernmentandprivatesectorresponsiveactionssuchasclosures,restrictionsonproduct
shipments,andtravelrestrictions.Delaysrelatedtosupplierchangescouldalsoariseduetoanincreaseinshippingtimesif
newsuppliersarelocatedfartherawayfromourmarketsorfromotherparticipantsinoursupplychain.Inaddition,freight
capacityissuescontinuetopersistworldwideasthereismuchgreaterdemandforshippingandreducedcapacityand
equipment.Anydelays,interruption,orincreasedcostsinthesupplyoffabricormanufactureofourproductscouldhavean
adverseeffectonourabilitytomeetguestdemandforourproductsandresultinlowernetrevenueandincomefrom
operationsbothintheshortandlongterm.
OurbusinesscouldbeharmedifoursuppliersandmanufacturersdonotcomplywithourVendorCodeofEthicsor
applicablelaws.
WhilewerequireoursuppliersandmanufacturerstocomplywithourVendorCodeofEthics,whichincludeslabor,
healthandsafety,andenvironmentstandards,wedonotcontroltheiroperations.Ifsuppliersorcontractorsdonotcomply
withthesestandardsorapplicablelawsorthereisnegativepublicityregardingtheproductionmethodsofanyofour
suppliersormanufacturers,evenifunfoundedornotspecifictooursupplychain,ourreputationandsalescouldbeadversely
affected,wecouldbesubjecttolegalliability,orcouldcauseustocontractwithalternativesuppliersormanufacturing
sources.
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Thefluctuatingcostofrawmaterialscouldincreaseourcostofgoodssold.
Thefabricsusedtomakeourproductsincludesyntheticfabricswhoserawmaterialsincludepetroleum-basedproducts.
Ourproductsalsoincludesilverandnaturalfibers,includingcotton.Ourcostsforrawmaterialsareaffectedby,amongother
things,weather,consumerdemand,speculationonthecommoditiesmarket,therelativevaluationsandfluctuationsofthe
currenciesofproducerversusconsumercountries,andotherfactorsthataregenerallyunpredictableandbeyondourcontrol.
Anyandallofthesefactorsmaybeexacerbatedbyglobalclimatechange.Inaddition,politicalinstability,traderelations,
sanctions,inflationarypressure,orothergeopoliticaloreconomicconditionscouldcauserawmaterialcoststoincreaseand
haveanadverseeffectonourfuturemargins.Increasesinthecostofrawmaterials,includingpetroleumorthepriceswepay
forsilverandourcottonyarnandcotton-basedtextiles,couldhaveamaterialadverseeffectonourcostofgoodssold,results
ofoperations,financialcondition,andcashflows.
Ifweencounterproblemswithourdistributionsystem,ourabilitytodeliverourproductstothemarketandtomeetguest
expectationscouldbeharmed.
Werelyonourdistributionfacilitiesforsubstantiallyallofourproductdistribution.Ourdistributionfacilitiesinclude
computercontrolledandautomatedequipment,whichmeanstheiroperationsmaybesubjecttoanumberofrisksrelatedto
securityorcomputerviruses,theproperoperationofsoftwareandhardware,electronicorpowerinterruptions,orother
systemfailures.Inaddition,ouroperationscouldalsobeinterruptedbylabordifficulties,pandemics,theimpactsofclimate
change,extremeorsevereweatherconditionsorbyfloods,fires,orothernaturaldisastersnearourdistributioncenters.Ifwe
encounterproblemswithourdistributionsystem,ourabilitytomeetguestexpectations,manageinventory,completesales,
andachieveobjectivesforoperatingefficienciescouldbeharmed.
IncreasinglaborcostsandotherfactorsassociatedwiththeproductionofourproductsinSouthAsiaandSouthEastAsia
couldincreasethecoststoproduceourproducts.
AsignificantportionofourproductsareproducedinSouthAsiaandSouthEastAsiaandincreasesinthecostsoflabor
andothercostsofdoingbusinessinthecountriesinthisareacouldsignificantlyincreaseourcoststoproduceourproducts
andcouldhaveanegativeimpactonouroperationsandearnings.Factorsthatcouldnegativelyaffectourbusinessinclude
laborshortagesandincreasesinlaborcosts,labordisputes,pandemics,theimpactsofclimatechange,difficultiesand
additionalcostsintransportingproductsmanufacturedfromthesecountriestoourdistributioncentersandsignificant
revaluationofthecurrenciesusedinthesecountries,whichmayresultinanincreaseinthecostofproducingproducts.Also,
theimpositionoftradesanctionsorotherregulationsagainstproductsimportedbyusfrom,orthelossof"normaltrade
relations"statuswithanycountryinwhichourproductsaremanufactured,couldsignificantlyincreaseourcostofproducts
andharmourbusiness.
Risksrelatedtoinformationsecurityandtechnology
Wemaybeunabletosafeguardagainstsecuritybreacheswhichcoulddamageourcustomerrelationshipsandresultin
significantlegalandfinancialexposure.
Aspartofournormaloperations,wereceiveconfidential,proprietary,andpersonallyidentifiableinformation,including
creditcardinformation,andinformationaboutourcustomers,ouremployees,jobapplicants,andotherthirdparties.Our
businessemployssystemsandwebsitesthatallowforthestorageandtransmissionofthisinformation.However,despiteour
safeguardsandsecurityprocessesandprotections,securitybreachescouldexposeustoariskoftheftormisuseofthis
information,andcouldresultinlitigationandpotentialliability.
Theretailindustry,inparticular,hasbeenthetargetofmanyrecentcyber-attacks.Wemaynothavetheresourcesor
technicalsophisticationtobeabletoanticipateorpreventrapidlyevolvingtypesofcyber-attacks.Attacksmaybetargetedat
us,ourvendorsorcustomers,orotherswhohaveentrusteduswithinformation.Inaddition,despitetakingmeasuresto
safeguardourinformationsecurityandprivacyenvironmentfromsecuritybreaches,ourcustomersandourbusinesscould
stillbeexposedtorisk.Actualoranticipatedattacksmaycauseustoincurincreasingcostsincludingcoststodeployadditional
personnelandprotectiontechnologies,trainemployeesandengagethirdpartyexpertsandconsultants.Advancesin
computercapabilities,newtechnologicaldiscoveriesorotherdevelopmentsmayresultinthetechnologyusedbyusto
protecttransactionorotherdatabeingbreachedorcompromised.Measuresweimplementtoprotectagainstcyber-attacks
mayalsohavethepotentialtoimpactourcustomers'shoppingexperienceordecreaseactivityonourwebsitesbymaking
themmoredifficulttouse.
Dataandsecuritybreachescanalsooccurasaresultofnon-technicalissuesincludingintentionalorinadvertentbreach
byemployeesorpersonswithwhomwehavecommercialrelationshipsthatresultintheunauthorizedreleaseofpersonalor
15
confidentialinformation.Anycompromiseorbreachofoursecuritycouldresultinaviolationofapplicableprivacyandother
laws,significantlegalandfinancialexposure,anddamagetoourbrandandreputationorotherharmtoourbusiness.
Inaddition,theincreaseduseofemployee-owneddevicesforcommunicationsaswellaswork-from-home
arrangementspresentadditionaloperationalriskstoourtechnologysystems,includingincreasedrisksofcyber-attacks.
Further,likeothercompaniesintheretailindustry,wehaveinthepastexperienced,andweexpecttocontinueto
experience,cyber-attacks,includingphishing,andotherattemptstobreach,orgainunauthorizedaccessto,oursystems.To
date,theseattackshavenothadamaterialimpactonouroperations,buttheymayhaveamaterialimpactinthefuture.
Privacyanddataprotectionlawsincreaseourcomplianceburden.
Wearesubjecttoavarietyofprivacyanddataprotectionlawsandregulationsthatchangefrequentlyandhave
requirementsthatvaryfromjurisdictiontojurisdiction.Forexample,wearesubjecttosignificantcomplianceobligations
underprivacylawssuchastheGeneralDataPrivacyRegulation("GDPR")intheEuropeanUnion,thePersonalInformation
ProtectionandElectronicDocumentsAct(“PIPEDA”)inCanada,theCaliforniaConsumerPrivacyAct("CCPA")modifiedbythe
CaliforniaPrivacyRightsAct(“CPRA”),andthePersonalInformationProtectionLaw(“PIPL”)inthePeople'sRepublicofChina
("PRC")
(6)
.Someprivacylawsprohibitthetransferofpersonalinformationtocertainotherjurisdictions.Wearesubjectto
privacyanddataprotectionauditsorinvestigationsbyvariousgovernmentagencies.Ourfailuretocomplywiththeselaws
subjectsustopotentialregulatoryenforcementactivity,fines,privatelitigationincludingclassactions,andothercosts.Our
effortstocomplywithprivacylawsmaycomplicateouroperationsandaddtoourcompliancecosts.Asignificantprivacy
breachorfailureorperceivedfailurebyusorourthird-partyserviceproviderstocomplywithprivacyordataprotectionlaws,
regulations,policiesorregulatoryguidancemighthaveamateriallyadverseimpactonourreputation,businessoperations
andourfinancialconditionorresultsofoperations.
Disruptionofourtechnologysystemsorunexpectednetworkinterruptioncoulddisruptourbusiness.
Weareincreasinglydependentontechnologysystemsandthird-partiestooperateoure-commercewebsites,process
transactions,respondtoguestinquiries,manageinventory,purchase,sellandshipgoodsonatimelybasis,andmaintaincost-
efficientoperations.Thefailureofourtechnologysystemstooperateproperlyoreffectively,problemswithtransitioningto
upgradedorreplacementsystems,ordifficultyinintegratingnewsystems,couldadverselyaffectourbusiness.Inaddition,
wehavee-commercewebsitesintheUnitedStates,Canada,andinternationally.Ourtechnologysystems,websites,and
operationsofthirdpartiesonwhomwerely,mayencounterdamageordisruptionorslowdowncausedbyafailureto
successfullyupgradesystems,systemfailures,viruses,computer"hackers",naturaldisasters,orothercauses.Thesecould
causeinformation,includingdatarelatedtoguestorders,tobelostordelayedwhichcould,especiallyifthedisruptionor
slowdownoccurredduringtheholidayseason,resultindelaysinthedeliveryofproductstoourstoresandguestsorlost
sales,whichcouldreducedemandforourproductsandcauseoursalestodecline.Theconcentrationofourprimaryoffices,
severalofourdistributioncenters,andanumberofourstoresalongthewestcoastofNorthAmericacouldamplifythe
impactofanaturaldisasteroccurringinthatareatoourbusiness,includingtoourtechnologysystems.Inaddition,ifchanges
intechnologycauseourinformationsystemstobecomeobsolete,orifourinformationsystemsareinadequatetohandleour
growth,wecouldloseguests.Wehavelimitedback-upsystemsandredundancies,andourtechnologysystemsandwebsites
haveexperiencedsystemfailuresandelectricaloutagesinthepastwhichhavedisruptedouroperations.Anysignificant
disruptioninourtechnologysystemsorwebsitescouldharmourreputationandcredibility,andcouldhaveamaterialadverse
effectonourbusiness,financialcondition,andresultsofoperations.
Ourtechnology-basedsystemsthatgiveourcustomerstheabilitytoshopwithusonlinemaynotfunctioneffectively.
Manyofourcustomersshopwithusthroughoure-commercewebsitesandmobileapps.Increasingly,customersare
usingtabletsandsmartphonestoshoponlinewithusandwithourcompetitorsandtodocomparisonshopping.Weare
increasinglyusingsocialmediaandproprietarymobileappstointeractwithourcustomersandasameanstoenhancetheir
shoppingexperience.Anyfailureonourparttoprovideattractive,effective,reliable,user-friendlye-commerceplatformsthat
offerawideassortmentofmerchandisewithrapiddeliveryoptionsandthatcontinuallymeetthechangingexpectationsof
onlineshopperscouldplaceusatacompetitivedisadvantage,resultinthelossofe-commerceandothersales,harmour
16
(6)
PRCincludesChinaMainland,HongKongSAR,Taiwan,andMacauSAR.
reputationwithcustomers,haveamaterialadverseimpactonthegrowthofoure-commercebusinessgloballyandcould
haveamaterialadverseimpactonourbusinessandresultsofoperations.
Risksrelatedtoenvironmental,social,andgovernanceissues
Climatechange,andrelatedlegislativeandregulatoryresponsestoclimatechange,mayadverselyimpactourbusiness.
Thereisincreasingconcernthatagradualriseinglobalaveragetemperaturesduetoincreasedconcentrationofcarbon
dioxideandothergreenhousegasesintheatmospherewillcausesignificantchangesinweatherpatternsaroundtheglobe,
anincreaseinthefrequency,severity,anddurationofextremeweatherconditionsandnaturaldisasters,andwaterscarcity
andpoorwaterquality.Theseeventscouldadverselyimpactthecultivationofcotton,whichisakeyresourceinthe
productionofourproducts,disrupttheoperationofoursupplychainandtheproductivityofourcontractmanufacturers,
increaseourproductioncosts,imposecapacityrestraintsandimpactthetypesofapparelproductsthatconsumerspurchase.
Theseeventscouldalsocompoundadverseeconomicconditionsandimpactconsumerconfidenceanddiscretionary
spending.Asaresult,theeffectsofclimatechangecouldhavealong-termadverseimpactonourbusinessandresultsof
operations.Inmanycountries,governmentalbodiesareenactingneworadditionallegislationandregulationstoreduceor
mitigatethepotentialimpactsofclimatechange.Ifwe,oursuppliers,orourcontractmanufacturersarerequiredtocomply
withtheselawsandregulations,orifwechoosetotakevoluntarystepstoreduceormitigateourimpactonclimatechange,
wemayexperienceincreasedcostsforenergy,production,transportation,andrawmaterials,increasedcapitalexpenditures,
orincreasedinsurancepremiumsanddeductibles,whichcouldadverselyimpactouroperations.Inconsistencyoflegislation
andregulationsamongjurisdictionsmayalsoaffectthecostsofcompliancewithsuchlawsandregulations.Anyassessment
ofthepotentialimpactoffutureclimatechangelegislation,regulationsorindustrystandards,aswellasanyinternational
treatiesandaccords,isuncertaingiventhewidescopeofpotentialregulatorychangeinthecountriesinwhichweoperate.
Increasedscrutinyfrominvestorsandothersregardingourenvironmental,social,governance,orsustainability,
responsibilitiescouldresultinadditionalcostsorrisksandadverselyimpactourreputation,employeeretention,and
willingnessofcustomersandsupplierstodobusinesswithus.
Investorandpoliticaladvocacygroups,certaininstitutionalinvestors,investmentfunds,othermarketparticipants,
stockholders,andcustomershavefocusedincreasinglyontheenvironmental,socialandgovernance("ESG")practicesof
companies,includingthoseassociatedwithclimatechangeandsocialresponsibility.Thesepartieshaveplacedincreased
importanceontheimplicationsofthesocialcostoftheirinvestments.IfourESGpracticesdonotmeetcustomer,investor,
employee,orotherstakeholderexpectationsordonotalignwiththeiropinionsorvalues,ourbrand,reputation,employee
retention,andbusinessmaybenegativelyimpacted.AnysustainabilityreportthatwepublishorotherESGdisclosureswe
makemayincludeourpoliciesandpracticesonavarietyofsocialandethicalmatters,includingcorporategovernance,
environmentalcompliance,employeehealthandsafetypractices,humancapitalmanagement,productquality,supplychain
management,andworkforceinclusionanddiversity.ItispossiblethatstakeholdersmaynotbesatisfiedwithourESGpolicies
orpractices,includingifweoverstatetheimpactofourESGpractices,andthiscouldreducedemandforourproductsand
leadtoregulatoryenforcementthatcouldrestrictourabilitytomarketandsellourproducts.Wecouldalsoincuradditional
costsandrequireadditionalresourcestomonitor,report,andcomplywithvariousESGpractices.Also,ourfailure,or
perceivedfailure,tomeetthestandardsincludedinanysustainabilitydisclosurecouldnegativelyimpactourreputation,
employeeretention,andthewillingnessofourcustomersandsupplierstodobusinesswithus.
Risksrelatedtoglobaleconomic,political,andregulatoryconditions
Aneconomicrecession,depression,downturn,periodsofinflation,oreconomicuncertaintyinourkeymarketsmay
adverselyaffectconsumerdiscretionaryspendinganddemandforourproducts.
Manyofourproductsmaybeconsidereddiscretionaryitemsforconsumers.Someofthefactorsthatmayinfluence
consumerspendingondiscretionaryitemsincludegeneraleconomicconditions,highlevelsofunemployment,pandemics,
higherconsumerdebtlevels,reductionsinnetworthbasedonmarketdeclinesanduncertainty,homeforeclosuresand
reductionsinhomevalues,fluctuatinginterestandforeigncurrencyexchangeratesandcreditavailability,government
austeritymeasures,fluctuatingfuelandotherenergycosts,fluctuatingcommodityprices,inflationarypressure,taxratesand
generaluncertaintyregardingtheoverallfutureeconomicenvironment.Globaleconomicconditionsareuncertainand
volatile,dueinparttothepotentialimpactsofincreasinginflation,thepotentialimpactsofgeopoliticaluncertainties,andany
potentialsanctions,restrictionsorresponsestothoseconditions.Forexample,thePRCmarketpresentsanumberofrisks,
includingchangesinlawsandregulations,currencyfluctuations,increasedcompetition,andchangesineconomicconditions,
includingtheriskofaneconomicdownturnorrecession,tradeembargoes,restrictionsorotherbarriers,aswellasother
conditionsthatmayadverselyimpactconsumerspending,anyofwhichcouldcauseustofailtoachieveanticipatedgrowth.
Asglobaleconomicconditionscontinuetobevolatileoreconomicuncertaintyremains,trendsinconsumerdiscretionary
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spendingalsoremainunpredictableandsubjecttoreductionsduetocreditconstraintsanduncertaintiesaboutthefuture.
Unfavorableeconomicconditionsmayleadconsumerstodelayorreducepurchasesofourproducts.Consumerdemandfor
ourproductsmaynotreachourtargets,ormaydecline,whenthereisaneconomicdownturnoreconomicuncertaintyinour
keymarkets.Oursensitivitytoeconomiccyclesandanyrelatedfluctuationinconsumerdemandmayhaveamaterialadverse
effectonourfinancialcondition.
OurfinancialconditioncouldbeadverselyaffectedbyglobalorregionalhealtheventssuchastheCOVID-19pandemicand
relatedgovernment,privatesector,andindividualconsumerresponsiveactions.
TheCOVID-19pandemicnegativelyimpactedtheglobaleconomy,disruptedconsumerspendingandglobalsupply
chains,andcreatedsignificantvolatilityanddisruptionoffinancialmarkets.TheCOVID-19pandemicandrelatedgovernment,
privatesector,andindividualconsumerresponsiveactionsnegativelyimpactedourbusinessoperations,storetraffic,
employeeavailability,supplychain,financialcondition,liquidity,andcashflows.
TheoccurrenceorresurgenceofglobalorregionalhealtheventssuchastheCOVID-19pandemic,andtherelated
governmental,privatesectorandindividualconsumerresponses,couldcontributetoarecession,depression,orglobal
economicdownturn,reducestoretrafficandconsumerspending,resultintemporaryorpermanentclosuresofretail
locations,offices,andfactories,andcouldnegativelyimpacttheflowofgoods.Sucheventscouldcausehealthofficialsto
imposerestrictionsandrecommendprecautionstomitigatethehealthcrisissuchasthetemporaryclosureofourstores,
limitationsonthenumberofguestsallowedinourstoresatanysingletime,minimumphysicaldistancingrequirements,and
limitedoperatinghours.AhealtheventsuchastheCOVID-19pandemiccouldalsonegativelyimpactouremployees,guests,
andbrandbyreducingconsumerwillingnesstovisitstores,malls,andlifestylecenters,andemployeewillingnesstostaffour
stores.Aglobalorregionalhealtheventmayalsocauselong-termchangestoconsumershoppingbehavior,preferencesand
demandforourproductsthatmayhaveamaterialadverseeffectonourbusiness.
AglobalorregionalhealtheventsuchastheCOVID-19pandemiccouldsignificantlyandadverselyimpactoursupply
chainifthefactoriesthatmanufactureourproducts,thedistributioncenterswherewemanageourinventory,orthe
operationsofourlogisticsandotherserviceprovidersaredisrupted,temporarilyclosed,orexperienceworkershortages.
Globaleconomicandpoliticalconditionscouldadverselyimpactourresultsofoperations.
Uncertainorchallengingglobaleconomicandpoliticalconditionscouldimpactourperformance,includingourabilityto
successfullyexpandinternationally.Globaleconomicconditionscouldimpactlevelsofconsumerspendinginthemarketsin
whichweoperate,whichcouldimpactoursalesandprofitability.Politicalunrest,suchastheturmoilrelatedtocurrent
geopoliticaleventsandtherelatedsanctions,restrictions,orotherresponses,couldnegativelyimpactourguestsand
employees,reduceconsumerspending,andadverselyimpactourbusinessandresultsofoperations.
Wemaybeunabletosourceandsellourmerchandiseprofitablyoratallifnewtraderestrictionsareimposedorexisting
restrictionsbecomemoreburdensome.
TheUnitedStatesandthecountriesinwhichourproductsareproducedorsoldhaveimposedandmayimpose
additionalquotas,duties,tariffs,orotherrestrictionsorregulations,ormayadverselyadjustprevailingquota,duty,ortariff
levels.Theresultsofanyauditsorrelateddisputesregardingtheserestrictionsorregulationscouldhaveanadverseeffecton
ourfinancialstatementsfortheperiodorperiodsforwhichtheapplicablefinaldeterminationsaremade.Countriesimpose,
modify,andremovetariffsandothertraderestrictionsinresponsetoadiversearrayoffactors,includingglobalandnational
economicandpoliticalconditions,whichmakeitimpossibleforustopredictfuturedevelopmentsregardingtariffsandother
traderestrictions.Traderestrictions,includingtariffs,quotas,embargoes,safeguards,andcustomsrestrictions,couldincrease
thecostorreducethesupplyofproductsavailabletous,couldincreaseshippingtimes,ormayrequireustomodifyour
supplychainorganizationorothercurrentbusinesspractices,anyofwhichcouldharmourbusiness,financialcondition,and
resultsofoperations.
Wearedependentoninternationaltradeagreementsandregulations.Thecountriesinwhichweproduceandsellour
productscouldimposeorincreasetariffs,duties,orothersimilarchargesthatcouldnegativelyaffectourresultsof
operations,financialposition,orcashflows.
Adversechangesin,orwithdrawalfrom,tradeagreementsorpoliticalrelationshipsbetweentheUnitedStatesandthe
PRC,Canada,orothercountrieswherewesellorsourceourproducts,couldnegativelyimpactourresultsofoperationsor
cashflows.Generalgeopoliticalinstabilityandtheresponsestoit,suchasthepossibilityofsanctions,traderestrictions,and
changesintariffs,includingsanctionsagainstthePRC,tariffsimposedbytheUnitedStatesandthePRC,andthepossibilityof
additionaltariffsorothertraderestrictions,couldadverselyimpactourbusiness.Itispossiblethatfurthertariffsmaybe
introduced,orincreased.Suchchangescouldadverselyimpactourbusinessandcouldincreasethecostsofsourcingour
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productsfromthePRCaswellasothercountries,orcouldrequireustosourceourproductsfromdifferentcountries.The
UyghurForcedLaborPreventionActandothersimilarlegislationmayleadtogreatersupplychaincompliancecostsand
delaystousandtoourvendors.
Changesintaxlawsorunanticipatedtaxliabilitiescouldadverselyaffectoureffectiveincometaxrateandprofitability.
WearesubjecttotheincometaxlawsoftheUnitedStates,Canada,andseveralotherinternationaljurisdictions.Our
effectiveincometaxratescouldbeunfavorablyimpactedbyanumberoffactors,includingchangesinthemixofearnings
amongstcountrieswithdifferingstatutorytaxrates,changesinthevaluationofdeferredtaxassetsandliabilities,changesin
taxlaws,newtaxinterpretationsandguidance,theoutcomeofincometaxauditsinvariousjurisdictionsaroundtheworld,
andanyrepatriationofunremittedearningsforwhichwehavenotpreviouslyaccruedapplicableU.S.incometaxesand
internationalwithholdingtaxes.
RepatriationsfromourCanadiansubsidiariesarenotsubjecttoCanadianwithholdingtaxesifsuchdistributionsare
madeasareturnofcapital.TheextenttowhichtheaccumulatedearningsofourCanadiansubsidiariescanberepatriatedas
areturnofcapitalisdependenton,amongotherthings,theamountofpaid-up-capitalinourCanadiansubsidiariesand
transactionsundertakenbyourexchangeableshareholders.
Priorto2022,wehadnotaccruedforCanadianwithholdingtaxesbecausetheaccumulatedearningsof,or'net
investment'in,ourCanadiansubsidiarieswaseitherindefinitelyreinvestedorcouldberepatriatedasareturnofcapital
withoutthepaymentofwithholdingtaxes.
Since2022,thenetinvestmentinourCanadiansubsidiaries,whichwasnotindefinitelyreinvested,exceededthepaid-
upcapitalandthereforewerecognizedCanadianwithholdingtaxesontheportionofournetinvestmentwhichweareunable
torepatriatefreeofwithholdingtax.
In2024,assumingtherearenoexchangetransactionsbyourexchangeableshareholders,wewillcontinuetorecognize
CanadianwithholdingtaxesontheaccumulatedearningsofourCanadiansubsidiarieswhicharenotindefinitelyreinvested.
Weengageinanumberofintercompanytransactionsacrossmultipletaxjurisdictions.Althoughwebelievethatthese
transactionsreflecttheaccurateeconomicallocationofprofitandthatpropertransferpricingdocumentationisinplace,the
profitallocationandtransferpricingtermsandconditionsmaybescrutinizedbylocaltaxauthoritiesduringanauditandany
resultingchangesmayimpactourmixofearningsincountrieswithdifferingstatutorytaxrates.Attheendof2020,our
AdvancePricingArrangement("APA")withtheInternalRevenueServiceandtheCanadaRevenueAgencyexpired.ThisAPA
stipulatedtheallocationofcertainprofitsbetweentheU.S.andCanada.Wearecurrentlyintheprocessofnegotiatingthe
renewalofthisarrangementandthefinalagreedupontermsandconditionsthereofcouldimpactoureffectivetaxrate.
Currenteconomicandpoliticalconditionsmaketaxrulesinanyjurisdiction,includingtheUnitedStatesandCanada,
subjecttosignificantchange.ChangesinapplicableU.S.,Canadian,orotherinternationaltaxlawsandregulations,ortheir
interpretationandapplication,includingthepossibilityofretroactiveeffect,couldaffectourincometaxexpenseand
profitability,astheydidinfiscal2017andfiscal2018uponpassageoftheU.S.TaxCutsandJobsAct,andin2020withthe
passageoftheCoronavirusAid,Relief,andEconomicSecurityAct.CertainprovisionsoftheInflationReductionActpassedin
2022,includinga15%corporatealternativeminimumtax,aswellasthesimilar15%globalminimumtaxunderthe
OrganizationforEconomicCooperationandDevelopment'sPillarTwoGlobalAnti-BaseErosionRules,mayimpactourincome
taxexpense,profitability,andcapitalallocationdecisions.
Ourfailuretocomplywithtradeandotherregulationscouldleadtoinvestigationsoractionsbygovernmentregulators
andnegativepublicity.
Thelabeling,distribution,importation,marketing,andsaleofourproducts,aswellascomponentsofourproducts,
includingchemicals,aresubjecttoextensiveregulationbyvariousregulatorybodies.Theseincludefederalagenciessuchas
theFederalTradeCommission,ConsumerProductSafetyCommissionandstateattorneysgeneralintheUnitedStates,the
CompetitionBureauandHealthCanadainCanada,theStateAdministrationforMarketRegulationofthePRC,General
AdministrationofCustomsofthePRC,aswellasotherfederal,state,provincial,local,andinternationalregulatoryauthorities
inthecountriesinwhichourproductsaredistributedorsold.Ifwefailtocomplywithanyoftheseregulations,wecould
becomesubjecttoenforcementactionsortheimpositionofsignificantpenaltiesorclaims,whichcouldharmourresultsof
operationsorourabilitytoconductourbusiness.Inaddition,anyauditsandinspectionsbygovernmentalagenciesrelatedto
thesematterscouldresultinsignificantsettlementamounts,damages,fines,orotherpenalties,divertfinancialand
managementresources,andresultinsignificantlegalfees.Anunfavorableoutcomeofanyparticularproceedingcouldhave
anadverseimpactonourbusiness,financialcondition,andresultsofoperations.Inaddition,theadoptionofnewregulations
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orchangesintheinterpretationofexistingregulationsmayresultinsignificantcompliancecostsordiscontinuationofproduct
salesandcouldimpairthemarketingofourproducts,resultinginsignificantlossofnetrevenue.
OurinternationaloperationsarealsosubjecttocompliancewiththeU.S.ForeignCorruptPracticesAct("FCPA")and
otheranti-briberylawsapplicabletoouroperations.Inmanycountries,particularlyinthosewithdevelopingeconomies,it
maybealocalcustomthatbusinessesoperatinginsuchcountriesengageinbusinesspracticesthatareprohibitedbythe
FCPAorotherU.S.andinternationallawsandregulationsapplicabletous.Asweexpandouroperationsacrossmultiple
jurisdictions,wecouldbesubjecttoconflictinglaws,ordifferingconsumersentimentonapplicationoflaws,thatcouldlead
tonon-compliancewhichcouldhaveanadverseeffectonouroperations.Althoughwehaveimplementedprocedures
designedtoensurecompliancewiththeFCPAandsimilarlaws,someofouremployees,agents,orotherpartners,aswellas
thosecompaniestowhichweoutsourcecertainofourbusinessoperations,couldtakeactionsinviolationofourpolicies.Any
suchviolationcouldhaveamaterialandadverseeffectonourbusiness.
Asweexpandinternationally,wearesubjecttocomplexemployeeregulations,andifwefailtocomplywiththese
regulations,wecouldbesubjecttoenforcementactionsornegativeemployeerelationswhichcouldharmourresultsof
operations.
BecauseasignificantportionofournetrevenueandexpensesaregeneratedincountriesotherthantheUnitedStates,
fluctuationsinforeigncurrencyexchangerateshaveaffectedourresultsofoperationsandmaycontinuetodosointhe
future.
Thefunctionalcurrencyofourinternationalsubsidiariesisgenerallytheapplicablelocalcurrency.Ourconsolidated
financialstatementsarepresentedinU.S.dollars.Therefore,thenetrevenue,expenses,assets,andliabilitiesofour
internationalsubsidiariesaretranslatedfromtheirfunctionalcurrenciesintoU.S.dollars.FluctuationsinthevalueoftheU.S.
dollaraffectthereportedamountsofnetrevenue,expenses,assets,andliabilities.Foreigncurrencyexchangedifferences
whichariseontranslationofourinternationalsubsidiaries'balancesheetsintoU.S.dollarsarerecordedasother
comprehensiveincome(loss),netoftaxinaccumulatedothercomprehensiveincomeorlosswithinstockholders'equity.
Wealsohaveexposuretochangesinforeigncurrencyexchangeratesassociatedwithtransactionswhichare
undertakenbyoursubsidiariesincurrenciesotherthantheirfunctionalcurrency.Suchtransactionsincludeintercompany
transactionsandinventorypurchasesdenominatedincurrenciesotherthanthefunctionalcurrencyofthepurchasingentity.
