What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-06-02 compared with 2021-12-09 · 112 added, 166 removed, 380 unchanged (42% of the section changed)

22 unchanged sentences

Accounts payable $ 308,086 $ 289,728

Accrued inventory liabilities 10,038 14,956

Other accrued liabilities 314,394 211,911

Accrued liabilities and other 362,938 330,800

Accrued compensation and related expenses 119,482 204,921

35 unchanged sentences

Amounts in thousands, except per share amounts)

Quarter Ended Three Quarters Ended

2021 November 1,

2020 October 31,

2021 November 1,

Quarter Ended

Net revenue $ 1,613,463 $ 1,226,465

9 unchanged sentences

Net income $ 189,998 $ 144,956

Other comprehensive income (loss):

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment $ ( 25,848 ) $ 67,241

Net investment hedge gains (losses) 5,056 ( 23,605 )

Other comprehensive income (loss), net of tax $ ( 20,792 ) $ 43,636

Comprehensive income $ 169,206 $ 188,592

7 unchanged sentences

Amounts in thousands)

Quarter Ended October 31, 2021

Exchangeable Stock Special Voting Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total

Shares Shares Par Value Shares Par Value

Balance as of August 1, 2021 5,203 5,203 $ — 124,644 $ 623 $ 381,737 $ 2,445,845 $ ( 157,039 ) $ 2,671,166

Net income 187,788 187,788

Foreign currency translation adjustment 10,274 10,274

Stock-based compensation expense 21,657 21,657

Common stock issued upon settlement of stock-based compensation 83 — 7,907 7,907

Shares withheld related to net share settlement of stock-based compensation ( 9 ) — ( 3,914 ) ( 3,914 )

Repurchase of common stock ( 583 ) ( 2 ) ( 974 ) ( 235,447 ) ( 236,423 )

Balance as of October 31, 2021 5,203 5,203 $ — 124,135 $ 621 $ 406,413 $ 2,398,186 $ ( 146,765 ) $ 2,658,455

Quarter Ended November 1, 2020

Exchangeable Stock Special Voting Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total

Shares Shares Par Value Shares Par Value

Balance as of August 2, 2020 5,393 5,393 $ — 124,917 $ 625 $ 358,414 $ 1,872,948 $ ( 230,885 ) $ 2,001,102

Net income 143,643 143,643

Foreign currency translation adjustment 2,269 2,269

Common stock issued upon exchange of exchangeable shares ( 177 ) ( 177 ) — 177 1 ( 1 ) —

Stock-based compensation expense 15,186 15,186

Common stock issued upon settlement of stock-based compensation 30 1 1,678 1,679

Shares withheld related to net share settlement of stock-based compensation ( 3 ) ( 1 ) ( 925 ) ( 926 )

Balance as of November 1, 2020 5,216 5,216 $ — 125,121 $ 626 $ 374,352 $ 2,016,591 $ ( 228,616 ) $ 2,162,953

Three Quarters Ended October 31, 2021

Quarter Ended May 1, 2022

Exchangeable Stock Special Voting Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total

2 unchanged sentences

Net income 189,998 189,998

Foreign currency translation adjustment 30,390 30,390

Other comprehensive income (loss), net of tax ( 20,792 ) ( 20,792 )

Stock-based compensation expense 18,358 18,358

2 unchanged sentences

Repurchase of common stock ( 708 ) ( 4 ) ( 1,234 ) ( 231,406 ) ( 232,644 )

Balance as of October 31, 2021 5,203 5,203 $ — 124,135 $ 621 $ 406,413 $ 2,398,186 $ ( 146,765 ) $ 2,658,455

Three Quarters Ended November 1, 2020

Balance as of May 1, 2022 5,203 5,203 $ — 122,732 $ 614 $ 412,713 $ 2,471,432 $ ( 216,709 ) $ 2,668,050

Quarter Ended May 2, 2021

Exchangeable Stock Special Voting Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total

