What changed in this filing

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Item 1. Financial Statements

2024-08-29 compared with 2024-06-05 · 101 added, 54 removed, 439 unchanged (26% of the section changed)

55 unchanged sentences

Amounts in thousands, except per share amounts)

Quarter Ended

2024 April 30,

Quarter Ended Two Quarters Ended

2024 July 30,

2023 July 28,

2024 July 30,

Net revenue $ 2,371,078 $ 2,209,165 $ 4,579,969 $ 4,209,957

10 unchanged sentences

Foreign currency translation adjustment $ ( 25,571 ) $ 54,786 $ ( 69,876 ) $ 12,036

Net investment hedge gains 13,481 17,720

Net investment hedge gains (losses) 10,834 ( 17,014 ) 24,315 706

Other comprehensive income (loss), net of tax $ ( 14,737 ) $ 37,772 $ ( 45,561 ) $ 12,742

8 unchanged sentences

Amounts in thousands)

Quarter Ended April 28, 2024

Quarter Ended July 28, 2024

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 January 28, 2024 5,116 5,116 $ — 121,106 $ 606 $ 575,369 $ 3,920,362 $ ( 264,256 ) $ 4,232,081

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

Net income 392,922 392,922

4 unchanged sentences

Repurchase of common stock, including excise tax ( 1,882 ) ( 9 ) ( 4,238 ) ( 585,209 ) ( 589,456 )

Balance as of July 28, 2024 5,116 5,116 $ — 118,610 $ 593 $ 589,156 $ 3,751,713 $ ( 309,817 ) $ 4,031,645

Quarter Ended July 30, 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 April 30, 2023 5,116 5,116 $ — 122,099 $ 610 $ 478,496 $ 3,118,584 $ ( 277,614 ) $ 3,320,076

Quarter Ended April 30, 2023

Net income 341,603 341,603

Other comprehensive income (loss), net of tax 37,772 37,772

Stock-based compensation expense 24,283 24,283

Common stock issued upon settlement of stock-based compensation 33 — 4,228 4,228

Shares withheld related to net share settlement of stock-based compensation ( 2 ) — ( 942 ) ( 942 )

Repurchase of common stock, including excise tax ( 517 ) ( 2 ) ( 938 ) ( 192,598 ) ( 193,538 )

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

Two Quarters Ended July 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 ( 2,633 ) ( 13 ) ( 5,930 ) ( 882,992 ) ( 888,935 )

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

Balance as of July 28, 2024 5,116 5,116 $ — 118,610 $ 593 $ 589,156 $ 3,751,713 $ ( 309,817 ) $ 4,031,645

Two Quarters Ended July 30, 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 January 29, 2023 5,116 5,116 $ — 122,205 $ 611 $ 474,645 $ 2,926,127 $ ( 252,584 ) $ 3,148,799

Net income 632,008 632,008

Other comprehensive income (loss), net of tax 12,742 12,742

Stock-based compensation expense 45,584 45,584

Common stock issued upon settlement of stock-based compensation 307 — 16,101 16,101

Shares withheld related to net share settlement of stock-based compensation ( 90 ) — ( 29,735 ) ( 29,735 )

Repurchase of common stock, including excise tax ( 809 ) ( 3 ) ( 1,468 ) ( 290,546 ) ( 292,017 )

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

See accompanying notes to the unaudited interim consolidated financial statements

2 unchanged sentences

Amounts in thousands)

Quarter Ended

2024 April 30,

Two Quarters Ended

2024 July 30,

Cash flows from operating activities

Net income $ 714,343 $ 632,008

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

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

Depreciation and amortization 199,332 178,125

17 unchanged sentences

Settlement of net investment hedges 14,151 ( 549 )

Other investing activities ( 5,009 ) ( 658 )

Net cash used in investing activities ( 266,625 ) ( 283,660 )

23 unchanged sentences

Note 12 Legal Proceedings and Other Contingencies

Note 13 Subsequent Events

Note 13 Pending Acquisition

lululemon athletica inc.

6 unchanged sentences

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.

There were 721 and 711 company-operated stores as of July 28, 2024 and January 28, 2024, respectively.

Basis of presentation

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.

The unaudited interim consolidated financial statements, including the financial position as of July 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").

1 unchanged sentence

The financial information as of January 28, 2024 is derived from the Company's audited consolidated financial statements and related notes for the fiscal year ended January 28, 2024, which are included in Item 8 in the Company's fiscal 2023 Annual Report on Form 10-K filed with the SEC on March 21, 2024.

These unaudited interim consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

These unaudited interim consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

These unaudited interim consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and related notes included in Item 8 in the Company's fiscal 2023 Annual Report on Form 10-K.

4 unchanged sentences

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

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

The first two quarters of 2024 and 2023 ended on July 28, 2024 and July 30, 2023, respectively.

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

1 unchanged sentence

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.

The preparation of financial statements in conformity with GAAP 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.

19 unchanged sentences

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 April 28, 2024, aside from letters of credit of $ 6.3 million, the Company had no other borrowings outstanding under this credit facility.

As of July 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 April 28, 2024, the Company was in compliance with the covenants of the credit facility.

As of July 28, 2024, the Company was in compliance with the covenants of the credit facility.

China Mainland revolving credit facility

3 unchanged sentences

The Company is required to follow certain covenants.

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.

As of July 28, 2024, the Company was in compliance with the covenants and, aside from letters of credit of 40.3 million Chinese Yuan ($ 5.6 million), there were no other borrowings or guarantees outstanding under this credit facility.