Asaresult,wehavebeenimpactedbychangesinforeigncurrencyexchangeratesandmaybeimpactedfortheforeseeable
future.Thepotentialimpactofcurrencyfluctuationincreasesasourinternationalexpansionincreases.
Althoughweusefinancialinstrumentstohedgecertainforeigncurrencyrisks,thesemeasuresmaynotsucceedinfully
offsettingthenegativeimpactofforeigncurrencyratemovements.
Weareexposedtocredit-relatedlossesintheeventofnonperformancebythecounterpartiestoforwardcurrency
contractsusedinourhedgingstrategies.
Risksrelatedtointellectualproperty
Ourfabricsandmanufacturingtechnologygenerallyarenotpatentedandcanbeimitatedbyourcompetitors.Ifour
competitorssellproductssimilartooursatlowerprices,ournetrevenueandprofitabilitycouldsuffer.
Theintellectualpropertyrightsinthetechnology,fabrics,andprocessesusedtomanufactureourproductsgenerally
areownedorcontrolledbyoursuppliersandaregenerallynotuniquetous.Ourabilitytoobtainintellectualproperty
protectionforourproductsisthereforelimited.Weholdlimitedpatentsandexclusiveintellectualpropertyrightsinthe
technology,fabricsorprocessesunderlyingourproducts.Asaresult,ourcurrentandfuturecompetitorsareableto
manufactureandsellproductswithperformancecharacteristics,fabricsandstylingsimilartoourproducts.Becausemanyof
ourcompetitorshavesignificantlygreaterfinancial,distribution,marketing,andotherresourcesthanwedo,theymaybe
abletomanufactureandsellproductsbasedonourfabricsandmanufacturingtechnologyatlowerpricesthanwecan.Ifour
competitorssellproductssimilartooursatlowerprices,ournetrevenueandprofitabilitycouldsuffer.
Ourfailureorinabilitytoprotectourintellectualpropertyrightscoulddiminishthevalueofourbrandandweakenour
competitiveposition.
Wecurrentlyrelyonacombinationofpatent,copyright,trademark,tradedress,tradesecret,andunfaircompetition
laws,aswellasconfidentialityproceduresandlicensingarrangements,toestablishandprotectourintellectualproperty
rights.Thestepswetaketoprotectourintellectualpropertyrightsmaynotbeadequatetopreventinfringementofthese
rightsbyothers,includingimitationofourproductsandmisappropriationofourbrand.Inaddition,anyofourintellectual
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propertyrightsmaybechallenged,whichcouldresultinthembeingnarrowedinscopeordeclaredinvalidorunenforceable,
orourintellectualpropertyprotectionmaybeunavailableorlimitedinsomeinternationalcountrieswherelawsorlaw
enforcementpracticesmaynotprotectourintellectualpropertyrightsasfullyasintheUnitedStatesorCanada,anditmay
bemoredifficultforustosuccessfullychallengetheuseofourintellectualpropertyrightsbyotherpartiesinthesecountries.
Ifwefailtoprotectandmaintainourintellectualpropertyrights,thevalueofourbrandcouldbediminished,andour
competitivepositionmaysuffer.
Ourtrademarks,patents,andotherproprietaryrightscouldpotentiallyconflictwiththerightsofothersandwemaybe
preventedfromsellingsomeofourproducts.
Oursuccessdependsinlargepartonourbrandimage.Webelievethatourtrademarks,patents,andotherproprietary
rightshavesignificantvalueandareimportanttoidentifyinganddifferentiatingourproductsfromthoseofourcompetitors
andcreatingandsustainingdemandforourproducts.WehaveappliedforandobtainedsomeUnitedStates,Canada,and
internationaltrademarkregistrationsandpatents,andwillcontinuetoevaluateadditionaltrademarksandpatentsas
appropriate.However,someorallofthesependingtrademarkorpatentapplicationsmaynotbeapprovedbytheapplicable
governmentalauthorities.Moreover,eveniftheapplicationsareapproved,thirdpartiesmayseektoopposeorotherwise
challengetheseapplicationsorregistrations.Additionally,wemayfaceobstaclesasweexpandourproductlineandthe
geographicscopeofoursalesandmarketing.Thirdpartiesmayassertintellectualpropertyclaimsagainstus,particularlyas
weexpandourbusinessandthenumberofproductsweoffer.Ourdefenseofanyclaim,regardlessofitsmerit,couldbe
expensiveandtimeconsumingandcoulddivertmanagementresources.Successfulinfringementclaimsagainstuscould
resultinsignificantmonetaryliabilityorpreventusfromsellingsomeofourproducts.Inaddition,resolutionofclaimsmay
requireustoredesignourproducts,licenserightsfromthirdparties,orceaseusingthoserightsaltogether.Anyofthese
eventscouldharmourbusinessandcauseourresultsofoperations,liquidity,andfinancialconditiontosuffer.
Wehavebeen,andinthefuturemaybe,suedbythirdpartiesforallegedinfringementoftheirproprietaryrights.
Thereisconsiderablepatentandotherintellectualpropertydevelopmentactivityinourmarket,andlitigation,basedon
allegationsofinfringementorotherviolationsofintellectualproperty,isfrequentinthefitnessandtechnologyindustries.
Furthermore,itiscommonforindividualsandgroupstopurchasepatentsandotherintellectualpropertyassetsforthe
purposeofmakingclaimsofinfringementtoextractsettlementsfromcompanieslikeours.Ouruseofthird-partycontent,
includingmusiccontent,software,andotherintellectualpropertyrightsmaybesubjecttoclaimsofinfringementor
misappropriation.Wecannotguaranteethatourinternallydevelopedoracquiredtechnologiesandcontentdonotorwillnot
infringetheintellectualpropertyrightsofothers.Fromtimetotime,ourcompetitorsorotherthirdpartiesmayclaimthatwe
areinfringinguponormisappropriatingtheirintellectualpropertyrights,andwemaybefoundtobeinfringinguponsuch
rights.Anyclaimsorlitigationcouldcauseustoincursignificantexpensesand,ifsuccessfullyassertedagainstus,could
requirethatwepaysubstantialdamagesorongoingroyaltypayments,preventusfromofferingourplatformorservicesor
usingcertaintechnologies,forceustoimplementexpensivework-arounds,orimposeotherunfavorableterms.Weexpect
thattheoccurrenceofinfringementclaimsislikelytogrowasthemarketforfitnessproductsandservicesgrowsandaswe
introducenewandupdatedproductsandofferings.Accordingly,ourexposuretodamagesresultingfrominfringementclaims
couldincreaseandthiscouldfurtherexhaustourfinancialandmanagementresources.Anyoftheforegoingcouldpreventus
fromcompetingeffectivelyandcouldhaveanadverseeffectonourbusiness,financialcondition,andoperatingresults.
Risksrelatedtolegalandgovernancematters
Wearesubjecttoperiodicclaimsandlitigationthatcouldresultinunexpectedexpensesandcouldultimatelyberesolved
againstus.
Fromtimetotime,weareinvolvedinlitigationandotherproceedings,includingmattersrelatedtoproductliability
claims,stockholderclassactionandderivativeclaims,commercialdisputesandintellectualproperty,aswellastrade,
regulatory,employment,andotherclaimsrelatedtoourbusiness.Anyoftheseproceedingscouldresultinsignificant
settlementamounts,damages,fines,orotherpenalties,divertfinancialandmanagementresources,andresultinsignificant
legalfees.Anunfavorableoutcomeofanyparticularproceedingcouldexceedthelimitsofourinsurancepoliciesorthe
carriersmaydeclinetofundsuchfinalsettlementsand/orjudgmentsandcouldhaveanadverseimpactonourbusiness,
financialcondition,andresultsofoperations.Inaddition,anyproceedingcouldnegativelyimpactourreputationamongour
guestsandourbrandimage.
Ourbusinesscouldbenegativelyaffectedasaresultofactionsofactiviststockholdersorothers.
Wemaybesubjecttoactionsorproposalsfromstockholdersorothersthatmaynotalignwithourbusinessstrategies
ortheinterestsofourotherstockholders.Respondingtosuchactionscanbecostlyandtime-consuming,disruptourbusiness
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andoperations,anddiverttheattentionofourboardofdirectors,management,andemployeesfromthepursuitofour
businessstrategies.Suchactivitiescouldinterferewithourabilitytoexecuteourstrategicplan.Activiststockholdersorothers
maycreateperceiveduncertaintiesastothefuturedirectionofourbusinessorstrategywhichmaybeexploitedbyour
competitorsandmaymakeitmoredifficulttoattractandretainqualifiedpersonnelandpotentialguests,andmayaffectour
relationshipswithcurrentguests,vendors,investors,andotherthirdparties.Inaddition,aproxycontestfortheelectionof
directorsatourannualmeetingwouldrequireustoincursignificantlegalfeesandproxysolicitationexpensesandrequire
significanttimeandattentionbymanagementandourboardofdirectors.Theperceiveduncertaintiesastoourfuture
directionalsocouldaffectthemarketpriceandvolatilityofoursecurities.
Anti-takeoverprovisionsofDelawarelawandourcertificateofincorporationandbylawscoulddelayanddiscourage
takeoverattemptsthatstockholdersmayconsidertobefavorable.
CertainprovisionsofourcertificateofincorporationandbylawsandapplicableprovisionsoftheDelawareGeneral
CorporationLawmaymakeitmoredifficultorimpossibleforathird-partytoacquirecontrolofusoreffectachangeinour
boardofdirectorsandmanagement.Theseprovisionsinclude:
• theclassificationofourboardofdirectorsintothreeclasses,withoneclasselectedeachyear;
• prohibitingcumulativevotingintheelectionofdirectors;
• theabilityofourboardofdirectorstoissuepreferredstockwithoutstockholderapproval;
• theabilitytoremoveadirectoronlyforcauseandonlywiththevoteoftheholdersofatleast662/3%ofourvoting
stock;
• aspecialmeetingofstockholdersmayonlybecalledbyourchairmanorChiefExecutiveOfficer,orupona
resolutionadoptedbyanaffirmativevoteofamajorityoftheboardofdirectors,andnotbyourstockholders;
• prohibitingstockholderactionbywrittenconsent;and
• ourstockholdersmustcomplywithadvancenoticeproceduresinordertonominatecandidatesforelectiontoour
boardofdirectorsortoplacestockholderproposalsontheagendaforconsiderationatanymeetingofour
stockholders.
Inaddition,wearegovernedbySection203oftheDelawareGeneralCorporationLawwhich,subjecttosomespecified
exceptions,prohibits"businesscombinations"betweenaDelawarecorporationandan"interestedstockholder,"whichis
generallydefinedasastockholderwhobecomesabeneficialownerof15%ormoreofaDelawarecorporation'svotingstock,
forathree-yearperiodfollowingthedatethatthestockholderbecameaninterestedstockholder.Section203couldhavethe
effectofdelaying,deferring,orpreventingachangeincontrolthatourstockholdersmightconsidertobeintheirbest
interests.
ITEM1C.CYBERSECURITY
RiskManagementandStrategy
Ourbusinessoperationsandrelationshipswithcustomersandsuppliersareheavilyreliantontechnology.Weoperatea
cybersecurityprogramdesignedtoassessoursecurityrisksandthreats,tomanagethoserisksandprotectourtechnology
systemsanddata,andtodetectandrespondtocybersecurityincidents.
Wemanagestrategicrisks,includingcybersecurityrisk,throughourEnterpriseRiskManagementprogramwhichhas
directinvolvementfromtheboardofdirectors,theauditcommittee,andseniormanagement.Throughthisprocess,wehave
identifiedcybersecurityasariskmanagementpriority.
Governance
Ourboardofdirectorsprovidesoversightofcybersecurityrisksandhasdelegatedprimaryresponsibilitytotheaudit
committee,whichisresponsibleforoverseeingourenterpriseriskassessmentsandmanagementpolicies,procedures,and
practices(includingregardingthoserisksrelatedtoinformationsecurity,cybersecurity,anddataprotection).
Theauditcommitteemaintainsacybersecuritysub-committeethatiscomprisedofourChiefInformationOfficer
("CIO"),ourChiefInformationSecurityOfficer("CISO"),andrepresentativesfromtheauditcommitteeandboardofdirectors
thathaveknowledgeandexperienceincybersecuritymatters.Thecybersecuritysub-committeereviewsourcybersecurity
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riskassessmentsandthestepsbeingtakentomonitor,control,andreportonthoserisksaswellasdiscussesregulatoryand
marketdevelopments.Theyalsoreviewourprocessforidentifyingandrespondingtocybersecurityincidentsinatimely
manner,anddetailsofcybersecurityattacksorincidentswhichhaveoccurred.
Managementgenerallymeetswith,andprovidesreportsto,thecybersecuritysub-committeeonaquarterlybasis.Our
CIOandCISOalsomeetwithandprovidereportstotheauditcommitteeatleastquarterly.Theboardofdirectorsreceives
periodicreportsregardingtheactivitiesofthecybersecuritysub-committee.Thesereportsandmeetingsaredesignedto
informtheboardofdirectorsandcommitteesaboutthecurrentstateofourinformationsecurityprogramincluding
cybersecurityrisks,thenature,timing,andextentofcybersecurityincidents,ifany,andtheresolutionofsuchmatters.
CybersecurityProgramandIncidentResponse
OurCISOisresponsibleforourcybersecurityprogram,includingriskassessments,informationsecurityactivities,and
controls.TheCISOisresponsibleforestablishingandmaintainingcorporateinformationsecuritypoliciesandoverseeingour
riskmanagementactivities,whichprioritizevulnerabilitymanagement,riskreduction,andprevention.OurCISOalsoleadsour
CyberDefenseandIncidentResponse(“CDIR”)teamwhichidentifies,assesses,escalates,andremediatescybersecurity
incidents.OurcurrentCISOhasover25yearsofexperienceininformationsecurityacrossdifferentindustriesintheUS,
Europe,andSouthandCentralAmerica.OurcurrentCISOisamemberoftheInformationSystemsAuditandControl
Associationandbringsextensiveexperienceandknowledgeofcybersecurityriskmanagement.
TheCDIRteamidentifies,tracks,reviews,assesses,andtakesactionsoverkeycybersecurityrisksincludingbutnot
limitedto:(i)thirdparties/vendors,(ii)cloudsecurity,(iii)maliciouscode,(iv)ourdigitale-commercechannelsandsystems,
and(v)ourstoretechnology.TheCDIRteamalsoundertakesenterprisearchitecturereviews,considerscyberdefenseand
incidentresponsefindings,performsvulnerabilityscans,andassessesthreatsandperformslandscapeintelligenceanalysis.
Aspartofourcybersecurityprogram,weconductcybersecurityawarenesstrainingincludingphishingsimulationsand
supplementalcampaignsaswellasmandatorye-learningforallouremployees.Ouremployeeshavemultiplemechanismsfor
reportingcybersecurityanddataprivacyconcerns.Weworkwiththird-partycybersecurityadvisorstoundertakeassessments
ofourcriticalsystemsandtoremediateanyhigh-riskvulnerabilitiesidentified.Wealsoengagethirdpartiestoperform
penetrationtestingonourkeysystemstoidentifypotentialweaknesses.
Aspartofourcyberincidentresponseplan,weutilizeanestablishedframeworktoassesstheseverityofcybersecurity
incidents.Undertheplan,incidentsareescalatedtorelevantseniormanagement,andtheboardofdirectors,asappropriate,
basedontheirseverity.Ourdisclosurecommitteeassessesthematerialityofsevereincidentsincludingbothquantitativeand
qualitativefactors.
ThirdParties
Weutilizethird-partyserviceprovidersasanormalpartofourbusinessoperations.Toaddresscybersecurityrisks
arisingfromourrelationshipswiththird-partyserviceproviders,weemployavendorriskprogram.Wemonitorrisksrelating
topotentialcompromisesofsensitiveinformationatourthird-partyserviceprovidersandre-evaluatetherisksassociated
withourpartnersperiodically.Priortoexchangingourdatawiththird-partyserviceproviders,theyarerequiredtogothrough
avendorriskassessment.Wealsoconductthird-partysecurityreviewsandevaluatetheirnetwork,processes,andsystems.In
addition,weobtainannualattestationreportsrelatedtodatasecurityandprivacyfromcertainthird-partyserviceproviders
tofurthersupportcompliancewithindustry-standardcybersecurityprotocols.
ImpactofCybersecurityRisksonStrategyandResults
BasedontheinformationavailableasofthedateofthisAnnualReport,wehavenotbeenmateriallyaffectedbyany
previouscybersecurityincidents.However,wecontinuetoexperiencecyber-attacks,includingphishing,andotherattempts
tobreakorgainunauthorizedaccesstooursystemsthatcouldmateriallyaffectusinthefuture.Forfurtherinformation,see
“Risksrelatedtoinformationsecurityandtechnology”includedinItem1A.RiskFactorsofthisAnnualReport.
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ITEM2.PROPERTIES
Ourprincipalexecutiveandadministrativeofficesarelocatedat1818CornwallAvenue,Vancouver,BritishColumbia,
Canada,V6J1C7.
Thegenerallocation,useandapproximatesizeofourprincipalownedpropertiesasofJanuary28,2024,aresetforth
below:
Location Use
ApproximateSquare
Feet
Groveport,OH,UnitedStates DistributionCenter 310,000
Vancouver,BC,Canada ExecutiveandAdministrativeOffices 140,000
Weleasenon-retailpropertiesinanumberoflocationsglobally.Thegenerallocation,use,approximatesizeandlease
renewaldateofourprincipalnon-retailleasedpropertiesasofJanuary28,2024,aresetforthbelow:
Location Use
ApproximateSquare
Feet LeaseRenewalDate
Delta,BC,Canada DistributionCenter 375,000 December2037
Milton,ON,Canada DistributionCenter 255,000 May2031
Mississauga,ON,Canada DistributionCenter 250,000 September2033
Ravenhall,VIC,Australia DistributionCenter 250,000 September2033
Delta,BC,Canada DistributionCenter 155,000 January2031
Sumner,WA,UnitedStates DistributionCenter 150,000 July2025
Vancouver,BC,Canada ExecutiveandAdministrativeOffices 120,000 October2032
During2021,weenteredintoanewleaseforaU.S.distributioncenterinOntario,Californiaofapproximately1,255,000
squarefeetwhichexpiresin2039.Weexpectthisdistributioncentertobeoperationalinearlyfiscal2024.
During2022,weenteredintoanewleaseforaCanadiandistributioncenterinBrampton,Ontarioofapproximately
980,000squarefeetwhichexpiresin2041.Weexpectthisdistributioncentertobeoperationalinfiscal2026.
ITEM3.LEGALPROCEEDINGS
PleaseseethelegalproceedingsdescribedinNote21.CommitmentsandContingenciesincludedinItem8ofPartIIof
thisreport.
ITEM4.MINESAFETYDISCLOSURES
Notapplicable.
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PARTII
ITEM5.MARKETFORREGISTRANT'SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERSANDISSUERPURCHASESOF
EQUITYSECURITIES
MarketInformationandDividends
OurcommonstockisquotedontheNasdaqGlobalSelectMarketunderthesymbol"LULU."
AsofMarch15,2024,therewereapproximately1,300holdersofrecordofourcommonstock.Thisdoesnotinclude
personswhosestockisinnomineeor"streetname"accountsthroughbrokers.
Wedonotanticipatepayinganycashdividendsonourcommonstockintheforeseeablefuture.Anyfuture
determinationastothepaymentofcashdividendswillbeatthediscretionofourboardofdirectorsandwilldependonour
financialcondition,operatingresults,currentandanticipatedcashneeds,plansforexpansion,andotherfactorsthatour
boardofdirectorsconsiderstoberelevant.Inaddition,financialandothercovenantsinanyinstrumentsoragreementsthat
weenterintointhefuturemayrestrictourabilitytopaycashdividendsonourcommonstock.
StockPerformanceGraph
ThegraphsetforthbelowcomparesthecumulativetotalstockholderreturnonourcommonstockbetweenFebruary3,
2019(thedateofourfiscalyearendfiveyearsago)andJanuary28,2024,withthecumulativetotalreturnof(i)theS&P500
Indexand(ii)S&P500Apparel,Accessories&LuxuryGoodsIndex,overthesameperiod.Thisgraphassumestheinvestment
of$100onFebruary3,2019attheclosingsalepriceofourcommonstock,theS&P500IndexandtheS&PApparel,
Accessories&LuxuryGoodsIndexandassumesthereinvestmentofdividends,ifany.
Thecomparisonsshowninthegraphbelowarebasedonhistoricaldata.Wecautionthatthestockpriceperformance
showninthegraphbelowisnotnecessarilyindicativeof,norisitintendedtoforecast,thepotentialfutureperformanceof
ourcommonstock.InformationusedinthegraphwasobtainedfromBloomberg,asourcebelievedtobereliable,butweare
notresponsibleforanyerrorsoromissionsinsuchinformation.
ComparisonofCumulativeTotalStockholderReturn
lululemonathleticainc.
S&P500Index
S&P500Apparel,Accessories
&LuxuryGoodsIndex
03-Feb-19
02-Feb-20
31-Jan-21
30-Jan-22
29-Jan-23
28-Jan-24
$0.00
$100.00
$200.00
$300.00
$400.00
03-Feb-19 02-Feb-20 31-Jan-21 30-Jan-22 29-Jan-23 28-Jan-24
lululemonathleticainc. $ 100.00 $ 163.83 $ 224.94 $ 216.20 $ 212.74 $ 327.15
S&P500Index $ 100.00 $ 119.18 $ 137.23 $ 163.75 $ 150.40 $ 180.71
S&P500Apparel,Accessories&LuxuryGoodsIndex $ 100.00 $ 90.30 $ 86.51 $ 83.79 $ 59.05 $ 47.77
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IssuerPurchaseofEquitySecurities
Thefollowingtableprovidesinformationregardingourpurchasesofsharesofourcommonstockduringthefourth
quarterof2023relatedtoourstockrepurchaseprograms:
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)
October30,2023-November26,2023 50,619 $ 400.10 50,619 $ 222,941,393
November27,2023-December31,2023 10,040 507.57 10,040 1,217,845,403
January1,2024-January28,2024 59,180 483.73 59,180 1,189,218,138
Total 119,839 119,839
__________
(1)
Monthlyinformationispresentedbyreferencetoourfiscalperiodsduringourfourthquarterof2023.
(2)
OnMarch23,2022andNovember29,2023,ourboardofdirectorsapprovedstockrepurchaseprograms,eachforupto$1.0billionofourcommon
sharesontheopenmarketorinprivatelynegotiatedtransactions.Therepurchaseplanshavenotimelimitanddonotrequiretherepurchaseofa
minimumnumberofshares.Commonsharesrepurchasedontheopenmarketareatprevailingmarketprices,includingunderplanscomplyingwith
theprovisionsofRule10b5-1andRule10b-18oftheSecuritiesExchangeActof1934.Thetimingandactualnumberofcommonsharestobe
repurchasedwilldependuponmarketconditions,eligibilitytotrade,andotherfactors.Theauthorizedvalueofsharesavailabletoberepurchased
undertheseprogramsexcludesthecostofcommissionsandexcisetaxes.
Thefollowingtablesummarizespurchasesofsharesofourcommonstockduringthefourthquarterof2023relatedto
ourEmployeeSharePurchasePlan(ESPP):
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Number
ofSharesthatMay
YetBePurchased
UnderthePlansor
Programs
(2)
October30,2023-November26,2023 7,367 $ 418.18 7,367 4,415,983
November27,2023-December31,2023 7,331 491.70 7,331 4,408,652
January1,2024-January28,2024 5,954 482.84 5,954 4,402,698
Total 20,652 20,652
___________
(1)
Monthlyinformationispresentedbyreferencetoourfiscalperiodsduringourfourthquarterof2023.
(2)
TheESPPwasapprovedbyourboardofdirectorsandstockholdersinSeptember2007.AllsharespurchasedundertheESPParepurchasedonthe
NasdaqGlobalSelectMarket(orsuchotherstockexchangeaswemaydesignate).UnlessourboardterminatestheESPPearlier,itwillcontinueuntil
allsharesauthorizedforpurchasehavebeenpurchased.ThemaximumnumberofsharesauthorizedtobepurchasedundertheESPPwas6,000,000.
Excludedfromthisdisclosurearesharesrepurchasedtosettlestatutoryemployeetaxwithholdingrelatedtothe
vestingofstock-basedcompensationawards.
ITEM6.SELECTEDCONSOLIDATEDFINANCIALDATA
Notapplicable.
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ITEM7.MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS
Management'sdiscussionandanalysisoffinancialconditionandresultsofoperationsisprovidedasasupplementto,
andshouldbereadinconjunctionwith,ourconsolidatedfinancialstatementsandtherelatednotesincludedelsewherein
thisAnnualReportonForm10-K.Componentsofmanagement'sdiscussionandanalysisoffinancialconditionandresultsof
operationsinclude:
• Overview
• FinancialHighlightsandMarketConditionsandTrends
• ResultsofOperations
• Comparisonof2023to2022
• Comparisonof2022to2021
• ComparableSalesandSalesPerSquareFoot
• Non-GAAPFinancialMeasures
• LiquidityandCapitalResources
• LiquidityOutlook
• ContractualObligationsandCommitments
• CriticalAccountingPoliciesandEstimates
OurfiscalyearendsontheSundayclosesttoJanuary31ofthefollowingyear,typicallyresultingina52-weekyear,but
occasionallygivingrisetoanadditionalweek,resultingina53-weekyear.Fiscal2023,2022,and2021wereeach52-week
years.Fiscal2024willbea53-weekyear.
Thisdiscussionandanalysiscontainsforward-lookingstatementsbasedoncurrentexpectationsthatinvolverisks,
uncertaintiesandassumptions,suchasourplans,objectives,expectations,andintentionsincludedinthe"SpecialNote
RegardingForward-LookingStatements."Ouractualresultsandthetimingofeventsmaydiffermateriallyfromthose
anticipatedintheseforward-lookingstatementsasaresultofvariousfactors,includingthosedescribedinthe"Item1A.Risk
Factors"sectionandelsewhereinthisAnnualReportonForm10-K.
Weusecomparablesalesasametrictoevaluatetheperformanceofourbusiness.RefertotheComparableSalesand
SalesPerSquareFootsectionofthismanagement'sdiscussionandanalysisoffinancialconditionandresultsofoperationsfor
furtherinformation.
Weprovideconstantdollarchangesandadjustedfinancialresults,whicharenon-GAAPfinancialmeasures,as
supplementalinformationthatenableevaluationoftheunderlyingtrendinouroperatingperformance,andenablea
comparisontoourhistoricalfinancialinformation.RefertotheNon-GAAPFinancialMeasuressectionofthismanagement's
discussionandanalysisoffinancialconditionandresultsofoperationsforreconciliationsbetweentheadjustednon-GAAP
financialmeasuresandthemostdirectlycomparablemeasurescalculatedinaccordancewithGAAP.
Wedisclosematerialnon-publicinformationthroughoneormoreofthefollowingchannels:ourinvestorrelations
website(http://corporate.lululemon.com/investors),thesocialmediachannelsidentifiedonourinvestorrelationswebsite,
pressreleases,SECfilings,publicconferencecalls,andwebcasts.Informationcontainedonoraccessiblethroughourwebsites
isnotincorporatedinto,anddoesnotformapartof,thisAnnualReportoranyotherreportordocumentwefilewiththeSEC,
andanyreferencestoourwebsitesareintendedtobeinactivetextualreferencesonly.
Duringthefourthquarterof2023,werevisedthefinancialinformationwhichisregularlyreviewedandusedbyour
CODMtoevaluateperformanceandallocateresources.Historically,oursegmentswerebasedonsellingchannel.Aswehave
furtherexecutedonouromni-channelretailstrategy,andwiththecontinuedexpansionofourinternationaloperations,our
resourceallocationdecisionshaveevolvedtofocusonregionalmarkets.Weorganizeouroperationsintofourregional
markets:Americas,ChinaMainland,APAC,andEMEA.Wereportthreesegments,Americas,ChinaMainland,andRestof
World,whichiscomprisedoftheAPACandEMEAregionsonacombinedbasis.Ourprioryearsegmentresultshavebeen
recasttoreflectournewsegmentreportingstructure.
Overview
In2023,lululemoncelebratedits25thanniversaryanddeliveredanotherstrongyearoffinancialresults.Wecontinued
toexecuteagainstourPowerofThree×2growthplan,growingnetrevenue19%anddilutedearningspershare83%,or27%
onanadjustedbasis,asourteamswereabletosuccessfullynavigateanuncertainmacroeconomicenvironment.
Ourgrowthcontinuedacrossregions,merchandisecategories,andchannels.Wedeliveredstrongnetrevenuegrowth
acrossourregionsincluding12%intheAmericas,67%inChinaMainland,and43%inRestofWorld.Netrevenuefromour
women'sproductrangeincreased17%,men'sincreased15%,andnetrevenuefromourothercategoriesincreased36%.We
27
opened56netnewcompany-operatedstores,contributingtoa15%increaseinsquarefootage,whiletotalcompany-
operatedstorenetrevenueincreased21%ande-commercenetrevenueincreased17%.
Webelievethisbroad-basedgrowthwasunderpinnedbyourabilitytobringnewinnovationsintoourproduct
assortment,whilealsoincreasingourbrandawarenessandbringingnewguestsintoourbrand.
ProductInnovation
ByinnovatingthroughourScienceofFeelapproach,wecontinuetoseektosolvetheunmetneedsofourguests.While
continuingtoseestrengthfromourkeycollectionsincludingAlign,Scuba,Define,andSoftstremeforwomenandourABC
collectionformen,welaunchednewinnovationsaswell.Forwomen,welaunchedWundermost,ournewbodywear
collection,weexpandedourdualgendergolfandtennisassortments.Onthemen’sside,welaunchedSteadyStateandSoft
Jersey,toexpandourloungeoffering,whilealsoenhancingourPaceBreakershort.Inaccessories,wecontinuedtosee
strengthacrossourbagassortment,andinfootwearweupdatedourBlissfeelandChargefeelstyles,andinearly2024,we
launchedourfirstfootwearstylesformen.Wealsoannouncedanewtextile-to-textilerecyclingpartnershipwiththegoalof
enablingcircularityinoursupplychainbytransformingapparelwasteintohighqualitynylonandpolyester.
BrandAwareness
Webelievethatincreasingourbrandawarenessandintroducingnewgueststothelululemonbrandremainsoneofour
largestopportunities,bothintheAmericasandtoanevengreaterdegreeinourinternationalmarkets.
Inordertogrowbrandawarenesswecombineourcommunity-based,grassrootsmodelofguestengagement,with
largerscalebrandactivationsandglobalbrandcampaigns.Withconnectionpointsacrossbothourphysicalanddigital
channels,weaimtobringnewguestsintoourbrand,engagewiththeminwaysthataremorethanjusttransactionaland
createdeeperconnections.
In2023,weexecutedseveralstrategiesdesignedtoconnectwithguests,bringnewguestsintoourbrand,andgrow
awareness.Highlightsinclude:hostingourDupeSwapeventinLosAngeles;testingourfirstmen'sfocusedTVcampaign
featuringourABCpants;takingovertheWestBundinShanghaiforoneweektohostwellness-centriceventsandexperiences
intendedtobringawarenesstoWorldMentalHealthDay;andcontinuingtogrowourEssentialsmembershipprogram.
Inaddition,inSeptember2023weannouncedournewpartnershipwithPeloton.Pelotonisnowtheexclusiveprovider
ofcontentforourlululemonStudiomembers,wehavebecometheirprimaryapparelprovider.Weplantojointlyengageour
globalcommunitiesthroughspecialprogramming,experiences,andevents.