Shares Shares Par Value Shares Par Value

Balance as of February 2, 2020 6,227 6,227 $ — 124,122 $ 621 $ 355,541 $ 1,820,637 $ ( 224,581 ) $ 1,952,218

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 144,956 144,956

Foreign currency translation adjustment ( 4,035 ) ( 4,035 )

Common stock issued upon exchange of exchangeable shares ( 1,011 ) ( 1,011 ) — 1,011 5 ( 5 ) —

Other comprehensive income (loss), net of tax 43,636 43,636

Stock-based compensation expense 14,932 14,932

2 unchanged sentences

Repurchase of common stock ( 270 ) ( 2 ) ( 451 ) ( 83,378 ) ( 83,831 )

Balance as of November 1, 2020 5,216 5,216 $ — 125,121 $ 626 $ 374,352 $ 2,016,591 $ ( 228,616 ) $ 2,162,953

Balance as of May 2, 2021 5,203 5,203 $ — 125,069 $ 625 $ 364,743 $ 2,408,006 $ ( 133,519 ) $ 2,639,855

See accompanying notes to the unaudited interim consolidated financial statements

2 unchanged sentences

Amounts in thousands)

Three Quarters Ended

October 31, 2021 November 1, 2020

Quarter Ended

May 1, 2022 May 2, 2021

Cash flows from operating activities

Net income $ 189,998 $ 144,956

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 64,470 50,485

7 unchanged sentences

Accounts payable 20,630 19,623

Accrued inventory liabilities ( 5,253 ) 4,240

Other accrued liabilities 93,132 69,496

Accrued liabilities and other 28,113 38,181

Accrued compensation and related expenses ( 84,123 ) 22,764

3 unchanged sentences

Other current and non-current liabilities ( 15,476 ) 4,554

Net cash provided by operating activities 658,124 85,404

Net cash provided by (used in) operating activities ( 243,256 ) 214,109

Cash flows from investing activities

1 unchanged sentence

Settlement of net investment hedges 10,024 ( 21,239 )

Acquisition, net of cash acquired — ( 452,581 )

Other investing activities ( 10,000 ) 1,000

Net cash used in investing activities ( 101,328 ) ( 85,464 )

5 unchanged sentences

Effect of foreign currency exchange rate changes on cash and cash equivalents ( 6,711 ) 22,812

Decrease in cash and cash equivalents ( 156,926 ) ( 611,924 )

Increase (decrease) in cash and cash equivalents ( 610,855 ) 29,222

Cash and cash equivalents, beginning of period $ 1,259,871 $ 1,150,517

5 unchanged sentences

Note 2 Recent Accounting Pronouncements

Note 3 Acquisition

Note 3 Acquisition-Related Expenses

Note 4 Revolving Credit Facilities

7 unchanged sentences

Note 12 Legal Proceedings and Other Contingencies

Note 13 Subsequent Event

lululemon athletica inc.

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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 healthy lifestyle inspired athletic apparel and accessories, which are sold through a chain of company-operated stores, direct to consumer through e-commerce, outlets, sales from temporary locations, sales to wholesale accounts, and license and supply arrangements.

The Company operates stores in the United States, Canada, the People's Republic of China ("PRC"), Australia, the United Kingdom, South Korea, Germany, New Zealand, Japan, Singapore, France, Malaysia, Sweden, Ireland, the Netherlands, Norway, and Switzerland.

There were 552 and 521 company-operated stores as of October 31, 2021 and January 31, 2021, respectively.

On July 7, 2020, the Company acquired Curiouser Products Inc., dba MIRROR, ("MIRROR") which has been consolidated from the date of acquisition.

MIRROR generates net revenue from the sale of in-home fitness equipment and associated content subscriptions.

Please refer to Note 3.

Acquisition for further information.

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 technical athletic apparel, footwear, and accessories, which are sold through a chain of company-operated stores, direct to consumer through e-commerce, outlets, sales from temporary locations, sales to wholesale accounts, and license and supply arrangements.