Supply Chain Financing Program

4 unchanged sentences

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 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.

As of July 28, 2024 and January 28, 2024, $ 52.1 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 $ 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-based compensation expense charged to income for the plans was $ 46.7 million and $ 45.2 million for the first two quarters of 2024 and 2023, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 189.0 million as of July 28, 2024, which is expected to be recognized over a weighted-average period of 2.3 years.

A summary of the balances of the Company's stock-based compensation plans as of July 28, 2024, and changes during the first two quarters then ended, is presented below:

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

5 unchanged sentences

Forfeited/expired 38 369.21 19 373.95 — — 14 374.55

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

Balance as of July 28, 2024 938 $ 309.79 180 $ 373.12 5 $ 317.86 246 $ 374.52

Exercisable as of July 28, 2024 470 $ 250.42

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 quarter of 2024:

First Quarter

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

First Two Quarters

Expected term 3.75 years

7 unchanged sentences

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

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.

During the second quarter of 2024, there were 34.0 thousand shares purchased.

As of July 28, 2024, 4.3 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 $ 5.8 million and $ 4.8 million in the first quarter of 2024 and 2023, respectively.

The Company's net expense for the defined contribution plans was $ 11.1 million and $ 9.6 million in the first two quarters 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 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:

As of July 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

31 unchanged sentences

changes in forward rates.

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

The Company recorded no ineffectiveness from net investment hedges during the first two quarters 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 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.

During the first two quarters 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 April 28, 2024, there were derivative assets of $ 21.6 million and derivative liabilities of $ 18.9 million subject to enforceable netting arrangements.

As of July 28, 2024, there were derivative assets of $ 19.7 million and derivative liabilities of $ 19.6 million subject to enforceable netting arrangements.

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

April 28, 2024 January 28, 2024

July 28, 2024 January 28, 2024

Gross Notional Assets Liabilities Gross Notional Assets Liabilities

6 unchanged sentences

Forward currency contracts $ 19,658 $ 19,553 $ 647 $ 2,872

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 forward currency contracts designated as net investment hedges outstanding as of July 28, 2024 mature on different dates between August 2024 and November 2024.

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

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(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:

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(In thousands)

Gains (losses) recognized in selling, general and administrative expenses:

Gains recognized in selling, general and administrative expenses:

Foreign currency exchange gains (losses) $ 15,836 $ ( 38,426 ) $ 30,771 $ ( 30,099 )

Derivatives not designated in a hedging relationship ( 14,711 ) 42,729 ( 29,038 ) 33,023

Net foreign currency exchange and derivative gains (losses) $ 608 $ ( 1,379 )

Net foreign currency exchange and derivative gains $ 1,125 $ 4,303 $ 1,733 $ 2,924

The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to the forward currency contracts.

5 unchanged sentences

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

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(In thousands, except per share amounts)

8 unchanged sentences

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.

For the first two quarters 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.

1 unchanged sentence

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.

On May 29, 2024, the Company's board of directors approved a $ 1.0 billion increase to the existing stock repurchase program.

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 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.

The authorized value of shares available to be repurchased under this program excludes the cost of commissions and excise taxes and as of July 28, 2024, the remaining authorized value was $ 1.3 billion.

During the first two quarters of 2024 and 2023, 2.6 million and 0.8 million shares, respectively, were repurchased at a total cost including commissions and excise taxes of $ 888.9 million and $ 292.0 million, respectively.

Subsequent to July 28, 2024, and up to August 23, 2024, 1.0 million shares were repurchased at a total cost including commissions and excise taxes of $ 239.3 million.

Supplementary Financial Information

46 unchanged sentences

This resulted in a change in the Company's operating segments.

As of January 28, 2024, the Company reports three segments:

Since January 28, 2024, the Company has reported three segments:

Americas, China Mainland, and Rest of World, which is APAC and EMEA on a combined basis.

2 unchanged sentences

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

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(In thousands)

22 unchanged sentences

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

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(In thousands)

9 unchanged sentences

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

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(In thousands)

4 unchanged sentences

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

First Quarter

Second Quarter First Two Quarters

2024 2023 2024 2023

(In thousands)

4 unchanged sentences

Legal Proceedings and Other Contingencies

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.

In addition to the legal proceedings described below, 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.

1 unchanged sentence

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.

On July 12, 2024, lululemon and its subsidiary, lululemon usa inc., were named as defendants in a putative consumer class action (Gyani v.

Lululemon Athletica Inc., et al., No.

1:24-cv-22651-BB) in the United States District Court for the Southern District of Florida.

The complaint asserts claims under the Florida Deceptive and Unfair Trade Practices Act and for unjust enrichment based on statements by the Company relating to the sustainability and environmental impact of the Company's products and actions during the period October 28, 2020 to present.

The complaint seeks monetary damages, as

well as non-monetary relief such as an injunction to end the alleged unlawful practices.

The Company intends to defend the action vigorously.

On August 8, 2024, lululemon athletica inc.

and certain officers of the Company were named as defendants in a purported securities class action (Patel v.

Lululemon Athletica Inc., et al., No.

1:24-cv-06033) in the United States District Court for the Southern District of New York.

The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly false and misleading public statements and omissions by Defendants during the period December 7, 2023 to July 24, 2024 relating to lululemon's business, product offerings, and inventory allocation that Plaintiff alleges artificially inflated the Company’s stock price.

The complaint currently seeks unspecified monetary damages.

The Company intends to defend the action vigorously.

Pending Acquisition

During the second quarter of 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.

1 unchanged sentence

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