FinancialHighlights
Thesummarybelowcompares2023to2022andprovidesbothGAAPandnon-GAAPfinancialmeasures.Theadjusted
financialmeasuresfor2023exclude$72.1millionofpost-taxassetimpairmentandotherchargesrecognizedinrelationto
lululemonStudio.Theadjustedfinancialmeasuresfor2022exclude$442.7millionofpost-taxgoodwillimpairmentandother
chargesrecognizedinrelationtolululemonStudioandthepost-taxnetgainonthesaleofanadministrativebuildingof$8.5
million.
• Netrevenueincreased19%to$9.6billion.Onaconstantdollarbasis,netrevenueincreased20%.
• Comparablesalesincreased13%,or14%onaconstantdollarbasis.
– Americascomparablesalesincreased8%,or9%onaconstantdollarbasis.
– ChinaMainlandcomparablesalesincreased39%,or46%onaconstantdollarbasis.
– RestofWorldcomparablesalesincreased32%,or33%onaconstantdollarbasis.
• Grossprofitincreased25%to$5.6billion.Adjustedgrossprofitincreased24%to$5.6billion.
• Grossmarginincreased290basispointsto58.3%.Adjustedgrossmarginincreased240basispointsto58.6%.
• Incomefromoperationsincreased61%to$2.1billion.Adjustedincomefromoperationsincreased25%to$2.2
billion.
• Operatingmarginincreased580basispointsto22.2%from16.4%in2022.Adjustedoperatingmarginincreased110
basispointsto23.2%from22.1%in2022.
28
• Incometaxexpenseincreased31%to$625.5million.Oureffectivetaxratefor2023was28.8%comparedto35.9%
for2022.Theadjustedeffectivetaxratewas28.7%and28.1%for2023and2022,respectively.
• Dilutedearningspersharewere$12.20for2023comparedto$6.68in2022.Adjusteddilutedearningspershare
were$12.77for2023comparedto$10.07in2022.
MarketConditionsandTrends
Macroeconomicconditions,supplychaindisruption,andtheCOVID-19pandemichaveimpactedourbusinessand
operatingcosts.Certaintrendsareexpectedtocontinuethroughout2024,withtheimpactvaryingbymarket.
MacroeconomicConditions
Macroeconomicconditions,includingforeigncurrencyfluctuations,haveimpactedourfinancialresults.Foreign
currencyfluctuationsreducedthegrowthofournetrevenueby$89.8millionwhencomparing2023to2022,primarilydueto
theoverallappreciationoftheUSdollar.Weexpectfutureexchangeratevolatilitytoimpactourresults.Wehavealso
experiencedincreasedwagerateswhichincreasedouremployeecostswhencomparing2023to2022.
Consumerpurchasingbehaviorsandtheirpropensitytospendinoursectorhavebeenimpactedbyuncertaineconomic
conditionsincludinginflation,higherinterestrates,andotherfactors.Whileweexperiencedtrafficandnetrevenuegrowthin
2023inallmarkets,overthecourseof2023wesawmoderationintheyearoveryeartrafficandnetrevenuegrowthinthe
Americas.Wecontinuetomonitormacroeconomicconditionsandthetrendsinconsumerdemandforourproducts.
SupplyChainDisruption
In2021and2022weexperiencedsupplychaindisruption,includingdelaysininbounddeliveryofourproductsaswell
asinmanufacturing.Thissupplychaindisruptioncausedustousehighercostmodesoftransport,includingincreasingouruse
ofairfreight.Wesawanimprovementinthesupplychaindisruptionduringthesecondhalfof2022andduring2023,
includingreductionsinfreightcostsandreductionsinourlevelsofairfreightusage.
COVID-19Pandemic
Mostofourretaillocationswereopenthroughout2023,2022,and2021,withcertainlocationstemporarilycloseddue
toCOVID-19resurgencesduringthefirstquarterof2022andatvarioustimesin2021.TheeffectofCOVID-19,includingstore
closures,impactedourrevenueandoperatingmarginsin2021andthefirstquarterof2022inChinaMainland.
ResultsofOperations
Thefollowingtablesummarizeskeycomponentsofourresultsofoperationsfortheperiodsindicated:
2023 2022 2021 2023 2022 2021
(Inthousands) (Percentageofnetrevenue)
Netrevenue $ 9,619,278 $ 8,110,518 $ 6,256,617 100.0% 100.0% 100.0%
Costofgoodssold 4,009,873 3,618,178 2,648,052 41.7 44.6 42.3
Grossprofit 5,609,405 4,492,340 3,608,565 58.3 55.4 57.7
Selling,generalandadministrative
expenses 3,397,218 2,757,447 2,225,034 35.3 34.0 35.6
Impairmentofgoodwillandother
assets,restructuringcosts 74,501 407,913 — 0.8 5.0 —
Amortizationofintangibleassets 5,010 8,752 8,782 0.1 0.1 0.1
Acquisition-relatedexpenses — — 41,394 — — 0.7
Gainondisposalofassets — (10,180) — — (0.1) —
Incomefromoperations 2,132,676 1,328,408 1,333,355 22.2 16.4 21.3
Otherincome(expense),net 43,059 4,163 514 0.4 0.1 —
Incomebeforeincometaxexpense 2,175,735 1,332,571 1,333,869 22.6 16.4 21.3
Incometaxexpense 625,545 477,771 358,547 6.5 5.9 5.7
Netincome $ 1,550,190 $ 854,800 $ 975,322 16.1% 10.5% 15.6%
29
Comparisonof2023to2022
NetRevenue
Netrevenueincreased$1.5billion,or19%,to$9.6billionin2023from$8.1billionin2022.Onaconstantdollarbasis,
netrevenueincreased20%.Comparablesalesincreased13%,or14%onaconstantdollarbasis.Theincreaseinnetrevenue
wasprimarilyduetoincreasedAmericasnetrevenue.ChinaMainlandandRestofWorldnetrevenuealsoincreased.
Netrevenuefor2023and2022issummarizedbelow,andreflectsourupdatedsegments,includingcomparatives.
2023 2022 2023 2022 Yearoveryearchange
(Inthousands) (Percentageofnetrevenue) (Inthousands) (Percentage)
(Constantdollar
change)
Americas $ 7,631,647 $ 6,817,454 79.3% 84.1% $ 814,193 11.9% 12.0%
ChinaMainland 963,760 576,503 10.0 7.1 387,257 67.2 75.0
RestofWorld 1,023,871 716,561 10.6 8.8 307,310 42.9 44.0
Netrevenue $ 9,619,278 $ 8,110,518 100.0% 100.0% $ 1,508,760 18.6% 20.0%
Americas.TheincreaseinAmericasnetrevenuewasprimarilyduetoanincreaseincomparablesales,whichincreased
8%,or9%onaconstantdollarbasis.Theincreaseincomparablesaleswasprimarilyaresultofincreasedtraffic,partially
offsetbyalowerdollarvaluepertransactionandadecreaseinconversionrates.TheincreaseinAmericasnetrevenuewas
alsodrivenbya$327.6millionincreaseinnon-comparablesales,primarilyfromourcompany-operatedstoresthatwere
openedorsignificantlyexpandedsince2022aswellasincreasedoutlet,wholesale,andlicenseandsupplyarrangementnet
revenue,partiallyoffsetbyfewertemporarylocationsandlowerlululemonStudionetrevenue.
ChinaMainland.TheincreaseinChinaMainlandnetrevenuewasprimarilyduetoanincreaseincomparablesales,
whichincreased39%,or46%onaconstantdollarbasis.Theincreaseincomparablesaleswasprimarilyaresultofincreased
traffic,partiallyoffsetbyadecreaseinconversionratesandalowerdollarvaluepertransaction.TheincreaseinChina
Mainlandnetrevenuewasalsodrivenbya$180.6millionincreaseinnon-comparablesales,primarilyfromourcompany-
operatedstoresthatwereopenedorsignificantlyexpandedsince2022aswellasincreasednetrevenuefromoutlets.
RestofWorld.TheincreaseinRestofWorldnetrevenuewasprimarilyduetoanincreaseincomparablesales,which
increased32%,or33%onaconstantdollarbasis.Theincreaseincomparablesaleswasprimarilyaresultofincreasedtraffic,
partiallyoffsetbyadecreaseinconversionrates.TheincreaseinRestofWorldnetrevenuewasalsodrivenbya$118.9
millionincreaseinnon-comparablesales,primarilyfromourcompany-operatedstoresthatwereopenedorsignificantly
expandedsince2022aswellasincreasedlicenseandsupplyarrangementsandoutletsnetrevenue.
GrossProfit
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Grossprofit $ 5,609,405 $ 4,492,340 $ 1,117,065 24.9%
Grossmargin 58.3% 55.4% 290basispoints
During2022,wedecidedtoshiftourlululemonStudiostrategytofocusonprovidingdigitalapp-basedservices.While
wecontinuedtosellat-homehardwarein2023,wereachedthedecisiontoceasesellingthelululemonStudioMirrorduring
thethirdquarterof2023.Thesestrategyshiftsresultedintherecognitionofaninventoryobsolescenceprovisionof$62.9
millionin2022andafurtherprovisionof$23.7millionin2023.Theseprovisionsreducedgrossmarginby80basispointsand
30basispointsin2022and2023respectively.PleaserefertoNote8.ImpairmentofGoodwillandOtherAssets,Restructuring
CostsincludedinItem8ofPartIIofthisreport.
30
Grossmarginincreased290basispoints,orexcludingtheimpactofthelululemonStudioobsolescenceprovisions
detailedabove,increased240basispoints.This240basispointnetincreasewasprimarilyaresultof:
• anetincreaseinproductmarginof290basispoints,primarilyduetolowerfreightcostsfromratereductionsand
reducedairfreight,aswellaslowerdutycosts,modestlyoffsetbyhigherinventoryprovisionsandshrinkinthe
currentyear;
• anunfavorableimpactofforeigncurrencyexchangeratesof20basispoints;and
• deleverageonoccupancycostsof20basispointsandanincreaseincostsrelatedtoourdistributioncentersasa
percentageofnetrevenueof10basispoints.
Selling,GeneralandAdministrativeExpenses
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Selling,generalandadministrativeexpenses $ 3,397,218 $ 2,757,447 $ 639,771 23.2%
Selling,generalandadministrativeexpensesasapercentageofnet
revenue 35.3% 34.0% 130basispoints
Theincreaseinselling,generalandadministrativeexpenseswasprimarilydueto:
• anincreaseinheadofficecostsof$327.7million,comprisedof:
– anincreaseinemployeecostsof$108.8millionprimarilyduetoincreasedsalariesandwagesexpenseas
wellasincreasedstock-basedcompensationandincentivecompensation,primarilyasaresultofheadcount
growthandincreasedwagerates;
– anincreaseinbrandandcommunitycostsof$95.4millionprimarilyduetoincreasedmarketingexpenses;
– anincreaseindepreciationof$46.0million;
– anincreaseinotherheadofficecostsof$40.4million,primarilyduetoincreasedprofessionalfees;and
– anincreaseintechnologycosts,includingcloudcomputingamortization,of$37.1million.
• anincreaseincostsrelatedtoouroperatingchannelsof$319.1million,comprisedof:
– anincreaseinemployeecostsof$145.1millionprimarilyduetoincreasedsalariesandwagesexpense,
incentivecompensation,andbenefitcostsforretailemployees,primarilyfromthegrowthinourbusiness
andincreasedwagerates;
– anincreaseinotheroperatingcostsof$67.7millionprimarilyduetoincreaseddepreciationcosts,
technologycosts,andrepairsandmaintenancecosts;
– anincreaseinvariablecostsof$66.8millionprimarilyduetoincreasedcreditcardfees,distributioncosts,
andpackagingcosts,primarilyasaresultofincreasednetrevenue;and
– anincreaseinbrandandcommunitycostsof$39.5millionprimarilyduetoincreaseddigitalmarketing
expenses.
Theincreaseinselling,generalandadministrativeexpenseswaspartiallyoffsetbyadecreaseinnetforeigncurrency
exchangeandderivativerevaluationlossesof$7.0million.
31
ImpairmentofGoodwillandOtherAssets,RestructuringCosts
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Impairmentofgoodwillandotherassets,restructuringcosts $ 74,501 $ 407,913 $ (333,412) (81.7)%
During2023,werecognizedcertainassetimpairmentsandrestructuringcosts,andduring2022,werecognized
impairmentofgoodwillandotherassets,eachinrelationtolululemonStudio.PleaserefertoNote8.ImpairmentofGoodwill
andOtherAssets,RestructuringCostsincludedinItem8ofPartIIofthisreportforfurtherinformation.
AmortizationofIntangibleAssets
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Amortizationofintangibleassets $ 5,010 $ 8,752 $ (3,742) (42.8)%
Theamortizationofintangibleassetswasprimarilytheresultoftheamortizationofintangibleassetsrecognizedupon
theacquisitionofMIRROR,whichwerebrandedaslululemonStudio.
GainonDisposalofAssets
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Gainondisposalofassets $ — $ (10,180) $ 10,180 (100.0)%
Duringthesecondquarterof2022,wecompletedthesaleofanadministrativeofficebuilding,whichresultedinapre-
taxgainof$10.2million.
IncomefromOperations
Onasegmentbasis,wedetermineincomefromoperationswithouttakingintoaccountourgeneralcorporateexpenses
andcertainotherexpenses.Segmentedincomefromoperationsissummarizedbelow.Ourprioryearsegmentresultshave
beenrecasttoreflectournewsegmentreportingstructure.
2023 2022 2023 2022 Yearoveryearchange
(Inthousands)
(Percentageofnetrevenueof
respectiveoperatingsegment)
(Inthousands) (Percentage)
Segmentedincomefromoperations:
Americas $2,937,184 $2,503,740 38.5% 36.7% $ 433,444 17.3%
ChinaMainland 337,316 196,865 35.0 34.1 140,451 71.3
RestofWorld 201,832 103,204 19.7 14.4 98,628 95.6
$3,476,332 $2,803,809 $ 672,523 24.0%
Generalcorporateexpenses 1,240,436 1,005,988 234,448 23.3
lululemonStudioobsolescenceprovision 23,709 62,928 (39,219) (62.3)
Impairmentofgoodwillandotherassets,
restructuringcosts 74,501 407,913 (333,412) (81.7)
Amortizationofintangibleassets 5,010 8,752 (3,742) (42.8)
Gainondisposalofassets — (10,180) 10,180 (100.0)
Incomefromoperations $2,132,676 $1,328,408 $ 804,268 60.5%
Operatingmargin 22.2% 16.4% 580basispoints
Americas.TheincreaseinAmericasincomefromoperationswasprimarilytheresultofincreasedgrossprofitof$691.7
million,drivenbyincreasednetrevenueandhighergrossmargin.Theincreaseingrossmarginwasprimarilyduetohigher
productmargin,partiallyoffsetbydeleverageondistributioncentercosts.Theincreaseingrossprofitwaspartiallyoffsetby
anincreaseinselling,generalandadministrativeexpenses,primarilyduetohigheremployeecosts,increaseddigital
marketingexpenses,increasedcreditcardfees,packagingcosts,anddistributioncostsdrivenbyhighernetrevenue,and
32
increaseddepreciation,andtechnologycosts.IncomefromoperationsasapercentageofAmericasnetrevenueincreased
duetohighergrossmargin,partiallyoffsetbydeleverageonselling,generalandadministrativeexpenses.
ChinaMainland.TheincreaseinChinaMainlandincomefromoperationswasprimarilytheresultofincreasedgross
profitof$228.1million,drivenbyincreasednetrevenue.Grossmarginwasconsistentyearoveryear,primarilydueto
leverageonoccupancyandothercosts,partiallyoffsetbyunfavorableforeigncurrencyexchangeratesandlowerproduct
margin.Theincreaseingrossprofitwaspartiallyoffsetbyanincreaseinselling,generalandadministrativeexpensesprimarily
duetohigheremployeecosts,aswellasincreaseddigitalmarketingexpenses,increasedpackagingcosts,distributioncosts,
andcreditcardfeesdrivenbyhighernetrevenue,andincreasedtechnologycosts.Incomefromoperationsasapercentageof
ChinaMainlandnetrevenueincreasedduetoleverageonselling,generalandadministrativeexpenses.
RestofWorld.TheincreaseinRestofWorldincomefromoperationswasprimarilytheresultofincreasedgrossprofitof
$190.2million,drivenbyincreasednetrevenueandhighergrossmargin.Theincreaseingrossmarginwasprimarilydueto
higherproductmarginaswellasleverageonoccupancyandothercosts,partiallyoffsetbyunfavorableforeigncurrency
exchangerates.Theincreaseingrossprofitwaspartiallyoffsetbyanincreaseinselling,generalandadministrativeexpenses
primarilyduetohigheremployeecosts,aswellasincreaseddigitalmarketingexpenses,increaseddistributioncosts,credit
cardfees,andpackagingcostsdrivenbyhighernetrevenue,andincreasedtechnologycosts.Incomefromoperationsasa
percentageofRestofWorldnetrevenueincreasedduetohighergrossmarginandleverageonselling,generaland
administrativeexpenses.
GeneralCorporateExpenses.Theincreaseingeneralcorporateexpenseswasprimarilyduetoincreasedemployee
costs,aswellasincreasedbrandandcommunitycosts,depreciation,technologycosts,professionalfees,andproductteam
costs.Theincreaseingeneralcorporateexpenseswaspartiallyoffsetbyadecreaseinnetforeigncurrencyexchangeand
derivativelossesof$7.0million.
OtherIncome(Expense),Net
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Otherincome(expense),net $ 43,059 $ 4,163 $ 38,896 934.3%
Theincreaseinotherincome,netwasprimarilyduetoanincreaseininterestincomeasaresultofhighercashbalances
andhigherinterestrates.
IncomeTaxExpense
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Incometaxexpense $ 625,545 $ 477,771 $ 147,774 30.9%
Effectivetaxrate 28.8% 35.9% (710)basispoints
Thedecreaseintheeffectivetaxratewasprimarilyduetheincometaximpactofcertainnon-deductibleimpairment
andotherchargesrecognizedin2022and2023relatedtolululemonStudio,partiallyoffsetbyalowertaxrateonthegainon
thesaleofanadministrativebuildingin2022.Theseitemsincreasedtheeffectivetaxrateby780basispointsand10basis
pointsin2022and2023,respectively.
Excludingtheincometaxeffectsoftheimpairmentandotherchargesrecognizedin2022and2023inrelationto
lululemonStudio,andexcludingthetaxeffectofthegainonthesaleoftheadministrativebuildingin2022,theadjusted
effectivetaxrateincreasedto28.7%in2023from28.1%in2022.
Theincreaseintheadjustedeffectivetaxratewasprimarilyduetowithholdingtaxesonunremittedearningswhichare
notconsideredtobepermanentlyreinvested,partiallyoffsetbyadjustmentsuponthefilingofcertainincometaxreturns,
andadecreaseinU.S.statetaxes.
NetIncome
2023 2022 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Netincome $ 1,550,190 $ 854,800 $ 695,390 81.4%
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Theincreaseinnetincomein2023wasprimarilyduetoanincreaseingrossprofitof$1.1billion,anincreaseinother
income(expense),netof$38.9million,andimpairmentandrestructuringchargesrecognizedin2023of$74.5million
comparedtoimpairmentchargesof$407.9millionrecognizedin2022,partiallyoffsetbyanincreaseinselling,generaland
administrativeexpensesof$639.8million,anincreaseinincometaxexpenseof$147.8million,andagainondisposalof
assetsof$10.2millionintheprioryear.
Excludingcertaininventoryprovisions,goodwillandotherassetimpairments,andrestructuringcostsrecognizedin
relationtolululemonStudioin2023and2022andthegainonsaleofanadministrativebuildingin2022,andtheirtaxeffects,
adjustednetincomeincreased$333.4millionor26%.
Comparisonof2022to2021
NetRevenue
Netrevenueincreased$1.9billion,or30%,to$8.1billionin2022from$6.3billionin2021.Onaconstantdollarbasis,
netrevenueincreased32%.Comparablesalesincreased25%,or28%onaconstantdollarbasis.Theincreaseinnetrevenue
wasprimarilyduetoincreasedAmericasnetrevenue.ChinaMainlandandRestofWorldnetrevenuealsoincreased.
Netrevenuefor2022and2021issummarizedbelow,andreflectsourupdatedsegments,includingcomparatives.
2022 2021 2022 2021 Yearoveryearchange
(Inthousands) (Percentageofnetrevenue) (Inthousands) (Percentage)
(Constantdollar
change)
Americas $ 6,817,454 $ 5,299,906 84.1% 84.7% $ 1,517,548 28.6% 30.0%
ChinaMainland 576,503 434,261 7.1 6.9 142,242 32.8 40.0
RestofWorld 716,561 522,450 8.8 8.4 194,111 37.2 49.0
Netrevenue $ 8,110,518 $ 6,256,617 100.0% 100.0% $ 1,853,901 29.6% 32.0%
Americas.TheincreaseinAmericasnetrevenuewasprimarilyduetoanincreaseincomparablesales,whichincreased
28%,or29%onaconstantdollarbasis.Theincreaseincomparablesaleswasprimarilyaresultofincreasedtraffic,partially
offsetbyadecreaseinconversionrates.Americasnetrevenuealsoincreasedduetoa$296.9millionincreaseinnon-
comparablesales,primarilyfromourcompany-operatedstoresthatwereopenedorsignificantlyexpandedsince2021aswell
asincreasedoutlet,wholesale,andre-commercenetrevenue,partiallyoffsetbylowerlicenseandsupplyarrangementand
lululemonStudionetrevenue.
ChinaMainland.TheincreaseinChinaMainlandnetrevenuewasprimarilyduetoanincreaseincomparablesales,
whichincreased17%,or23%onaconstantdollarbasis.Theincreaseincomparablesaleswasprimarilyaresultofincreased
traffic,partiallyoffsetbyadecreaseinconversionrates.TheincreaseinChinaMainlandnetrevenuewasalsodrivenbya
$77.5millionincreaseinnon-comparablesales,primarilyfromourcompany-operatedstoresthatwereopenedor
significantlyexpandedsince2021.
RestofWorld.TheincreaseinRestofWorldnetrevenuewasprimarilyduetoa$151.5millionincreaseinnon-
comparablesales,primarilyfromourcompany-operatedstoresthatwereopenedorsignificantlyexpandedsince2021aswell
asincreasedlicenseandsupplyarrangements,outlets,andwholesalenetrevenue.TheincreaseinRestofWorldnetrevenue
wasalsodrivenbyanincreaseincomparablesales,whichincreased10%,or19%onaconstantdollarbasis.Theincreasein
comparablesaleswasprimarilyaresultofincreasedtraffic,partiallyoffsetbyadecreaseinconversionrates.
GrossProfit
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Grossprofit $ 4,492,340 $ 3,608,565 $ 883,775 24.5%
Grossmargin 55.4% 57.7% (230)basispoints
34
During2022,weupdatedourlululemonStudiostrategytofocusondigitalapp-basedservices,whichmeantweno
longerexpectedtobeabletosellallofthein-homehardwareinventoryabovecost.Werecognizedaprovisionof$62.9
millionagainsthardwareinventoryduring2022.Thisreduced2022grossmarginby80basispoints.PleaserefertoNote8.
ImpairmentofGoodwillandOtherAssets,RestructuringCostsincludedinItem8ofPartIIofthisreport.
Theremaining150basispointdecreaseingrossmarginwasprimarilytheresultof:
• adecreaseinproductmarginof100basispointsprimarilyduetohighermarkdowns,salesmix,andincreased
damagesandshrink,partiallyoffsetbylowerairfreightcosts;
• anincreaseincostsrelatedtoourproductdepartmentsanddistributioncentersasapercentageofnetrevenueof
60basispoints;and
• anunfavorableimpactofforeigncurrencyexchangeratesof40basispoints.
Thedecreaseingrossmarginwaspartiallyoffsetbyleverageonoccupancyanddepreciationcostsof50basispoints,
drivenprimarilybytheincreaseinnetrevenue.
Selling,GeneralandAdministrativeExpenses
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Selling,generalandadministrativeexpenses $ 2,757,447 $ 2,225,034 $ 532,413 23.9%
Selling,generalandadministrativeexpensesasapercentageofnet
revenue 34.0% 35.6% (160)basispoints
Theincreaseinselling,generalandadministrativeexpenseswasprimarilydueto:
• anincreaseinheadofficecostsof$283.7million,comprisedof:
– anincreaseincostsof$142.2millionprimarilyduetoincreaseddepreciationof$43.5millionandincreased
technologycosts,includingcloudcomputingamortization,of$35.7million,aswellasincreasedbrandand
communitycostsandprofessionalfees;and
– anincreaseinemployeecostsof$141.5millionprimarilyduetoanincreaseinsalariesandwagesexpense
of$76.5millionandincentivecompensationof$34.8million,aswellasincreasedstock-based
compensationexpenseandtravelcosts,primarilyasaresultofheadcountgrowthandincreasedwagerates.
• anincreaseincostsrelatedtoouroperatingchannelsof$249.5million,comprisedof:
– anincreaseinvariablecostsof$127.6millionprimarilyduetoanincreaseindistributioncostsandcredit
cardfees,primarilyasaresultofincreasednetrevenue;
– anincreaseinemployeecostsof$104.2millionprimarilyduetoanincreaseinsalariesandwagesexpense
andincentivecompensationinourcompany-operatedstoreande-commercechannels,primarilydueto
growthinourbusinessandincreasedwagerates;
– anincreaseinothercostsof$15.3millionprimarilyduetoanincreaseinrepairsandmaintenancecosts,
depreciation,andtechnologycosts,partiallyoffsetbyadecreaseinprofessionalfees;and
– anincreaseinbrandandcommunitycostsof$2.4millionprimarilyduetoanincreaseindigitalmarketing
expensesrelatedtooure-commercechannel,partiallyoffsetbyadecreaseinmarketingexpensesrelatedto
lululemonStudio.
Theincreaseinselling,generalandadministrativeexpenseswaspartiallyoffsetbyadecreaseinnetforeignexchange
andderivativerevaluationlossesof$0.8million.
35
ImpairmentofGoodwillandOtherAssets,RestructuringCosts
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Impairmentofgoodwillandotherassets,restructuringcosts $ 407,913 $ — $ 407,913 n/a
During2022,werecognizedanimpairmentofgoodwillandotherlong-livedassetsinrelationtoourlululemonStudio
businessunit.PleaserefertoNote8.ImpairmentofGoodwillandOtherAssets,RestructuringCostsincludedinItem8ofPart
IIofthisreport.
AmortizationofIntangibleAssets
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Amortizationofintangibleassets $ 8,752 $ 8,782 $ (30) (0.3)%
Theamortizationofintangibleassetswasprimarilytheresultoftheamortizationofintangibleassetsrecognizedupon
theacquisitionofMIRROR,whichwerebrandedaslululemonStudio.
Acquisition-RelatedExpenses
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Acquisition-relatedexpenses $ — $ 41,394 $ (41,394) (100.0)%
InconnectionwithouracquisitionofMIRROR,werecognizedacquisition-relatedcompensationexpensesof$38.4
millionandtransactionandintegrationrelatedcostsof$3.0millionin2021.Therewerenoacquisition-relatedexpensesin
2022.PleaserefertoNote9.Acquisition-RelatedExpensesincludedinItem8ofPartIIofthisreportforfurtherinformation.
GainonDisposalofAssets
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Gainondisposalofassets $ (10,180) $ — $ (10,180) n/a
Duringthesecondquarterof2022,wecompletedthesaleofanadministrativeofficebuilding,whichresultedinapre-
taxgainof$10.2million.
36
IncomefromOperations
Onasegmentbasis,wedetermineincomefromoperationswithouttakingintoaccountourgeneralcorporateexpenses
andcertainotherexpenses.Segmentedincomefromoperationsissummarizedbelow.Ourpriorsegmentresultshavebeen
recasttoreflectournewsegmentreportingstructure.
2022 2021 2022 2021 Yearoveryearchange
(Inthousands)
(Percentageofnetrevenueof
respectiveoperatingsegment)
(Inthousands) (Percentage)
Segmentedincomefromoperations:
Americas $2,503,740 $1,867,016 36.7% 35.2% $ 636,724 34.1%
ChinaMainland 196,865 167,318 34.1 38.5 29,547 17.7
RestofWorld 103,204 67,674 14.4 13.0 35,530 52.5
$2,803,809 $2,102,008 $ 701,801 33.4%
Generalcorporateexpenses 1,005,988 718,477 287,511 40.0
lululemonStudioobsolescenceprovision 62,928 — 62,928 n/a
Impairmentofgoodwillandotherassets,
restructuringcosts 407,913 — 407,913 n/a
Amortizationofintangibleassets 8,752 8,782 (30) (0.3)
Acquisition-relatedexpenses — 41,394 (41,394) (100.0)
Gainondisposalofassets (10,180) — (10,180) n/a
Incomefromoperations $1,328,408 $1,333,355 $ (4,947) (0.4)%
Operatingmargin 16.4% 21.3% (490)basispoints
Americas.TheincreaseinAmericasincomefromoperationswasprimarilytheresultofincreasedgrossprofitof$855.2
million,drivenbyincreasednetrevenue,partiallyoffsetbylowergrossmargin.Thedecreaseingrossmarginwasprimarily
duetolowerproductmargin,partiallyoffsetbyleverageonoccupancyandothercosts.Theincreaseingrossprofitwas
partiallyoffsetbyanincreaseinselling,generalandadministrativeexpenses,primarilyduetohigheremployeecosts,aswell
asincreaseddistributioncostsandcreditcardfeesdrivenbyhighernetrevenue,andincreasedtechnologycosts.Income
fromoperationsasapercentageofAmericasnetrevenueincreasedduetoleverageonselling,generalandadministrative
expenses.
ChinaMainland.TheincreaseinChinaMainlandincomefromoperationswasprimarilytheresultofincreasedgross
profitof$70.4million,drivenbyincreasednetrevenue,partiallyoffsetbylowergrossmargin.Thedecreaseingrossmargin
wasprimarilyduetounfavorableforeigncurrencyexchangeratesaswellasdeleverageondistributioncenterandothercosts.
Theincreaseingrossprofitwaspartiallyoffsetbyanincreaseinselling,generalandadministrativeexpensesprimarilydueto
higheremployeecosts,aswellasincreaseddigitalmarketingexpenses,increasedpackaginganddistributioncostsdrivenby
highernetrevenue,andincreasedtechnologycosts.IncomefromoperationsasapercentageofChinaMainlandnetrevenue
decreasedprimarilyduetolowergrossmargin.
RestofWorld.TheincreaseinRestofWorldincomefromoperationswasprimarilytheresultofincreasedgrossprofitof
$80.9million,drivenbyincreasednetrevenue,partiallyoffsetbylowergrossmargin.Thedecreaseingrossmarginwas
primarilyduetounfavorableforeigncurrencyexchangeratesaswellaslowerproductmargin,partiallyoffsetbyleverageon
occupancyandothercosts.Theincreaseingrossprofitwaspartiallyoffsetbyanincreaseinselling,generaland
administrativeexpensesprimarilyduetohigheremployeecosts,aswellasincreaseddistributioncosts,creditcardfees,and
packagingcostsdrivenbyhighernetrevenue,andincreaseddigitalmarketingexpenses.Incomefromoperationsasa
percentageofRestofWorldnetrevenueincreasedduetoleverageonselling,generalandadministrativeexpenses.