The Company operates stores in the United States, the People's Republic of China ("PRC"), Canada, Australia, the United Kingdom, South Korea, Germany, New Zealand, Japan, Singapore, Ireland, France, Malaysia, Sweden, the Netherlands, Norway, and Switzerland.

There were 579 and 574 company-operated stores as of May 1, 2022 and January 30, 2022, respectively.

The Company also engages in the design and retail of in-home fitness equipment and associated content subscriptions through its MIRROR brand.

COVID-19 Pandemic

The outbreak of a novel strain of coronavirus ("COVID-19") caused governments and public health officials to impose restrictions and recommend precautions to mitigate the spread of the virus.

The Company temporarily closed almost all of its retail locations for a significant portion of the first two quarters of fiscal 2020.

While most of the Company's retail locations were open throughout the first three quarters of fiscal 2021, certain locations were temporarily closed based on government and health authority guidance.

During the third quarter and first three quarters of fiscal 2020, the Company recognized $ 1.4 million and $ 37.0 million, respectively, of government payroll subsidies as a reduction in selling, general, and administrative expenses.

These subsidies partially offset the wages paid to employees while its retail locations were temporarily closed due to COVID-19.

The Company did not recognize any payroll subsidies in the first three quarters of fiscal 2021.

While most of the Company's retail locations were open throughout the first quarter of fiscal 2022 and 2021, certain locations were temporarily closed based on government and health authority guidance.

Certain stores and the Company's third party distribution center in the PRC experienced temporary closures during the first quarter of 2022, and there is uncertainty regarding the ongoing impact of COVID-19 on its operations in the PRC.

The pandemic has impacted its suppliers and its distribution and logistics providers, including in the PRC.

There has been disruption in transportation and port congestion, an increase in freight costs, and the Company has increased its use of air freight.

Basis of presentation

The unaudited interim consolidated financial statements as of October 31, 2021 and for the quarters and three quarters ended October 31, 2021 and November 1, 2020 are presented in U.S.

The unaudited interim consolidated financial statements as of May 1, 2022 and for the quarters ended May 1, 2022 and May 2, 2021 are presented in U.S.

dollars and have been prepared by the Company under the rules and regulations of the Securities and Exchange Commission ("SEC").

8 unchanged sentences

Fiscal 2022 and fiscal 2021 are referred to as "2022," and "2021," respectively.

The first three quarters of 2021 and 2020 ended on October 31, 2021 and November 1, 2020, respectively.

The first quarter of 2022 and 2021 ended on May 1, 2022 and May 2, 2021, respectively.

The Company's business is affected by the pattern of seasonality common to most retail apparel businesses.

2 unchanged sentences

Recently adopted accounting pronouncements

In December 2019, the FASB issued guidance on ASC 740, Income Taxes.

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740.

The amendments also improve consistent application and make simplifications in other areas of this topic by clarifying and amending existing guidance.

The Company adopted this update during the first quarter of 2021 and it did not have a material impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements

The Company considers the applicability and impact of all Accounting Standard Updates ("ASUs").

Recently issued ASUs 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.

On July 7, 2020, the Company acquired all of the outstanding shares of MIRROR, an in-home fitness company with an interactive workout platform that features live and on-demand classes.

The results of operations, financial position, and cash flows of MIRROR have been included in the Company's consolidated financial statements since the date of acquisition.

The fair value of the consideration paid, net of cash acquired, was $ 452.6 million.

This resulted in the recognition of intangible assets of $ 85.0 million and goodwill of $ 362.5 million.

The purchase price allocation was finalized as of January 31, 2021 with no measurement period adjustments.

ASUs adopted by the Company during the first quarter of 2022 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 November 2021, the FASB issued ASC 832, Government Assistance to require annual disclosures about the nature of certain government assistance received, the accounting policy used to account for the transactions, the location in the financial statements where such transactions were recorded and significant terms and conditions associated with such transactions.

