What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-17 compared with 2025-03-27 · 307 added, 315 removed, 877 unchanged (41% of the section changed)

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of lululemon athletica inc.

and its subsidiaries (the Company) as of February 2, 2025 and January 28, 2024, and the related consolidated statements of operations and comprehensive income, of stockholders’ equity and of cash flows for the 53-week year ended February 2, 2025, the 52-week year ended January 28, 2024, and the 52-week year ended January 29, 2023, including the related notes (collectively referred to as the consolidated financial statements).

and its subsidiaries (the Company) as of February 1, 2026 and February 2, 2025, and the related consolidated statements of operations and comprehensive income, of stockholders’ equity and of cash flows for the 52-week year ended February 1, 2026, the 53-week year ended February 2, 2025, and the 52-week year ended January 28, 2024, including the related notes (collectively referred to as the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of February 1, 2026, based on criteria established in Internal Control ‒ Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 2, 2025 and January 28, 2024, and the results of its operations and its cash flows for the 53-week year ended February 2, 2025, the 52-week year ended January 28, 2024, and the 52-week year ended January 29, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 1, 2026 and February 2, 2025, and the results of its operations and its cash flows for the 52-week year ended February 1, 2026, the 53-week year ended February 2, 2025, and the 52-week year ended January 28, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2026, based on criteria established in Internal Control ‒ Integrated Framework (2013) issued by the COSO.

32 unchanged sentences

(ii) evaluating the appropriateness of management’s process for developing the estimates of net realizable value;

(iii) testing the reliability of reports used by management by agreeing to underlying records;

(iii) testing the reliability of reports used by management by agreeing to the underlying records;

(iv) testing the reasonableness of the assumptions about quality, damages, future demand, selling prices and market conditions by considering historical trends and consistency with evidence obtained in other areas of the audit;

8 unchanged sentences

(Amounts in thousands, except per share amounts)

2025 January 28, 2024

2026 February 2, 2025

Current assets

23 unchanged sentences

Non-current lease liabilities 1,499,717 1,300,637

Non-current income taxes payable — 15,864

Deferred income tax liabilities 52,278 98,188

25 unchanged sentences

Fiscal Year Ended

2025 January 28,

2026 February 2,

2025 January 28,

1 unchanged sentence

Cost of goods sold 4,818,468 4,317,315 4,009,873

Gross profit 6,270,811 5,609,405 4,492,340

6,284,132 6,270,811 5,609,405

Selling, general and administrative expenses 4,066,556 3,762,379 3,397,218

Impairment of goodwill and other assets, restructuring costs — 74,501 407,913

Impairment of assets and restructuring costs — — 74,501

Amortization of intangible assets 6,961 2,735 5,010

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

Income from operations 2,210,615 2,505,697 2,132,676

1 unchanged sentence

Income before income tax expense

2,238,967 2,576,077 2,175,735

Income tax expense 659,784 761,461 625,545

Net income $ 1,814,616 $ 1,550,190 $ 854,800

$ 1,579,183 $ 1,814,616 $ 1,550,190

Other comprehensive income (loss), net of tax:

11 unchanged sentences

(Amounts in thousands)

Exchangeable Stock

Special Voting Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Total Stockholders' Equity

Exchangeable Stock Special Voting

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

1 unchanged sentence

Other comprehensive income (loss), net of tax ( 11,672 ) ( 11,672 )

Common stock issued upon exchange of exchangeable shares ( 87 ) ( 87 ) — 87 — — —

Stock-based compensation expense 93,560 93,560

2 unchanged sentences

Repurchase of common stock, including excise tax ( 1,482 ) ( 7 ) ( 2,690 ) ( 555,955 ) ( 558,652 )

( 1,396 ) ( 7 ) ( 2,481 ) ( 441,513 ) ( 444,001 )

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

Net income 1,550,190 1,550,190

1,814,616 1,814,616

Other comprehensive income (loss), net of tax ( 160,185 ) ( 160,185 )

3 unchanged sentences

Repurchase of common stock, including excise tax ( 5,147 ) ( 26 ) ( 11,592 ) ( 1,625,261 ) ( 1,636,879 )

( 1,482 ) ( 7 ) ( 2,690 ) ( 555,955 ) ( 558,652 )

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

Exchangeable Stock

Special Voting Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Total Stockholders' Equity

Balance as of February 2, 2025 5,116 5,116 $ — 116,166 $ 581 $ 638,190 $ 4,109,717 $ ( 424,441 ) $ 4,324,047