GeneralCorporateExpenses.Theincreaseingeneralcorporateexpenseswasprimarilyduetohigheremployeecosts,as
wellasincreaseddepreciation,brandandcommunitycosts,technologycosts,professionalfees,andproductteamcosts.The
increaseingeneralcorporateexpenseswaspartiallyoffsetbyadecreaseinnetforeignexchangeandderivativelossesof$0.8
million.
37
OtherIncome(Expense),Net
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Otherincome(expense),net
$ 4,163 $ 514 $ 3,649 709.9%
Theincreaseinotherincome,netwasprimarilyduetoanincreaseininterestincomefromhigherinterestrates,
partiallyoffsetbyanincreaseinotherexpenses.
IncomeTaxExpense
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Incometaxexpense $ 477,771 $ 358,547 $ 119,224 33.3%
Effectivetaxrate 35.9% 26.9% 900basispoints
Theincreaseintheeffectivetaxratewasprimarilyduetocertainnon-deductibleexpensesrelatedtotheimpairmentof
goodwillandotherassetsrecognizedinrelationtoourlululemonStudiobusinessunit(formerlyMIRROR)partiallyoffsetby
thegainonsaleofanadministrativebuildingin2022whichincreasedtheeffectivetaxrateby780basispoints.Certainnon-
deductibleexpensesrelatedtotheMIRRORacquisitionincreasedtheeffectivetaxrateby70basispointsin2021.The
increaseintheeffectivetaxratewasalsoduetotheaccrualofU.S.statetaxandCanadianwithholdingtaxesonunremitted
earningswhicharenotconsideredtobepermanentlyreinvested,adjustmentsuponfilingofcertainincometaxreturns,anda
decreaseindeductionsforstock-basedcompensation,partiallyoffsetbyadecreaseinnon-deductibleexpensesin
internationaljurisdictions.
ExcludingtheimpairmentofgoodwillandotherassetsrecognizedinrelationtoourlululemonStudiobusinessunit
(formerlyMIRROR)andthegainonsaleofanadministrativebuildingin2022,andtheMIRRORacquisition-relatedexpensesin
2021,andtheirtaxeffects,ouradjustedeffectivetaxrateswere28.1%and26.2%for2022and2021,respectively.
NetIncome
2022 2021 Yearoveryearchange
(Inthousands) (Inthousands) (Percentage)
Netincome $ 854,800 $ 975,322 $ (120,522) (12.4)%
Thedecreaseinnetincomein2022wasprimarilyduetoanincreaseinselling,generalandadministrativeexpensesof
$532.4million,animpairmentchargerecognizedin2022of$407.9million,anincreaseinincometaxexpenseof$119.2
million,partiallyoffsetbyanincreaseingrossprofitof$883.8million,adecreaseinacquisition-relatedexpensesof$41.4
million,againondisposalofassetsof$10.2million,andanincreaseinotherincome(expense),netof$3.6million.Excluding
theimpairmentofgoodwillandotherassetsrecognizedinrelationtoourlululemonStudiobusinessunit(formerlyMIRROR)
andthegainonsaleofanadministrativebuildingin2022,andtheMIRRORacquisition-relatedexpensesin2021,andtheirtax
effects,adjustednetincomeincreased$273.7millionor27.0%.
ComparableSalesandSalesPerSquareFoot
ComparableSales
Weusecomparablesalestoevaluatetheperformanceofourcompany-operatedstoreande-commercebusinesses
fromanomni-channelperspective.Itallowsustomonitortheperformanceofourbusinesswithouttheimpactofrecently
openedorexpandedstores.Webelieveinvestorswouldsimilarlyfindthesemetricsusefulinassessingtheperformanceof
ourbusiness.
Comparablesalesincludescomparablecompany-operatedstoreandalle-commercenetrevenue.E-commercenet
revenueincludesourbuyonlinepick-upinstore,back-backroom,andshipfromstoreomni-channelretailingcapabilitiesin
additiontoourwebsites,otherregion-specificwebsites,digitalmarketplaces,andmobileapps.Comparablecompany-
operatedstoreshavebeenopen,oropenafterbeingsignificantlyexpanded,foratleast12fullfiscalmonths.Netrevenue
fromacompany-operatedstoreisincludedincomparablesalesbeginningwiththefirstfiscalmonthforwhichthestorehasa
fullfiscalmonthofsalesintheprioryear.Comparablesalesexcludessalesfromnewstoresthathavenotbeenopenforat
least12fullfiscalmonths,fromstoreswhichhavenotbeenintheirsignificantlyexpandedspaceforatleast12fullfiscal
months,fromstoreswhichhavebeentemporarilyrelocatedforrenovationsortemporarilyclosed,andsalesfromcompany-
38
operatedstoresthathaveclosed.Comparablesalesalsoexcludessalesfromoursellingchannelsotherthancompany-
operatedstoresande-commerce.Thecomparablesalesmeasureswereportmaynotbeequivalenttosimilarlytitled
measuresreportedbyothercompanies.
Infiscalyearswith53weeks,the53rdweekofnetrevenueisexcludedfromthecalculationofcomparablesales.Inthe
yearfollowinga53-weekyear,theprioryearperiodisshiftedbyoneweektocomparesimilarcalendarweeks.
Non-comparablesalesincludesallnetrevenueotherthancomparablesales.
SalesPerSquareFoot
Weusesalespersquarefoottoassesstheperformanceofourcompany-operatedstoresrelativetotheirsquare
footage.Webelievethatsalespersquarefootisusefulinevaluatingtheperformanceofourcompany-operatedstores.Sales
persquarefootiscalculatedusingtotalnetrevenuefromallcompany-operatedstoresdividedbytheaverageendingsquare
footageofthestoresforeachperiodduringtheyear.Infiscalyearswith53weeks,the53rdweekofnetrevenueisexcluded
fromthecalculationofsalespersquarefoot.Thesquarefootageofourcompany-operatedstoresincludesallretailrelated
space,includingsellingspaceaswellasstorageandback-officeareas.Thesalespersquarefootmetricwereportmaynotbe
equivalenttosimilarlytitledmetricsreportedbyothercompanies.
Non-GAAPFinancialMeasures
Constantdollarchangesandadjustedfinancialresultsarenon-GAAPfinancialmeasures.
Aconstantdollarbasisassumestheaverageforeigncurrencyexchangeratesfortheperiodremainedconstantwiththe
averageforeigncurrencyexchangeratesforthesameperiodoftheprioryear.Weprovideconstantdollarchangesinour
resultstohelpinvestorsunderstandtheunderlyinggrowthrateofnetrevenueexcludingtheimpactofchangesinforeign
currencyexchangerates.
Adjustedgrossprofit,grossmargin,incomefromoperations,operatingmargin,incometaxexpense,effectivetaxrates,
netincome,anddilutedearningspershareexcludecertaininventoryprovisions,goodwillandotherassetimpairments,and
restructuringcostsrecognizedinrelationtolululemonStudio,thegainondisposalofassetsforthesaleofanadministrative
officebuilding,theMIRRORacquisition-relatedexpenses,andtherelatedincometaxeffectsoftheseitems.
Webelievetheseadjustedfinancialmeasuresareusefultoinvestorsastheyprovidesupplementalinformationthat
enableevaluationoftheunderlyingtrendinouroperatingperformance,andenableacomparisontoourhistoricalfinancial
information.Further,duetothefiniteanddiscretenatureoftheseitems,wedonotconsiderthemtobenormaloperating
expensesthatarenecessarytorunourbusiness,orimpairmentsordisposalgainsthatareexpectedtoariseinthenormal
courseofouroperations.Managementusestheseadjustedfinancialmeasuresandconstantcurrencymetricsinternallywhen
reviewingandassessingfinancialperformance.
Thepresentationofthisfinancialinformationisnotintendedtobeconsideredinisolationorasasubstitutefor,orwith
greaterprominenceto,thefinancialinformationpreparedandpresentedinaccordancewithGAAP.Areconciliationofthe
non-GAAPfinancialmeasuresfollows,whichincludesmoredetailontheGAAPfinancialmeasurethatismostdirectly
comparabletoeachnon-GAAPfinancialmeasure,andtherelatedreconciliationsbetweenthesefinancialmeasures.Ournon-
GAAPfinancialmeasuresmaybecalculateddifferentlyfrom,andthereforemaynotbedirectlycomparableto,similarlytitled
measuresreportedbyothercompanies.
39
ConstantDollarChanges
Thebelowchangesinnetrevenueandcomparablesalesshowthechangecomparedtothecorrespondingperiodinthe
prioryear.
2023Comparedto2022 2022Comparedto2021
Change
Foreign
exchange
changes
Changein
constant
dollars Change
Foreign
exchange
changes
Changein
constant
dollars
NetRevenue
Americas 12% —% 12% 29% 1% 30%
ChinaMainland 67 8 75 33 7 40
RestofWorld 43 1 44 37 12 49
Totalnetrevenue 19% 1% 20% 30% 2% 32%
Comparablesales
(1)
Americas 8% 1% 9% 28% 1% 29%
ChinaMainland 39 7 46 17 6 23
RestofWorld 32 1 33 10 9 19
Totalcomparablesales 13% 1% 14% 25% 3% 28%
__________
(1)
Comparablesalesincludescomparablecompany-operatedstoreande-commercenetrevenue.
AdjustedFinancialMeasures
ThefollowingtablesreconcilethemostdirectlycomparablemeasurescalculatedinaccordancewithGAAPwiththe
adjustedfinancialmeasures.The2023and2022adjustmentsrelatetocertaininventoryprovisions,goodwillandotherasset
impairments,andrestructuringcostsrecognizedinrelationtolululemonStudio,andtheirrelatedtaxeffects.The2022
adjustmentsalsorelatetothegainonsaleofanadministrativeofficebuilding,andtheirrelatedtaxeffects.The2021
adjustmentsrelatetoMIRRORacquisition-relatedexpenses,andtheirrelatedtaxeffects.PleaserefertoNote5.Propertyand
Equipment,Note8.ImpairmentofGoodwillandOtherAssets,RestructuringCosts,andNote9.Acquisition-RelatedExpenses
includedinItem8ofPartIIofthisreportforfurtherinformationonthenatureoftheseamounts.
2023
Gross
Profit
Gross
Margin
Income
from
Operations
Operating
Margin
IncomeTax
Expense
Effective
TaxRate
Net
Income
Diluted
Earnings
PerShare
(Inthousands,exceptpershareamounts)
GAAPresults $5,609,405 58.3% $2,132,676 22.2% $ 625,545 28.8% $1,550,190 $ 12.20
lululemonStudiocharges:
lululemonStudio
obsolescenceprovision 23,709 0.3 23,709 0.2 23,709 0.19
Impairmentofassets 44,186 0.5 44,186 0.35
Restructuringcosts 30,315 0.3 30,315 0.24
Taxeffectoftheabove 26,085 (0.1) (26,085) (0.21)
23,709 0.3 98,210 1.0 26,085 (0.1) 72,125 0.57
Adjustedresults(non-
GAAP) $5,633,114 58.6% $2,230,886 23.2% $ 651,630 28.7% $1,622,315 $ 12.77
40
2022
Gross
Profit
Gross
Margin
Income
from
Operations
Operating
Margin
IncomeTax
Expense
Effective
TaxRate
Net
Income
Diluted
Earnings
PerShare
(Inthousands,exceptpershareamounts)
GAAPresults $4,492,340 55.4% $1,328,408 16.4% $ 477,771 35.9% $ 854,800 $ 6.68
lululemonStudiocharges:
lululemonStudio
obsolescenceprovision 62,928 0.8 62,928 0.8 62,928 0.49
Impairmentofgoodwill
andotherassets 407,913 5.0 407,913 3.19
Taxeffectoftheabove 28,171 (7.8) (28,171) (0.22)
62,928 0.8 470,841 5.8 28,171 (7.8) 442,670 3.46
Gainondisposalofassets (10,180) (0.1) (10,180) (0.08)
Taxeffectoftheabove (1,661) — 1,661 0.01
Adjustedresults(non-
GAAP) $4,555,268 56.2% $1,789,069 22.1% $ 504,281 28.1% $1,288,951 $ 10.07
2021
Income
from
Operations
Operating
Margin
IncomeTax
Expense
Effective
TaxRate
Net
Income
Diluted
Earnings
PerShare
(Inthousands,exceptpershareamounts)
GAAPresults $1,333,355 21.3% $ 358,547 26.9% $ 975,322 $ 7.49
Transactionandintegrationcosts 2,989 — 2,989 0.02
Acquisition-relatedcompensation 38,405 0.7 38,405 0.29
Taxeffectoftheabove 1,417 (0.7) (1,417) (0.01)
Adjustedresults(non-GAAP) $1,374,749 22.0% $ 359,964 26.2% $1,015,299 $ 7.79
LiquidityandCapitalResources
Ourprimarysourcesofliquidityareourcurrentbalancesofcashandcashequivalents,cashflowsfromoperations,and
capacityunderourcommittedrevolvingcreditfacility,includingtofundshort-termworkingcapitalrequirements.Ourprimary
cashneedsarecapitalexpendituresforopeningnewstoresandremodelingorrelocatingexistingstores,investinginour
distributioncenters,investingintechnologyandmakingsystemenhancements,fundingworkingcapitalrequirements,and
makingotherstrategiccapitalinvestments.Wemayalsousecashtorepurchasesharesofourcommonstock.Cashandcash
equivalentsinexcessofourneedsareheldininterestbearingaccountswithfinancialinstitutions,aswellasinmoneymarket
fundsandtermdeposits.
Thefollowingtablesummarizesournetcashflowsprovidedbyandusedinoperating,investing,andfinancingactivities
fortheperiodsindicated:
2023 2022
Yearoveryear
change
(Inthousands)
Totalcashprovidedby(usedin):
Operatingactivities $ 2,296,164 $ 966,463 $ 1,329,701
Investingactivities (654,132) (569,937) (84,195)
Financingactivities (548,828) (467,487) (81,341)
Effectofforeigncurrencyexchangeratechangesoncashandcashequivalents (4,100) (34,043) 29,943
Increase(decrease)incashandcashequivalents $ 1,089,104 $ (105,004) $ 1,194,108
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OperatingActivities
Theincreaseincashprovidedbyoperatingactivitieswasprimarilyasaresultof:
• anincreaseincashflowsfromchangesinoperatingassetsandliabilitiesof$859.1million,primarilydrivenby
changesininventories,accountspayable,andprepaidexpensesandothercurrentassets,partiallyoffsetbychanges
inincometaxesandaccruedliabilities;and
• increasednetincomeof$695.4million.
Theincreaseincashprovidedbyoperatingactivitieswaspartiallyoffsetbychangesinadjustingitemsof$224.8million,
primarilydrivenbygoodwillandotherassetimpairmentsandrestructuringcostsrecognizedinrelationtolululemonStudio,
aswellasincreaseddepreciationandhighercashinflowsrelatedtoderivatives.
InvestingActivities
Theincreaseincashusedininvestingactivitieswasprimarilyduetothesettlementofnetinvestmenthedgesand
increasedcapitalexpenditures.Theincreaseincapitalexpenditureswasprimarilyduetoinvestmentinourdistribution
centersaswellasothertechnologyinfrastructureandsysteminitiatives,partiallyoffsetbyadecreaseincompany-operated
storeandcorporatecapitalexpenditures.
FinancingActivities
Theincreaseincashusedinfinancingactivitieswasprimarilytheresultofanincreaseinourstockrepurchases.During
2023,1.5millionshareswererepurchasedatatotalcostincludingcommissionsandexcisetaxesof$558.7million.During
2022,1.4millionshareswererepurchasedatatotalcostincludingcommissionsandexcisetaxesof$444.0million.The
commonstockwasrepurchasedintheopenmarketatprevailingmarketprices,includingunderplanscomplyingwiththe
provisionsofRule10b5-1andRule10b-18oftheSecuritiesExchangeActof1934,withthetimingandactualnumberof
sharesrepurchaseddependinguponmarketconditions,eligibilitytotrade,andotherfactors.
LiquidityOutlook
Webelieveourcashandcashequivalentbalances,cashgeneratedfromoperations,andborrowingsavailabletous
underourcommittedrevolvingcreditfacilitywillbeadequatetomeetourliquidityneedsandcapitalexpenditure
requirementsforatleastthenext12months.Ourcashfromoperationsmaybenegativelyimpactedbyadecreaseindemand
forourproductsaswellastheotherfactorsdescribedin"Item1A.RiskFactors".Inaddition,wemaymakediscretionary
capitalimprovementswithrespecttoourstores,distributionfacilities,headquarters,orsystems,orwemayrepurchase
sharesunderanapprovedstockrepurchaseprogram,whichwewouldexpecttofundthroughtheuseofcash,issuanceof
debtorequitysecuritiesorotherexternalfinancingsourcestotheextentwewereunabletofundsuchexpendituresoutof
ourcashandcashequivalentsandcashgeneratedfromoperations.
Thefollowingtableincludescertainmeasuresofourliquidity:
January28,
2024
(Inthousands)
Cashandcashequivalents $ 2,243,971
Workingcapitalexcludingcashandcashequivalents
(1)
185,345
Capacityundercommittedrevolvingcreditfacility 393,661
__________
(1)
Workingcapitaliscalculatedascurrentassetsof$4.1billionlesscurrentliabilitiesof$1.6billion.
Capitalexpendituresareexpectedtorangebetween$690.0millionand$710.0millionin2024.
Ourcurrentcommitmentswithrespecttoinventorypurchasesareincludedwithinourpurchaseobligationsoutlined
below.Thetimingandcostofourinventorypurchaseswillvarydependingonavarietyoffactorssuchasrevenuegrowth,
assortmentandpurchasingdecisions,productcostsincludingfreightandduty,andtheavailabilityofproductioncapacityand
speed.OurinventorybalanceasofJanuary28,2024was$1.3billion,adecreaseof9%fromJanuary29,2023.Weexpectour
inventoriestodecreaseduringthefirsthalfof2024comparedtothefirsthalfof2023,andthenincreaseinthesecondhalfof
2024comparedtothesecondhalfof2023.
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OurexistingAmericascreditfacilityprovidesfor$400.0millionincommitmentsunderanunsecuredfive-yearrevolving
creditfacility.ThecreditfacilityhasamaturitydateofDecember14,2026,subjecttoextensionundercertaincircumstances.
AsofJanuary28,2024,asidefromlettersofcreditof$6.3million,wehadnootherborrowingsoutstandingunderthiscredit
facility.FurtherinformationregardingourcreditfacilitiesandassociatedcovenantsisoutlinedinNote12.RevolvingCredit
FacilitiesincludedinItem8ofPartIIofthisreport.
ContractualObligationsandCommitments
Leases.Weleasecertainstoreandotherretaillocations,distributioncenters,offices,andequipmentundernon-
cancellableoperatingleases.Ourleasesgenerallyhaveinitialtermsofbetweentwoand15years,andgenerallycanbe
extendedinincrementsbetweentwoandfiveyears,ifatall.Thefollowingtabledetailsourfutureminimumleasepayments.
Minimumleasecommitmentsexcludevariableleaseexpensesincludingcontingentrentpayments,commonarea
maintenance,propertytaxes,andlandlord'sinsurance.
Purchaseobligations.Theamountslistedforpurchaseobligationsinthetablebelowrepresentagreements(including
openpurchaseorders)topurchaseproductsandforotherexpendituresintheordinarycourseofbusinessthatare
enforceableandlegallybindingandthatspecifyallsignificantterms.Insomecases,valuesaresubjecttochange,suchasfor
productpurchasesthroughouttheproductionprocess.Thereportedamountsexcludeliabilitiesincludedinourconsolidated
balancesheetsasofJanuary28,2024.
One-timetransitiontaxpayable.TheU.S.taxreformsenactedinDecember2017imposedamandatorytransitiontaxon
accumulatedforeignsubsidiaryearningswhichhavenotpreviouslybeensubjecttoU.S.incometax.Theone-timetransition
taxispayableovereightyearsbeginninginfiscal2018.Theone-timetransitiontaxpayableisnetofforeigntaxcredits,and
thetablebelowoutlinestheexpectedpaymentsduebyfiscalyear.
ThefollowingtablesummarizesourcontractualarrangementsduebyfiscalyearasofJanuary28,2024,andthetiming
andeffectthatsuchcommitmentsareexpectedtohaveonourliquidityandcashflowsinfutureperiods:
Total 2024 2025 2026 2027 2028 Thereafter
(Inthousands)
Operatingleases(minimumrent) $1,645,318 $ 300,379 $ 287,224 $ 232,510 $ 214,519 $ 158,252 $ 452,434
Purchaseobligations 688,934 656,376 5,566 10,506 2,899 13,587 —
One-timetransitiontaxpayable 28,555 12,691 15,864 — — — —
AsofJanuary28,2024,ouroperatingleasecommitmentsfordistributioncenteroperatingleaseswhichhavebeen
committedto,butnotyetcommenced,was$299.6million,whichisnotreflectedinthetableabove.
Weenterintostandbylettersofcredittosecurecertainofourobligations,includingleases,taxes,andduties.Asof
January28,2024,lettersofcreditandlettersofguaranteetotaling$10.2millionhadbeenissued,including$6.3millionunder
ourcommittedrevolvingcreditfacility.
CriticalAccountingPoliciesandEstimates
ThepreparationoffinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciplesrequires
managementtomakeestimatesandassumptions.Predictingfutureeventsisinherentlyanimpreciseactivityand,assuch,
requirestheuseofsignificantjudgment.Actualresultsmayvaryfromourestimatesinamountsthatmaybematerialtothe
financialstatements.Anaccountingpolicyisdeemedtobecriticalifitrequiresanaccountingestimatetobemadebasedon
assumptionsaboutmattersthatarehighlyuncertainatthetimetheestimateismade,andifdifferentestimatesthat
reasonablycouldhavebeenusedorchangesintheaccountingestimatesthatarereasonablylikelytooccurperiodically,could
materiallyimpactourconsolidatedfinancialstatements.
Ourcriticalaccountingpolicies,estimates,andjudgementsareasfollows,andseeNote2.SummaryofSignificant
AccountingPoliciesincludedinItem8ofPartIIforadditionalinformation:
Inventoryprovision
Inventoryisvaluedatthelowerofcostandnetrealizablevalue.Weperiodicallyreviewourinventoriesandmakea
provisionforobsolescenceandgoodsthathavequalityissuesorthataredamaged.Werecordaprovisionatanamountthat
isequaltothedifferencebetweentheinventorycostanditsnetrealizablevalue.AsofJanuary28,2024thenetcarryingvalue
ofourinventorieswas$1.3billion,whichincludedprovisionsforobsoleteanddamagedinventoryof$139.7million.The
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provisionisdeterminedbaseduponassumptionsaboutproductquality,damages,futuredemand,sellingprices,andmarket
conditions,andincludesaprovisionof$63.0millionagainstlululemonStudioMirrorinventory.
Deferredtaxesonundistributednetinvestmentofforeignsubsidiaries.
WehavenotrecognizedU.S.stateincometaxesandforeignwithholdingtaxesonthenetinvestmentinoursubsidiaries
whichwehavedeterminedtobeindefinitelyreinvested.Thisdeterminationisbasedonthecashflowprojectionsand
operationalandfiscalobjectivesofeachofourforeignsubsidiaries.Suchestimatesareinherentlyimprecisesincemany
assumptionsutilizedintheprojectionsaresubjecttorevisioninthefuture.
FortheportionofournetinvestmentinourCanadiansubsidiariesthatisnotindefinitelyreinvested,wehaverecorded
adeferredtaxliabilityforthetaxeswhichwouldbedueuponrepatriation.FordistributionsmadebyourCanadian
subsidiaries,theamountoftaxpayableispartiallydependentonhowtherepatriationtransactionsaremade.Thedeferred
taxliabilityhasbeenrecordedonthebasisthatwewouldchoosetomaketherepatriationtransactionsinthemosttax
efficientmanner.Specifically,totheextentthattheCanadiansubsidiarieshavesufficientpaid-up-capital,anysuch
distributionswouldbemadeasareturnofcapital,ratherthanasadividend,andthereforewouldnotbesubjecttoCanadian
withholdingtax.
AsofJanuary28,2024,thenetinvestmentinourCanadiansubsidiarieswas$2.5billion,ofwhich$1.6billionwas
determinedtobeindefinitelyreinvested.Thepaid-up-capitalbalanceoftheCanadiansubsidiarieswasapproximately$140.0
million.
Wehaverecognizedadeferredtaxliabilityof$41.2millionasofJanuary28,2024whichrepresentstheCanadian
withholdingtaxespayableontheportionofourCanadianearningsthatarenotindefinitelyreinvestedandcannotbe
repatriatedasareturnofcapital,andU.S.stateincometaxespayableuponrepatriationoftheamountswhicharenot
indefinitelyreinvested.
Infutureperiods,ifthenetinvestmentinourCanadiansubsidiariescontinuestogrow,whetherduetothe
accumulationofprofitsbythesesubsidiariesorduetoachangeintheamountthatisindefinitelyreinvested,wewillrecord
additionaldeferredtaxliabilities,includingbothCanadianwithholdingtaxesfortheamountinexcessofthepaid-upcapital
balanceandU.S.stateincometaxes.
Contingencies
Weareinvolvedinlegalproceedingsregardingcontractualandemploymentrelationshipsandavarietyofother
matters.Werecordcontingentliabilitieswhenalossisassessedtobeprobableanditsamountisreasonablyestimable.Ifitis
reasonablypossiblethatamateriallosscouldoccurthroughongoinglitigation,weprovidedisclosureinthefootnotestoour
financialstatements.Assessingprobabilityoflossandestimatingtheamountofprobablelossesrequiresanalysisofmultiple
factors,includinginsomecasesjudgmentsaboutthepotentialactionsofthird-partyclaimantsandcourts.Shouldwe
experienceadversecourtjudgmentsorshouldnegotiatedoutcomesdiffertoourexpectationswithrespecttosuchongoing
litigationitcouldhaveamaterialadverseeffectonourresultsofoperations,financialposition,andcashflows.
ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK
ForeignCurrencyExchangeRisk
TranslationRisk.Thefunctionalcurrencyofourinternationalsubsidiariesisgenerallytheapplicablelocalcurrency.Our
consolidatedfinancialstatementsarepresentedinU.S.dollars.Therefore,thenetrevenue,expenses,assets,andliabilitiesof
ourinternationalsubsidiariesaretranslatedfromtheirfunctionalcurrenciesintoU.S.dollars.Fluctuationsinthevalueofthe
U.S.dollaraffectthereportedamountsofnetrevenue,expenses,assets,andliabilities.Asaresultofthefluctuationin
exchangeratescomparedtotheU.S.dollarourrevenuewas$89.8millionlowerin2023incomparisonto2022.
Foreigncurrencyexchangedifferenceswhichariseontranslationofourinternationalsubsidiaries'balancesheetsinto
U.S.dollarsarerecordedasothercomprehensiveincome(loss),netoftaxinaccumulatedothercomprehensiveincome(loss)
withinstockholders'equity.AsignificantportionofournetassetsareheldbyourCanadiandollarsubsidiary.Weenterinto
forwardcurrencycontractsinordertohedgeaportionoftheforeigncurrencyexposureassociatedwiththetranslationofour
netinvestmentinourCanadiansubsidiary.TheimpacttoothercomprehensivelossoftranslationofourCanadiansubsidiaries
wasanincreaseinthelossof$9.0million,inclusiveofnetinvestmenthedgegains.
TransactionRisk.Wealsohaveexposuretochangesinforeigncurrencyexchangeratesassociatedwithtransactions
whichareundertakenbyoursubsidiariesincurrenciesotherthantheirfunctionalcurrency.Suchtransactionsinclude
intercompanytransactionsandinventorypurchasesdenominatedincurrenciesotherthanthefunctionalcurrencyofthe
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purchasingentity.Wealsoholdcashandcashequivalentsandothermonetaryassetsincurrenciesthataredifferenttothe
functionalcurrencyofoursubsidiaries.AsofJanuary28,2024,wehadcertainforwardcurrencycontractsoutstandingin
ordertoeconomicallyhedgetheforeigncurrencyrevaluationgainsandlossesrecognizedbyourforeignsubsidiaries,
includingourCanadianandChinesesubsidiaries,ontheirmonetaryassetsandliabilitiesdenominatedincurrenciesotherthan
theirfunctionalcurrency.
Weperformasensitivityanalysistodeterminethemarketriskexposureassociatedwiththefairvaluesofourforward
currencycontracts.ThenetfairvalueofoutstandingderivativesasofJanuary28,2024wasaliabilityof$2.2million.Asof
January28,2024,a10%depreciationintheU.S.dollaragainstthehedgedcurrencieswouldhaveresultedinthenetfairvalue
ofoutstandingderivativesdepreciatingby$29.8million.Thehypotheticalchangeinthefairvalueoftheforwardcurrency
contractswouldhavebeensubstantiallyoffsetbyacorrespondingbutdirectionallyoppositechangeintheunderlyinghedged
items.
Inthefuture,inanefforttoreduceforeigncurrencyexchangerisks,wemayenterintofurtherderivativefinancial
instrumentsincludinghedgingadditionalcurrencypairs.Wedonot,anddonotintendto,engageinthepracticeoftrading
derivativesecuritiesforprofit.
PleaserefertoNote17.DerivativeFinancialInstrumentsincludedinItem8ofPartIIofthisreportforfurtherdetailson
thenatureofourfinancialinstruments.
InterestRateRisk
Ourcommittedrevolvingcreditfacilityprovidesuswithavailableborrowingsinanamountupto$400.0million.
Becauseourrevolvingcreditfacilitiesbearinterestatavariablerate,wewillbeexposedtomarketrisksrelatingtochangesin
interestrates,ifwehaveameaningfuloutstandingbalance.AsofJanuary28,2024,asidefromlettersofcreditof$6.3million,
therewerenoborrowingsoutstandingunderthesecreditfacilities.Wecurrentlydonotengageinanyinterestratehedging
activityandcurrentlyhavenointentiontodoso.However,inthefuture,ifwehaveameaningfuloutstandingbalanceunder
ourrevolvingfacility,inanefforttomitigatelossesassociatedwiththeserisks,wemayattimesenterintoderivativefinancial
instruments,althoughwehavenothistoricallydoneso.Thesemaytaketheformofforwardcontracts,optioncontracts,or
interestrateswaps.Wedonot,anddonotintendto,engageinthepracticeoftradingderivativesecuritiesforprofit.
Ourcashandcashequivalentbalancesareheldintheformofcashonhand,bankbalances,andshort-termdeposits
withoriginalmaturitiesofthreemonthsorless,andinmoneymarketfunds.AsofJanuary28,2024,weheldcashandcash
equivalentsof$2.2billion.Interestgeneratedoncashbalancesissubjecttovariabilityasinterestratesincreaseordecrease.
CreditRisk.Wehavecashondepositwithvariouslarge,reputablefinancialinstitutionsandhaveinvestedinAAA-rated
moneymarketfunds.Theamountofcashandcashequivalentsheldwithcertainfinancialinstitutionsexceedsgovernment-
insuredlimits.Wearealsoexposedtocredit-relatedlossesintheeventofnonperformancebythefinancialinstitutionsthat
arecounterpartiestoourforwardcurrencycontracts.Thecreditriskamountisourunrealizedgainsonourderivative
instruments,basedonforeigncurrencyratesatthetimeofnonperformance.Wehavenotexperiencedanylossesrelatedto
theseitems,andwebelievecreditrisktobeminimal.Weseektominimizeourcreditriskbyenteringintotransactionswith
investmentgradecreditworthyandreputablefinancialinstitutionsandbymonitoringthecreditstandingofthefinancial
institutionswithwhomwetransact.Weseektolimittheamountofexposurewithanyonecounterparty.
Inflation
Inflationaryfactorssuchasincreasesinthecostofourproduct,aswellasoverheadcostsandcapitalexpendituresmay
adverselyaffectouroperatingresults.During2022and2023,ouroperatingmarginwasimpactedbyincreasedwagerates.
During2022,ourgrossmarginwasimpactedbyhigherairfreightcostsasaresultofglobalsupplychaindisruption.
Sustainedincreasesintransportationcosts,wages,andrawmaterialcosts,orotherinflationarypressuresinthefuture
mayhaveanadverseeffectonourabilitytomaintaincurrentlevelsofoperatingmarginifthesellingpricesofourproductsdo
notincreasewiththeseincreasedcosts,orwecannotidentifycostefficiencies.
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ITEM8.FINANCIALSTATEMENTS
lululemonathleticainc.
INDEXTOCONSOLIDATEDFINANCIALSTATEMENTS
ReportofIndependentRegisteredPublicAccountingFirm(PCAOBID271) 47
ConsolidatedBalanceSheets 49
ConsolidatedStatementsofOperationsandComprehensiveIncome 50
ConsolidatedStatementsofStockholders'Equity 51
ConsolidatedStatementsofCashFlows 53
IndexforNotestotheConsolidatedFinancialStatements 54
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REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
TotheStockholdersandBoardofDirectorsoflululemonathleticainc.
OpinionsontheFinancialStatementsandInternalControloverFinancialReporting
Wehaveauditedtheaccompanyingconsolidatedbalancesheetsoflululemonathleticainc.anditssubsidiaries
(together,theCompany)asofJanuary28,2024andJanuary29,2023,andtherelatedconsolidatedstatementsofoperations
andcomprehensiveincome,ofstockholders'equityandofcashflowsforeachofthe52-weekyearsendedJanuary28,2024,
January29,2023,andJanuary30,2022,includingtherelatednotes(collectivelyreferredtoastheconsolidatedfinancial
statements).WealsohaveauditedtheCompany’sinternalcontroloverfinancialreportingasofJanuary28,2024,basedon
criteriaestablishedinInternalControl–IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizations
oftheTreadwayCommission(COSO).
Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,the
financialpositionoftheCompanyasofJanuary28,2024andJanuary29,2023,andtheresultsofitsoperationsanditscash
flowsforeachofthe52-weekyearsendedJanuary28,2024,January29,2023,andJanuary30,2022inconformitywith
accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Alsoinouropinion,theCompanymaintained,inall
materialrespects,effectiveinternalcontroloverfinancialreportingasofJanuary28,2024,basedoncriteriaestablishedin
InternalControl–IntegratedFramework(2013)issuedbytheCOSO.
BasisforOpinions
TheCompany’smanagementisresponsiblefortheseconsolidatedfinancialstatements,formaintainingeffective
internalcontroloverfinancialreporting,andforitsassessmentoftheeffectivenessofinternalcontroloverfinancial
reporting,includedinManagement'sAnnualReportonInternalControloverFinancialReportingappearingunderItem9Aof
theCompany’s2023AnnualReportonForm10-K.OurresponsibilityistoexpressopinionsontheCompany’sconsolidated
financialstatementsandontheCompany’sinternalcontroloverfinancialreportingbasedonouraudits.Weareapublic
accountingfirmregisteredwiththePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB)andarerequiredto
beindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesand
regulationsoftheSecuritiesandExchangeCommissionandthePCAOB.
WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanand
performtheauditstoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreeofmaterial
misstatement,whetherduetoerrororfraud,andwhethereffectiveinternalcontroloverfinancialreportingwasmaintained
inallmaterialrespects.
Ourauditsoftheconsolidatedfinancialstatementsincludedperformingprocedurestoassesstherisksofmaterial
misstatementoftheconsolidatedfinancialstatements,whetherduetoerrororfraud,andperformingproceduresthat
respondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosures
intheconsolidatedfinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificant
estimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.Our
auditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontroloverfinancial
reporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperating
effectivenessofinternalcontrolbasedontheassessedrisk.Ourauditsalsoincludedperformingsuchotherproceduresaswe
considerednecessaryinthecircumstances.Webelievethatourauditsprovideareasonablebasisforouropinions.
DefinitionandLimitationsofInternalControloverFinancialReporting
Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregarding
thereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewith
generallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesand
proceduresthat(i)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthe
transactionsanddispositionsoftheassetsofthecompany;(ii)providereasonableassurancethattransactionsarerecordedas
necessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthat
receiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementand
directorsofthecompany;and(iii)providereasonableassuranceregardingpreventionortimelydetectionofunauthorized
acquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.
47
Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.
Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecome
inadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmay
deteriorate.
CriticalAuditMatters
Thecriticalauditmattercommunicatedbelowisamatterarisingfromthecurrentperiodauditoftheconsolidated
financialstatementsthatwascommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat(i)relatesto
accountsordisclosuresthatarematerialtotheconsolidatedfinancialstatementsand(ii)involvedourespeciallychallenging,
subjective,orcomplexjudgments.Thecommunicationofcriticalauditmattersdoesnotalterinanywayouropiniononthe
consolidatedfinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmatterbelow,
providingaseparateopiniononthecriticalauditmatterorontheaccountsordisclosurestowhichitrelates.
InventoryProvision
AsdescribedinNotes2and3totheconsolidatedfinancialstatements,inventoriesarevaluedatthelowerofcostand
netrealizablevalue,andmanagementrecordsaprovisionasnecessarytoappropriatelyvalueinventoriesthatareobsolete,
havequalityissues,oraredamaged.Provisionexpenseisrecordedincostofgoodssold.AsofJanuary28,2024,the
Company’sconsolidatednetinventoriesbalancewas$1,323.6millioninclusiveoftheinventoryprovisionof$141.5million.
Theamountoftheinventoryprovisionisequaltothedifferencebetweenthecostoftheinventoryanditsestimatednet
realizablevaluebasedonassumptionsaboutproductquality,damages,futuredemand,sellingprices,andmarketconditions.
Theprincipalconsiderationsforourdeterminationthatperformingproceduresrelatingtotheinventoryprovisionisa
criticalauditmatterarethesignificantjudgmentbymanagementindeterminingtheestimatednetrealizablevalueof
inventoriesthatareobsolete,havequalityissues,oraredamaged,whichinturnledtoahighdegreeofauditorjudgment,
subjectivity,andeffortinperformingproceduresandevaluatingauditevidencerelatingtotheinventoryprovision.
Addressingthematterinvolvedperformingproceduresandevaluatingauditevidenceinconnectionwithformingour
overallopinionontheconsolidatedfinancialstatements.Theseproceduresincludedtestingtheeffectivenessofcontrols
relatingtothereviewoftheinventoryprovisionincludingtheassumptionsused.Theseproceduresalsoincluded,among
others,(i)observingthephysicalconditionofinventoriesduringinventorycounts;(ii)evaluatingtheappropriatenessof
management’sprocessfordevelopingtheestimatesofnetrealizablevalue;(iii)testingthereliabilityofreportsusedby
managementbyagreeingtounderlyingrecords;(iv)testingthereasonablenessoftheassumptionsaboutquality,damages,
futuredemand,sellingpricesandmarketconditionsbyconsideringhistoricaltrendsandconsistencywithevidenceobtained
inotherareasoftheaudit;and(v)corroboratingtheassumptionswithindividualswithintheproductteam.
/s/PricewaterhouseCoopersLLP
CharteredProfessionalAccountants
Vancouver,Canada
March21,2024
WehaveservedastheCompany'sauditorsince2006.
48
lululemonathleticainc.
CONSOLIDATEDBALANCESHEETS
(Amountsinthousands,exceptpershareamounts)
January28,
2024
January29,
2023
ASSETS
Currentassets
Cashandcashequivalents $ 2,243,971 $ 1,154,867
Accountsreceivable,net 124,769 132,906
Inventories 1,323,602 1,447,367
Prepaidandreceivableincometaxes 183,733 185,641
Prepaidexpensesandothercurrentassets 184,502 238,672
4,060,577 3,159,453
Propertyandequipment,net 1,545,811 1,269,614
Right-of-useleaseassets 1,265,610 969,419
Goodwill 24,083 24,144
Intangibleassets,net — 21,961
Deferredincometaxassets 9,176 6,402
Othernon-currentassets 186,684 156,045
$ 7,091,941 $ 5,607,038
LIABILITIESANDSTOCKHOLDERS'EQUITY
Currentliabilities
Accountspayable $ 348,441 $ 172,732
Accruedliabilitiesandother 348,555 399,223
Accruedcompensationandrelatedexpenses 326,110 248,167
Currentleaseliabilities 249,270 207,972
Currentincometaxespayable 12,098 174,221
Unredeemedgiftcardliability 306,479 251,478
Othercurrentliabilities 40,308 38,405
1,631,261 1,492,198
Non-currentleaseliabilities 1,154,012 862,362
Non-currentincometaxespayable 15,864 28,555
Deferredincometaxliabilities 29,522 55,084
Othernon-currentliabilities 29,201 20,040
2,859,860 2,458,239
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;5,116and5,116issuedandoutstanding — —
Specialvotingstock,$0.000005parvalue:60,000sharesauthorized;5,116and5,116issuedand
outstanding — —
Commonstock,$0.005parvalue:400,000sharesauthorized;121,106and122,205issuedandoutstanding  606 611
Additionalpaid-incapital 575,369 474,645
Retainedearnings 3,920,362 2,926,127
Accumulatedothercomprehensiveloss (264,256) (252,584)
4,232,081 3,148,799
$ 7,091,941 $ 5,607,038
Seeaccompanyingnotestotheconsolidatedfinancialstatements
49
lululemonathleticainc.
CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCOMPREHENSIVEINCOME
(Amountsinthousands,exceptpershareamounts)
FiscalYearEnded
January28,
2024
January29,
2023
January30,
2022
Netrevenue $ 9,619,278 $ 8,110,518 $ 6,256,617
Costofgoodssold 4,009,873 3,618,178 2,648,052
Grossprofit 5,609,405 4,492,340 3,608,565
Selling,generalandadministrativeexpenses 3,397,218 2,757,447 2,225,034
Impairmentofgoodwillandotherassets,restructuringcosts 74,501 407,913 —
Amortizationofintangibleassets 5,010 8,752 8,782
Acquisition-relatedexpenses — — 41,394
Gainondisposalofassets — (10,180) —
Incomefromoperations 2,132,676 1,328,408 1,333,355
Otherincome(expense),net 43,059 4,163 514
Incomebeforeincometaxexpense 2,175,735 1,332,571 1,333,869
Incometaxexpense 625,545 477,771 358,547
Netincome $ 1,550,190 $ 854,800 $ 975,322
Othercomprehensiveincome(loss),netoftax:
Foreigncurrencytranslationadjustment $ (23,077) $ (65,571) $ (28,494)
Netinvestmenthedgegains(losses) 11,405 8,904 9,732
Othercomprehensiveincome(loss),netoftax (11,672) (56,667) (18,762)
Comprehensiveincome $ 1,538,518 $ 798,133 $ 956,560
Basicearningspershare $ 12.23 $ 6.70 $ 7.52
Dilutedearningspershare $ 12.20 $ 6.68 $ 7.49
Basicweighted-averagenumberofsharesoutstanding 126,726 127,666 129,768
Dilutedweighted-averagenumberofsharesoutstanding 127,060 128,017 130,295
Seeaccompanyingnotestotheconsolidatedfinancialstatements
50
lululemonathleticainc.
CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERS'EQUITY
(Amountsinthousands)
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 975,322 975,322
Othercomprehensive
income(loss),netoftax (18,762) (18,762)
Stock-based
compensationexpense 69,137 69,137
Commonstockissued
uponsettlementof
stock-based
compensation 502 2 18,192 18,194
Shareswithheldrelated
tonetsharesettlement
ofstock-based
compensation (153) (1) (49,808) (49,809)
Repurchaseofcommon
stock (2,202) (11) (3,681) (808,910) (812,602)
BalanceasofJanuary30,
2022 5,203 5,203 $ — 123,297 $ 616 $ 422,507 $ 2,512,840 $ (195,917) $ 2,740,046
Netincome 854,800 854,800
Othercomprehensive
income(loss),netoftax (56,667) (56,667)
Commonstockissued
uponexchangeof
exchangeableshares (87) (87) — 87 — — —
Stock-based
compensationexpense 78,075 78,075
Commonstockissued
uponsettlementof
stock-based
compensation 322 2 11,702 11,704
Shareswithheldrelated
tonetsharesettlement
ofstock-based
compensation (105) — (35,158) (35,158)
Repurchaseofcommon
stock,includingexcise
tax (1,396) (7) (2,481) (441,513) (444,001)
BalanceasofJanuary29,
2023 5,116 5,116 $ — 122,205 $ 611 $ 474,645 $ 2,926,127 $ (252,584) $ 3,148,799
Exchangeable
Stock SpecialVotingStock CommonStock
Additional
Paid-inCapital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
EquityShares Shares
Par
Value Shares
Par
Value
51
Netincome 1,550,190 1,550,190
Othercomprehensive
income(loss),netoftax (11,672) (11,672)
Stock-based
compensationexpense 93,560 93,560
Commonstockissued
uponsettlementof
stock-based
compensation 479 2 42,428 42,430
Shareswithheldrelated
tonetsharesettlement
ofstock-based
compensation (96) — (32,574) (32,574)
Repurchaseofcommon
stock,includingexcise
tax (1,482) (7) (2,690) (555,955) (558,652)
BalanceasofJanuary28,
2024 5,116 5,116 $ — 121,106 $ 606 $ 575,369 $ 3,920,362 $ (264,256) $ 4,232,081
Exchangeable
Stock SpecialVotingStock CommonStock
Additional
Paid-inCapital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
EquityShares Shares
Par
Value Shares
Par
Value
Seeaccompanyingnotestotheconsolidatedfinancialstatements
52
lululemonathleticainc.
CONSOLIDATEDSTATEMENTSOFCASHFLOWS
(Amountsinthousands)
FiscalYearEnded
January28,
2024
January29,
2023
January30,
2022
Cashflowsfromoperatingactivities
Netincome $ 1,550,190 $ 854,800 $ 975,322
Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:
Depreciationandamortization 379,384 291,791 224,206
lululemonStudioobsolescenceprovision 23,709 62,928 —
Impairmentofgoodwillandotherassets,restructuringcosts 74,501 407,913 —
Gainondisposalofassets — (10,180) —
Stock-basedcompensationexpense 93,560 78,075 69,137
Derecognitionofunredeemedgiftcardliability (28,547) (23,337) (18,699)
Settlementofderivativesnotdesignatedinahedgingrelationship 32,527 (38,649) 15,191
Deferredincometaxes (28,383) 3,042 (5,180)
Changesinoperatingassetsandliabilities:
Inventories 66,584 (573,438) (323,609)
Prepaidandreceivableincometaxes 1,908 (66,714) 20,108
Prepaidexpensesandothercurrentassets 47,167 (113,820) (82,404)
Othernon-currentassets (53,280) (36,518) (17,556)
Accountspayable 177,367 (107,280) 117,655
Accruedliabilitiesandother (71,734) 65,364 103,878
Accruedcompensationandrelatedexpenses 70,327 47,254 75,273
Currentandnon-currentincometaxespayable (173,196) 35,986 120,778
Unredeemedgiftcardliability 84,315 68,266 71,441
Right-of-useleaseassetsandcurrentandnon-currentleaseliabilities 37,535 23,905 13,494
Othercurrentandnon-currentliabilities 12,230 (2,925) 30,073
Netcashprovidedbyoperatingactivities 2,296,164 966,463 1,389,108
Cashflowsfrominvestingactivities
Purchaseofpropertyandequipment (651,865) (638,657) (394,502)
Settlementofnetinvestmenthedges (1,609) 47,804 (23,389)
Otherinvestingactivities (658) 20,916 (10,000)
Netcashusedininvestingactivities (654,132) (569,937) (427,891)
Cashflowsfromfinancingactivities
Proceedsfromsettlementofstock-basedcompensation 42,430 11,704 18,194
Shareswithheldrelatedtonetsharesettlementofstock-basedcompensation (32,574) (35,158) (49,809)
Repurchaseofcommonstock (558,652) (444,001) (812,602)
Otherfinancingactivities (32) (32) (770)
Netcashusedinfinancingactivities (548,828) (467,487) (844,987)
Effectofforeigncurrencyexchangeratechangesoncashandcashequivalents (4,100) (34,043) (6,876)
Increase(decrease)incashandcashequivalents 1,089,104 (105,004) 109,354
Cashandcashequivalents,beginningofperiod $ 1,154,867 $ 1,259,871 $ 1,150,517
Cashandcashequivalents,endofperiod $ 2,243,971 $ 1,154,867 $ 1,259,871
Seeaccompanyingnotestotheconsolidatedfinancialstatements
53
lululemonathleticainc.
INDEXFORNOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS
Note1 NatureofOperationsandBasisofPresentation 55
Note2 SummaryofSignificantAccountingPolicies 55
Note3 Inventories 62
Note4 PrepaidExpensesandOtherCurrentAssets 62
Note5 PropertyandEquipment 63
Note6 Goodwill 63
Note7 IntangibleAssets 64
Note8 ImpairmentofGoodwillandOtherAssets,RestructuringCosts 64
Note9 Acquisition-RelatedExpenses 66
Note10 OtherNon-CurrentAssets 66
Note11 AccruedLiabilitiesandOther 66
Note12 RevolvingCreditFacilities 66
Note13 SupplyChainFinancingProgram 67
Note14 Stockholders'Equity 68
Note15 Stock-BasedCompensationandBenefitPlans 68
Note16 FairValueMeasurement 71
Note17 DerivativeFinancialInstruments 71
Note18 Leases 73
Note19 IncomeTaxes 74
Note20 EarningsPerShare 76
Note21 CommitmentsandContingencies 76
Note22 SupplementalCashFlowInformation 77
Note23 SegmentedInformation 78
Note24 DisaggregatedNetRevenue 79
54
lululemonathleticainc.
NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS
Note1.NatureofOperationsandBasisofPresentation
Natureofoperations
lululemonathleticainc.,aDelawarecorporation,("lululemon"and,togetherwithitssubsidiariesunlessthecontext
otherwiserequires,the"Company")isengagedinthedesign,distribution,andretailofperformanceapparel,footwear,and
accessories.TheCompanyorganizesitsoperationsintofourregionalmarkets:Americas,ChinaMainland,AsiaPacific
("APAC"),andEuropeandtheMiddleEast("EMEA").Itconductsitsbusinessthroughanumberofdifferentchannelsineach
market,includingcompany-operatedstores,e-commerce,temporarylocations,wholesale,outlets,are-commerceprogram,
andlicenseandsupplyarrangements.Therewere711,655,and574company-operatedstoresinoperationasofJanuary28,
2024,January29,2023,andJanuary30,2022,respectively.
Basisofpresentation
TheconsolidatedfinancialstatementshavebeenpresentedinU.S.dollarsandarepreparedinaccordancewithUnited
Statesgenerallyacceptedaccountingprinciples("GAAP").
TheCompany'sfiscalyearendsontheSundayclosesttoJanuary31ofthefollowingyear,typicallyresultingina52-
weekyear,butoccasionallygivingrisetoanadditionalweek,resultingina53-weekyear.Fiscal2023,fiscal2022,andfiscal
2021wereeach52-weekyears.Fiscal2023,2022,and2021endedonJanuary28,2024,January29,2023,andJanuary30,
2022,respectively,andarereferredtoas"2023,""2022,"and"2021,"respectively.
TheCompany'sbusinessisaffectedbythepatternofseasonalitycommontomostretailapparelbusinesses.
Historically,theCompanyhasrecognizedasignificantportionofitsoperatingprofitinthefourthfiscalquarterofeachyearas
aresultofincreasednetrevenueduringtheholidayseason.
Note2.SummaryofSignificantAccountingPolicies
Principlesofconsolidation
Theconsolidatedfinancialstatementsincludetheaccountsoflululemonathleticainc.anditswholly-owned
subsidiaries.Allintercompanybalancesandtransactionshavebeeneliminated.
Cashandcashequivalents
Cashandcashequivalentsconsistofcashonhand,bankbalances,moneymarketfunds,andshort-termdepositswith
originalmaturitiesofthreemonthsorless.TheCompanyhasnotexperiencedanylossesrelatedtothesebalances,and
managementbelievestheCompany'screditrisktobeminimal.
Accountsreceivable
Accountsreceivableprimarilyariseoutofthirdpartygiftcardsales,salestowholesaleaccounts,onlinemarketplaces,
dutyreceivables,andlicenseandsupplyarrangements.Theallowancefordoubtfulaccountsrepresentsmanagement'sbest
estimateofprobablecreditlossesinaccountsreceivable.Receivablesarewrittenoffagainsttheallowancewhen
managementbelievesthattheamountreceivablewillnotberecovered.AsofJanuary28,2024andJanuary29,2023,the
Companyhadaninsignificantallowancefordoubtfulaccounts.
Inventories
Inventories,consistingoffinishedgoods,inventoriesintransit,andrawmaterials,arestatedatthelowerofcostand
netrealizablevalue.Costisdeterminedusingweighted-averagecosts,andincludesallcostsincurredtodeliverinventoryto
theCompany'sdistributioncentersincludingfreight,non-refundabletaxes,duty,andotherlandingcosts.
TheCompanyperiodicallyreviewsitsinventoriesandmakesaprovisionasnecessarytoappropriatelyvaluegoodsthat
areobsolete,havequalityissues,oraredamaged.Theamountoftheprovisionisequaltothedifferencebetweenthecostof
theinventoryanditsnetrealizablevaluebaseduponassumptionsaboutproductquality,damages,futuredemand,selling
prices,andmarketconditions.Ifchangesinmarketconditionsresultinreductionsintheestimatednetrealizablevalueofits
inventorybelowitspreviousestimate,theCompanywouldincreaseitsprovisionintheperiodinwhichitmadesucha
determination.
55
Inaddition,theCompanyprovidesforinventoryshrinkagebasedonhistoricaltrendsfromactualphysicalinventory
counts.Inventoryshrinkageestimatesaremadetoreducetheinventoryvalueforlostorstolenitems.TheCompanyperforms
physicalinventorycountsandcyclecountsthroughouttheyearandadjuststheshrinkprovisionaccordingly.
Businesscombinations
Thepurchasepriceofanacquisitionismeasuredastheaggregateofthefairvalueoftheconsiderationtransferred
includingtheacquisition-datefairvalueoftheCompany'spreviouslyheldequityinterests.Thepurchasepriceisallocatedto
thefairvaluesofthetangibleandintangibleassetsacquiredandliabilitiesassumed,withanyexcessrecordedasgoodwill.
Thesefairvaluedeterminationsrequirejudgmentandmayinvolvetheuseofsignificantestimatesandassumptions.The
purchasepriceallocationmaybeprovisionalduringameasurementperiodofuptooneyeartoprovidereasonabletimeto
obtaintheinformationnecessarytoidentifyandmeasuretheassetsacquiredandliabilitiesassumed.Anysuchmeasurement
periodadjustmentsarerecognizedintheperiodinwhichtheadjustmentamountisdetermined.Transactioncostsassociated
withtheacquisitionareexpensedasincurred.
Goodwill
Goodwillrepresentstheexcessoftheaggregateoftheconsiderationtransferred,thefairvalueofanynon-controlling
interestintheacquiree,andtheacquisition-datefairvalueoftheCompany'spreviouslyheldequityinterestoverthenet
assetsacquiredandliabilitiesassumed.Goodwillisallocatedtothereportingunitwhichisexpectedtoreceivethebenefit
fromthesynergiesofthecombination.
Goodwillistestedannuallyforimpairmentormorefrequentlywhenaneventorcircumstanceindicatesthatgoodwill
mightbeimpaired.Generally,theCompanyfirstperformsaqualitativeassessmenttodeterminewhetheritismorelikely
thannotthatthefairvalueofareportingunitislessthanitscarryingvalue.Iffactorsindicatethatthisisthecase,the
Companythenestimatesthefairvalueoftherelatedreportingunit.Ifthefairvalueislessthanthecarryingvalue,the
goodwillofthereportingunitisdeterminedtobeimpairedandtheCompanywillrecordanimpairmentequaltotheexcessof
thecarryingvalueoveritsfairvalue.
Intangibleassets
Acquiredfinite-livedintangibleassetsareamortizedonastraight-linebasisovertheirestimatedusefullives,andare
reviewedforimpairmentwheneventsorcircumstancesindicatethattheassetgrouptowhichtheintangibleassetsbelong
mightbeimpaired.TheCompanyrevisestheestimatedremainingusefullifeoftheseassetswheneventsorchangesin
circumstanceswarrantarevision.IftheCompanyrevisestheusefullife,theunamortizedbalanceisamortizedoverthe
remainingusefullifeonaprospectivebasis.
Propertyandequipment
Propertyandequipmentarerecordedatcostlessaccumulateddepreciation.Directinternalandexternalcostsrelated
tosoftwareusedforinternalpurposeswhichareincurredduringtheapplicationdevelopmentstageorforupgradesthatadd
functionalityarecapitalized.Allothercostsrelatedtointernalusesoftwareareexpensedasincurred.Propertyand
equipmentcarryingvaluesarereviewedforimpairmentwheneventsorcircumstancesindicatethattheassetgrouptowhich
thepropertyandequipmentbelongmightbeimpaired.
Depreciationcommenceswhenanassetisreadyforitsintendeduse.Buildingsaredepreciatedonastraight-linebasis
overtheexpectedusefullifeoftheasset,whichisindividuallyassessed,andestimatedtobeupto40years.Leasehold
improvementsaredepreciatedonastraight-linebasisoverthelesseroftheexpectedleasetermandtheestimatedusefullife
oftheimprovement,toamaximumof10yearsforstoresand15yearsforcorporateofficesanddistributioncenters.Allother
propertyandequipmentaredepreciatedusingthedecliningbalancemethodasfollows:
Furnitureandfixtures 20%
Computerhardwareandsoftware 20%-50%
Equipmentandvehicles 20%-30%
56
CloudComputingArrangements
TheCompanyincurscoststoimplementcloudcomputingarrangementshostedbythirdpartyvendors.Costsincurred
toimplementcloudcomputingservicearrangementsarecapitalizedwhenincurredduringtheapplicationdevelopment
phase,andrecognizedasothernon-currentassets.Implementationcostsaresubsequentlyamortizedovertheexpectedterm
oftherelatedcloudservice.Thecarryingvalueofcloudcomputingimplementationcostsaretestedforimpairmentwhenan
eventorcircumstanceindicatesthattheassetmightbeimpaired.Changesincloudcomputingarrangementimplementation
costsareclassifiedwithinoperatingactivitiesintheconsolidatedstatementsofcashflows.
Impairmentoflong-livedassets
Long-livedassets,heldforuseareevaluatedforimpairmentwhentheoccurrenceofeventsorachangein
circumstancesindicatesthatthecarryingvalueoftheassetsmaynotberecoverableasmeasuredbycomparingtheircarrying
valuetotheestimatedundiscountedfuturecashflowsgeneratedbytheiruseandeventualdisposition.Impairedassetsare
recordedatfairvalue,determinedprincipallybydiscountingthefuturecashflowsexpectedfromtheiruseandeventual
disposition.Reductionsinassetvaluesresultingfromimpairmentvaluationsarerecognizedinincomeintheperiodthatthe
impairmentisdetermined.
Leasedpropertyandequipment
Atleasecommencement,whichisgenerallywhentheCompanytakespossessionoftheasset,theCompanyrecordsa
leaseliabilityandcorrespondingright-of-useasset.Leaseliabilitiesrepresentthepresentvalueofminimumleasepayments
overtheexpectedleaseterm,whichincludesoptionstoextendorterminatetheleasewhenitisreasonablycertainthose
optionswillbeexercised.ThepresentvalueoftheleaseliabilityisdeterminedusingtheCompany'sincrementalcollateralized
borrowingrateattheleasecommencement.
Minimumleasepaymentsincludebaserent,fixedescalationofrentalpayments,andrentalpaymentsthatareadjusted
periodicallydependingonarateorindex.Indeterminingminimumleasepayments,theCompanydoesnotseparatenon-
leasecomponentsforrealestateleases.Non-leasecomponentsaregenerallyservicesthatthelessorperformsforthe
Companyassociatedwiththeleasedasset,suchascommonareamaintenance.
Right-of-useassetsrepresenttherighttocontroltheuseoftheleasedassetduringtheleaseandareinitiallyrecognized
inanamountequaltotheleaseliability.Inaddition,prepaidrent,initialdirectcosts,andadjustmentsforleaseincentivesare
componentsoftheright-of-useasset.Overtheleasetermtheleaseexpenseisamortizedonastraight-linebasisbeginningon
theleasecommencementdate.Right-of-useassetsareassessedforimpairmentaspartoftheimpairmentoflong-lived
assets,whichisperformedwhenevereventsorchangesincircumstancesindicatethatthecarryingamountofanassetor
assetgroupmaynotberecoverable.
Variableleasepayments,includingcontingentrentalpaymentsbasedonsalesvolume,arerecognizedwhenthe
achievementofthespecifictargetisprobable.Aright-of-useassetandleaseliabilityarenotrecognizedforleaseswithan
initialtermof12monthsorless,andtheleaseexpenseisrecognizedonastraight-linebasisovertheleaseterm.
TheCompanyrecognizesaliabilityforthefairvalueofassetretirementobligations("AROs")whensuchobligationsare
incurred.TheCompany'sAROsareprimarilyassociatedwithleaseholdimprovementswhich,attheendofalease,the
Companyiscontractuallyobligatedtoremoveinordertocomplywiththeleaseagreement.Attheinceptionofaleasewith
suchconditions,theCompanyrecordsanAROliabilityandacorrespondingcapitalassetinanamountequaltotheestimated
fairvalueoftheobligation.Theliabilityisestimatedbasedonanumberofassumptionsrequiringmanagement'sjudgment,
includingstoreclosingcosts,costinflationratesanddiscountrates,andisaccretedtoitsprojectedfuturevalueovertime.
Thecapitalizedassetisdepreciatedusingtheconventionfordepreciationofleaseholdimprovementassets.Uponsatisfaction
oftheAROconditions,anydifferencebetweentherecordedAROliabilityandtheactualretirementcostsincurredis
recognizedasanoperatinggainorlossintheconsolidatedstatementsofoperations.
TheCompanyrecognizesaliabilityforacostassociatedwithaleaseexitordisposalactivitywhensuchobligationis
incurred.Aleaseexitordisposalliabilityismeasuredinitiallyatitsfairvalueintheperiodinwhichtheliabilityisincurred.The
Companyestimatesfairvalueatthecease-usedateofitsoperatingleasesastheremainingleaserentals,reducedby
estimatedsubleaserentalsthatcouldbereasonablyobtainedfortheproperty,evenwheretheCompanydoesnotintendto
enterintoasublease.Estimatingthecostofcertainleaseexitcostsinvolvessubjectiveassumptions,includingthetimeit
wouldtaketosubleasetheleasedlocationandtherelatedpotentialsubleaseincome.Theestimatedaccrualsforthesecosts
couldbesignificantlyaffectediffutureexperiencediffersfromtheassumptionsusedintheinitialestimate.
57
Revenuerecognition
Netrevenueiscomprisedofcompany-operatedstorenetrevenue,e-commercenetrevenuethroughwebsitesand
mobileapps,includingmobileappsonin-storedevicesthatallowdemandtobefulfilledviatheCompany'sdistribution
centers,andothernetrevenue,whichincludesrevenuefromoutlets,salestowholesaleaccounts,licenseandsupply
arrangementnetrevenue,whichconsistsofroyaltiesaswellassalesoftheCompany'sproductstolicensees,re-commerce
revenue,revenuefromtemporarylocations,andlululemonStudiorevenue.Allrevenueisreportednetofmarkdowns,
discounts,salestaxescollectedfromcustomersonbehalfoftaxingauthorities,andreturns.lululemonStudiogeneratesgross
revenuefromdigitalcontentsubscriptions.
