What changed in this filing

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Item 1. Financial Statements

2024-06-05 compared with 2023-12-07 · 118 added, 171 removed, 375 unchanged (44% of the section changed)

14 unchanged sentences

Goodwill 23,992 24,083

Intangible assets, net — 21,961

Deferred income tax assets 9,099 9,176

39 unchanged sentences

Amounts in thousands, except per share amounts)

Quarter Ended Three Quarters Ended

2023 October 30,

2022 October 29,

2023 October 30,

Quarter Ended

2024 April 30,

Net revenue $ 2,208,891 $ 2,000,792

2 unchanged sentences

Selling, general and administrative expenses 842,426 747,513

Impairment of assets and restructuring costs 74,501 — 74,501 —

Amortization of intangible assets — 1,878

Gain on disposal of assets — — — ( 10,180 )

Income from operations 432,642 401,414

5 unchanged sentences

Foreign currency translation adjustment $ ( 44,305 ) $ ( 42,750 )

Net investment hedge gains (losses) 20,490 25,492 21,196 26,259

Net investment hedge gains 13,481 17,720

Other comprehensive income (loss), net of tax $ ( 30,824 ) $ ( 25,030 )

8 unchanged sentences

Amounts in thousands)

Quarter Ended October 29, 2023

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

Shares Shares Par Value Shares Par Value

Balance as of July 30, 2023 5,116 5,116 $ — 121,613 $ 608 $ 505,127 $ 3,267,589 $ ( 239,842 ) $ 3,533,482

Net income 248,714 248,714

Other comprehensive income (loss), net of tax ( 75,988 ) ( 75,988 )

Stock-based compensation expense 24,573 24,573

Common stock issued upon settlement of stock-based compensation 67 2 8,834 8,836

Shares withheld related to net share settlement of stock-based compensation ( 5 ) — ( 1,142 ) ( 1,142 )

Repurchase of common stock, including excise tax ( 553 ) ( 4 ) ( 1,002 ) ( 211,620 ) ( 212,626 )

Balance as of October 29, 2023 5,116 5,116 $ — 121,122 $ 606 $ 536,390 $ 3,304,683 $ ( 315,830 ) $ 3,525,849

Quarter Ended October 30, 2022

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

Shares Shares Par Value Shares Par Value

Balance as of July 31, 2022 5,203 5,203 $ — 122,334 $ 612 $ 433,092 $ 2,636,377 $ ( 212,283 ) $ 2,857,798

Net income 255,470 255,470

Other comprehensive income (loss), net of tax ( 79,524 ) ( 79,524 )

Stock-based compensation expense 20,312 20,312

Common stock issued upon settlement of stock-based compensation 45 — 4,057 4,057

Shares withheld related to net share settlement of stock-based compensation ( 6 ) — ( 1,917 ) ( 1,917 )

Repurchase of common stock ( 55 ) — ( 100 ) ( 16,892 ) ( 16,992 )

Balance as of October 30, 2022 5,203 5,203 $ — 122,318 $ 612 $ 455,444 $ 2,874,955 $ ( 291,807 ) $ 3,039,204

Three Quarters Ended October 29, 2023

Quarter Ended April 28, 2024

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

7 unchanged sentences

Repurchase of common stock, including excise tax ( 751 ) ( 4 ) ( 1,692 ) ( 297,783 ) ( 299,479 )

Balance as of October 29, 2023 5,116 5,116 $ — 121,122 $ 606 $ 536,390 $ 3,304,683 $ ( 315,830 ) $ 3,525,849

Three Quarters Ended October 30, 2022

Balance as of April 28, 2024 5,116 5,116 $ — 120,470 $ 602 $ 570,286 $ 3,944,000 $ ( 295,080 ) $ 4,219,808

Quarter Ended April 30, 2023

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

6 unchanged sentences

Shares withheld related to net share settlement of stock-based compensation ( 88 ) — ( 28,793 ) ( 28,793 )

Repurchase of common stock ( 1,183 ) ( 6 ) ( 2,096 ) ( 372,874 ) ( 374,976 )

Balance as of October 30, 2022 5,203 5,203 $ — 122,318 $ 612 $ 455,444 $ 2,874,955 $ ( 291,807 ) $ 3,039,204

Repurchase of common stock, including excise tax ( 292 ) ( 1 ) ( 530 ) ( 97,948 ) ( 98,479 )