The Company adopted this update prospectively during the first quarter of 2022 and it did not have a material impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements

ASUs recently issued 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.

Acquisition-Related Expenses

In connection with the acquisition, the Company recognized certain acquisition-related expenses which are expensed as incurred.

These expenses are recognized within acquisition-related expenses in the consolidated statements of operations include the following amounts:

• acquisition-related compensation, including the partial acceleration of vesting of certain stock options, amounts due to selling shareholders and MIRROR employees that are contingent upon continuing employment;

• transaction and integration costs, including fees for advisory and professional services incurred as part of the acquisition and integration costs subsequent to the acquisition;

• gain recognized on the Company's existing investment in the acquiree as of the acquisition date.

On July 7, 2020, the Company acquired all of the outstanding shares of MIRROR, an in-home fitness company with an interactive workout platform that features live and on-demand classes.

In connection with the acquisition, the Company recognized certain acquisition-related expenses which were expensed within acquisition-related expenses in the consolidated statements of operations.

The following table summarizes the acquisition-related expenses recognized:

Third Quarter First Three Quarters

2021 2020 2021 2020

First Quarter

(in thousands)

1 unchanged sentence

Transaction and integration costs $ — $ 496

Gain on existing investment — — — ( 782 )

Acquisition-related compensation — 7,168

$ 24,127 $ 8,531 $ 39,934 $ 22,040

Income tax effects of acquisition-related expenses $ — $ ( 372 )

In connection with the acquisition, $ 2.9 million was recognized on the acquisition date for the partial acceleration of vesting of certain stock options held by MIRROR employees, and $ 57.1 million of consideration was deferred up to three years from the acquisition, subject to the continued employment of the recipients through various vesting dates.

This acquisition-related compensation is expensed over the vesting periods as service is provided.

In September 2021, MIRROR's Chief Executive Officer transitioned into an advisory role with the Company.

The remaining deferred consideration payable to this individual will be paid in July 2022.

Due to the reduction in this individual's responsibilities, the compensation expense has been accelerated and was recognized in full during the third quarter of 2021.

Revolving Credit Facilities

North America revolving credit facility

During 2016, the Company obtained a $ 150.0 million committed and unsecured five-year revolving credit facility with major financial institutions.

During 2018, the Company amended the credit agreement to provide for:

an increase in the aggregate commitments under the revolving credit facility to $ 400.0 million, with an increase of the sub-limits for the issuance of letters of credit and extensions of swing line loans to $ 50.0 million for each;

an increase in the option, subject to certain conditions, to request increases in commitments from $ 400.0 million to $ 600.0 million;

an extension in the maturity of the facility from December 15, 2021 to June 6, 2023.

Borrowings under the facility may be made in U.S.

Dollars, Euros, Canadian Dollars, and in other currencies, subject to the lenders' approval.

As of October 31, 2021, aside from letters of credit of $ 3.1 million, there were no other borrowings outstanding under this facility.

Borrowings under the facility bear interest at a rate equal to, at the Company's option, either (a) rates based on deposits on the interbank market for U.S.

Dollars or the applicable currency in which the borrowings are made ("LIBOR") or (b) an alternate base rate, plus, an applicable margin 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 1.00 %- 1.50 % for LIBOR loans and 0.00 %- 0.50 % for alternate base rate loans.

Additionally, a commitment fee of between 0.10 %- 0.20 % is payable on the average unused amounts under the revolving credit facility, and fees of 1.00 %- 1.50 % are payable on unused letters of credit.

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).

As of May 1, 2022, aside from letters of credit of $ 3.1 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 is also required to maintain a consolidated rent-adjusted leverage ratio of not greater than 3.5 :1 and to maintain the ratio of consolidated EBITDAR to consolidated interest charges (plus rent) below 2 :1.

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).

As of October 31, 2021, the Company was in compliance with the covenants of the credit facility.

Mainland China revolving credit facility

In December 2019, the Company entered into an uncommitted and unsecured 130.0 million Chinese Yuan revolving credit facility with terms that are reviewed on an annual basis.

The credit facility was increased to 230.0 million Chinese Yuan during 2020.

It is comprised of a revolving loan of up to 200.0 million Chinese Yuan and a financial guarantee facility of up to 30.0 million Chinese Yuan, or its equivalent in another currency.

If an event of default occurs, the credit agreement may be terminated, and the maturity of any outstanding amounts may be accelerated.

As of May 1, 2022, 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 ($ 19.7 million) revolving credit facility with terms that are reviewed on an annual basis.

The credit facility was increased to 230.0 million Chinese Yuan ($ 34.8 million) during 2020.

It is comprised of a revolving loan of up to 200.0 million Chinese Yuan ($ 30.3 million) and a financial guarantee facility of up to 30.0 million Chinese Yuan ($ 4.5 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 October 31, 2021, the Company was in compliance with the covenants and, aside from letters of credit of 3.5 million Chinese Yuan, there were no borrowings or guarantees outstanding under this credit facility.

As of May 1, 2022, the Company was in compliance with the covenants and, aside from letters of credit of 6.1 million Chinese Yuan ($ 0.9 million), there were no other borrowings or guarantees outstanding under this credit facility.

Stock-Based Compensation and Benefit Plans

1 unchanged sentence

The Company's eligible employees participate in various stock-based compensation plans, provided directly by the Company.

Stock-based compensation expense charged to income for the plans was $ 49.6 million and $ 41.9 million for the first three quarters of 2021 and 2020, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 108.9 million as of October 31, 2021, which is expected to be recognized over a weighted-average period of 2.1 years.

A summary of the balances of the Company's stock-based compensation plans as of October 31, 2021, and changes during the first three quarters 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

Stock-based compensation expense charged to income for the plans was $ 18.2 million and $ 16.2 million for the first quarter of 2022 and 2021, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 170.0 million as of May 1, 2022, which is expected to be recognized over a weighted-average period of 2.5 years.

A summary of the balances of the Company's stock-based compensation plans as of May 1, 2022, and changes during the first quarter then ended, is presented below:

Stock Options Performance-Based Restricted Stock Units Restricted Shares Restricted Stock Units

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

(In thousands, except per share amounts)

3 unchanged sentences

Forfeited/expired 5 261.38 2 304.24 — — 4 317.78

Balance as of October 31, 2021 798 $ 185.23 164 $ 222.98 4 $ 327.22 236 $ 260.76 — $ —

Exercisable as of October 31, 2021 258 $ 126.62

Balance as of May 1, 2022 920 $ 223.21 165 $ 295.62 4 $ 326.70 238 $ 327.25

Exercisable as of May 1, 2022 415 $ 152.79

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 award date.

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 award date.

Restricted stock units that are 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.

This fair value is 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 the restricted shares and restricted stock units is based on the closing price of the Company's common stock on the grant date.

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 behavior.

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.

1 unchanged sentence

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 during the first three quarters of 2021:

First Three Quarters

following are weighted averages of the assumptions that were used in calculating the fair value of stock options granted during the first quarter of 2022:

First Quarter

Expected term 3.75 years

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All shares purchased under the ESPP are purchased in the open market.

During the third quarter of 2021, there were 16.1 thousand shares purchased.

During the first quarter of 2022, there were 21.6 thousand shares purchased.

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.

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 $ 8.8 million and $ 6.7 million in the first three quarters of 2021 and 2020, respectively.

The Company's net expense for the defined contribution plans was $ 3.4 million and $ 2.8 million in the first quarter of 2022 and 2021, respectively.

Fair Value Measurement

6 unchanged sentences

The fair value measurement is categorized in its entirety by reference to its lowest level of significant input.