Net income 1,579,183 1,579,183

10 unchanged sentences

Fiscal Year Ended

2025 January 28,

2026 February 2,

2025 January 28,

4 unchanged sentences

lululemon Studio obsolescence provision — — 23,709

Impairment of goodwill and other assets, restructuring costs — 74,501 407,913

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

Impairment of assets and restructuring costs — — 74,501

Stock-based compensation expense 62,203 90,011 93,560

35 unchanged sentences

INDEX FOR NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Nature of Operations and Basis of Presentation

Note 1 Nature of Operations and Basis of Presentation

Note 2 Summary of Significant Accounting Policies

Note 3 Net Revenue

Note 4 Inventories

4 unchanged sentences

Note 9 Intangible Assets

Note 9 Impairment of Goodwill and Other Assets, Restructuring Costs

Note 10 Impairment of Assets and Restructuring Costs

Note 11 Other Non-Current Assets

10 unchanged sentences

Note 22 Commitments and Contingencies

Note 22 Supplemental Cash Flow Information

Segmented Information

Note 24 Disaggregated Net Revenue

Note 23 Supplemental Financial Information

Note 24 Segmented Information

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, outlets, temporary locations, wholesale, license and supply arrangements, and a re-commerce program.

There were 767 , 711 , and 655 company-operated stores in operation as of February 2, 2025, January 28, 2024, and January 29, 2023, respectively.

There were 811 , 767 , and 711 company-operated stores in operation as of February 1, 2026, February 2, 2025, and January 28, 2024, respectively.

Basis of presentation

1 unchanged sentence

dollars and are prepared in accordance with United States generally accepted accounting principles ("GAAP").

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 6.

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.

Fiscal 2024 was a 53-week year.

Fiscal 2025 and fiscal 2023 were each 52-week years.

Fiscal 2024, 2023, and 2022 ended on February 2, 2025, January 28, 2024, and January 29, 2023, respectively, and are referred to as "2024," "2023," and "2022," respectively.

Fiscal 2024 was a 53-week year.

Fiscal 2025, 2024, and 2023 ended on February 1, 2026, February 2, 2025, and January 28, 2024, respectively, and are referred to as "2025," "2024," and "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.

Events predominantly impacting the Company's international net revenue, such as those related to Lunar New Year and Singles Day, can fall in different fiscal quarters from year to year.

Summary of Significant Accounting Policies

5 unchanged sentences

Cash and cash equivalents consist of cash on hand, bank balances, money market funds, and short-term deposits with original maturities of three months or less.

The Company has not experienced any losses related to these balances, and management believes the Company's credit risk to be minimal.

The Company has not experienced significant losses related to these balances and does not currently believe credit risk exposure is significant.

Accounts receivable

Accounts receivable primarily arise out of third party gift card sales, sales to wholesale accounts, online marketplaces, duty receivables, and license and supply arrangements.

Accounts receivable primarily arise out of third-party online marketplaces, sales to wholesale accounts, third-party gift card sales, duty receivables, and license and supply arrangements.

The allowance for doubtful accounts represents management's best estimate of probable credit losses in accounts receivable.

Receivables are written off against the allowance when management believes that the amount receivable will not be recovered.

As of February 2, 2025 and January 28, 2024, the Company had an insignificant allowance for doubtful accounts.

As of February 1, 2026 and February 2, 2025, the Company had an insignificant allowance for doubtful accounts.

Inventories, consisting of finished goods, inventories in transit, and raw materials, are stated at the lower of cost and net realizable value.

37 unchanged sentences

The Company incurs costs to implement cloud computing arrangements hosted by third-party vendors.

Costs incurred to implement cloud computing service arrangements are capitalized when incurred during the application development phase, and recognized as other non-current assets.

These costs are capitalized when incurred during the application development phase, and recognized as other non-current assets.

Implementation costs are subsequently amortized over the expected term of the related cloud service.

33 unchanged sentences

Revenue recognition

Net revenue is comprised of company-operated store net revenue, e-commerce net revenue through websites and mobile apps, including mobile apps on in-store devices that allow demand to be fulfilled via the Company's distribution centers, and other net revenue, which includes revenue from outlets, sales to wholesale accounts, license and supply arrangement net revenue, which consists of royalties as well as sales of the Company's products to licensees, re-commerce revenue, revenue from temporary locations, and lululemon Studio revenue.

All revenue is reported net of markdowns, discounts, sales taxes collected from customers on behalf of taxing authorities, and returns.

lululemon Studio generates gross revenue from digital content subscriptions.

Net revenue is comprised of:

• company-operated store net revenue;

• e-commerce net revenue through websites, mobile apps, including mobile apps on in-store devices that allow demand to be fulfilled via the Company's distribution centers, and third-party online marketplaces;

• other net revenue, which includes revenue from outlets, sales to wholesale accounts, license and supply arrangement net revenue, which consists of royalties as well as sales of the Company's products to licensees, re-commerce revenue, revenue from temporary locations, and lululemon Studio revenue from digital content subscriptions.

All revenue is reported net of:

• markdowns and discounts,

• sales taxes collected from customers on behalf of taxing authorities;

Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods or services to the Company's customers.

7 unchanged sentences

The Company's liability for sales return refunds is recognized within accrued liabilities and other, and an asset for the value of inventory which is expected to be returned is recognized within other prepaid expenses and other current assets on the consolidated balance sheets.

As of February 2, 2025 and January 28, 2024, the sales return allowance was $ 73.9 million and $ 61.6 million, respectively.

Shipping fees billed to customers are recorded as revenue, and shipping costs are recognized within selling, general and administrative expenses in the same period the related revenue is recognized.

1 unchanged sentence

While the Company will continue to honor all gift cards presented for payment, to the extent management determines there is no requirement to remit unused card balances to government agencies under unclaimed property laws, the portion of card balances not expected to be redeemed are recognized in net revenue in proportion to the gift cards which have been redeemed, under the redemption recognition method.

As of February 2, 2025 and January 28, 2024, the unredeemed gift card liability was $ 308.4 million and $ 306.5 million, respectively.

During 2024, 2023, and 2022, the Company recognized net revenue of $ 180.9 million, $ 151.4 million, and $ 126.9 million, respectively, that was included in the opening balance of the unredeemed gift card liability at the beginning of each year.

For 2024, 2023, and 2022, net revenue recognized on unredeemed gift card balances was $ 36.2 million, $ 28.5 million, and $ 23.3 million, respectively.

The Company is responsible for funding a share of credits offered to customers through credit card affiliate programs, which are recognized as a discount within net revenue and the corresponding liability is recognized within accrued liabilities and other.

For certain programs, the share of credits funded by the Company varies based on annually assessed thresholds, which are estimated at each reporting date.

Cost of goods sold

5 unchanged sentences

• the cost of digital content subscription services;

• hemming costs.

• hemming costs and other product alteration costs;

• product-related royalties paid to third parties.

Other cost of sales

4 unchanged sentences

Selling, general and administrative expenses consist of all operating costs not otherwise included in cost of goods sold, intangible asset amortization, or acquisition-related expenses.

The Company's selling, general and administrative expenses include the costs of corporate and retail employee wages and benefits, costs to transport the Company's products from the distribution facilities to the Company's retail locations and e-commerce guests, professional fees, marketing, technology, human resources, accounting, legal, corporate facility and occupancy costs, and depreciation and amortization expense other than in cost of goods sold.

For 2024, 2023, and 2022, the Company incurred costs to transport its products from its distribution facilities to its retail locations and e-commerce guests of $ 349.0 million, $ 374.2 million, and $ 353.7 million, respectively.

The Company's selling, general and administrative expenses include the costs of corporate and retail employee wages and benefits, costs to transport the Company's products from the distribution facilities to the Company's retail locations and e-commerce guests, professional fees, marketing, technology, human resources, accounting, legal, corporate facility and occupancy costs, e-commerce platform costs, and depreciation and amortization expense other than in cost of goods sold.

Advertising and Marketing Costs

Advertising costs, including the costs to produce advertising, are expensed as incurred.

Advertising expenses were $ 541.5 million, $ 429.7 million, and $ 328.6 million for 2024, 2023, and 2022, respectively, and are included within selling, general and administrative expenses.

Advertising expenses are included within selling, general and administrative expenses.

Store pre-opening costs

23 unchanged sentences

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

The Company holds certain assets and liabilities that are required to be measured at fair value on a recurring basis, and performs certain valuations on a non-recurring basis, which are outlined in Note 16.

The Company holds certain assets and liabilities that are required to be measured at fair value on a recurring basis, and performs certain valuations on a non-recurring basis.

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

The fair values of the forward currency contract assets and liabilities are determined using observable Level 2 inputs, including foreign currency spot exchange rates, forward pricing curves, and interest rates.

The fair values consider the credit risk of the Company and its counterparties.

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

However, the Company records all derivatives on its consolidated balance sheets at fair value and does not offset derivative assets and liabilities.

Additional information is included in Note 17.

Fair Value Measurement.

5 unchanged sentences

Unrealized translation gains and losses are recorded as a foreign currency translation adjustment, which is included in other comprehensive income (loss), net of tax, which is a component of accumulated other comprehensive income or loss included in stockholders' equity.

Foreign currency transactions denominated in a currency other than an entity's functional currency are remeasured into the functional currency with any resulting gains and losses recognized in selling, general and administrative expenses, except for gains and losses arising on intercompany foreign currency transactions that are of a long-term investment nature, which are recorded as a net investment hedge gains (losses) in other comprehensive income (loss), net of tax.

Foreign currency transactions denominated in a currency other than an entity's functional currency are remeasured into the functional currency with any resulting gains and losses recognized in selling, general and administrative expenses, except for gains and losses arising on intercompany foreign currency transactions that are of a long-term investment nature, which are recorded as net investment hedge gains (losses) in other comprehensive income (loss), net of tax.

Derivative financial instruments

17 unchanged sentences

Concentration of credit risk

Accounts receivable primarily arise out of third party gift card sales, sales to wholesale accounts, online marketplaces, duty receivables, and license and supply arrangements.

Accounts receivable primarily arise out of third-party gift card sales, sales to wholesale accounts, third-party online marketplaces, duty receivables, and license and supply arrangements.

The Company generally does not require collateral to support the accounts receivable;

5 unchanged sentences

The credit risk amount is the Company's unrealized gains on its derivative instruments, based on foreign currency rates at the time of nonperformance.

The Company has not experienced any losses related to these items, and it believes credit risk to be minimal.

The Company seeks to minimize its credit risk by entering into transactions with investment grade credit worthy and reputable financial institutions and by monitoring the credit standing of the financial institutions with whom it transacts.

It seeks to limit the amount of exposure with any one counterparty.

The Company seeks to minimize its credit risk by entering into transactions with investment-grade, creditworthy, and reputable financial institutions, by monitoring their credit standing, and by limiting exposure to any one counterparty.

The Company has not experienced significant losses related to these items and does not currently believe credit risk exposure is significant.

The Company's derivative contracts contain certain credit risk-related contingent features.

4 unchanged sentences

The employee compensation expense is recognized on a straight-line basis over the requisite service period with the offsetting credit to additional paid-in capital.

The grant date fair value of each stock option granted is estimated on the date of grant using the Black-Scholes model.

The closing price of the Company's common stock on the grant date is used in the model.

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

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

The risk-free interest rate is based on the U.S.

Treasury yield curve for the period corresponding with the expected term of the options.

The grant date fair value of restricted shares, performance-based restricted stock units ("PSUs"), and restricted stock units ("RSUs") is based on the closing price of the Company's common stock on the grant date.

For awards with service and/or performance conditions, the amount of compensation expense recognized is based on the number of awards expected to vest, reflecting estimated expected forfeitures, and is adjusted to reflect those awards that do ultimately vest.

2 unchanged sentences

The Company reassesses the probability of achieving the performance condition at each reporting date.

The grant date fair value of each stock option granted is estimated on the grant date using the Black-Scholes model.

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

Earnings per share

3 unchanged sentences

Diluted earnings per share is calculated by dividing net income available to stockholders for the period by the diluted weighted-average number of shares outstanding during the period.

Diluted earnings per share reflects the potential dilution from common shares issuable through stock options, performance-based restricted stock units that have satisfied their performance factor, restricted shares, and restricted stock units using the treasury stock method.

Diluted earnings per share reflects the potential dilution from common shares issuable through stock options, PSUs that have satisfied their performance factor, restricted shares, and RSUs using the treasury stock method.

Contingencies

6 unchanged sentences

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

ASUs adopted during 2024 not listed below were assessed, and determined to be either not applicable or are expected to have minimal impact on its consolidated financial position or results of operations.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

Entities are 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.

The Company adopted this update for 2024 and the related disclosures are included in Note 23.

Segmented Information.

Recently issued accounting pronouncements

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.

ASUs adopted during 2025 not listed below were assessed, and determined to be either not applicable or to have minimal impact on its consolidated financial position or results of operations.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

1 unchanged sentence

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, 2024, and is applied prospectively.

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

The company adopted this update retrospectively for 2025, and the related disclosures are included in Note 20.

Income Taxes.

Recently issued accounting pronouncements

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

1 unchanged sentence

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 within fiscal years beginning after December 15, 2027, and shall be applied retrospectively for periods presented in the financial statements.

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

February 2, 2025 January 28, 2024

In September 2025, the FASB issued ASU 2025‑06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350‑40):

Targeted Improvements to the Accounting for Internal-Use Software.

The amendment replaces the previous project-stage model with a principles-based approach for capitalizing internal-use software costs.

This guidance is effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within that year.

The Company is currently evaluating the impact that this new guidance may have on its accounting policies and related disclosures.

Disaggregated net revenue

In addition to the disaggregation of net revenue by reportable segment in Note 24.

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

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.

2025 2024 2023

(In thousands)

United States $ 6,328,380 $ 6,483,183 $ 6,346,392

Canada 1,423,178 1,411,673 1,285,255

Mexico 95,486 33,300 —

Americas 7,847,044 7,928,156 7,631,647

China Mainland 1,754,799 1,361,337 963,760

Hong Kong SAR, Taiwan, and Macau SAR

199,079 180,092 170,533

People's Republic of China 1,953,878 1,541,429 1,134,293

Other geographic areas 1,301,678 1,118,541 853,338

$ 11,102,600 $ 10,588,126 $ 9,619,278

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

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

2025 2024 2023

(In thousands)

Women's apparel $ 6,995,365 $ 6,692,630 $ 6,147,372

Men's apparel 2,663,986 2,558,380 2,252,753

Accessories and other categories 1,443,249 1,337,116 1,219,153

$ 11,102,600 $ 10,588,126 $ 9,619,278

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

2025 2024 2023

(In thousands)

Company-operated stores $ 5,049,744 $ 5,007,872 $ 4,410,956

E-commerce 4,918,697 4,570,446 4,311,110

Other channels 1,134,159 1,009,808 897,212

$ 11,102,600 $ 10,588,126 $ 9,619,278

Gift card net revenue

During 2025, 2024, and 2023, the Company recognized net revenue of $ 179.2 million, $ 180.9 million, and $ 151.4 million, respectively, that was included in the opening balance of the unredeemed gift card liability at the beginning of each year.

For 2025, 2024, and 2023, net revenue recognized on unredeemed gift card balances was $ 37.8 million, $ 36.2 million, and $ 28.5 million, respectively.

February 1, 2026 February 2, 2025

(In thousands)

Inventories, at cost $ 1,789,576 $ 1,526,055

Inventory provisions and reserves:

lululemon Studio Mirror provision — ( 62,956 )

Obsolescence provision ( 52,646 ) ( 45,840 )

2 unchanged sentences

( 1,727 ) ( 1,718 )

( 88,823 ) ( 83,974 )

Inventories $ 1,700,753 $ 1,442,081

During 2024, we disposed of the lululemon Studio Mirror inventories which had previously been provided for.

Shrink and inventory provision expense was $ 134.8 million, $ 139.8 million, and $ 181.1 million in 2025, 2024, and 2023, respectively.

The expense for 2023 included an inventory obsolescence provision of $ 23.7 million recognized as a result of the decision to cease selling the lululemon Studio Mirror in the third quarter of 2023.

Please refer to Note 10.

Impairment of Goodwill and Other Assets, Restructuring Costs for further details on the lululemon Studio obsolescence provision.

Impairment of Assets and Restructuring Costs for further information.

Prepaid Expenses and Other Current Assets

February 2, 2025 January 28, 2024

February 1, 2026 February 2, 2025

(In thousands)

4 unchanged sentences

Property and Equipment

February 2, 2025 January 28, 2024

February 1, 2026 February 2, 2025

(In thousands)

7 unchanged sentences

Work in progress

378,226 206,398

Property and equipment, gross 3,896,570 3,241,666

2 unchanged sentences

Depreciation expense related to property and equipment was $ 489.7 million, $ 443.3 million, and $ 374.0 million for 2025, 2024, and 2023, respectively.

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.

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

22 unchanged sentences

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.

As of February 1, 2026, $ 10.1 million in consideration payments has been paid.

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

3 unchanged sentences

Balance as of January 28, 2024

Effect of foreign currency translation ( 61 )

Balance as of January 28, 2024

Acquisition of the Mexico operations 147,001

1 unchanged sentence

Balance as of February 2, 2025

Effect of foreign currency translation 25,393

Balance as of February 1, 2026

Of the Company's goodwill, $ 147.0 million relates to the acquisition of the Mexico operations in 2024.

3 unchanged sentences

Intangible Assets

A summary of the balances of the Company's intangible assets as of February 2, 2025, January 28, 2024, is presented below:

A summary of the intangible asset balances is presented below:

February 1, 2026

2 unchanged sentences

Franchise rights 16,965 ( 10,682 ) 6,283 0.8

Other 270 ( 270 ) — n/a

Intangible assets $ 16,965 $ ( 10,682 ) $ 6,283 0.8

January 28, 2024

Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Carrying Amount

(In thousands)

MIRROR brand $ 26,500 $ ( 4,089 ) $ ( 22,411 ) $ —

Customer relationships 28,000 ( 7,492 ) ( 20,508 ) —

Technology 25,500 ( 12,632 ) ( 12,868 ) —

Content 5,000 ( 3,250 ) ( 1,750 ) —

Other 270 ( 270 ) — —

February 2, 2025

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Useful Life (Years)

(In thousands, except in years)

Franchise rights 14,325 ( 2,652 ) 11,673 1.8

Other 270 ( 270 ) — n/a

Intangible assets $ 14,595 $ ( 2,922 ) $ 11,673 1.8

3 unchanged sentences

Amortization of intangible assets was $ 7.0 million, $ 2.7 million, and $ 5.0 million in 2025, 2024, and 2023, respectively.

Future expected amortization expense as of February 2, 2025, is $ 6.4 million and $ 5.2 million, for 2025 and 2026, respectively.

During 2023 and 2022, the Company recognized intangible asset impairment charges of $ 17.0 million and $ 40.6 million, respectively.

Future expected amortization expense as of February 1, 2026 is $ 6.3 million for 2026.

During 2023, the Company recognized intangible asset impairment charges of $ 17.0 million.

These impairment charges related to the intangible assets that were recognized on the acquisition of MIRROR.

Please refer to Note 10.

Impairment of Goodwill and Other Assets, Restructuring Costs for further information.

Impairment of Goodwill and Other Assets, Restructuring Costs

During 2022, the Company decided to shift its lululemon Studio strategy to focus on providing digital app-based services.

The Company continued to sell the lululemon Studio Mirror hardware in 2023, and reached the decision to cease selling it during the third quarter of 2023.

Impairment of Assets and Restructuring Costs for further information.

Impairment of Assets and Restructuring Costs

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

It also contracted with Peloton Interactive, Inc.

1 unchanged sentence

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

These strategy shifts resulted in impairment testing and the recognition of goodwill impairment, inventory provisions, asset impairments, and restructuring costs related to the lululemon Studio reporting unit.

These strategy shifts resulted in impairment testing and the recognition of inventory provisions, asset impairments, and restructuring costs related to the lululemon Studio reporting unit.

The following table summarizes the amounts recognized:

2024 2023 2022

(In thousands)

3 unchanged sentences

Impairment of assets:

Impairment of goodwill $ — $ — $ 362,492

Impairment of intangible assets 16,951

1 unchanged sentence

Impairment of property and equipment 11,161

$ — $ 44,186 $ 407,913

Restructuring costs 30,315

Impairment of goodwill and other assets, restructuring costs $ — $ 74,501 $ 407,913

Impairment of assets and restructuring costs $ 74,501

Total pre-tax charges $ 98,210

2 unchanged sentences

lululemon Studio obsolescence provision

During 2022, the change in strategy related to lululemon Studio to focus on digital app-based services meant the Company no longer expected to be able to sell all of the lululemon Studio hardware inventory above cost and it recognized an obsolescence provision of $ 62.9 million.

The net realizable value was determined based on hardware sales forecasts and assumptions regarding liquidation value.

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

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

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

Impairment of goodwill and other assets

As a result of the strategy shift during 2022, it was concluded that the Company should conduct an impairment test for the goodwill, intangible assets, and property and equipment related to lululemon Studio as of January 29, 2023.

The Company used a discounted cash flow model to estimate the fair value of the lululemon Studio reporting unit based on the updated strategic plans, supplemented by market comparable analysis, which indicated the fair value of lululemon Studio was lower than its carrying value, and led to a recognition of an impairment of goodwill of $ 362.5 million.

The key assumptions used to estimate the fair value of the lululemon Studio reporting unit were the revenue growth rates, operating profit margins, and the discount rate.

The fair value of the lululemon Studio reporting unit was a Level 3 fair value measurement.

As of January 29, 2023, the undiscounted cash flows of the lululemon Studio asset group to which the intangible assets belonged 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.

This resulted in impairment of intangible assets of $ 40.6 million relating to the MIRROR brand, which was associated with in-home hardware, and to the customer relationship intangible assets that were recognized as part of the acquisition.

Impairment of assets

During 2023, 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.

6 unchanged sentences

Other Non-Current Assets

February 2, 2025 January 28, 2024

February 1, 2026 February 2, 2025

(In thousands)

Cloud computing arrangement implementation costs:

Deferred cloud computing arrangement implementation costs $ 513,713 $ 385,441

Accumulated amortization ( 321,682 ) ( 223,682 )

192,031 161,759

Security deposits 61,117 44,076

1 unchanged sentence

Other non-current assets $ 314,910 $ 237,841

As of February 2, 2025 and January 28, 2024, cloud computing arrangement implementation costs consisted of deferred costs of $ 385.4 million and $ 289.3 million, respectively, and associated accumulated amortization of $ 223.7 million and $ 155.7 million, respectively.

Accrued Liabilities and Other

February 2, 2025 January 28, 2024

February 1, 2026 February 2, 2025

(In thousands)

Accrued operating expenses $ 167,052 $ 166,745

Forward currency contract liabilities 74,638 2,872

Sales return allowances 73,892 61,634

Accrued freight 53,121 41,241

Accrued duty 99,353 45,400

Accrued digital marketing 71,240 45,392

Sales return allowances 70,611 73,892

Accrued credit card affiliate liabilities 64,837 —

Forward currency contract liabilities 36,476 74,638

Accrued capital expenditures 34,860 36,690

Accrued rent 17,962 12,522

Accrued freight 34,455 53,121

Sales tax collected 25,353 16,967

Accrued rent 20,691 17,962

Other 38,054 28,656

Accrued liabilities and other

$ 662,982 $ 559,463

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.

The credit facility has a maturity date of December 14, 2026.

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 February 2, 2025, aside from letters of credit of $ 6.1 million, the Company had no other borrowings outstanding under this credit facility.

Borrowings made under the credit facility bear interest at a rate per annum equal to, at the Company's option, either (a) a rate based on the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York ("SOFR"), or (b) an alternate base rate, plus, in each case, an applicable margin.

The applicable margin is determined by reference to a pricing grid, based on the ratio of indebtedness to earnings before interest, tax, depreciation, amortization, and rent ("EBITDAR") and ranges between 1.000 %- 1.375 % for SOFR loans and 0.000 %- 0.375 % for alternate base rate or Canadian prime rate loans.

Additionally, a commitment fee of between 0.100 %- 0.200 %, also determined by reference to the pricing grid, is payable on the average daily unused amounts under the credit facility.

The applicable interest rates and commitment fees are subject to adjustment based on certain sustainability key performance indicators ("KPIs").

The two KPIs are based on greenhouse gas emissions intensity reduction and gender pay equity, and the Company's performance against certain targets measured on an annual basis could result in positive or negative sustainability rate adjustments of 2.50 basis points to its drawn pricing and positive or negative sustainability fee adjustments of 0.50 basis points to its undrawn pricing.

The credit agreement contains negative covenants that, among other things and subject to certain exceptions, limit the ability of the Company's subsidiaries to incur indebtedness, incur liens, undergo fundamental changes, make dispositions of all or substantially all of their assets, alter their businesses and enter into agreements limiting subsidiary dividends and distributions.

The Company's financial covenants include maintaining an operating lease adjusted leverage ratio of not greater than 3.25 :1.00 and the ratio of consolidated EBITDAR to consolidated interest charges (plus rent) of not less than 2.00 :1.00.

The credit agreement also contains certain customary representations, warranties, affirmative covenants, and events of default (including, among others, an event of default upon the occurrence of a change of control).

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

As of February 2, 2025, the Company was in compliance with the covenants of the credit facility.

On October 15, 2025, the Company entered into an amended and restated unsecured revolving credit agreement, which provides for $ 600.0 million in commitments under an unsecured five-year revolving credit facility.

The credit facility has a maturity date of October 15, 2030, subject to two one-year extensions at the request of the Company.

Subject to the conditions stated in the credit agreement, the Company may request increases in aggregate commitments thereunder up to a total of $ 1.0 billion.

The credit facility permits prepayment of borrowings and reductions or terminations of commitments from time to time without premium or penalty, subject to customary breakage costs.

As of February 1, 2026, the Company had no borrowings outstanding under this credit facility other than $ 6.4 million in outstanding letters of credit and guarantee.

Borrowings made under the credit facility bear interest at variable rates based on the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York ("SOFR"), or an alternate base rate, plus applicable margin.

The credit agreement contains customary financial, affirmative and negative covenants applicable to the Company and its subsidiaries, including limitations on indebtedness, liens, fundamental changes, dispositions of assets, changes in the nature of business, and restrictions on subsidiary dividends and distributions, as well as financial covenants based on leverage and fixed charge coverage ratios.

The Company was in compliance with all such covenants as of February 1, 2026.

China Mainland revolving credit facility

The Company has an uncommitted and unsecured 300.0 million Chinese Yuan ($ 41.4 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 guarantee facility of up to 100.0 million Chinese Yuan ($ 13.8 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 February 2, 2025, the Company was in compliance with the covenants and, aside from letters of credit of 45.8 million Chinese Yuan ($ 6.3 million), there were no other borrowings or guarantees outstanding under this credit facility.

The Company has an uncommitted and unsecured Chinese Yuan-denominated revolving credit facility totaling the equivalent of USD $ 43.1 million, which is reviewed annually and provides for short-term borrowing and the issuance of

As of February 1, 2026, there were no borrowings or guarantees outstanding, letters of credit totaling USD $ 7.9 million were issued, and the Company was in compliance with all applicable terms of the credit facility.

Supply Chain Financing Program

24 unchanged sentences

2023 Equity Incentive Plan.

The 2023 Equity Incentive Plan provides for awards in the form of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, performance shares, performance-based restricted stock units, cash-based awards, other stock-based awards, and deferred compensation awards to employees (including officers and directors who are also employees), consultants, and directors of the Company.