Balance as of April 30, 2023 5,116 5,116 $ — 122,099 $ 610 $ 478,496 $ 3,118,584 $ ( 277,614 ) $ 3,320,076

See accompanying notes to the unaudited interim consolidated financial statements

2 unchanged sentences

Amounts in thousands)

Three Quarters Ended

2023 October 30,

Quarter Ended

2024 April 30,

Cash flows from operating activities

2 unchanged sentences

Depreciation and amortization 95,759 84,116

lululemon Studio obsolescence provision 23,709 —

Impairment of assets and restructuring costs 74,501 —

Gain on disposal of assets — ( 10,180 )

Stock-based compensation expense 25,758 21,301

12 unchanged sentences

Other current and non-current liabilities 2,236 1,975

Net cash provided by (used in) operating activities 912,066 ( 79,801 )

Net cash provided by operating activities 127,524 45,503

Cash flows from investing activities

1 unchanged sentence

Settlement of net investment hedges ( 856 ) ( 1,277 )

Other investing activities ( 658 ) 15,657

Net cash used in investing activities ( 131,537 ) ( 138,219 )

5 unchanged sentences

Effect of foreign currency exchange rate changes on cash and cash equivalents ( 10,658 ) 3,855

Increase (decrease) in cash and cash equivalents ( 63,729 ) ( 907,247 )

Decrease in cash and cash equivalents ( 343,299 ) ( 204,260 )

Cash and cash equivalents, beginning of period $ 2,243,971 $ 1,154,867

5 unchanged sentences

Note 2 Recent Accounting Pronouncements

Note 3 Impairment of Assets and Restructuring Costs

Note 4 Gain on Disposal of Assets

Note 5 Revolving Credit Facilities and Supply Chain Financing Program

Note 3 Revolving Credit Facilities

Note 4 Supply Chain Financing Program

Note 5 Stock-Based Compensation and Benefit Plans

4 unchanged sentences

Note 10 Segmented Information

Note 12 Net Revenue by Geography and Category

Note 11 Disaggregated Net Revenue

Note 12 Legal Proceedings and Other Contingencies

Note 13 Subsequent Events

lululemon athletica inc.

2 unchanged sentences

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

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, Singapore, Japan, France, Ireland, Spain, Malaysia, Sweden, the Netherlands, Norway, Switzerland, and Thailand.

There were 686 and 655 company-operated stores as of October 29, 2023 and January 29, 2023, respectively.

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 and 711 company-operated stores as of April 28, 2024 and January 28, 2024, respectively.

Basis of presentation

The unaudited interim consolidated financial statements, including the financial position as of October 29, 2023 and the results of operations and cash flows for the periods disclosed, are presented in U.S.

The unaudited interim consolidated financial statements, including the financial position as of April 28, 2024 and the results of operations and cash flows for the periods disclosed, 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").

5 unchanged sentences

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 will end on January 28, 2024 and will be a 52-week year.

Fiscal 2024 will end on February 2, 2025 and will be a 53-week year.

Fiscal 2023 was a 52-week year and ended on January 28, 2024.

Fiscal 2024 and fiscal 2023 are referred to as "2024," and "2023," respectively.

The first three quarters of 2023 and 2022 ended on October 29, 2023 and October 30, 2022, respectively.

The first quarter of 2024 and 2023 ended on April 28, 2024 and April 30, 2023, 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.

Certain comparative figures have been reclassified to conform to the financial presentation adopted for the current year.

Use of estimates

2 unchanged sentences

Recent Accounting Pronouncements

Recently adopted accounting pronouncements

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

ASUs adopted by the Company during the first three quarters of 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 ASC 405-50, Liabilities - Supplier Finance Programs, 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 rollforward of those obligations.

The Company adopted this update during the first quarter of 2023 and the related disclosures are included in Note 5.

Revolving Credit Facilities and Supply Chain Financing Program.

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.

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.

Impairment of Assets and Restructuring Costs

During the third quarter of 2023, the Company contracted with Peloton Interactive, Inc.

to be the exclusive digital fitness content provider for the lululemon Studio Mirror and decided it would no longer produce its own digital fitness content.

While the Company will continue to provide services and support to existing lululemon Studio subscribers, it also decided that it would cease selling the Mirror hardware and end its digital app-only subscription.

The Company ceased selling the Mirror in December 2023.

During the third quarter of 2023, the Company recognized certain inventory provisions, asset impairments, and restructuring costs related to lululemon Studio.

The following table summarizes the amounts recognized:

(In thousands)

Costs recorded in cost of goods sold:

lululemon Studio obsolescence provision $ 23,709

Costs recorded in operating expenses:

Impairment of assets:

Impairment of intangible assets $ 16,951

Impairment of cloud computing arrangement implementation costs 16,074

Impairment of property and equipment 11,161

Restructuring costs 30,315

Impairment of assets and restructuring costs $ 74,501

Total pre-tax charges $ 98,210

Income tax effects of charges $ ( 26,085 )

Total after-tax charges $ 72,125

lululemon Studio obsolescence provision

As a result of the decision to cease selling the lululemon Studio Mirror, the Company recognized an inventory provision of $ 23.7 million during the third quarter of 2023.

Impairment of assets

As a result of the Company's decisions to no longer produce digital fitness content and to cease the sale of the lululemon Studio Mirror, the Company identified an impairment trigger for the lululemon Studio asset group and conducted an impairment test 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.

As a result of the impairment test, the Company recognized asset impairments totaling $ 44.2 million during the third quarter of 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.

lululemon Studio is included within Other in the Company's segment disclosures.

Restructuring costs

The Company recorded restructuring costs of $ 30.3 million primarily related to contract termination costs, employee severance costs, and professional fees.

The accrued costs are expected to be settled within one year.

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.

Revolving Credit Facilities and Supply Chain Financing Program

North America revolving credit facility

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.

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.

1 unchanged sentence

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 October 29, 2023, aside from letters of credit and guarantee of $ 6.6 million, the Company had no other borrowings outstanding under this credit facility.

As of April 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.

7 unchanged sentences

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

As of October 29, 2023, the Company was in compliance with the covenants of the credit facility.

As of April 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 ($ 17.8 million) revolving credit facility with terms that are reviewed on an annual basis.

The credit facility was increased to 230.0 million Chinese Yuan ($ 31.4 million) during 2020.

The Company has an uncommitted and unsecured 240.0 million Chinese Yuan ($ 33.1 million) revolving credit facility with terms that are reviewed on an annual basis.

It is comprised of a revolving loan of up to 200.0 million Chinese Yuan ($ 27.6 million) and a financial guarantee facility of up to 40.0 million Chinese Yuan ($ 5.5 million), or its equivalent in another currency.

1 unchanged sentence

The Company is required to follow certain covenants.

As of October 29, 2023, the Company was in compliance with the covenants and, aside from letters of credit and guarantee of 29.9 million Chinese Yuan ($ 4.1 million), there were no other borrowings or guarantees outstanding under this credit facility.

As of April 28, 2024, the Company was in compliance with the covenants and, aside from letters of credit of 33.2 million Chinese Yuan ($ 4.6 million), there were no other borrowings or guarantees outstanding under this credit facility.

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.

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.

As of October 29, 2023 and January 29, 2023, $ 29.0 million and $ 17.6 million, respectively, were outstanding under the SCF program and presented within accounts payable .

As of April 28, 2024 and January 28, 2024, $ 37.9 million and $ 42.1 million, respectively, were outstanding under the SCF program and presented within accounts payable.

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 $ 69.5 million and $ 58.8 million for the first three quarters of 2023 and 2022, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 156.9 million as of October 29, 2023, which is expected to be recognized over a weighted-average period of 2.2 years.

A summary of the balances of the Company's stock-based compensation plans as of October 29, 2023, and changes during the first three quarters then ended, is presented below:

Stock-based compensation expense charged to income for the plans was $ 25.4 million and $ 21.0 million for the first quarter of 2024 and 2023, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 224.3 million as of April 28, 2024, 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 April 28, 2024, and changes during the first quarter then ended, is presented below:

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

5 unchanged sentences

Forfeited/expired 4 366.87 — 362.00 — — 3 373.94

Balance as of October 29, 2023 884 $ 273.39 175 $ 349.78 3 $ 368.36 230 $ 355.73

Exercisable as of October 29, 2023 423 $ 203.17

Balance as of April 28, 2024 975 $ 310.26 197 $ 373.82 4 $ 371.33 251 $ 376.27

Exercisable as of April 28, 2024 475 $ 247.34

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.

9 unchanged sentences

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 2023:

First Three Quarters

The following are weighted averages of the assumptions that were used in calculating the fair value of stock options granted during the first quarter of 2024:

First Quarter

Expected term 3.75 years

3 unchanged sentences

Employee share purchase plan

The Company's board of directors and stockholders approved the Company's Employee Share Purchase Plan ("ESPP") in September 2007.

The Company has an Employee Share Purchase Plan ("ESPP").

Contributions are made by eligible employees, subject to certain limits defined in the ESPP, and the Company matches one-third of the contribution.

1 unchanged sentence

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

During the third quarter of 2023, there were 25.7 thousand shares purchased.

During the first quarter of 2024, there were 28.0 thousand shares purchased.

As of April 28, 2024, 4.4 million shares remain authorized to be purchased under the ESPP.

Defined contribution pension plans

2 unchanged sentences

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 $ 14.6 million and $ 10.1 million in the first three quarters of 2023 and 2022, respectively.

The Company's net expense for the defined contribution plans was $ 5.8 million and $ 4.8 million in the first quarter of 2024 and 2023, 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 29, 2023 and January 29, 2023, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis:

As of April 28, 2024 and January 28, 2024, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis:

2024 Level 1 Level 2 Level 3 Balance Sheet Classification

12 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 AAA-rated money market funds, which include investments in government bonds, and term deposits.

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.

16 unchanged sentences

changes in forward rates.

The Company recorded no ineffectiveness from net investment hedges during the first three quarters of 2023.

The Company recorded no ineffectiveness from net investment hedges during the first quarter of 2024.

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

4 unchanged sentences

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

During the first three quarters of 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.

During the first quarter of 2024, 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.

3 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 29, 2023, there were derivative assets of $ 15.9 million and derivative liabilities of $ 11.5 million subject to enforceable netting arrangements.

As of April 28, 2024, there were derivative assets of $ 21.6 million and derivative liabilities of $ 18.9 million subject to enforceable netting arrangements.

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

October 29, 2023 January 29, 2023

April 28, 2024 January 28, 2024

Gross Notional Assets Liabilities Gross Notional Assets Liabilities

6 unchanged sentences

Forward currency contracts $ 21,620 $ 18,873 $ 647 $ 2,872

The forward currency contracts designated as net investment hedges outstanding as of October 29, 2023 mature on different dates between November 2023 and March 2024.

The forward currency contracts not designated in a hedging relationship outstanding as of October 29, 2023 mature on different dates between November 2023 and May 2024.

The forward currency contracts designated as net investment hedges outstanding as of April 28, 2024 mature on different dates between May 2024 and September 2024.

The forward currency contracts not designated in a hedging relationship outstanding as of April 28, 2024 mature on different dates between May 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:

Third Quarter First Three Quarters

2023 2022 2023 2022

First Quarter

(In thousands)

3 unchanged sentences

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

2023 2022 2023 2022

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

2023 2022 2023 2022

First Quarter

(In thousands, except per share amounts)

6 unchanged sentences

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 equivalent of common shares in all material respects.

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

For the first three quarters of 2023 and 2022, 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.

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 the first quarter of 2024 and 2023, 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 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.

During the first quarter of 2024, the Company completed the remaining stock repurchases under this program.

On November 29, 2023, the Company's board of directors approved an additional 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.

The authorized value of shares available to be repurchased under this program excludes the cost of commissions and excise taxes and as of October 29, 2023, the remaining authorized value was $ 243.2 million.

During the first three quarters of 2023, 1.4 million shares were repurchased at a total cost including commissions and excise taxes of $ 504.6 million.

During the first three quarters of 2022, 1.2 million shares were repurchased at a total cost including commissions of $ 375.0 million.

Subsequent to October 29, 2023, and up to December 1, 2023, 0.1 million shares were repurchased at a total cost including commissions and excise taxes of $ 20.4 million.

The authorized value of shares available to be repurchased under this program excludes the cost of commissions and excise taxes and as of April 28, 2024, the remaining authorized value was $ 892.3 million.

During the first quarter of 2024 and 2023, 0.8 million and 0.3 million shares, respectively, were repurchased at a total cost including commissions and excise taxes of $ 299.5 million and $ 98.5 million, respectively.

Subsequent to April 28, 2024, and up to May 30, 2024, 0.6 million shares were repurchased at a total cost including commissions and excise taxes of $ 201.1 million.