Revenueisrecognizedwhenperformanceobligationsaresatisfiedthroughthetransferofcontrolofpromisedgoodsor
servicestotheCompany'scustomers.Controltransfersonceacustomerhastheabilitytodirecttheuseof,andobtain
substantiallyallofthebenefitsfrom,theproduct.Thisincludesthetransferoflegaltitle,physicalpossession,therisksand
rewardsofownership,andcustomeracceptance.Revenuefromcompany-operatedstoresandotherretaillocationsis
recognizedatthepointofsale.E-commercerevenue,salestowholesaleaccountsandin-homefitnesshardwaresalesare
recognizeduponreceiptbythecustomer.IncertainarrangementstheCompanyreceivespaymentbeforethecustomer
receivesthepromisedgood.Thesepaymentsareinitiallyrecordedasdeferredrevenue,andrecognizedasrevenueinthe
periodwhencontrolistransferredtothecustomer.
Revenueispresentednetofanallowanceforestimatedreturns.TheCompany'sliabilityforsalesreturnrefundsis
recognizedwithinaccruedliabilitiesandother,andanassetforthevalueofinventorywhichisexpectedtobereturnedis
recognizedwithinotherprepaidexpensesandothercurrentassetsontheconsolidatedbalancesheets.AsofJanuary28,2024
andJanuary29,2023,thesalesreturnallowancewas$61.6millionand$55.5million,respectively.
Shippingfeesbilledtocustomersarerecordedasrevenue,andshippingcostsarerecognizedwithinselling,generaland
administrativeexpensesinthesameperiodtherelatedrevenueisrecognized.
Proceedsfromthesaleofgiftcardsareinitiallydeferredandrecognizedwithinunredeemedgiftcardliabilityonthe
consolidatedbalancesheets,andarerecognizedasrevenuewhentenderedforpayment.WhiletheCompanywillcontinueto
honorallgiftcardspresentedforpayment,totheextentmanagementdeterminesthereisnorequirementtoremitunused
cardbalancestogovernmentagenciesunderunclaimedpropertylaws,theportionofcardbalancesnotexpectedtobe
redeemedarerecognizedinnetrevenueinproportiontothegiftcardswhichhavebeenredeemed,undertheredemption
recognitionmethod.For2023,2022,and2021,netrevenuerecognizedonunredeemedgiftcardbalanceswas$28.5million,
$23.3million,and$18.7million,respectively.
Costofgoodssold
Costofgoodssoldincludes:
• thecostofpurchasedmerchandise,whichincludesacquisitionandproductioncostsincludingrawmaterialand
labor,asapplicable;
• thecostincurredtodeliverinventorytotheCompany'sdistributioncentersincludingfreight,non-refundabletaxes,
duty,andotherlandingcosts;
• thecostoftheCompany'sdistributioncenters,suchaslabor,rent,utilities,anddepreciation;
• thecostoftheCompany'sproduction,design,researchanddevelopment,distribution,andmerchandising
departmentsincludingsalaries,stock-basedcompensationandbenefits,andotherexpenses;
• occupancycostssuchasminimumrent,contingentrentwhereapplicable,propertytaxes,utilities,anddepreciation
expensefortheCompany'scompany-operatedstorelocations;
• hemmingcosts;
• shrinkandinventoryprovisionexpense;and
• thecostofdigitalcontentsubscriptionservices
58
Selling,generalandadministrativeexpenses
Selling,generalandadministrativeexpensesconsistofalloperatingcostsnototherwiseincludedincostofgoodssold,
intangibleassetamortization,oracquisition-relatedexpenses.TheCompany'sselling,generalandadministrativeexpenses
includethecostsofcorporateandretailemployeewagesandbenefits,coststotransporttheCompany'sproductsfromthe
distributionfacilitiestotheCompany'sretaillocationsande-commerceguests,professionalfees,marketing,technology,
humanresources,accounting,legal,corporatefacilityandoccupancycosts,anddepreciationandamortizationexpenseother
thanincostofgoodssold.
For2023,2022,and2021,theCompanyincurredcoststotransportitsproductsfromitsdistributionfacilitiestoitsretail
locationsande-commerceguestsof$374.2million,$353.7million,and$270.8million,respectively.
AdvertisingandMarketingCosts
Advertisingcosts,includingthecoststoproduceadvertising,areexpensedasincurred.Advertisingexpenseswere
$429.7million,$328.6million,and$297.5millionfor2023,2022,and2021,respectively,andareincludedwithinselling,
generalandadministrativeexpenses.
Storepre-openingcosts
Operatingcostsincurredpriortotheopeningofnewstoresareexpensedasincurredasselling,generaland
administrativeexpenses.
Incometaxes
TheCompanyfollowstheliabilitymethodwithrespecttoaccountingforincometaxes.Deferredincometaxassetsand
liabilitiesaredeterminedbasedonthetemporarydifferencesbetweenthecarryingamountsandthetaxbasisofassetsand
liabilities,andfortaxlosses,taxcreditcarryforwards,andothertaxattributes.Deferredincometaxassetsandliabilitiesare
measuredusingenactedtaxrates,fortheappropriatetaxjurisdiction,thatareexpectedtobeineffectwhenthese
differencesareanticipatedtoreverse.
TheCompanyhasnotrecognizedU.S.stateincometaxesandforeignwithholdingtaxesonundistributedearningsof
foreignsubsidiarieswhichtheCompanyhasdeterminedtobeindefinitelyreinvested.
Deferredincometaxassetsarereducedbyavaluationallowance,ifbasedontheweightofavailableevidence,itis
morelikelythannotthatsomeportionorallofthedeferredtaxassetswillnotberealized.Theevaluationastothelikelihood
ofrealizingthebenefitofadeferredincometaxassetisbasedonthetimingofscheduledreversalsofdeferredtaxliabilities,
taxableincomeforecasts,andtax-planningstrategies.Therecognitionofadeferredincometaxassetisbaseduponseveral
assumptionsandforecasts,includingcurrentandanticipatedtaxableincome,theutilizationofpreviouslyunrealizednon-
operatinglosscarryforwards,andregulatoryreviewsoftaxfilings.
TheCompanyevaluatesitstaxfilingpositionsandrecognizesthelargestamountoftaxbenefitthatisconsideredmore
likelythannottobesustaineduponexaminationbytherelevanttaxingauthoritiesbasedonthetechnicalmeritsofthe
position.Thisdeterminationrequirestheuseofsignificantjudgment.Incometaxexpenseisadjustedintheperiodinwhichan
uncertaintaxpositioniseffectivelysettled,thestatuteoflimitationsexpires,factsorcircumstanceschange,taxlawschange,
ornewinformationbecomesavailable.TheCompany'spolicyistorecognizeinterestexpenseandpenaltiesrelatedtoincome
taxmattersaspartofincometaxexpense.Accruedinterestandpenaltiesareincludedwithintherelatedtaxliabilityonthe
Company'sconsolidatedbalancesheets.
TheCompanytreatstheglobalintangiblelow-taxedincome("GILTI")taxasacurrentperiodexpense.
Fairvalueoffinancialinstruments
Fairvalueisdefinedasthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderly
transactionbetweenmarketparticipantsatthemeasurementdate.Fairvaluemeasurementsaremadeusingathree-tierfair
valuehierarchy,whichprioritizestheinputsusedinmeasuringfairvalue:
• Level1-definedasobservableinputssuchasquotedpricesinactivemarkets;
• Level2-definedasinputsotherthanquotedpricesinactivemarketsthatareeitherdirectlyorindirectly
observable;and
• Level3-definedasunobservableinputsinwhichlittleornomarketdataexists,thereforerequiringanentityto
developitsownassumptions.
Thefairvaluemeasurementiscategorizedinitsentiretybyreferencetoitslowestlevelofsignificantinput.
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TheCompanyrecordscash,accountsreceivable,accountspayable,andaccruedliabilitiesatcost.Thecarryingvaluesof
theseinstrumentsapproximatetheirfairvalueduetotheirshort-termmaturities.
TheCompanyholdscertainassetsandliabilitiesthatarerequiredtobemeasuredatfairvalueonarecurringbasis,and
performscertainvaluationsonanon-recurringbasis,whichareoutlinedinNote16.FairValueMeasurement.
Foreigncurrency
Thefunctionalcurrencyforeachentityincludedintheseconsolidatedfinancialstatementsthatisdomiciledoutsideof
theUnitedStatesisgenerallytheapplicablelocalcurrency.Assetsandliabilitiesofeachforeignentityaretranslatedinto
U.S.dollarsattheexchangerateineffectonthebalancesheetdate.Netrevenueandexpensesaretranslatedattheaverage
rateineffectduringtheperiod.Unrealizedtranslationgainsandlossesarerecordedasaforeigncurrencytranslation
adjustment,whichisincludedinothercomprehensiveincome(loss),netoftax,whichisacomponentofaccumulatedother
comprehensiveincomeorlossincludedinstockholders'equity.
Foreigncurrencytransactionsdenominatedinacurrencyotherthananentity'sfunctionalcurrencyareremeasuredinto
thefunctionalcurrencywithanyresultinggainsandlossesrecognizedinselling,generalandadministrativeexpenses,except
forgainsandlossesarisingonintercompanyforeigncurrencytransactionsthatareofalong-terminvestmentnature,which
arerecordedasanetinvestmenthedgegains(losses)inothercomprehensiveincome(loss),netoftax.
Derivativefinancialinstruments
TheCompanyusesderivativefinancialinstrumentstomanageitsexposuretocertainforeigncurrencyexchangerate
risks.
Netinvestmenthedges.TheCompanyentersintocertainforwardcurrencycontractsthataredesignatedasnet
investmenthedges.Theeffectiveportionsofthehedgesarereportedinaccumulatedothercomprehensiveincomeorloss,
netoftax,andwillsubsequentlybereclassifiedtonetearningsintheperiodinwhichthehedgedinvestmentiseithersoldor
substantiallyliquidated.Hedgeeffectivenessismeasuredusingamethodbasedonchangesinforwardexchangerates.The
Companyclassifiesthecashflowsatsettlementofitsnetinvestmenthedgeswithininvestingactivitiesintheconsolidated
statementsofcashflows.
Derivativesnotdesignatedashedginginstruments.TheCompanyalsoentersintocertainforwardcurrencycontracts
thatarenotdesignatedasnetinvestmenthedges.Theyaredesignedtoeconomicallyhedgetheforeignexchangerevaluation
gainsandlossesofcertainmonetaryassetsandliabilities.TheCompanyhasnotappliedhedgeaccountingtothese
instrumentsandthechangeinfairvalueofthesederivativesisrecordedwithinselling,generalandadministrativeexpenses.
TheCompanyclassifiesthecashflowsatsettlementofitsforwardcurrencycontractswhicharenotdesignatedinhedging
relationshipswithinoperatingactivitiesintheconsolidatedstatementsofcashflows.
TheCompanypresentsitsderivativeassetsandderivativeliabilitiesattheirgrossfairvalueswithinprepaidexpenses
andothercurrentassetsandothercurrentliabilitiesontheconsolidatedbalancesheets.However,theCompany'sMaster
InternationalSwapDealersAssociation,Inc.,Agreementsandothersimilararrangementsallownetsettlementsundercertain
conditions.
TheCompanydoesnotenterintoderivativecontractsforspeculativeortradingpurposes.Additionalinformationonthe
Company'sderivativefinancialinstrumentsisincludedinNote16.FairValueMeasurementandNote17.DerivativeFinancial
Instruments.
Concentrationofcreditrisk
Accountsreceivableprimarilyariseoutofthirdpartygiftcardsales,salestowholesaleaccounts,onlinemarketplaces,
dutyreceivables,andlicenseandsupplyarrangements.TheCompanygenerallydoesnotrequirecollateraltosupportthe
accountsreceivable;however,incertaincircumstances,theCompanymayrequirepartiestoprovidepaymentforgoodsprior
todeliveryofthegoodsortoprovidelettersofcredit.Theaccountsreceivablearenetofanallowancefordoubtfulaccounts,
whichisestablishedbasedonmanagement'sassessmentofthecreditriskoftheunderlyingaccounts.
Cashandcashequivalentsareheldwithhighqualityfinancialinstitutions.Theamountofcashandcashequivalents
heldwithcertainfinancialinstitutionsexceedsgovernment-insuredlimits.TheCompanyisalsoexposedtocredit-related
lossesintheeventofnonperformancebythecounterpartiestotheforwardcurrencycontracts.Thecreditriskamountisthe
Company'sunrealizedgainsonitsderivativeinstruments,basedonforeigncurrencyratesatthetimeofnonperformance.The
Companyhasnotexperiencedanylossesrelatedtotheseitems,anditbelievescreditrisktobeminimal.TheCompanyseeks
tominimizeitscreditriskbyenteringintotransactionswithinvestmentgradecreditworthyandreputablefinancial
institutionsandbymonitoringthecreditstandingofthefinancialinstitutionswithwhomittransacts.Itseekstolimitthe
amountofexposurewithanyonecounterparty.
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TheCompany'sderivativecontractscontaincertaincreditrisk-relatedcontingentfeatures.Undercertaincircumstances,
includinganeventofdefault,bankruptcy,termination,andcrossdefaultundertheCompany'sAmericasrevolvingcredit
facility,theCompanymayberequiredtomakeimmediatepaymentforoutstandingliabilitiesunderitsderivativecontracts.
Stock-basedcompensation
TheCompanyaccountsforstock-basedcompensationusingthefairvaluemethod.Thefairvalueofawardsgrantedis
estimatedatthedateofgrant.Awardssettledincashorcommonstockattheelectionoftheemployeeareremeasuredto
fairvalueattheendofeachreportingperioduntilsettlement.Theemployeecompensationexpenseisrecognizedona
straight-linebasisovertherequisiteserviceperiodwiththeoffsettingcredittoadditionalpaid-incapitalforawardsthatare
settledincommonshares,andwiththeoffsettingcredittoaccruedcompensationandrelatedexpensesforawardsthatare
settledincashorcommonstockattheelectionoftheemployee.
Forawardswithserviceand/orperformanceconditions,theamountofcompensationexpenserecognizedisbasedon
thenumberofawardsexpectedtovest,reflectingestimatedexpectedforfeitures,andisadjustedtoreflectthoseawardsthat
doultimatelyvest.Theforfeiturerateisbasedonmanagement'sbestestimateofexpectedforfeitures,takinginto
considerationhistoricaltrendsandexpectedfuturebehavior.Forawardswithperformanceconditions,theCompany
recognizesthecompensationexpenseifandwhentheCompanyconcludesthatitisprobablethattheperformancecondition
willbeachieved.TheCompanyreassessestheprobabilityofachievingtheperformanceconditionateachreportingdate.
ThegrantdatefairvalueofeachstockoptiongrantedisestimatedonthegrantdateusingtheBlack-Scholesmodel.The
grantdatefairvalueofrestrictedshares,performance-basedrestrictedstockunits,andrestrictedstockunitsisbasedonthe
closingpriceoftheCompany'scommonstockonthegrantdate.Restrictedstockunitsthatweresettledincashorcommon
stockattheelectionoftheemployeewereremeasuredtofairvalueattheendofeachreportingperioduntilsettlement.This
fairvaluewasbasedontheclosingpriceoftheCompany'scommonstockonthelastbusinessdaybeforeeachperiodend.
Earningspershare
Earningspershareiscalculatedusingtheweighted-averagenumberofcommonandexchangeablesharesoutstanding
duringtheperiod.Exchangeablesharesaretheeconomicequivalentofcommonsharesinallmaterialrespects.Allclassesof
stockhaveineffectthesameeconomicrightsandshareequallyinundistributednetincome.Dilutedearningspershareis
calculatedbydividingnetincomeavailabletostockholdersfortheperiodbythedilutedweighted-averagenumberofshares
outstandingduringtheperiod.Dilutedearningspersharereflectsthepotentialdilutionfromcommonsharesissuablethrough
stockoptions,performance-basedrestrictedstockunitsthathavesatisfiedtheirperformancefactor,restrictedshares,and
restrictedstockunitsusingthetreasurystockmethod.
Contingencies
Intheordinarycourseofbusiness,theCompanyisinvolvedinlegalproceedingsregardingcontractualandemployment
relationshipsandavarietyofothermatters.TheCompanyrecordscontingentliabilitiesresultingfromclaimsagainstit,when
alossisassessedtobeprobableandtheamountofthelossisreasonablyestimable.
Useofestimates
ThepreparationoffinancialstatementsinconformitywithGAAPintheUnitedStatesrequiresmanagementtomake
estimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesandthedisclosureofcontingentassets
andliabilitiesatthedateofthefinancialstatementsaswellasthereportedamountsofnetrevenueandexpensesduringthe
reportingperiod.Actualresultscoulddifferfromthoseestimates.
Recentlyadoptedaccountingpronouncements
TheCompanyconsiderstheapplicabilityandimpactofallAccountingStandardUpdates("ASUs").ASUsadoptedduring
2023notlistedbelowwereassessed,anddeterminedtobeeithernotapplicableorareexpectedtohaveminimalimpacton
itsconsolidatedfinancialpositionorresultsofoperations.
InSeptember2022,theFASBissuedASU2022-04,Liabilities-SupplierFinancePrograms(Subtopic405-50):Disclosure
ofSupplierFinanceProgramObligations,torequireannualandinterimdisclosuresaboutthekeytermsofsupplierfinance
programsusedinconnectionwiththepurchaseofgoodsandservicesalongwithinformationabouttheobligationsunder
theseprograms,includingtheamountoutstandingattheendofeachreportingperiodandaroll-forwardofthoseobligations.
TheCompanyadoptedthisupdateduringthefirstquarterof2023andtherelateddisclosuresareincludedinNote13.Supply
ChainFinancingProgram.
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Recentlyissuedaccountingpronouncements
ASUsrecentlyissuednotlistedbelowwereassessedanddeterminedtobeeithernotapplicableorareexpectedtohave
minimalimpactontheCompany'sconsolidatedfinancialpositionorresultsofoperations.
InNovember2023,theFASBissuedASU2023-07,SegmentReporting(Topic280):ImprovementstoReportableSegment
Disclosures.Entitieswillberequiredtoprovidedisclosuresofsignificantsegmentedexpensesandothercategoriesusedby
theChiefOperatingDecisionMaker("CODM")inordertoenhancedisclosureatthesegmentlevel.Thisamendmentis
effectiveforannualperiodsbeginningafterDecember15,2023,andinterimperiodsbeginningafterDecember15,2024,and
isappliedretrospectivelyforperiodspresentedinthefinancialstatements.TheCompanyiscurrentlyevaluatingtheimpact
thatthisnewguidancemayhaveonitsfinancialstatementdisclosures.
InDecember2023,theFASBissuedASU2023-09,IncomeTaxes(Topic740):ImprovementstoIncomeTaxDisclosures.
Thisdisclosurerequiresexpandeddisclosurewithintheratereconciliationaswellasdisaggregationofannualtaxespaid.This
amendmentiseffectiveforannualperiodsbeginningafterDecember15,2023,andisappliedprospectively.TheCompanyis
currentlyevaluatingtheimpactthatthisnewguidancemayhaveonitsfinancialstatementdisclosures.
Note3.Inventories
January28,
2024
January29,
2023
(Inthousands)
Inventories,atcost $ 1,465,076 $ 1,571,981
Provisiontoreduceinventoriestonetrealizablevalue:
lululemonStudioMirrorprovision (62,956) (65,328)
Obsolescenceprovision (42,903) (18,903)
Damagesprovision (33,836) (38,996)
Shrinkprovision (1,779) (1,387)
(141,474) (124,614)
Inventories $ 1,323,602 $ 1,447,367
PleaserefertoNote8.ImpairmentofGoodwillandOtherAssets,RestructuringCostsforfurtherdetailsonthe
lululemonStudioobsolescenceprovision.
Note4.PrepaidExpensesandOtherCurrentAssets
January28,
2024
January29,
2023
(Inthousands)
Prepaidexpenses 137,203 142,003
Forwardcurrencycontractassets 647 16,707
Othercurrentassets 46,652 79,962
Prepaidexpensesandothercurrentassets $ 184,502 $ 238,672
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Note5.PropertyandEquipment
January28,
2024
January29,
2023
(Inthousands)
Land $ 79,498 $ 80,692
Buildings 29,032 28,850
Leaseholdimprovements 1,006,926 818,071
Furnitureandfixtures 156,656 144,572
Computerhardware 176,597 166,768
Computersoftware 1,032,567 742,295
Equipmentandvehicles 34,017 30,766
Workinprogress 247,943 244,898
Propertyandequipment,gross 2,763,236 2,256,912
Accumulateddepreciation (1,217,425) (987,298)
Propertyandequipment,net $ 1,545,811 $ 1,269,614
Depreciationexpenserelatedtopropertyandequipmentwas$374.0million,$282.7million,and$215.3millionfor
2023,2022,and2021,respectively.
GainonDisposalofAssets
Duringthesecondquarterof2022,theCompanycompletedthesaleofanadministrativeofficebuilding,whichresulted
inapre-taxgainof$10.2million.Theincometaxeffectofthegainondisposalofassetswasanexpenseof$1.7million.
Note6.Goodwill
Thechangesinthecarryingamountsofgoodwillwereasfollows:
Goodwill
(Inthousands)
BalanceasofJanuary30,2022 $ 386,880
Impairmentofgoodwill (362,492)
Effectofforeigncurrencytranslation (244)
BalanceasofJanuary29,2023 $ 24,144
Effectofforeigncurrencytranslation (61)
BalanceasofJanuary28,2024 $ 24,083
TheCompanyrecognizedanimpairmentchargeof$362.5millionrelatedtothelululemonStudioreportingunitasof
January29,2023onthegoodwillthatarosefromtheacquisitionofMIRROR.PleaserefertoNote8.ImpairmentofGoodwill
andOtherAssets,RestructuringCostsforfurtherinformation.
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Note7.IntangibleAssets
AsummaryofthebalancesoftheCompany'sintangibleassetsasofJanuary28,2024,January29,2023,ispresented
below:
January28,2024
GrossCarrying
Amount
Accumulated
Amortization
Accumulated
Impairment
NetCarrying
Amount
(Inthousands)
MIRRORbrand $ 26,500 $ (4,089) $ (22,411) $ —
Customerrelationships 28,000 (7,492) (20,508) —
Technology 25,500 (12,632) (12,868) —
Content 5,000 (3,250) (1,750) —
Other 270 (270) — —
Intangibleassets $ 85,270 $ (27,733) $ (57,537) $ —
January29,2023
GrossCarrying
Amount
Accumulated
Amortization Impairment
NetCarrying
Amount
Remaining
UsefulLife
(Years)
(Inthousands,exceptinyears)
MIRRORbrand $ 26,500 $ (3,423) $ (20,077) $ 3,000 3.0
Customerrelationships 28,000 (7,492) (20,508) — n/a
Technology 25,500 (8,956) — 16,544 3.0
Content 5,000 (2,583) — 2,417 2.4
Other 270 (270) — — n/a
Intangibleassets $ 85,270 $ (22,724) $ (40,585) $ 21,961 2.9
Amortizationofintangibleassetswas$5.0million,$8.8million,and$8.8millionin2023,2022,and2021,respectively.
During2022and2023,theCompanyrecognizedintangibleassetimpairmentchargesof$40.6millionand$17.0million,
respectively.TheseimpairmentchargesrelatedtotheintangibleassetsthatwererecognizedontheacquisitionofMIRROR.
PleaserefertoNote8.ImpairmentofGoodwillandOtherAssets,RestructuringCostsforfurtherinformation.
Note8.ImpairmentofGoodwillandOtherAssets,RestructuringCosts
During2022,theCompanydecidedtoshiftitslululemonStudiostrategytofocusonprovidingdigitalapp-based
services.TheCompanycontinuedtosellthelululemonStudioMirrorhardwarein2023,andreachedthedecisiontocease
sellingitduringthethirdquarterof2023.ItalsocontractedwithPelotonInteractive,Inc.tobetheexclusivedigitalfitness
contentprovidertoexistinglululemonStudiosubscribers,andstoppedproducingitsowndigitalfitnesscontent.The
CompanyceasedsellingthelululemonStudioMirrorandnewdigitalcontentsubscriptionsinDecember2023.
64
Thesestrategyshiftsresultedinimpairmenttestingandtherecognitionofgoodwillimpairment,inventoryprovisions,
assetimpairments,andrestructuringcostsrelatedtothelululemonStudioreportingunit.Thefollowingtablesummarizesthe
amountsrecognized:
2023 2022
(Inthousands)
Costsrecordedincostofgoodssold:
lululemonStudioobsolescenceprovision $ 23,709 $ 62,928
Costsrecordedinoperatingexpenses:
Impairmentofassets:
Impairmentofgoodwill $ — $ 362,492
Impairmentofintangibleassets 16,951 40,585
Impairmentofcloudcomputingarrangementimplementationcosts 16,074 —
Impairmentofpropertyandequipment 11,161 4,836
$ 44,186 $ 407,913
Restructuringcosts 30,315 —
Impairmentofgoodwillandotherassets,restructuringcosts $ 74,501 $ 407,913
Totalpre-taxcharges $ 98,210 $ 470,841
Incometaxeffectsofcharges $ (26,085) $ (28,171)
Totalafter-taxcharges $ 72,125 $ 442,670
lululemonStudioobsolescenceprovision
During2022,thechangeinstrategyrelatedtolululemonStudiotofocusondigitalapp-basedservicesmeantthe
CompanynolongerexpectedtobeabletosellallofthelululemonStudiohardwareinventoryabovecostanditrecognizedan
obsolescenceprovisionof$62.9million.Thenetrealizablevaluewasdeterminedbasedonhardwaresalesforecastsand
assumptionsregardingliquidationvalue.
AsaresultofthedecisiontoceasesellingthelululemonStudioMirrorinthethirdquarterof2023,theCompany
recognizedafurtherinventoryobsolescenceprovisionof$23.7millionduring2023.Thenetrealizablevalueofthelululemon
Studioinventorywasbasedonassumptionsregardingliquidationvalue.
Impairmentofgoodwillandotherassets
Asaresultofthestrategyshiftduring2022,itwasconcludedthattheCompanyshouldconductanimpairmenttestfor
thegoodwill,intangibleassets,andpropertyandequipmentrelatedtolululemonStudioasofJanuary29,2023.TheCompany
usedadiscountedcashflowmodeltoestimatethefairvalueofthelululemonStudioreportingunitbasedontheupdated
strategicplans,supplementedbymarketcomparableanalysis,whichindicatedthefairvalueoflululemonStudiowaslower
thanitscarryingvalue,andledtoarecognitionofanimpairmentofgoodwillof$362.5million.Thekeyassumptionsusedto
estimatethefairvalueofthelululemonStudioreportingunitweretherevenuegrowthrates,operatingprofitmargins,and
thediscountrate.ThefairvalueofthelululemonStudioreportingunitwasaLevel3fairvaluemeasurement.
AsofJanuary29,2023,theundiscountedcashflowsofthelululemonStudioassetgrouptowhichtheintangibleassets
belongedwerelessthantheircarryingvalue,andthereforetheCompanycalculatedthefairvalueoftheassetgroup,which
wasalsolessthanitscarryingvalue.Thisresultedinimpairmentofintangibleassetsof$40.6millionrelatingtotheMIRROR
brand,whichwasassociatedwithin-homehardware,andtothecustomerrelationshipintangibleassetsthatwererecognized
aspartoftheacquisition.
During2023,asaresultoftheCompany'sdecisiontonolongerproducedigitalfitnesscontentandtoceasethesaleof
thelululemonStudioMirror,theCompanyperformedimpairmenttestingforthelululemonStudioassetgroupasofOctober
29,2023.TheundiscountedcashflowsofthelululemonStudioassetgroupwerelessthantheircarryingvalue,andtherefore
theCompanycalculatedthefairvalueoftheassetgroup,whichwasalsolessthanitscarryingvalue.
65
Asaresultoftheimpairmenttest,theCompanyrecognizedassetimpairmentstotaling$44.2millionduring2023.The
fairvalueoflong-livedassetswasbasedonadiscountedcashflowmodel,andisaLevel3non-recurringfairvalue
measurement.Thekeyassumptionsusedtoestimatethefairvalueweresubscriberchurnratesandoperatingcosts.
Restructuringcosts
During2023,theCompanyrecognizedrestructuringcostsof$30.3millionforlululemonStudioprimarilyrelatedto
contractterminationcosts,employeeseverancecosts,andprofessionalfees.
Note9.Acquisition-RelatedExpenses
InconnectionwiththeacquisitionofMIRRORinfiscal2020,theCompanyrecognizedcertainexpenseswhichwere
includedwithinacquisition-relatedexpensesintheconsolidatedstatementsofoperations.Theseamountsincluded
acquisition-relatedcompensation,transactionandintegrationcosts,andagainontheCompany'sexistinginvestmentin
MIRROR.During2021,$41.4millionwasrecognized.Therewerenoacquisition-relatedexpensesrecognizedin2023or2022.
Note10.OtherNon-CurrentAssets
January28,
2024
January29,
2023
(Inthousands)
Cloudcomputingarrangementimplementationcosts $ 133,597 $ 114,700
Securitydeposits 31,825 28,447
Other 21,262 12,898
Othernon-currentassets $ 186,684 $ 156,045
AsofJanuary28,2024andJanuary29,2023,cloudcomputingarrangementimplementationcostsconsistedofdeferred
costsof$289.3millionand$212.4million,respectively,andassociatedaccumulatedamortizationof$155.7millionand$97.7
million,respectively.
Note11.AccruedLiabilitiesandOther
January28,
2024
January29,
2023
(Inthousands)
Accruedoperatingexpenses $ 147,215 $ 169,429
Salesreturnallowances 61,634 55,528
Accruedfreight 41,241 57,692
Accruedcapitalexpenditures 31,936 19,365
Accruedduty 25,817 21,046
Accruedrent 12,522 12,223
Accruedinventoryliabilities 4,783 4,345
Salestaxcollected 3,088 20,183
Forwardcurrencycontractliabilities 2,872 25,625
Other 17,447 13,787
Accruedliabilitiesandother $ 348,555 $ 399,223
Note12.RevolvingCreditFacilities
Americasrevolvingcreditfacility
OnDecember14,2021,theCompanyenteredintoanamendedandrestatedcreditagreementextendingitsexisting
creditfacility,whichprovidesfor$400.0millionincommitmentsunderanunsecuredfive-yearrevolvingcreditfacility.The
creditfacilityhasamaturitydateofDecember14,2026,subjecttoextensionundercertaincircumstances.Borrowingsunder
thecreditfacilitymaybeprepaidandcommitmentsmaybereducedorterminatedwithoutpremiumorpenalty(otherthan
customarybreakagecosts).
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AsofJanuary28,2024,asidefromlettersofcreditof$6.3million,theCompanyhadnootherborrowingsoutstanding
underthiscreditfacility.
Borrowingsmadeunderthecreditfacilitybearinterestatarateperannumequalto,attheCompany'soption,either
(a)aratebasedontheSecuredOvernightFinancingRateasadministeredbytheFederalReserveBankofNewYork("SOFR"),
or(b)analternatebaserate,plus,ineachcase,anapplicablemargin.Theapplicablemarginisdeterminedbyreferencetoa
pricinggrid,basedontheratioofindebtednesstoearningsbeforeinterest,tax,depreciation,amortization,andrent
("EBITDAR")andrangesbetween1.000%-1.375%forSOFRloansand0.000%-0.375%foralternatebaserateorCanadian
primerateloans.Additionally,acommitmentfeeofbetween0.100%-0.200%,alsodeterminedbyreferencetothepricing
grid,ispayableontheaveragedailyunusedamountsunderthecreditfacility.
