What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-09-08 compared with 2020-06-11 · 39 added, 14 removed, 299 unchanged (15% of the section changed)

13 unchanged sentences

Related government and private sector responsive actions have significantly affected our business operations and will likely continue to do so for the foreseeable future.

The spread of COVID-19 has caused public health officials to recommend precautions to mitigate the spread of the virus, especially when congregating in heavily populated areas, such as malls and lifestyle centers.

In February 2020, we temporarily closed all of our retail locations in Mainland China.

All of these locations have since reopened.

In March 2020, we temporarily closed all of our retail locations in North America, Europe, and certain countries in Asia Pacific.

We have started to reopen stores in certain markets with precautionary measures such as limited operating hours and maximum occupancy levels, in line with the guidance from local authorities.

There is significant uncertainty around the breadth and duration of our store closures and the restrictions in place once they do reopen.

There is significant uncertainty regarding the pace of stores reopening and what their results of operations will be once they do.

We do not know what the duration and severity of potential restrictions on the operations of reopened stores will be.

These restrictions could include precautionary measures such as limitations on the number of guests allowed in our stores at a time, minimum distancing requirements, and limited operating hours.

A resurgence in COVID-19 cases could cause additional restrictions, including temporarily closing the stores again.

The spread of COVID-19 has caused public health officials to impose restrictions and recommend precautions to mitigate the spread of the virus, especially when congregating in heavily populated areas, such as malls and lifestyle centers.

In February 2020, we temporarily closed the majority of our stores, and we have implemented precautionary measures in line with guidance from local authorities in the stores we have reopened.

These measures include restrictions such as limitations on the number of guests allowed in our stores at any single time, minimum physical distancing requirements, and limited operating hours.

We do not know how the measures recommended by local authorities or implemented by us may change over time or what the duration of these restrictions will be.

There is significant uncertainty regarding what the results of operations of reopened stores will be.

A resurgence in COVID-19 cases could cause additional restrictions, including temporarily closing all or some of our stores again.

An outbreak at one of our locations, even if we follow appropriate precautionary measures, could negatively impact our employees, guests, and brand.

There is uncertainty over the impact of COVID-19 on the U.S., Canadian, and global economies, consumer willingness to visit stores, malls, and lifestyle centers, and employee willingness to staff our stores once they reopen.

There is also uncertainty regarding potential long-term changes to consumer shopping behavior and preferences and whether consumer demand will recover when stay-at-home restrictions are lifted.

There is also uncertainty regarding potential long-term changes to consumer shopping behavior and preferences and whether consumer demand will recover when restrictions are lifted.

We may be impacted by other business disruptions related to COVID-19, including disruptions to our sourcing and manufacturing or to our distribution facilities.

28 unchanged sentences

We work with a group of approximately 39 vendors that manufacture our products, five of which produced approximately 56% of our products in fiscal 2019.

During fiscal 2019, the largest single manufacturer produced approximately 17% of our

During fiscal 2019, the largest single manufacturer produced approximately 17% of our products.

During fiscal 2019, approximately 33% of our products were manufactured in Vietnam, 16% in Cambodia, 15% in Sri Lanka, and 11% in the PRC, including 2% in Taiwan, PRC.

24 unchanged sentences

Some of the factors that may influence consumer spending on discretionary items include general economic conditions (particularly those in North America), high levels of unemployment, health pandemics (such as the impact of the current COVID-19 coronavirus pandemic, including reduced store traffic and widespread temporary store closures), 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 rates and credit availability, government austerity measures, fluctuating fuel and other energy costs, fluctuating commodity prices, tax rates and general uncertainty regarding the overall future economic environment.

To date, COVID-19 and related precautions and mitigation measures have negatively impacted the global economy and created significant volatility and disruption of financial markets.

To date, COVID-19 and related restrictions and mitigation measures have negatively impacted the global economy and created significant volatility and disruption of financial markets.

While the duration and severity of the economic impact of COVID-19 is unknown, any recession, depression or general downturn in the global economy will negatively affect consumer confidence and discretionary spending.

102 unchanged sentences

The current political administrations in the United States and the PRC have proposed tariffs which increase the costs of our products.

General geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions, and changes in tariffs, including recent sanctions against the PRC, tariffs imposed by the United States and the PRC, and the possibility of additional tariffs or other trade restrictions between the United States and Mexico, could adversely impact our business.

It is possible that further tariffs may be introduced, or increased.

4 unchanged sentences

Our business could be adversely affected by these changes, including by additional duties on the importation of our products into the UK from the EU and as a result of shipping delays or congestion.

The potential benefits and synergies sought with the acquisition of MIRROR might not be fully realized, if at all.

On July 7, 2020, we completed the acquisition of MIRROR as part of our growth plan, which includes driving business through omni guest experiences.

The potential benefits of enhancing our digital and interactive capabilities and deepening our roots in the sweatlife might not be realized fully, if at all.

The expected synergies between lululemon and MIRROR, such as those related to our connections with our guests and communities as well as our store and direct to consumer infrastructure, may not materialize.

A significant portion of the purchase price was allocated to goodwill and if our acquisition does not yield expected returns, we may be required to record impairment charges, which would adversely affect our results of operations.

Management has limited experience in addressing the challenges of integrating management teams, strategies, cultures, and organizations of two companies.

This integration may divert the attention of management and cause additional expenses.

Management also has limited experience outside of the retail industry, including with the specialized hardware and software sold and licensed by MIRROR.

If MIRROR has inadequate or ineffective controls and procedures, our internal control over financial reporting could be adversely impacted.

The acquisition may not be well received by the customers or employees of either company, and this could hurt our brand and result in the loss of key employees.

If we are unable to successfully integrate MIRROR, including its people and technologies, we may not be able to manage operations efficiently, which could adversely affect our results of operations.

In addition, 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.

The acquisition of MIRROR or other strategic investments or acquisitions may not create value and may harm our brand and adversely affect our business, financial condition, and results of operations.

The significant costs incurred in connection with the acquisition of MIRROR could limit our operating flexibility.

The acquisition of MIRROR had a significant impact on our cash flows.

We have incurred and expect to continue to incur costs in connection with the acquisition including fees for financial and legal advisors as well as expenses incurred in integrating MIRROR.

These costs could limit our operating flexibility and ability to take responsive actions to current and future economic uncertainty, including the ongoing impact of COVID-19.

While we expanded our available borrowings under our credit facilities to provide extra liquidity, we will incur additional interest expenses if we draw from these facilities.

We may not be able to grow the MIRROR business and have it achieve profitability.

We may be unable to attract and retain subscribers to MIRROR.

If we do not provide the delivery and installation service that our guests expect, offer engaging and innovative classes, and support and continue to improve the technology used, we may not be able to maintain and grow the number of subscribers.

This could adversely impact our results of operations.

We are dependent on information technology systems to provide live and recorded classes to our customers with MIRROR subscriptions, to maintain its software, and to manage subscriptions.

If we experience issues such as cybersecurity threats or actions, or interruptions or delays in our information technology systems, the data privacy and overall experience of subscribers could be negatively impacted and could therefore damage our brand and adversely affect our results of operations.

Competition, including from other in-home fitness solutions as well as in-person fitness studios, and trends of consumer preferences, could also impact the level of subscriptions and therefore our results of operations.

Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.

2 unchanged sentences

income taxes and foreign withholding taxes.

We may face unanticipated tax liabilities in connection with our acquisition of MIRROR.

Repatriations from our Canadian subsidiaries are not subject to Canadian withholding taxes if such distributions are made as a return of capital.

58 unchanged sentences

Our business is affected by the general seasonal trends common to the retail apparel industry.

This seasonality may adversely affect our business and cause our results of operations to fluctuate, and, as a result, we believe that comparisons of our operating results between different quarters within a single fiscal year are not necessarily meaningful and that results of operations in any period should not be considered indicative of the results to be expected for any future period.

This seasonality may adversely affect our business and cause our results of operations to fluctuate, and, as a result, we believe that comparisons of

our operating results between different quarters within a single fiscal year are not necessarily meaningful and that results of operations in any period should not be considered indicative of the results to be expected for any future period.

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.

52 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors