What changed in this filing

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Item 1. Financial Statements

2024-12-05 compared with 2024-08-29 · 163 added, 66 removed, 474 unchanged (33% of the section changed)

14 unchanged sentences

Goodwill 164,462 24,083

Intangible assets, net 13,723 —

Deferred income tax assets 9,253 9,176

39 unchanged sentences

Amounts in thousands, except per share amounts)

Quarter Ended Two Quarters Ended

2024 July 30,

2023 July 28,

2024 July 30,

Quarter Ended Three Quarters Ended

2024 October 29,

2023 October 27,

2024 October 29,

Net revenue $ 2,396,660 $ 2,204,218 $ 6,976,629 $ 6,414,175

2 unchanged sentences

Selling, general and administrative expenses 909,827 842,795 2,624,212 2,407,683

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

Amortization of intangible assets 1,118 1,253 1,118 5,010

17 unchanged sentences

Amounts in thousands)

Quarter Ended July 28, 2024

Quarter Ended October 27, 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 April 28, 2024 5,116 5,116 $ — 120,470 $ 602 $ 570,286 $ 3,944,000 $ ( 295,080 ) $ 4,219,808

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

Net income 351,870 351,870

4 unchanged sentences

Repurchase of common stock, including excise tax ( 1,576 ) ( 8 ) ( 3,549 ) ( 409,036 ) ( 412,593 )

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

Balance as of October 27, 2024 5,116 5,116 $ — 117,046 $ 585 $ 610,402 $ 3,694,547 $ ( 319,802 ) $ 3,985,732

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

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

4 unchanged sentences

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

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

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 27, 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 ( 4,209 ) ( 21 ) ( 9,479 ) ( 1,292,028 ) ( 1,301,528 )

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

Balance as of October 27, 2024 5,116 5,116 $ — 117,046 $ 585 $ 610,402 $ 3,694,547 $ ( 319,802 ) $ 3,985,732

Three Quarters Ended October 29, 2023

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 ( 1,362 ) ( 7 ) ( 2,470 ) ( 502,166 ) ( 504,643 )

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

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

See accompanying notes to the unaudited interim consolidated financial statements

2 unchanged sentences

Amounts in thousands)

Two Quarters Ended

2024 July 30,

Three Quarters Ended

2024 October 29,

Cash flows from operating activities

2 unchanged sentences

Depreciation and amortization 312,931 276,094

lululemon Studio obsolescence provision — 23,709

Impairment of assets and restructuring costs — 74,501

Stock-based compensation expense 71,494 70,157

16 unchanged sentences

Settlement of net investment hedges 15,041 686

Acquisition, net of cash acquired ( 130,996 ) —

Other investing activities ( 5,009 ) ( 658 )

14 unchanged sentences

Note 2 Recent Accounting Pronouncements

Note 3 Acquisition

Note 4 Impairment of Assets and Restructuring Costs

Note 5 Revolving Credit Facilities

8 unchanged sentences

Note 14 Legal Proceedings and Other Contingencies

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

There were 749 and 711 company-operated stores as of October 27, 2024 and January 28, 2024, respectively.

Basis of presentation

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.

The unaudited interim consolidated financial statements, including the financial position as of October 27, 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").

4 unchanged sentences

Recent Accounting Pronouncements sets out the impact of recent accounting pronouncements.

On September 10, 2024, the Company acquired the lululemon branded retail locations and operations run by a third party in Mexico.

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

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

Please refer to Note 3.

Acquisition for further information.

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.

2 unchanged sentences

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

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

The first three quarters of 2024 and 2023 ended on October 27, 2024 and October 29, 2023, respectively.

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

10 unchanged sentences

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.

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.

4 unchanged sentences

The Company is currently evaluating the impact that this new guidance may have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

Entities will be required to provide disaggregated disclosures for certain income statement expense line items.

This amendment is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and shall be 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.

On September 10, 2024, the Company acquired the lululemon branded retail locations and operations run by a third party in Mexico.

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

The following table summarizes the fair value of the consideration transferred, as well as the calculation of goodwill based on the excess of consideration over the provisional fair value of net assets acquired.

September 10, 2024

(In thousands)

Fair value of consideration transferred:

Cash to shareholders $ 159,380

Contingent consideration 15,000

Settlement of intercompany balances 6,975

Less cash acquired ( 5,234 )

Fair value of consideration transferred, net of cash and cash equivalents acquired $ 176,121

Less fair value of net assets acquired:

Assets acquired:

Inventories $ 15,275

Intangible assets 15,500

Other current and non-current assets 14,013

Liabilities assumed ( 15,668 )

Net assets acquired $ 29,120

Goodwill $ 147,001

The purchase price allocation remains provisional as the Company is still obtaining all the information necessary to finalize the fair value of acquired intangibles, deferred taxes, certain contingencies, and the resulting amount of goodwill as of the date of acquisition.