As of October 31, 2021 and January 31, 2021, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis:

October 31, 2021 Level 1 Level 2 Level 3 Balance Sheet Classification

As of May 1, 2022 and January 30, 2022, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis:

May 1, 2022 Level 1 Level 2 Level 3 Balance Sheet Classification

(In thousands)

11 unchanged sentences

The carrying values of these instruments approximate their fair value due to their short-term maturities.

The Company has short-term, highly liquid investments classified as cash equivalents, which are invested in money market funds, Treasury bills, and term deposits.

The Company has short-term, highly liquid investments classified as cash equivalents, which are invested in money market funds and term deposits.

The Company records cash equivalents at their original purchase prices plus interest that has accrued at the stated rate.

11 unchanged sentences

The Company is exposed to foreign currency exchange gains and losses which arise on translation of its international subsidiaries' balance sheets into U.S.

These gains and losses are recorded as a foreign currency translation adjustment in accumulated other comprehensive income or loss within stockholders' equity.

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.

1 unchanged sentence

The Company assesses hedge effectiveness based on changes in forward rates.

The Company recorded no ineffectiveness from net investment hedges during the first three quarters of 2021.

The Company recorded no ineffectiveness from net investment hedges during the first quarter of 2022.

The Company classifies the cash flows at settlement of its net investment hedges within investing activities in the consolidated statements of cash flows.

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The resulting foreign currency gains and losses are recorded in selling, general and administrative expenses.

During the first three quarters of 2021, 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.

During the first quarter of 2022, 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.

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.

2 unchanged sentences

However, the Company's Master International Swap Dealers Association, Inc., Agreements and other similar arrangements allow net settlements under certain conditions.

As of October 31, 2021, there were derivative assets of $ 6.4 million and derivative liabilities of $ 7.9 million subject to enforceable netting arrangements.

As of May 1, 2022, there were derivative assets of $ 21.7 million and derivative liabilities of $ 15.4 million subject to enforceable netting arrangements.

The notional amounts and fair values of forward currency contracts were as follows:

October 31, 2021 January 31, 2021

May 1, 2022 January 30, 2022

Gross Notional Assets Liabilities Gross Notional Assets Liabilities

6 unchanged sentences

Forward currency contracts $ 21,722 $ 15,353 $ 19,077 $ 18,985

The forward currency contracts designated as net investment hedges outstanding as of October 31, 2021 mature on different dates between November 2021 and May 2022.

The forward currency contracts not designated in a hedging relationship outstanding as of October 31, 2021 mature on different dates between November 2021 and May 2022.

The forward currency contracts designated as net investment hedges outstanding as of May 1, 2022 mature on different dates between May 2022 and February 2023.

The forward currency contracts not designated in a hedging relationship outstanding as of May 1, 2022 mature on different dates between May 2022 and February 2023.

The pre-tax gains and losses on foreign currency exchange forward contracts recorded in accumulated other comprehensive income or loss were as follows:

Third Quarter First Three Quarters

2021 2020 2021 2020

First Quarter

(In thousands)

Gains (losses) recognized in foreign currency translation adjustment:

Gains (losses) recognized in net investment hedge gains (losses):

Derivatives designated as net investment hedges $ 6,847 $ ( 31,986 )

1 unchanged sentence

The pre-tax net foreign currency exchange and derivative gains and losses recorded in the consolidated statement of operations were as follows:

Third Quarter First Three Quarters

2021 2020 2021 2020

First Quarter

(In thousands)

10 unchanged sentences

The details of the computation of basic and diluted earnings per share are as follows:

Third Quarter First Three Quarters

2021 2020 2021 2020

First Quarter

(In thousands, except per share amounts)

8 unchanged sentences

All classes of stock have, in effect, the same rights and share equally in undistributed net income.

For the first three quarters of 2021 and 2020, 48.0 thousand and 40.2 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 the open market or in privately negotiated transactions.

On December 1, 2020, the Company's board of directors approved an increase in the remaining authorization of the existing stock repurchase program 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.