Supplementary Financial Information

31 unchanged sentences

Accrued operating expenses $ 163,726 $ 147,215

Accrued freight 47,235 57,692

Sales return allowances 54,622 61,634

Forward currency contract liabilities 11,497 25,625

Accrued duty 29,177 21,046

Sales tax collected 23,349 20,183

Accrued freight 41,226 41,241

Accrued capital expenditures 22,689 31,936

Accrued duty 27,163 25,817

Accrued rent 16,579 12,522

Accrued inventory liabilities 3,410 4,783

Sales tax collected 8,885 3,088

Forward currency contract liabilities 18,873 2,872

Other 17,273 17,447

1 unchanged sentence

Segmented Information

The Company's segments are based on the financial information it uses in managing its business and comprise two reportable segments:

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

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

Third Quarter First Three Quarters

2023 2022 2023 2022

The Company's operating 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 operating segments were comprised of company-operated stores, direct to consumer (or "e-commerce"), and other.

The Company has recast the prior period information to reflect its new operating segments.

First Quarter

(In thousands)

Company-operated stores $ 1,073,973 $ 903,060 $ 3,128,999 $ 2,537,741

Direct to consumer 908,127 767,351 2,636,742 2,264,029

Other 222,118 186,478 648,434 536,910

Americas $ 1,622,264 $ 1,567,738

China Mainland 303,786 210,068

Rest of World 282,841 222,986

$ 2,208,891 $ 2,000,792

Segmented income from operations:

Company-operated stores $ 310,510 $ 242,733 $ 910,021 $ 660,246

Direct to consumer 384,393 321,742 1,137,716 933,272

Other 53,527 24,911 146,293 74,064

Americas $ 564,840 $ 581,222

China Mainland 119,778 73,885

Rest of World 66,681 43,794

751,299 698,901

General corporate expense 318,657 295,609

lululemon Studio obsolescence provision 23,709 — 23,709 —

Impairment of assets and restructuring costs 74,501 — 74,501 —

Amortization of intangible assets — 1,878

Gain on disposal of assets — — — ( 10,180 )

Income from operations 432,642 401,414

1 unchanged sentence

Income before income tax expense $ 455,925 $ 409,439

Capital expenditures:

Company-operated stores $ 73,329 $ 96,509 $ 168,511 $ 182,360

Direct to consumer 29,295 29,933 83,674 72,024

Corporate and other 60,276 49,165 193,168 177,293

$ 162,900 $ 175,607 $ 445,353 $ 431,677

Depreciation and amortization:

Company-operated stores $ 39,283 $ 33,482 $ 113,983 $ 96,807

Direct to consumer 17,001 9,805 42,562 27,281

Corporate and other 41,685 35,901 119,549 87,541

Americas $ 44,326 $ 35,136

China Mainland 8,025 5,965

Rest of World 6,506 5,298

Corporate 36,902 37,717

$ 95,759 $ 84,116

Net Revenue by Geography and Category

Disaggregated Net Revenue

In addition to the disaggregation of net revenue by reportable segment in Note 10.

Segmented Information, the following table disaggregates the Company's net revenue by geographic area.

Third Quarter First Three Quarters

2023 2022 2023 2022

First Quarter

(In thousands)

1 unchanged sentence

Canada 281,864 253,347

China Mainland 303,786 210,068

Hong Kong SAR, Taiwan, and Macau SAR

42,264 39,617

People's Republic of China 346,050 249,685

Rest of world 204,929 142,402 600,190 422,490

Other geographic areas 240,577 183,369

$ 2,208,891 $ 2,000,792

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

Other categories is primarily composed of accessories, lululemon Studio, and footwear.

Third Quarter First Three Quarters

2023 2022 2023 2022

Other categories is primarily composed of accessories, footwear, and lululemon Studio.

First Quarter

(In thousands)

3 unchanged sentences

$ 2,208,891 $ 2,000,792

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

First Quarter

(In thousands)

Company-operated stores $ 1,070,525 $ 958,087

E-commerce 905,787 834,942

Other channels 232,579 207,763

$ 2,208,891 $ 2,000,792

Legal Proceedings and Other Contingencies

3 unchanged sentences

The Company has recognized immaterial provisions related to the expected outcome of legal proceedings.

Subsequent Events

Subsequent to April 28, 2024, the Company entered into an agreement to acquire the operations and lululemon branded retail locations being run by a third party under a license and supply arrangement in Mexico for approximately $ 160.0 million in cash.

The Company had previously granted this third party the right to operate lululemon branded retail locations and to sell lululemon products in Mexico.

The transaction is subject to customary closing conditions and regulatory approval.

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