Goodwill relates to the assembled workforce and benefits expected as a result of the acquisition and has been allocated to the Americas segment.

None of the goodwill is expected to be deductible for income tax purposes.

Reacquired franchise rights were valued using the future expected cash flows of the remaining contractual franchise period until November 2026.

These intangible assets have a fair value of $ 15.5 million, which is expected to be amortized until

November 2026.

Contingent consideration of $ 15.0 million relates to performance related conditions from the acquisition date to December 31, 2025, and has been recognized at fair value.

Of the net cash paid to shareholders, $ 131.0 million was paid during the third quarter of 2024, and $ 23.1 million was paid subsequent to October 27, 2024.

The Company has not disclosed pro forma information of the combined business as the transaction is not material to net revenue or net earnings.

During the first three quarters of 2024, the Company recognized $ 2.5 million in acquisition-related expenses within selling, general and administrative expenses primarily related to legal, accounting, valuation, and other professional services.

Impairment of Assets and Restructuring Costs

During the third quarter of 2023, the Company decided to cease selling the lululemon Studio Mirror hardware.

It also contracted with Peloton Interactive, Inc.

to be the exclusive digital fitness content provider to existing lululemon Studio subscribers, and stopped producing its own digital fitness content.

The Company ceased selling the lululemon Studio Mirror and new digital content subscriptions in December 2023.

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:

Third Quarter

(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 obsolescence provision of $ 23.7 million during the third quarter of 2023.

The net realizable value of the lululemon Studio inventory was based on assumptions regarding liquidation value.

Impairment of assets

As a result of the Company's decision to no longer produce digital fitness content and to cease the sale of the lululemon Studio Mirror, the Company performed impairment testing for the lululemon Studio asset group as of October 29, 2023.

The undiscounted cash flows of the lululemon Studio asset group were less than their carrying value, and therefore the Company calculated the fair value of the asset group, which was also less than its carrying value.

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.

Restructuring costs

The Company recognized restructuring costs of $ 30.3 million for lululemon Studio primarily related to contract termination costs, employee severance costs, and professional fees during the third quarter of 2023.

Revolving Credit Facilities

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

As of October 27, 2024, aside from letters of credit of $ 6.5 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 July 28, 2024, the Company was in compliance with the covenants of the credit facility.

As of October 27, 2024, the Company was in compliance with the covenants of the credit facility.

China Mainland revolving credit facility

The Company has an uncommitted and unsecured 300.0 million Chinese Yuan ($ 42.1 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.

It is comprised of a revolving loan of up to 200.0 million Chinese Yuan ($ 28.1 million) and a guarantee facility of up to 100.0 million Chinese Yuan ($ 14.0 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 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.

As of October 27, 2024, the Company was in compliance with the covenants and, aside from letters of credit of 44.1 million Chinese Yuan ($ 6.2 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 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.

As of October 27, 2024 and January 28, 2024, $ 49.9 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 $ 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-based compensation expense charged to income for the plans was $ 70.5 million and $ 69.5 million for the first three quarters of 2024 and 2023, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 156.8 million as of October 27, 2024, 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 27, 2024, and changes during the first three quarters then ended, is presented below:

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

5 unchanged sentences

Forfeited/expired 64 362.78 19 374.03 — — 22 372.19

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

Balance as of October 27, 2024 910 $ 309.62 180 $ 371.76 5 $ 317.86 242 $ 370.02

Exercisable as of October 27, 2024 448 $ 249.06

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.

5 unchanged sentences

The assumptions used to calculate the fair value of the options granted are evaluated and revised, as necessary, to reflect market conditions and the Company's historical experience.

The expected term of the options is based upon the historical experience of similar awards, giving consideration to expectations of future employee exercise behavior.

The expected term of the options is based upon the historical experience of similar awards, giving consideration to expectations of future 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 two quarters of 2024:

First Two Quarters

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 2024:

First Three Quarters

Expected term 3.75 years

7 unchanged sentences

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

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.

During the third quarter of 2024, there were 39.7 thousand shares purchased.

As of October 27, 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 $ 11.1 million and $ 9.6 million in the first two quarters of 2024 and 2023, respectively.

The Company's net expense for the defined contribution plans was $ 16.4 million and $ 14.6 million in the first three 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 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:

As of October 27, 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 two quarters of 2024.

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

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

As of October 27, 2024, there were derivative assets of $ 36.1 million and derivative liabilities of $ 33.8 million subject to enforceable netting arrangements.

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

July 28, 2024 January 28, 2024

October 27, 2024 January 28, 2024

Gross Notional Assets Liabilities Gross Notional Assets Liabilities

6 unchanged sentences

Forward currency contracts $ 36,076 $ 33,768 $ 647 $ 2,872

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 forward currency contracts designated as net investment hedges outstanding as of October 27, 2024 mature on different dates between October 2024 and May 2025.