Theapplicableinterestratesandcommitmentfeesaresubjecttoadjustmentbasedoncertainsustainabilitykey
performanceindicators("KPIs").ThetwoKPIsarebasedongreenhousegasemissionsintensityreductionandgenderpay
equity,andtheCompany'sperformanceagainstcertaintargetsmeasuredonanannualbasiscouldresultinpositiveor
negativesustainabilityrateadjustmentsof2.50basispointstoitsdrawnpricingandpositiveornegativesustainabilityfee
adjustmentsof0.50basispointstoitsundrawnpricing.
Thecreditagreementcontainsnegativecovenantsthat,amongotherthingsandsubjecttocertainexceptions,limitthe
abilityoftheCompany'ssubsidiariestoincurindebtedness,incurliens,undergofundamentalchanges,makedispositionsofall
orsubstantiallyalloftheirassets,altertheirbusinessesandenterintoagreementslimitingsubsidiarydividendsand
distributions.
TheCompany'sfinancialcovenantsincludemaintaininganoperatingleaseadjustedleverageratioofnotgreaterthan
3.25:1.00andtheratioofconsolidatedEBITDARtoconsolidatedinterestcharges(plusrent)ofnotlessthan2.00:1.00.The
creditagreementalsocontainscertaincustomaryrepresentations,warranties,affirmativecovenants,andeventsofdefault
(including,amongothers,aneventofdefaultupontheoccurrenceofachangeofcontrol).Ifaneventofdefaultoccurs,the
creditagreementmaybeterminated,andthematurityofanyoutstandingamountsmaybeaccelerated.AsofJanuary28,
2024,theCompanywasincompliancewiththecovenantsofthecreditfacility.
ChinaMainlandrevolvingcreditfacility
InDecember2019,theCompanyenteredintoanuncommittedandunsecured130.0millionChineseYuan($18.1
million)revolvingcreditfacilitywithtermsthatarereviewedonanannualbasis.Thecreditfacilitywasincreasedto
230.0millionChineseYuan($32.0million)during2020andincreasedto240.0millionChineseYuan($33.4million)during
2023.Itiscomprisedofarevolvingloanofupto200.0millionChineseYuan($27.9million)andafinancialguaranteefacilityof
upto40.0millionChineseYuan($5.6million),oritsequivalentinanothercurrency.Loansareavailableforaperiodnotto
exceed12months,ataninterestrateequaltotheloanprimerateplusaspreadof0.5175%.TheCompanyisrequiredto
followcertaincovenants.AsofJanuary28,2024,theCompanywasincompliancewiththecovenantsand,asidefromletters
ofcreditof32.5millionChineseYuan($4.5million),therewerenootherborrowingsorguaranteesoutstandingunderthis
creditfacility.
Note13.SupplyChainFinancingProgram
TheCompanyfacilitatesavoluntarysupplychainfinancing("SCF")programthatallowsitssupplierstoelecttosellthe
receivablesowedtothembytheCompanytoathirdpartyfinancialinstitution.Participatingsuppliersnegotiatearrangements
directlywiththefinancialinstitution.IfasupplierchoosestoparticipateintheSCFprogramitmayrequestaninvoicebepaid
earlierthanitwouldbytheCompany,andthefinancialinstitutionatitssoleandabsolutediscretion,mayelecttomakean
earlypaymenttothesupplieratadiscount.TheCompany'sobligationstoitssuppliers,includingamountsdueandscheduled
paymentterms,arenotimpactedbyasupplier'sparticipationinthearrangementandtheCompanyprovidesnoguarantees
toanythirdpartiesundertheSCFprogram.
67
Aroll-forwardoftheamountsoutstandingundertheSCFprogram,whicharepresentedwithinaccountspayable,is
presentedbelow:
2023
(Inthousands)
Supplychainfinancingprogrambalance,beginningofyear $ 17,578
Amountsaddedduringtheyear $ 533,640
Amountssettledduringtheyear $ (509,079)
Supplychainfinancingprogrambalance,endofyear $ 42,139
Note14.Stockholders'Equity
Specialvotingstockandexchangeableshares
Theholdersofthespecialvotingstockareentitledtoonevoteforeachshareheld.Thespecialvotingsharesarenot
entitledtoreceivedividendsordistributionsorreceiveanyconsiderationintheeventofaliquidation,dissolution,orwind-up.
Totheextentthatexchangeablesharesasdescribedbelowareexchangedforcommonstock,acorrespondingnumberof
specialvotingshareswillbecancelledwithoutconsideration.
Theholdersoftheexchangeableshareshavedividendandliquidationrightsequivalenttothoseofholdersofthe
commonsharesoftheCompany.Theexchangeablesharescanbeconvertedonaoneforonebasisbytheholderatanytime
intocommonsharesoftheCompanyplusacashpaymentforanyaccruedandunpaiddividends.Holdersofexchangeable
sharesareentitledtothesameoreconomicallyequivalentdividendasdeclaredonthecommonstockoftheCompany.The
exchangeablesharesarenon-voting.TheCompanyhastherighttoconverttheexchangeablesharesintocommonsharesof
theCompanyatanytimeaftertheearliestofJuly26,2047,thedateonwhichfewerthan4.2millionexchangeablesharesare
outstanding,orintheeventofcertaineventssuchasachangeincontrol.
Note15.Stock-BasedCompensationandBenefitPlans
Stock-basedcompensationplans
TheCompany'seligibleemployeesparticipateinvariousstock-basedcompensationplans,provideddirectlybythe
Company.
InJune2023,theCompany'sstockholdersapprovedtheadoptionofthelululemonathleticainc.2023EquityIncentive
Plan.The2023EquityIncentivePlanprovidesforawardsintheformofstockoptions,stockappreciationrights,restricted
stockpurchaserights,restrictedstockbonuses,restrictedstockunits,performanceshares,performance-basedrestricted
stockunits,cash-basedawards,otherstock-basedawards,anddeferredcompensationawardstoemployees(including
officersanddirectorswhoarealsoemployees),consultants,anddirectorsoftheCompany.
Theawardsgrantedunderthe2014EquityIncentivePlanremainoutstandingandcontinuetovestundertheiroriginal
conditions.Nofurtherawardswillbegrantedunderthe2014EquityIncentivePlan.
TheCompanyhasgrantedstockoptions,performance-basedrestrictedstockunits,restrictedstockunits,andrestricted
shares.Stockoptionsgrantedtodategenerallyhaveafour-yearvestingperiodandvestatarateof25%eachyearonthe
anniversarydateofthegrant.Stockoptionsgenerallyexpireontheearlierofsevenyearsfromthedateofgrant,ora
specifiedperiodoftimefollowingtermination.Performance-basedrestrictedstockunitsissuedgenerallyvestthreeyears
fromthegrantdateandrestrictedsharesgenerallyvestoneyearfromthegrantdate.Restrictedstockunitsgrantedgenerally
haveathree-yearvestingperiodandvestatacertainpercentageeachyearontheanniversarydateofthegrant.
TheCompanyissuespreviouslyunissuedsharesupontheexerciseofCompanyoptions,vestingofperformance-based
restrictedstockunitsorrestrictedstockunitsthataresettledincommonstock,andgrantingofrestrictedshares.
Stock-basedcompensationexpensechargedtoincomefortheplanswas$92.7million,$77.2million,and$66.4million
for2023,2022,and2021,respectively.
Totalunrecognizedcompensationcostforallstock-basedcompensationplanswas$135.9millionasofJanuary28,
2024,whichisexpectedtoberecognizedoveraweighted-averageperiodof2.0years,andwas$118.0millionasof
January29,2023overaweighted-averageperiodof2.1years.
68
AsummaryofthebalancesoftheCompany'sstock-basedcompensationplansasofJanuary28,2024,January29,2023,
andJanuary30,2022,andchangesduringthefiscalyearsthenendedispresentedbelow:
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 194 310.29 139 185.37 4 326.70 129 331.42 — —
Exercised/vested 174 104.85 165 100.89 4 299.09 144 139.33 15 397.83
Forfeited/expired 35 199.76 6 216.62 — — 22 235.23 — —
BalanceasofJanuary
30,2022 789 $ 186.10 167 $ 225.27 4 $ 326.70 238 $ 265.90 — $ —
Granted 192 371.04 117 274.90 5 308.66 120 364.51 — —
Exercised/vested 93 127.68 114 170.04 4 326.70 111 241.02 — —
Forfeited/expired 22 286.56 4 307.76 — — 26 334.39 — —
BalanceasofJanuary
29,2023 866 $ 230.78 166 $ 295.93 5 $ 308.66 221 $ 323.89 — $ —
Granted 213 360.00 121 296.27 4 370.59 132 364.63 — —
Exercised/vested 264 160.45 104 201.56 5 308.66 106 294.65 — —
Forfeited/expired 32 332.26 8 351.14 — 368.36 24 350.38 — —
BalanceasofJanuary
28,2024 783 $ 285.69 175 $ 349.84 4 $ 370.85 223 $ 359.12 — $ —
Atotalof4.0millionsharesoftheCompany'scommonstockhavebeenauthorizedforfutureissuanceunderthe
Company's2023EquityIncentivePlan.
TheCompany'sperformance-basedrestrictedstockunitsareawardedtoeligibleemployeesandentitlethegranteeto
receiveamaximumoftwosharesofcommonstockperperformance-basedrestrictedstockunitiftheCompanyachieves
specifiedperformancegoalsandthegranteeremainsemployedduringthevestingperiod.Thefairvalueofperformance-
basedrestrictedstockunitsisbasedontheclosingpriceoftheCompany'scommonstockonthegrantdate.Expensefor
performance-basedrestrictedstockunitsisrecognizedwhenitisprobablethattheperformancegoalwillbeachieved.
Thegrantdatefairvalueoftherestrictedsharesandrestrictedstockunitsisbasedontheclosingpriceofthe
Company'scommonstockonthegrantdate.Restrictedstockunitsthatweresettledincashorcommonstockattheelection
oftheemployeewereremeasuredtofairvalueattheendofeachreportingperioduntilsettlement.Thisfairvaluewasbased
ontheclosingpriceoftheCompany'scommonstockonthelastbusinessdaybeforeeachperiodend.
ThegrantdatefairvalueofeachstockoptiongrantedisestimatedonthedateofgrantusingtheBlack-Scholesmodel.
TheclosingpriceoftheCompany'scommonstockonthegrantdateisusedinthemodel.Theassumptionsusedtocalculate
thefairvalueoftheoptionsgrantedareevaluatedandrevised,asnecessary,toreflectmarketconditionsandtheCompany's
historicalexperience.Theexpectedtermoftheoptionsisbaseduponthehistoricalexperienceofsimilarawards,giving
considerationtoexpectationsoffutureemployeeexercisebehavior.Expectedvolatilityisbaseduponthehistoricalvolatility
oftheCompany'scommonstockfortheperiodcorrespondingwiththeexpectedtermoftheoptions.Therisk-freeinterest
rateisbasedontheU.S.Treasuryyieldcurvefortheperiodcorrespondingwiththeexpectedtermoftheoptions.The
followingareweightedaveragesoftheassumptionsthatwereusedincalculatingthefairvalueofstockoptionsgranted
in2023,2022,and2021:
2023 2022 2021
Expectedterm 3.75years 3.75years 3.75years
Expectedvolatility 42.35% 40.00% 39.32%
Risk-freeinterestrate 3.49% 2.51% 0.50%
Dividendyield —% —% —%
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ThefollowingtablesummarizesinformationaboutstockoptionsoutstandingandexercisableasofJanuary28,2024:
Outstanding Exercisable
RangeofExercisePrices
Numberof
Options
Weighted-
Average
ExercisePrice
Weighted-
Average
Remaining
Life(Years)
Numberof
Options
Weighted-
Average
ExercisePrice
Weighted-
Average
Remaining
Life(Years)
(Inthousands,exceptpershareamountsandyears)
$2.78-$174.52 151 $ 146.29 1.8 151 $ 146.29 1.8
$188.84-$296.36 121 189.43 3.1 79 189.43 3.1
$306.71-$356.93 157 309.16 4.3 63 309.07 4.2
$358.09-$358.09 192 358.09 6.1 1 358.09 6.2
$368.36-$502.74 162 378.96 5.2 33 378.71 5.0
783 $ 285.69 4.3 327 $ 212.01 2.9
Intrinsicvalue $ 150,645 $ 86,874
AsofJanuary28,2024,theunrecognizedcompensationcostrelatedtotheseoptionswas$35.8million,whichis
expectedtoberecognizedoveraweighted-averageperiodof2.6years.Theweighted-averagegrantdatefairvalueofoptions
grantedduring2023,2022,and2021was$130.75,$124.17,and$94.09,respectively.
Thefollowingtablesummarizestheintrinsicvalueofoptionsexercisedandawardsthatvestedduring2023,2022,and
2021:
2023 2022 2021
(Inthousands)
Stockoptions $ 69,316 $ 19,906 $ 46,761
Performance-basedrestrictedstockunits 33,198 37,672 52,495
Restrictedshares 1,661 1,152 1,364
Restrictedstockunits 38,016 37,275 47,042
Restrictedstockunits(liabilityaccounting) — — 5,938
$ 142,191 $ 96,005 $ 153,600
Employeesharepurchaseplan
TheCompany'sboardofdirectorsandstockholdersapprovedtheCompany'sEmployeeSharePurchasePlan("ESPP")in
September2007.Contributionsaremadebyeligibleemployees,subjecttocertainlimitsdefinedintheESPP,andthe
Companymatchesone-thirdofthecontribution.ThemaximumnumberofsharesauthorizedtobepurchasedundertheESPP
is6.0millionshares.AllsharespurchasedundertheESPParepurchasedintheopenmarket.Duringeachof2023,2022,and
2021,therewere0.1millionsharespurchased.AsofJanuary28,2024,4.4millionsharesremainauthorizedtobepurchased
undertheESPP.
Definedcontributionpensionplans
TheCompanyoffersdefinedcontributionpensionplanstoitseligibleemployees.Participatingemployeesmayelectto
deferandcontributeaportionoftheireligiblecompensationtoaplanuptolimitsstatedintheplandocuments,notto
exceedthedollaramountssetbyapplicablelaws.TheCompanymatches50%to75%ofthecontributiondependingonthe
participant'slengthofservice,andthecontributionissubjecttoatwo-yearvestingperiod.TheCompany'snetexpensefor
thedefinedcontributionplanswas$19.8million,$14.0million,and$11.8millionduring2023,2022,and2021,respectively.
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Note16.FairValueMeasurement
Assetsandliabilitiesmeasuredatfairvalueonarecurringbasis
AsofJanuary28,2024andJanuary29,2023,theCompanyheldcertainassetsandliabilitiesthatarerequiredtobe
measuredatfairvalueonarecurringbasis:
January28,
2024 Level1 Level2 Level3 BalanceSheetClassification
(Inthousands)
Moneymarketfunds $ 1,102,119 $ 1,102,119 $ — $ — Cashandcashequivalents
Termdeposits 8 — 8 — Cashandcashequivalents
Forwardcurrencycontractassets 647 — 647 —
Prepaidexpensesandother
currentassets
Forwardcurrencycontract
liabilities 2,872 — 2,872 — Othercurrentliabilities
January29,
2023 Level1 Level2 Level3 BalanceSheetClassification
(Inthousands)
Moneymarketfunds $ 568,000 $ 568,000 $ — $ — Cashandcashequivalents
Termdeposits 8 — 8 — Cashandcashequivalents
Forwardcurrencycontractassets 16,707 — 16,707 —
Prepaidexpensesandother
currentassets
Forwardcurrencycontract
liabilities 25,625 — 25,625 — Othercurrentliabilities
TheCompanyhasshort-term,highlyliquidinvestmentsclassifiedascashequivalents,whichareinvestedinmoney
marketfundsandshort-termdepositswithoriginalmaturitiesofthreemonthsorless.TheCompanyrecordscashequivalents
attheiroriginalpurchasepricesplusinterestthathasaccruedatthestatedrate.
ThefairvaluesoftheforwardcurrencycontractassetsandliabilitiesaredeterminedusingobservableLevel2inputs,
includingforeigncurrencyspotexchangerates,forwardpricingcurves,andinterestrates.Thefairvaluesconsiderthecredit
riskoftheCompanyanditscounterparties.TheCompany'sMasterInternationalSwapDealersAssociation,Inc.,Agreements
andothersimilararrangementsallownetsettlementsundercertainconditions.However,theCompanyrecordsallderivatives
onitsconsolidatedbalancesheetsatfairvalueanddoesnotoffsetderivativeassetsandliabilities.
Assetsandliabilitiesmeasuredatfairvalueonanon-recurringbasis
TheCompanyhasalsorecordedleaseterminationliabilitiesatfairvalueonanon-recurringbasis,determinedusing
Level3inputsbasedonremainingleaserentalsandreducedbyestimatedsubleaseincome.
During2023and2022,theCompanyrecordedimpairmentchargesforgoodwill,intangibleassets,cloudcomputing
arrangementimplementationcosts,andpropertyandequipment,asdisclosedinNote8.ImpairmentofGoodwillandOther
Assets,RestructuringCosts.Thatnoteincludesdetailsonthediscountedcashflowmodelusedtoestimatefairvalue,whichis
aLevel3valuationtechnique.
Note17.DerivativeFinancialInstruments
TheCompanycurrentlyhedgesagainstchangesintheCanadiandollarandChineseYuantotheU.S.dollarexchange
rateandchangesintheEuroandAustraliandollartotheCanadiandollarexchangerateusingforwardcurrencycontracts.
Netinvestmenthedges
TheCompanyisexposedtoforeigncurrencyexchangegainsandlosseswhichariseontranslationofitsinternational
subsidiaries'balancesheetsintoU.S.dollars.Thesegainsandlossesarerecordedasothercomprehensiveincome(loss),net
oftaxinaccumulatedothercomprehensiveincomeorlosswithinstockholders'equity.
TheCompanyholdsasignificantportionofitsassetsinCanadaandentersintoforwardcurrencycontractsdesignedto
hedgeaportionoftheforeigncurrencyexposurethatarisesontranslationofaCanadiansubsidiaryintoU.S.dollars.These
71
forwardcurrencycontractsaredesignatedasnetinvestmenthedges.TheCompanyassesseshedgeeffectivenessbasedon
changesinforwardrates.TheCompanyrecordednoineffectivenessfromnetinvestmenthedgesduring2023.
Derivativesnotdesignatedashedginginstruments
During2023,theCompanyenteredintocertainforwardcurrencycontractsdesignedtoeconomicallyhedgetheforeign
currencyexchangerevaluationgainsandlossesthatarerecognizedbyitsCanadianandChinesesubsidiariesonspecific
monetaryassetsandliabilitiesdenominatedincurrenciesotherthanthefunctionalcurrencyoftheentity.TheCompanyhas
notappliedhedgeaccountingtotheseinstrumentsandthechangeinfairvalueofthesederivativesisrecordedwithinselling,
generalandadministrativeexpenses.
Quantitativedisclosuresaboutderivativefinancialinstruments
Thenotionalamountsandfairvaluesofforwardcurrencycontractswereasfollows:
January28,2024 January29,2023
Gross
Notional Assets Liabilities
Gross
Notional Assets Liabilities
(Inthousands)
Derivativesdesignatedasnet
investmenthedges:
Forwardcurrencycontracts $ 1,242,000 $ — $ 258 $ 1,070,000 $ — $ 17,211
Derivativesnotdesignatedina
hedgingrelationship:
Forwardcurrencycontracts 1,543,351 647 2,614 1,605,284 16,707 8,414
Netderivativesrecognizedon
consolidatedbalancesheets:
Forwardcurrencycontracts $ 647 $ 2,872 $ 16,707 $ 25,625
AsofJanuary28,2024,therewerederivativeassetsof$0.6millionandderivativeliabilitiesof$2.9millionsubjectto
enforceablenettingarrangements.
TheforwardcurrencycontractsdesignatedasnetinvestmenthedgesoutstandingasofJanuary28,2024matureon
differentdatesbetweenFebruary2024andSeptember2024.
TheforwardcurrencycontractsnotdesignatedinahedgingrelationshipoutstandingasofJanuary28,2024matureon
differentdatesbetweenFebruary2024andOctober2024.
Thepre-taxgainsandlossesonforeigncurrencyexchangeforwardcontractsrecordedinaccumulatedother
comprehensiveincomeorlosswereasfollows:
2023 2022 2021
(Inthousands)
Gains(losses)recognizedinnetinvestmenthedgegains(losses):
Derivativesdesignatedasnetinvestmenthedges $ 15,344 $ 12,125 $ 13,177
Nogainsorlosseshavebeenreclassifiedfromaccumulatedothercomprehensiveincomeorlossintonetincomefor
derivativefinancialinstrumentsinanetinvestmenthedgingrelationship,astheCompanyhasnotsoldorliquidated(or
substantiallyliquidated)itshedgedsubsidiary.
Thepre-taxnetforeigncurrencyexchangeandderivativegainsandlossesrecordedintheconsolidatedstatementof
operationswereasfollows:
2023 2022 2021
(Inthousands)
Gains(losses)recognizedinselling,generalandadministrativeexpenses:
Foreignexchangegains(losses) $ (23,232) $ 4,410 $ 11,511
Derivativesnotdesignatedinahedgingrelationship 22,765 (11,945) (19,874)
Netforeignexchangeandderivativelosses $ (467) $ (7,535) $ (8,363)
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Note18.Leases
TheCompanyhasobligationsunderoperatingleasesforitsstoreandotherretaillocations,distributioncenters,offices,
andequipment.AsofJanuary28,2024,theinitialleasetermsofthevariousleasesgenerallyrangefromtwoto15years.The
majorityoftheCompany'sleasesincluderenewaloptionsatthesolediscretionoftheCompany.Theleasetermincludes
optionstoextendorterminatetheleasewhenitisreasonablycertainthoseoptionswillbeexercised.
ThefollowingtabledetailstheCompany'snetleaseexpense.CertainoftheCompany'sleasesincluderentescalation
clauses,rentholidays,andleaseholdrentalincentives.ThemajorityoftheCompany'sleasesforstorepremisesalsoinclude
contingentrentalpaymentsbasedonsalesvolume.Thevariableleaseexpensesdisclosedbelowincludecontingentrent
paymentsandothernon-fixedleaserelatedcosts,includingcommonareamaintenance,propertytaxes,andlandlord's
insurance.
2023 2022 2021
(Inthousands)
Netleaseexpense:
Operatingleaseexpense $ 282,888 $ 245,767 $ 215,549
Short-termleaseexpense 15,289 16,790 12,366
Variableleaseexpense 152,791 114,441 90,852
$ 450,968 $ 376,998 $ 318,767
Thefollowingtablepresentsfutureminimumleasepaymentsbyfiscalyearandtheimpactofdiscounting.
January28,
2024
(Inthousands)
2024 $ 300,379
2025 287,224
2026 232,510
2027 214,519
2028 158,252
Thereafter 452,434
Futureminimumleasepayments $ 1,645,318
Impactofdiscounting (242,036)
Presentvalueofleaseliabilities $ 1,403,282
Balancesheetclassification:
Currentleaseliabilities $ 249,270
Non-currentleaseliabilities 1,154,012
$ 1,403,282
AsofJanuary28,2024,theCompany'sminimumleasecommitmentfordistributioncenteroperatingleaseswhichhave
beencommittedto,butnotyetcommenced,was$299.6million,whichisnotreflectedinthetableabove.
Theweighted-averageremainingleasetermsandweighted-averagediscountrateswereasfollows:
January28,
2024
January29,
2023
Weighted-averageremainingleaseterm 6.95years 5.64years
Weighted-averagediscountrate 4.0% 3.1%
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Note19.IncomeTaxes
TheCompany'sdomesticandforeignincomebeforeincometaxexpenseandcurrentanddeferredincometaxesfrom
federal,state,andforeignsourcesareasfollows:
2023 2022 2021
(Inthousands)
Income(loss)beforeincometaxexpense
Domestic $ 458,041 $ (98,764) $ 204,350
Foreign 1,717,694 1,431,335 1,129,519
$ 2,175,735 $ 1,332,571 $ 1,333,869
Currentincometaxexpense
Federal $ 140,726 $ 34,752 $ 25,701
State 42,476 33,369 17,608
Foreign 469,090 400,250 322,105
$ 652,292 $ 468,371 $ 365,414
Deferredincometaxexpense(recovery)
Federal $ (14,741) $ 8,932 $ 5,858
State (3,097) 2,363 1,045
Foreign (8,909) (1,895) (13,770)
$ (26,747) $ 9,400 $ (6,867)
Incometaxexpense $ 625,545 $ 477,771 $ 358,547
TheCompany'sincometaxexpensefor2023,2022,and2021includecertaindiscretetaxamounts,asfollows:
2023 2022 2021
(Inthousands)
Impairmentofgoodwillandotherassets,restructuringcosts $ (26,085) $ (28,171) $ —
Gainondisposalofassets — 1,661 —
Acquisition-relatedexpenses — — (1,417)
Totaldiscreteincometaxexpense(recovery) $ (26,085) $ (26,510) $ (1,417)
PleaserefertoNote5.PropertyandEquipment,Note8.ImpairmentofGoodwillandOtherAssets,RestructuringCosts,
andNote9.Acquisition-RelatedExpensesforfurtherinformation.
AsofJanuary28,2024,theCompany'snetinvestmentinitsCanadiansubsidiarieswas$2.5billion,ofwhich$1.6billion
wasdeterminedtobeindefinitelyreinvested.Adeferredincometaxliabilityof$41.2millionhasbeenrecognizedinrelation
totheportionoftheCompany'snetinvestmentinitsCanadiansubsidiariesthatisnotindefinitelyreinvested,representing
theCanadianwithholdingtaxesandU.S.stateincometaxeswhichwouldbedueuponrepatriation.Thisdeferredtaxliability
hasbeenrecordedonthebasisthattheCompanywouldchoosetomaketherepatriationtransactionsinthemosttax
efficientmanner.Specifically,totheextentthattheCanadiansubsidiarieshavepaid-up-capital,anysuchdistributionswould
bestructuredasareturnofcapital,andthereforenotsubjecttoCanadianwithholdingtax.Theunrecognizeddeferredtax
liabilityontheindefinitelyreinvestedamountisapproximately$89.7million.Nodeferredincometaxliabilitieshavebeen
recognizedonanyoftheundistributedearningsoftheCompany'sotherforeignsubsidiariesastheseearningsare
permanentlyreinvestedoutsideoftheUnitedStates.ExcludingitsCanadiansubsidiaries,cumulativeundistributedearningsof
theCompany'sforeignsubsidiariesasofJanuary28,2024were$466.5million.
AsofJanuary28,2024,theCompanyhadcashandcashequivalentsof$822.5millionoutsideoftheUnitedStates.
74
Asummaryreconciliationoftheeffectivetaxrateisasfollows:
2023 2022 2021
(Percentage)
Federalincometaxatstatutoryrate 21.0% 21.0% 21.0%
Foreigntaxratedifferentials 4.1 6.8 5.0
U.S.statetaxes 1.0 (0.4) 0.8
Non-deductiblecompensationexpense 0.6 0.7 0.7
Excesstaxbenefitsfromstock-basedcompensation (0.4) (0.5) (0.9)
Taxonunremittedforeignearnings 2.6 1.4 —
Impairmentofgoodwillandotherassets,gainondisposalofassets — 7.8 —
Permanentandother (0.1) (0.9) 0.3
Effectivetaxrate 28.8% 35.9% 26.9%
Thetaxeffectsoftemporarydifferencesthatgiverisetosignificantportionsofthedeferredincometaxassetsand
deferredincometaxliabilitiesasofJanuary28,2024andJanuary29,2023arepresentedbelow:
January28,
2024
January29,
2023
(Inthousands)
Deferredincometaxassets:
Netoperatinglosscarryforwards $ 2,385 $ 2,312
Inventories 43,157 43,471
Accruedbonuses 19,075 13,647
Unredeemedgiftcardliability 15,580 12,877
Non-currentleaseliabilities 286,528 216,495
Researchandexperimentalexpenditures 48,922 —
Stock-basedcompensation 20,057 16,093
Other 16,802 9,645
Deferredincometaxassets 452,506 314,540
Valuationallowance (2,334) (743)
Deferredincometaxassets,netofvaluationallowance $ 450,172 $ 313,797
Deferredincometaxliabilities:
Propertyandequipment,net $ (162,312) $ (142,516)
Intangibleassets,net — (5,224)
Right-of-useleaseassets (265,157) (192,221)
Other (43,049) (22,518)
Deferredincometaxliabilities (470,518) (362,479)
Netdeferredincometaxliabilities $ (20,346) $ (48,682)
Balancesheetclassification:
Deferredincometaxassets $ 9,176 $ 6,402
Deferredincometaxliabilities (29,522) (55,084)
Netdeferredincometaxliabilities $ (20,346) $ (48,682)
AsofJanuary28,2024,theCompanyhadnetoperatinglosscarryforwardsof$20.0million.Themajorityofthenet
operatinglosscarryforwardsexpire,ifunused,betweenfiscal2030andfiscal2040.
Therewasa$1.6millionnetincreaseinthevaluationallowancein2023,comparedtoa$2.1millionnetdecreasein
2022,anda$3.7millionnetdecreasein2021.
TheCompanyfilesincometaxreturnsintheU.S.,Canada,andvariousforeignandstatejurisdictions.The2017to2022
taxyearsremainsubjecttoexaminationbytheU.S.federalandstatetaxauthorities.The2013taxyearisstillopenforcertain
statetaxauthorities.The2017to2022taxyearsremainsubjecttoexaminationbyCanadiantaxauthorities.The2016to2022
75
taxyearsremainsubjecttoexaminationbytaxauthoritiesincertainforeignjurisdictions.TheCompanydoesnothaveany
significantunrecognizedtaxbenefitsarisingfromuncertaintaxpositionstaken,orexpectedtobetaken,intheCompany'stax
returns.
Note20.EarningsPerShare
Thedetailsofthecomputationofbasicanddilutedearningspershareareasfollows:
2023 2022 2021
(Inthousands,exceptpershareamounts)
Netincome $ 1,550,190 $ 854,800 $ 975,322
Basicweighted-averagenumberofsharesoutstanding 126,726 127,666 129,768
Assumedconversionofdilutivestockoptionsandawards 334 351 527
Dilutedweighted-averagenumberofsharesoutstanding 127,060 128,017 130,295
Basicearningspershare $ 12.23 $ 6.70 $ 7.52
Dilutedearningspershare $ 12.20 $ 6.68 $ 7.49
TheCompany'scalculationofweighted-averagesharesincludesthecommonstockoftheCompanyaswellasthe
exchangeableshares.Exchangeablesharesaretheeconomicequivalentofcommonsharesinallmaterialrespects.Allclasses
ofstockhaveineffectthesameeconomicrightsandshareequallyinundistributednetincome.For2023,2022,and2021,
62.7thousand,43.5thousand,and36.0thousandstockoptionsandawards,respectively,wereanti-dilutivetoearningsper
shareandthereforehavebeenexcludedfromthecomputationofdilutedearningspershare.