For the first quarter of 2022 and 2021, 0.1 million and 0.1 million 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, the Company's board of directors approved a stock repurchase program for up to $ 1.0 billion of the Company's common shares on the open market or in privately negotiated transactions.

The repurchase plan has no time limit and does not require the repurchase of a minimum number of shares.

1 unchanged sentence

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.

As of October 31, 2021, the remaining authorized value of shares available to be repurchased under this program was $ 508.7 million.

During the first three quarters of 2021 and 2020, 1.4 million and 0.4 million shares, respectively, were repurchased under the program at a total cost of $ 491.3 million and $ 63.7 million, respectively.

Subsequent to October 31, 2021, and up to December 2, 2021, 46.5 thousand shares were repurchased at a total cost of $ 21.5 million.

As of May 1, 2022, the remaining authorized value of shares available to be repurchased under this program was $ 954.8 million.

During the first quarter of 2022 and 2021, 0.7 million and 0.3 million shares, respectively, were repurchased under the program at a total cost of $ 232.6 million and $ 83.8 million, respectively.

Subsequent to May 1, 2022, and up to May 27, 2022, 0.3 million shares were repurchased at a total cost of $ 87.9 million.

Supplementary Financial Information

5 unchanged sentences

$ 1,275,040 $ 966,481

2021 January 31,

(In thousands)

Prepaid expenses and other current assets:

Prepaid expenses $ 131,852 $ 82,164

Prepaid inventories $ — $ 42,691

Other prepaid expenses 117,707 98,254

Forward currency contract assets 21,722 19,077

18 unchanged sentences

$ 137,160 $ 132,102

Other accrued liabilities

Accrued freight and other operating expenses $ 187,773 $ 97,335

Accrued duty 24,871 17,404

Accrued liabilities and other:

Accrued operating expenses $ 116,638 $ 116,822

Accrued freight 73,192 71,390

Sales return allowances 47,838 41,690

Sales tax collected 17,583 15,246

Accrued capital expenditures 16,564 8,653

Accrued duty 28,121 27,182

Forward currency contract liabilities 15,353 18,985

Sales tax collected 15,131 13,540

Accrued rent 12,446 11,254

Accrued capital expenditures 15,949 9,616

Accrued inventory liabilities 21,965 4,005

Other 16,305 16,316

3 unchanged sentences

(i) company-operated stores and (ii) direct to consumer.

The remainder of its operations which includes outlets, temporary locations, sales to wholesale accounts, license and supply arrangements, and MIRROR are included within Other.

Third Quarter First Three Quarters

2021 2020 2021 2020

The remainder of its operations which includes outlets, temporary locations, MIRROR, sales to wholesale accounts, and license and supply arrangements are included within Other.

First Quarter

(In thousands)

26 unchanged sentences

The following table disaggregates the Company's net revenue by geographic area.

Third Quarter First Three Quarters

2021 2020 2021 2020

First Quarter

(In thousands)

3 unchanged sentences

$ 1,613,463 $ 1,226,465

The following table disaggregates the Company's net revenue by category.

During the fourth quarter of 2020, the Company determined that a portion of certain sales returns which had been recorded within Other categories were more

appropriately classified within Women's product and Men's product.

Accordingly, comparative figures have been reclassified to conform to the current presentation.

Third Quarter First Three Quarters

2021 2020 2021 2020

In addition to the disaggregation of net revenue by reportable segment, the following table disaggregates the Company's net revenue by category.

First Quarter

(In thousands)

19 unchanged sentences

The Company intends to vigorously defend this matter.

Subsequent Event

Subsequent to May 1, 2022, the Company completed the sale of an administrative office building.

As of May 1, 2022, the building's carrying value of $ 5.4 million was classified as a held for sale and was recognized within other current assets.

The sale resulted in a pre-tax gain of $ 10.2 million which will be recognized during the second quarter of 2022.

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 1. Financial Statements