The forward currency contracts not designated in a hedging relationship outstanding as of October 27, 2024 mature on different dates between October 2024 and May 2025.

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

Second Quarter First Two Quarters

Third Quarter First Three Quarters

2024 2023 2024 2023

4 unchanged sentences

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

Second Quarter First Two Quarters

Third Quarter First Three Quarters

2024 2023 2024 2023

(In thousands)

Gains recognized in selling, general and administrative expenses:

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

Foreign currency exchange gains (losses) $ 13,423 $ 18,154 $ 44,194 $ ( 11,944 )

Derivatives not designated in a hedging relationship ( 20,260 ) ( 17,962 ) ( 49,298 ) 15,060

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

Net foreign currency exchange and derivative gains (losses) $ ( 6,837 ) $ 192 $ ( 5,104 ) $ 3,116

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:

Second Quarter First Two Quarters

Third Quarter First Three Quarters

2024 2023 2024 2023

9 unchanged sentences

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

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.

For the first three 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.

5 unchanged sentences

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 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.

The authorized value of shares available to be repurchased under this program excludes the cost of commissions and excise taxes and as of October 27, 2024, the remaining authorized value was $ 900.1 million.

During the first three quarters of 2024 and 2023, 4.2 million and 1.4 million shares, respectively, were repurchased at a total cost including commissions and excise taxes of $ 1.3 billion and $ 504.6 million, respectively.

Subsequent to October 27, 2024, and up to November 29, 2024, 0.4 million shares were repurchased at a total cost including commissions and excise taxes of $ 120.6 million.

Supplementary Financial Information

3 unchanged sentences

Inventories, at cost $ 1,914,758 $ 1,465,076

Provision to reduce inventories to net realizable value ( 107,462 ) ( 141,474 )

Inventory provisions and reserves ( 113,865 ) ( 141,474 )

$ 1,800,893 $ 1,323,602

38 unchanged sentences

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.

As the Company 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.

4 unchanged sentences

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

Second Quarter First Two Quarters

Third Quarter First Three Quarters

2024 2023 2024 2023

10 unchanged sentences

General corporate expense 342,522 321,480 983,465 931,296

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

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

Amortization of intangible assets 1,118 1,253 1,118 5,010

11 unchanged sentences

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

Second Quarter First Two Quarters

Prior to the acquisition of the Mexico operations on September 10, 2024, wholesale sales to the third party under the license and supply arrangement by lululemon athletica canada inc.

were disclosed as net revenue recognized within Canada.

Third Quarter First Three Quarters

2024 2023 2024 2023

2 unchanged sentences

Canada 335,484 308,824 936,801 857,018

Mexico 10,664 — 10,664 —

Americas 1,770,382 1,732,398 5,134,079 5,019,909

China Mainland 318,338 228,595 936,313 673,108

6 unchanged sentences

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

Second Quarter First Two Quarters

Third Quarter First Three Quarters

2024 2023 2024 2023

5 unchanged sentences

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

Second Quarter First Two Quarters

Third Quarter First Three Quarters

2024 2023 2024 2023

13 unchanged sentences

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 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.

6 unchanged sentences

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.

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

On November 4, 2024, November 8, 2024, November 12, 2024, November 18, 2024, and November 20, 2024, stockholder derivative complaints were filed against certain of the Company's officers, and all of the Company's directors as of that date in the United States Court for the Southern District of New York:

McDonald et al.

1:24-cv-08405 (the " Bhavsar Action");

McDonald et al.

1:24-cv-08507 (the " Muszynski Action");

McDonald et al.

1:24-cv-08572 (the " Holtz Action");

McDonald et al.

1:24-cv-08752 (the " Wong Action");

and Kanaly v.

McDonald et al , No.

1:24-cv-08839 (the " Kanaly Action," and collectively with the Bhavsar Action, the Muszynski Action, the Holtz Action, and the Wong Action, the "Derivative Actions.").

The Kanaly Action additionally names certain of the Company's former directors.

The Derivative Actions assert claims for (a) violating Sections 10(b), 14(a) and 20(a) of the Exchange Act, (b) breach of fiduciary duties, and (c) unjust enrichment and waste of corporate assets on allegations substantially similar to the allegations in the securities action complaint.

The Bhavsar Action further asserts claims for abuse of control, gross mismanagement, and contribution under Sections 10(b) and 21D of the Exchange Act.

The Wong Action also asserts a claim for contribution under Sections 10(b) and 21D of the Exchange Act.

The Kanaly Action also asserts claims for gross mismanagement and aiding and abetting breach of fiduciary duty.

The Wong Action and the Kanaly Action further bring claims based on allegedly false and misleading public statements and omissions during the period October 28, 2020 to March 21, 2024 relating to lululemon's "Inclusion, Diversity, Equity, and Action" program.

The complaints seek monetary damages, equitable relief, and attorneys' fees and costs on behalf of the company, as well as an order directing certain governance reforms.

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