OnJanuary31,2019,theCompany'sboardofdirectorsapprovedastockrepurchaseprogramforupto$500.0millionof
theCompany'scommonshares.OnDecember1,2020,itapprovedanincreaseintheremainingauthorizationfrom
$263.6millionto$500.0million,andonOctober1,2021,itapprovedanincreaseintheremainingauthorizationfrom
$141.2millionto$641.2million.Duringthefirstquarterof2022,theCompanycompletedtheremainingstockrepurchases
underthisprogram.
OnMarch23,2022andNovember29,2023,theCompany'sboardofdirectorsapprovedstockrepurchaseprograms,
eachforupto$1.0billionoftheCompany'scommonsharesontheopenmarketorinprivatelynegotiatedtransactions.The
repurchaseplanshavenotimelimitanddonotrequiretherepurchaseofaminimumnumberofshares.Commonshares
repurchasedontheopenmarketareatprevailingmarketprices,includingunderplanscomplyingwiththeprovisionsof
Rule10b5-1andRule10b-18oftheSecuritiesExchangeActof1934.Thetimingandactualnumberofcommonsharestobe
repurchasedwilldependuponmarketconditions,eligibilitytotrade,andotherfactors,inaccordancewithSecuritiesand
ExchangeCommissionrequirements.Theauthorizedvalueofsharesavailabletoberepurchasedundertheseprograms
excludesthecostofcommissionsandexcisetaxesandasofJanuary28,2024,theremainingauthorizedvaluewas$1.2billion.
During2023,2022,and2021,1.5million,1.4million,and2.2millionshares,respectively,wererepurchasedunderthe
programsatatotalcostincludingcommissionsandexcisetaxesof$558.7million,$444.0million,and$812.6million,
respectively.
SubsequenttoJanuary28,2024,anduptoMarch15,2024,0.2millionshareswererepurchasedatatotalcostincluding
commissionsandexcisetaxesof$99.2million.
Note21.CommitmentsandContingencies
Commitments
Leases.TheCompanyhasobligationsunderoperatingleasesforitsstoreandotherretaillocations,distributioncenters,
offices,andequipment.PleaserefertoNote18.Leasesforfurtherdetailsregardingleasecommitmentsandthetimingof
futureminimumleasepayments.
76
Licenseandsupplyarrangements.TheCompanyhasenteredintolicenseandsupplyarrangementswithpartnersinthe
MiddleEastandMexicowhichgrantthemtherighttooperatelululemonbrandedretaillocationsandselllululemonproducts
onwebsitesinspecificcountries.Underthesearrangements,theCompanysuppliesthepartnerswithlululemonproducts,
training,andothersupport.AsofJanuary28,2024,therewere39licensedlocations,including15inMexico,eightinthe
UnitedArabEmirates,sixinSaudiArabia,threeinQatar,threeinKuwait,threeinIsrael,andoneinBahrain.
One-timetransitiontaxpayable.TheU.S.taxreformsenactedinDecember2017imposedamandatorytransitiontaxon
accumulatedforeignsubsidiaryearningswhichhavenotpreviouslybeensubjecttoU.S.incometaxatarateof15.5%oncash
andcashequivalentsand8%ontheremainingearnings,netofforeigntaxcredits.Theone-timetransitiontaxispayableover
eightyearsbeginninginfiscal2018.Thetablebelowoutlinestheremainingexpectedpaymentsduebyfiscalyear.
PaymentsDuebyFiscalYear
Total 2024 2025 2026 2027 2028 Thereafter
(Inthousands)
One-timetransitiontaxpayable $ 28,555 $ 12,691 $ 15,864 $ — $ — $ — $ —
Contingencies
Legalproceedings.TheCompanyis,fromtimetotime,involvedinroutinelegalmatters,andauditsandinspectionsby
governmentalagenciesandotherthirdpartieswhichareincidentaltotheconductofitsbusiness.Thisincludeslegalmatters
suchasinitiationanddefenseofproceedingstoprotectintellectualpropertyrights,employmentclaims,productliability
claims,personalinjuryclaims,andsimilarmatters.TheCompanybelievestheultimateresolutionofanysuchlegal
proceedings,audits,andinspectionswillnothaveamaterialadverseeffectonitsconsolidatedbalancesheets,resultsof
operationsorcashflows.TheCompanyhasrecognizedimmaterialprovisionsrelatedtotheexpectedoutcomeoflegal
proceedings.
Note22.SupplementalCashFlowInformation
2023 2022 2021
(Inthousands)
Cashpaidforincometaxes $ 824,213 $ 502,136 $ 245,213
Cashpaidforamountsincludedinthemeasurementofleaseliabilities 288,934 242,758 215,157
Leasedassetsobtainedinexchangefornewoperatingleaseliabilities 586,926 450,787 287,008
Interestpaid 234 116 12
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Note23.SegmentedInformation
TheCompany'ssegmentsarebasedonthefinancialinformationtheCODM,whoistheChiefExecutiveOfficer,usesto
evaluateperformanceandallocateresources.
Duringthefourthquarterof2023,thefinancialinformationtheCODMregularlyusestoevaluateperformanceand
allocateresourceswasrevised.AstheCompanyhasfurtherexecutedonitsomni-channelretailstrategy,andwiththe
continuedexpansionofitsinternationaloperations,theCODMhasshiftedresourceallocationdecisionstobefocusedby
regionalmarket,ratherthanbysellingchannel.ThisresultedinachangeintheCompany'soperatingsegments.
AsofJanuary28,2024,theCompanyreportsthreesegments,Americas,ChinaMainland,andRestofWorld,whichis
APACandEMEAonacombinedbasis.TheCompanydoesnotreportcapitalexpendituresandassetsbysegmentasthat
informationisnotreviewedbytheCODM.
Previously,theCompany'ssegmentswerecomprisedofcompany-operatedstores,directtoconsumer(or"e-
commerce"),andother.TheCompanyhasrestatedthepriorperiodinformationtoreflectitsnewsegments.
2023 2022 2021
(Inthousands)
Netrevenue:
Americas $ 7,631,647 $ 6,817,454 $ 5,299,906
ChinaMainland 963,760 576,503 434,261
RestofWorld 1,023,871 716,561 522,450
$ 9,619,278 $ 8,110,518 $ 6,256,617
Segmentedincomefromoperations:
Americas $ 2,937,184 $ 2,503,740 $ 1,867,016
ChinaMainland 337,316 196,865 167,318
RestofWorld 201,832 103,204 67,674
3,476,332 2,803,809 2,102,008
Generalcorporateexpenses 1,240,436 1,005,988 718,477
lululemonStudioobsolescenceprovision 23,709 62,928 —
Impairmentofgoodwillandotherassets,restructuringcosts 74,501 407,913 —
Amortizationofintangibleassets 5,010 8,752 8,782
Acquisition-relatedexpenses — — 41,394
Gainondisposalofassets — (10,180) —
Incomefromoperations 2,132,676 1,328,408 1,333,355
Otherincome(expense),net 43,059 4,163 514
Incomebeforeincometaxexpense $ 2,175,735 $ 1,332,571 $ 1,333,869
Depreciationandamortization:
Americas $ 170,417 $ 137,260 $ 121,278
ChinaMainland 25,746 17,842 12,208
RestofWorld 23,644 19,346 16,829
Corporate 159,577 117,343 73,891
$ 379,384 $ 291,791 $ 224,206
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Long-livedassets,includingpropertyandequipment,netandright-of-useleaseassets,bygeographicareaasof
January28,2024andJanuary29,2023wereasfollows:
January28,
2024
January29,
2023
(Inthousands)
UnitedStates
$ 1,597,318 $ 1,175,317
Canada
671,622 601,756
People'sRepublicofChina
284,575 233,590
Othergeographicareas
257,906 228,370
$ 2,811,421 $ 2,239,033
Note24.DisaggregatedNetRevenue
InadditiontothedisaggregationofnetrevenuebyreportablesegmentinNote23.SegmentedInformation,the
followingtabledisaggregatestheCompany'snetrevenuebygeographicarea.
2023 2022 2021
(Inthousands)
UnitedStates $ 6,346,392 $ 5,654,343 $ 4,345,687
Canada 1,285,255 1,163,111 954,219
ChinaMainland 963,760 576,503 434,261
HongKongSAR,Taiwan,andMacauSAR 170,533 105,130 86,111
People'sRepublicofChina 1,134,293 681,633 520,372
Othergeographicareas 853,338 611,431 436,339
$ 9,619,278 $ 8,110,518 $ 6,256,617
ThefollowingtabledisaggregatestheCompany'snetrevenuebycategory.Othercategoriesisprimarilycomposedof
accessories,lululemonStudio,andfootwear.
2023 2022 2021
(Inthousands)
Women'sproduct $ 6,147,372 $ 5,259,803 $ 4,171,762
Men'sproduct 2,252,753 1,956,602 1,535,850
Othercategories 1,219,153 894,113 549,005
$ 9,619,278 $ 8,110,518 $ 6,256,617
ThefollowingtabledisaggregatestheCompany'snetrevenuebychannel.
2023 2022 2021
(Inthousands)
Company-operatedstores $ 4,410,956 $ 3,648,127 $ 2,821,497
E-commerce 4,311,110 3,699,791 2,777,944
Otherchannels 897,212 762,600 657,176
$ 9,619,278 $ 8,110,518 $ 6,256,617
ITEM9A.CONTROLSANDPROCEDURES
EvaluationofDisclosureControlsandProcedures
Underthesupervisionandwiththeparticipationofourmanagement,includingourprincipalexecutiveofficerand
principalfinancialandaccountingofficer,weconductedanevaluationoftheeffectivenessofthedesignandoperationofour
79
disclosurecontrolsandprocedures,asdefinedinRules13a-15(e)and15d-15(e)undertheSecuritiesExchangeActof1934,as
amended,ortheExchangeAct,asoftheendoftheperiodcoveredbythisreport,ortheEvaluationDate.Baseduponthe
evaluation,ourprincipalexecutiveofficerandprincipalfinancialandaccountingofficerconcludedthatourdisclosurecontrols
andprocedureswereeffectiveasoftheEvaluationDate.Disclosurecontrolsandproceduresarecontrolsandprocedures
designedtoreasonablyensurethatinformationrequiredtobedisclosedinourreportsfiledundertheExchangeAct,suchas
thisreport,isrecorded,processed,summarized,andreportedwithinthetimeperiodsspecifiedintheSEC'srulesandforms.
Disclosurecontrolsandproceduresincludecontrolsandproceduresdesignedtoreasonablyensurethatsuchinformationis
accumulatedandcommunicatedtoourmanagement,includingourprincipalexecutiveofficerandprincipalfinancialand
accountingofficer,asappropriatetoallowtimelydecisionsregardingrequireddisclosure.
InherentLimitationsoverInternalControls
Ourinternalcontroloverfinancialreportingisdesignedtoprovidereasonableassurancesregardingthereliabilityof
financialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyaccepted
accountingprinciples.Ourinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(i)pertainto
themaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsofour
assets;(ii)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancial
statementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatourreceiptsandexpendituresarebeing
madeonlyinaccordancewithauthorizationsofourmanagementanddirectors;and(iii)providereasonableassurance
regardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofourassetsthatcouldhavea
materialeffectonthefinancialstatements.Management,includingourprincipalexecutiveofficerandprincipalfinancialand
accountingofficer,doesnotexpectthatourinternalcontrolswillpreventordetectallerrorsandallfraud.Acontrolsystem,
nomatterhowwelldesignedandoperated,canprovideonlyreasonable,notabsolute,assurancethattheobjectivesofthe
controlsystemaremet.Further,thedesignofacontrolsystemmustreflectthefactthatthereareresourcelimitationsonall
controlsystems;noevaluationofinternalcontrolscanprovideabsoluteassurancethatallcontrolissuesandinstancesof
fraud,ifany,havebeendetected.Also,anyevaluationoftheeffectivenessofcontrolsinfutureperiodsaresubjecttotherisk
thatthoseinternalcontrolsmaybecomeinadequatebecauseofchangesinbusinessconditions,orthatthedegreeof
compliancewiththepoliciesandproceduresmaydeteriorate.
Management'sAnnualReportonInternalControloverFinancialReporting
Managementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting(as
definedinRule13a-15(f)undertheSecuritiesExchangeActof1934,asamended).Managementconductedanevaluationof
theeffectivenessofourinternalcontroloverfinancialreportingbasedonthecriteriasetforthinInternalControl—Integrated
Framework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission,orCOSO.Basedonthis
evaluation,managementconcludedthatwemaintainedeffectiveinternalcontroloverfinancialreportingasofJanuary28,
2024.
TheeffectivenessofourinternalcontroloverfinancialreportingasofJanuary28,2024hasbeenauditedby
PricewaterhouseCoopersLLP,ourindependentregisteredpublicaccountingfirm,asstatedintheirreport,whichappearsin
Item8ofPartIIofthisForm10-K.
ChangesinInternalControloverFinancialReporting
Therewerenochangesinourinternalcontroloverfinancialreportingduringthefourthquarterof2023thathave
materiallyaffected,orarereasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting.
ITEM9B.OTHERINFORMATION
TradingArrangements
Duringthefourthquarterof2023,nodirectororofficeroflululemon(asdefinedinRule16a-1(f)undertheExchange
Act)adoptedorterminatedaRule10b5-1tradingarrangementornon-Rule10b5-1tradingarrangement(ineachcase,as
definedinItem408(a)ofRegulationS-K).
AppointmentofDirector
OnMarch15,2024,theboardofdirectorsoflululemonappointedTeriL.Listasamemberoftheboardofdirectors.
Ms.ListservedasexecutivevicepresidentandchieffinancialofficerofGapInc,aglobalclothingretailer,fromJanuary2017
80
untilherretirementinJune2020.PriortojoiningtheGap,sheservedaschieffinancialofficeratDICK’sSportingGoodsand
KraftFoodGroup.Priortothoseroles,Ms.Listspentnearly20yearswithProcter&GambleculminatingintheroleofSVPand
Treasurer.ShebeganhercareerinpublicaccountingatDeloitteLLP,anauditing,consulting,taxandadvisoryservicesfirm.
ShecurrentlyservesontheBoardsofVisa,MicrosoftandDanaherCorporation.Ms.ListreceivedherBachelor’sdegreein
accountingfromNorthernMichiganUniversityandisacertifiedpublicaccountant.
TheboardofdirectorsincreasedthesizeoftheboardfromtentoelevenmembersandappointedMs.ListasaClassI
directortofillthenewlycreatedvacancy.AlthoughMs.Listwillserveasamemberoftheclassofdirectorswhoseterms
expireatthe2026annualmeetingofstockholders,ourstockholderswillhavetheopportunitytovoteonhernominationasa
continuingClassIdirectoratthenextannualmeetingofstockholders.
Ms.ListwillserveontheAuditCommitteeandwillreceivecompensationforherserviceasadirectorconsistentwith
thatofourothernon-employeedirectors.Adescriptionofourstandardcompensationarrangementsfornon-employee
directorsisincludedasanexhibittothisannualreportonForm10-K.WeexpectMs.Listtoenterintoourstandardform
indemnificationagreementfornon-employeedirectors,theformofwhichisfiledwiththeSECasExhibit10.16toour
registrationstatementonFormS-1,datedJuly9,2007.
ITEM9C.DISCLOSUREREGARDINGFOREIGNJURISDICTIONSTHATPREVENTINSPECTIONS
Notapplicable.
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PARTIII
ITEM10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE
Theinformationrequiredbythisitemconcerningourdirectors,directornomineesandSection16beneficialownership
reportingcomplianceisincorporatedbyreferencetoourdefinitiveProxyStatementforour2024AnnualMeetingof
Stockholdersunderthecaptions"ElectionofDirectors,""ExecutiveOfficers,"and"CorporateGovernance,"and,totheextent
necessary,underthecaption"DelinquentSection16(a)Reports."
Wehaveadoptedawrittencodeofbusinessconductandethics,whichappliestoallofourdirectors,officers,and
employees,includingourprincipalexecutiveofficerandourprincipalfinancialandaccountingofficer.OurGlobalCodeof
BusinessConductandEthicsisavailableonourwebsite,www.lululemon.com,andcanbeobtainedbywritingtoInvestor
Relations,lululemonathleticainc.,1818CornwallAvenue,Vancouver,BritishColumbia,CanadaV6J1C7orbysendingan
emailto[email protected].Informationcontainedonoraccessiblethroughourwebsitesisnotincorporatedinto,and
doesnotformapartof,thisAnnualReportoranyotherreportordocumentwefilewiththeSEC,andanyreferencestoour
websitesareintendedtobeinactivetextualreferencesonly.Anyamendments,otherthantechnical,administrative,orother
non-substantiveamendments,toourGlobalCodeofBusinessConductandEthicsorwaiversfromtheprovisionsoftheGlobal
CodeofBusinessConductandEthicsforourprincipalexecutiveofficerandourprincipalfinancialandaccountingofficerwill
bepromptlydisclosedonourwebsitefollowingtheeffectivedateofsuchamendmentorwaiver.
ITEM11.EXECUTIVECOMPENSATION
Theinformationrequiredbythisitemisincorporatedbyreferencetoour2024ProxyStatementunderthecaptions
"ExecutiveCompensation"and"ExecutiveCompensationTables."
ITEM12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDER
MATTERS
Theinformationrequiredbythisitemisincorporatedbyreferencetoour2024ProxyStatementunderthecaption
"PrincipalShareholdersandShareOwnershipbyManagement."
EquityCompensationPlanInformation(asofJanuary28,2024)
PlanCategory
Numberof
SecuritiestobeIssued
UponExerciseof
OutstandingOptions,
WarrantsandRights
(1)
(A)
Weighted-Average
ExercisePriceof
OutstandingOptions,
WarrantsandRights
(2)
(B)
NumberofSecurities
RemainingAvailable
forFutureIssuance
UnderEquity
CompensationPlans
(ExcludingSecurities
ReflectedinColumn
(A))
(3)
(C)
Equitycompensationplansapprovedbystockholders 1,181,031 $ 285.69 8,428,503
Equitycompensationplansnotapprovedbystockholders — — —
Total 1,181,031 $ 285.69 8,428,503
__________
(1)
Thisamountrepresentsthefollowing:(a)783,036sharessubjecttooutstandingoptions,(b)175,365sharessubjecttooutstandingperformance-based
restrictedstockunits,and(c)222,630sharessubjecttooutstandingrestrictedstockunits.Theoptions,performance-basedrestrictedstockunits,and
restrictedstockunitsareallunderour2023EquityIncentivePlan.Restrictedsharesoutstandingunderour2023EquityIncentivePlanhavealready
beenreflectedinourtotaloutstandingcommonstockbalance.
(2)
Theweighted-averageexercisepriceiscalculatedsolelyontheexercisepricesoftheoutstandingoptionsanddoesnotreflectthesharesthatwillbe
issueduponthevestingofoutstandingawardsofperformance-basedrestrictedstockunitsandrestrictedstockunits,whichhavenoexerciseprice.
(3)
Thisincludes(a)4,025,805sharesofourcommonstockavailableforfutureissuanceunderour2023EquityIncentivePlanand(b)4,402,698sharesof
ourcommonstockavailableforfutureissuanceunderourEmployeeSharePurchasePlan.Thenumberofsharesremainingavailableforfuture
issuanceunderour2023EquityIncentivePlanisreducedby1.7sharesforeachawardotherthanstockoptionsgrantedandbyoneshareforeach
stockoptionawardgranted.Outstandingawardsthatexpireorarecanceledwithouthavingbeenexercisedorsettledinfullareavailableforissuance
againunderour2023EquityIncentivePlanbutsharesthatarewithheldinsatisfactionoftaxwithholdingobligationsforfullvalueawardsarenotagain
availableforissuance.Nofurtherawardsmaybeissuedunderthepredecessorplan,our2014EquityIncentivePlan.
82
ITEM13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE
Theinformationrequiredbythisitemisincorporatedbyreferencetoour2024ProxyStatementunderthecaptions
"CertainRelationshipsandRelatedPartyTransactions"and"CorporateGovernance."
ITEM14.PRINCIPALACCOUNTANTFEESANDSERVICES
Theinformationrequiredbythisitemisincorporatedbyreferencetoour2024ProxyStatementunderthecaption
"FeesforProfessionalServices."
83
PARTIV
ITEM15.EXHIBITSANDFINANCIALSTATEMENTSCHEDULE
(a)Documentsfiledaspartofthisreport:
1.FinancialStatements.ThefinancialstatementsassetforthunderItem8ofthisAnnualReportonForm10-Kare
incorporatedherein.
2.FinancialStatementSchedule.Separatefinancialstatementscheduleshavebeenomittedeitherbecausetheyarenot
applicableorbecausetherequiredinformationisincludedintheconsolidatedfinancialstatementsornotesdescribedinItem
15(a)(1)above.
84
3.Exhibits
ExhibitIndex
3.1 RestatedCertificateofIncorporationoflululemonathletica
inc.
X
3.2 Bylawsoflululemonathleticainc. 10-K 3.5 001-33608 3/28/2023
4.1 FormofSpecimenStockCertificateoflululemonathleticainc. S-3 4.1 333-185899 1/7/2013
4.2 DescriptionofSecuritiesRegisteredUnderSection12ofthe
SecuritiesExchangeActof1934
10-K 4.2 001-33608 3/26/2020
10.1* lululemonathleticainc.2023EquityIncentivePlan X
10.2* FormofNon-QualifiedStockOptionAgreement 8-K 10.2 001-33608 6/13/2023
10.3* FormofNoticeofGrantofPerformanceSharesand
PerformanceSharesAgreement
8-K 10.3 001-33608 6/13/2023
10.4* FormofNoticeofGrantofRestrictedStockUnitsand
RestrictedStockUnitsAgreement
8-K 10.4 001-33608 6/13/2023
10.5* FormofRestrictedStockAwardAgreement 8-K 10.5 001-33608 6/13/2023
10.6* AmendedandRestatedLIPOInvestments(USA),Inc.Option
PlanandformofAwardAgreement
S-1 10.3 333-142477 5/1/2007
10.7 ExchangeTrustAgreementdatedJuly26,2007between
lululemonathleticainc.,LuluCanadianHolding,Inc.and
ComputershareTrustCompanyofCanada
10-Q 10.5 001-33608 9/10/2007
10.8 ExchangeableShareSupportAgreementdatedJuly26,2007
betweenlululemonathleticainc.,LululemonCallcoULCand
LuluCanadianHolding,Inc.
10-Q 10.6 001-33608 9/10/2007
10.9 AmendedandRestatedDeclarationofTrustforForfeitable
ExchangeableSharesdatedJuly26,2007,byandamongthe
partiesnamedtherein
10-Q 10.7 001-33608 9/10/2007
10.10 AmendedandRestatedArrangementAgreementdatedasof
June18,2007,byandamongthepartiesnamedtherein
(includingPlanofArrangementandExchangeableShare
Provisions)
S-1/A 10.14 333-142477 7/9/2007
10.11 FormofIndemnificationAgreementbetweenlululemon
athleticainc.anditsdirectorsandcertainofficers
S-1/A 10.16 333-142477 7/9/2007
10.12* OutsideDirectorCompensationPlan X
10.13* ExecutiveBonusPlan 8-K 10.1 001-33608 3/29/2022
10.14* lululemonathleticainc.EmployeeSharePurchasePlan 10-Q 10.3 001-33608 11/29/2007
10.15* ExecutiveEmploymentAgreement,effectiveasofDecember
5,2016,betweenlululemonathleticacanadainc.andCeleste
Burgoyne
10-K 10.23 001-33608 3/29/2017
10.16* AmendmenttoExecutiveEmploymentAgreement,effective
October27,2020,betweenlululemonathleticacanadainc.
andCelesteBurgoyne
10-Q 10.1 001-33608 12/10/2020
10.17* ExecutiveEmploymentAgreement,effectiveasofAugust20,
2018,betweenlululemonathleticacanadainc.andCalvin
McDonald
8-K 10.1 001-33608 7/24/2018
10.18* ExecutiveEmploymentAgreement,effectiveasofNovember
23,2020,betweenlululemonathleticainc.andMeghanFrank
10-Q 10.2 001-33608 12/10/2020
IncorporatedbyReference
Exhibit
No. ExhibitTitle
Filed
Herewith Form ExhibitNo. FileNo. FilingDate
85
10.19* ExecutiveEmploymentAgreement,effectiveasofSeptember
20,2018,betweenlululemonathleticainc.andMichelleChoe
10-Q 10.1 001-33608 12/06/2018
10.20* ExecutiveEmploymentAgreement,effectiveSeptember20,
2021,betweenlululemonathleticainc.andNicoleNeuburger
10-Q 10.1 001-33608 12/09/2021
10.21* ExecutiveEmploymentAgreement,effectiveasofJanuary4,
2021,betweenlululemonathleticaUKltd.andAndre
Maestrini
10-K 10.22 001-33608 3/30/2021
10.22 CreditAgreement,datedDecember14,2021,among
lululemonathleticainc.,lululemonathleticacanadainc.,Lulu
CanadianHolding,Inc.andlululemonusainc.,asborrowers,
BankofAmerica,N.A.,asadministrativeagent,swingline
lenderandletterofcreditissuer,HSBCBankCanada,as
syndicationagentandletterofcreditissuer,BOFASecurities,
Inc.,assustainabilitycoordinator,andtheotherlendersparty
thereto.
8-K 10.1 001-33608 12/17/2021
21.1 Significantsubsidiariesoflululemonathleticainc. 10-K 21.1 001-33608 3/28/2023
23.1 ConsentofPricewaterhouseCoopersLLP X
31.1 Certificationofprincipalexecutiveofficerpursuantto
ExchangeActRules13a-14(a)and15d-14(a),asadopted
pursuanttoSection302oftheSarbanes-OxleyActof2002
X
31.2 Certificationofprincipalfinancialandaccountingofficer
pursuanttoExchangeActRules13a-14(a)and15d-14(a),as
adoptedpursuanttoSection302oftheSarbanes-OxleyActof
2002
X
32.1** Certificationofprincipalexecutiveofficerandprincipal
financialandaccountingofficerpursuantto18U.S.C.
Section1350,asadoptedpursuanttoSection906ofthe
Sarbanes-OxleyActof2002
X
97 PolicyforRecoveryofErroneouslyAwardedIncentive-Based
Compensation
8-K 10.1 001-33608 6/13/2023
101 ThefollowingfinancialstatementsfromtheCompany's10-K
forthefiscalyearendedJanuary28,2024,formattediniXBRL:
(i)ConsolidatedBalanceSheets,(ii)ConsolidatedStatements
ofOperationsandComprehensiveIncome,(iii)Consolidated
StatementsofStockholders'Equity,(iv)Consolidated
StatementsofCashFlows(v)NotestotheConsolidated
FinancialStatements
X
104 CoverPageInteractiveDataFile(formattediniXBRLand
containedinExhibit101)
X
* Denotesacompensatoryplan,contractorarrangement,inwhichourdirectorsorexecutiveofficersmayparticipate.
** Furnishedherewith.
IncorporatedbyReference
Exhibit
No. ExhibitTitle
Filed
Herewith Form ExhibitNo. FileNo. FilingDate
ITEM16.FORM10-KSUMMARY
None.
86
SIGNATURES
PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,asamended,theregistrant
hasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.
LULULEMONATHLETICAINC.
By: /s/CALVINMCDONALD
CalvinMcDonald
ChiefExecutiveOfficer
(principalexecutiveofficer)
Date: March21,2024
KNOWALLPERSONSBYTHESEPRESENTS,thateachpersonwhosesignatureappearsbelowconstitutesandappoints
CalvinMcDonaldandMeghanFrankandeachofthem,withfullpowerofsubstitutionandresubstitutionandfullpowertoact
withouttheother,ashisorhertrueandlawfulattorney-in-factandagenttoactinhisorhername,placeandsteadandto
executeinthenameandonbehalfofeachperson,individuallyandineachcapacitystatedbelow,andtofile,anyandall
documentsinconnectiontherewith,withtheSecuritiesandExchangeCommission,grantinguntosaidattorneys-in-factand
agents,andeachofthem,fullpowerandauthoritytodoandperformeachandeveryactandthing,ratifyingandconfirming
allthatsaidattorneys-in-factandagentsoranyofthemortheirandhisorhersubstituteorsubstitutes,maylawfullydoor
causetobedonebyvirtuethereof.
87
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,asamended,thisreporthasbeensignedbelowby
thefollowingpersonsonbehalfoftheregistrantandinthecapacitiesandonthedatesindicated:
Signature Title Date
/s/CALVINMCDONALD ChiefExecutiveOfficerandDirector March21,2024
CalvinMcDonald
(principalexecutiveofficer)
/s/MEGHANFRANK ChiefFinancialOfficer March21,2024
MeghanFrank
(principalfinancialandaccountingofficer)
/s/MARTHAA.M.MORFITT Director,BoardChair March21,2024
MarthaA.M.Morfitt
/s/MICHAELCASEY Director March21,2024
MichaelCasey
/s/SHANEGRANT Director March21,2024
ShaneGrant
/s/KATHRYNHENRY Director March21,2024
KathrynHenry
/s/TERILIST Director March21,2024
TeriList
/s/ALISONLOEHNIS Director March21,2024
AlisonLoehnis
/s/ISABELMAHE Director March21,2024
IsabelMahe
/s/JONMCNEILL Director March21,2024
JonMcNeill
/s/DAVIDM.MUSSAFER Director March21,2024
DavidM.Mussafer
/s/EMILYWHITE Director March21,2024
EmilyWhite
88
Board of Directors
Martha (Marti) Morfitt Board Chair
River Rock Partners Inc., Principal
David Mussafer Lead Director of the Board
Advent International, L.P., Chairman and Managing Partner
Calvin McDonald Chief Executive Oicer
Michael Casey Starbucks Corporation, Retired Executive Vice President,
Chief Financial Oicer and Chief Administrative Oicer
Shane Grant Danone, Group Deputy CEO, CEO Americas and EVP Dairy, Plant Based and Global Sales
Kathryn Henry LightBrite, Co-Founder and Advisor
Teri List Gap, Inc. Retired Executive Vice President and Chief Financial Oicer
Alison Loehnis Yoox Net-a-Porter, Ad-Interim CEO and President of Luxury and Fashion
Isabel Mahe Apple Inc., Vice President and Managing Director of Greater China
Jon McNeill DVx Ventures, Chief Executive Oicer
Emily White Anthos Capital, President
Annual Meeting
The annual meeting will be held on Thursday, June 6,
2024 at 8:00 am, Pacific Time, via live webcast at www.
virtualshareholdermeeting.com/LULU2024.
Investor Information
Shareholders are advised to review financial information and other
disclosures about lululemon contained in its 2023 Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statement
and other SEC filings, as well as press releases and earnings
announcements by accessing the Company’s website at http://
corporate.lululemon.com/Investors or at www.sec.gov.
Investor inquiries should be directed to:
By email: inv[email protected]
By mail: lululemon athletica Investor Relations
1818 Cornwall Avenue, Vancouver, British Columbia
Canada V6J 1C7
Independent Auditors
PricewaterhouseCoopers LLP
Transfer Agent
Computershare Trust Company, N.A.
Executive Oicers
Calvin McDonald Chief Executive Oicer
Meghan Frank Chief Financial Oicer
Celeste Burgoyne President, Americas and Global Guest Innovation
Michelle (Sun) Choe Chief Product Oicer
André Maestrini Executive Vice President, International
Nicole (Nikki) Neuburger Chief Brand Oicer
This letter contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations, and intentions.
Our actual results and the timing of events may dier materially from those anticipated in these forward-looking statements as a result of various factors, including those stated in the “Item 1A.
Risk Factors” section and elsewhere in our Annual Report on Form 10-K.
Board of Directors and Executive Oicers
AR | 2023
lululemon.com