The 2023 Equity Incentive Plan provides for awards in the form of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, RSUs, performance shares, PSUs, cash-based awards, other stock-based awards, and deferred compensation awards to employees (including officers and directors who are also employees), consultants, and directors of the Company.

The awards granted under the 2014 Equity Incentive Plan remain outstanding and continue to vest under their original conditions.

No further awards will be granted under the 2014 Equity Incentive Plan.

The Company has granted stock options, performance-based restricted stock units, restricted stock units, and restricted shares.

The Company has granted stock options, PSUs, RSUs, and restricted shares.

Stock options granted to date generally have a four-year vesting period and vest at a rate of 25 % each year on the anniversary date of the grant.

Stock options generally expire on the earlier of seven years from the date of grant, or a specified period of time following termination.

Performance-based restricted stock units issued generally vest three years from the grant date and restricted shares generally vest one year from the grant date.

Restricted stock units granted generally have a three-year vesting period and vest at a certain percentage each year on the anniversary date of the grant.

The Company issues previously unissued shares upon the exercise of Company options, vesting of performance-based restricted stock units or restricted stock units that are settled in common stock, and granting of restricted shares.

Stock options generally expire on the earlier of seven or 10 years from the date of grant, or a specified period of time following termination.

PSUs issued generally vest three years from the grant date and restricted shares generally vest one year from the grant date.

granted generally have a three-year vesting period and vest at a certain percentage each year on the anniversary date of the grant.

The Company issues previously unissued shares upon the exercise of Company options, vesting of PSUs or RSUs that are settled in common stock, and granting of restricted shares.

Stock-based compensation expense charged to income for the plans was $ 61.8 million, $ 88.6 million, and $ 92.7 million for 2025, 2024, and 2023, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $ 122.3 million as of February 2, 2025, which is expected to be recognized over a weighted-average period of 2.0 years, and was $ 135.9 million as of January 28, 2024 over a weighted-average period of 2.0 years.

A summary of the balances of the Company's stock-based compensation plans as of February 2, 2025, January 28, 2024, and January 29, 2023, and changes during the fiscal years then ended is presented below:

Total unrecognized compensation cost for all stock-based compensation plans was $ 150.9 million as of February 1, 2026, which is expected to be recognized over a weighted-average period of 2.5 years, and was $ 122.3 million as of February 2, 2025 over a weighted-average period of 2.0 years.

A summary of the balances of the Company's stock-based compensation plans as of February 1, 2026, February 2, 2025, and January 28, 2024, and changes during the fiscal years then ended is presented below:

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

5 unchanged sentences

Forfeited/expired

32 332.26 8 351.14 — 368.36 24 350.38

Balance as of January 28, 2024 783 $ 285.69 175 $ 349.84 4 $ 370.85 223 $ 359.12

2 unchanged sentences

Forfeited/expired 71 363.58 23 374.15 — — 29 371.69

Balance as of January 28, 2024 783 $ 285.69 175 $ 349.84 4 $ 370.85 223 $ 359.12

Balance as of February 2, 2025

849 $ 314.27 177 $ 371.83 5 $ 317.86 239 $ 371.09

Granted 593 243.30 177 299.16 6 252.28 476 232.49

2 unchanged sentences

Balance as of February 1, 2026

1,269 $ 287.41 220 $ 319.19 6 $ 252.28 561 $ 257.92

A total of 2.0 million shares of the Company's common stock have been authorized for future issuance under the Company's 2023 Equity Incentive Plan.

The Company's performance-based restricted stock units are awarded to eligible employees and entitle the grantee to receive a maximum of two shares of common stock per performance-based restricted stock unit if the Company achieves specified performance goals and the grantee remains employed during the vesting period.

The fair value of performance-based restricted stock units is based on the closing price of the Company's common stock on the grant date.

Expense for performance-based restricted stock units is recognized when it is probable that the performance goal will be achieved.

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

The grant date fair value of each stock option granted is estimated on the date of grant using the Black-Scholes model.

The closing price of the Company's common stock on the grant date is used in the model.

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

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

The risk-free interest rate is based on the U.S.

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 in 2024, 2023, and 2022:

The Company's PSUs are awarded to eligible employees and entitle the grantee to receive a maximum of two shares of common stock per PSU if the Company achieves specified performance goals and the grantee remains employed during the vesting period.

The fair value of PSUs is based on the closing price of the Company's common stock on the grant date.

Expense for PSUs is recognized when it is probable that the performance goal will be achieved.

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

The grant date fair value of each stock option granted is estimated on the date of grant using the Black-Scholes model and the following are weighted averages of the assumptions that were used:

2025 2024 2023

3 unchanged sentences

Dividend yield — % — % — %

The following table summarizes information about stock options outstanding and exercisable as of February 2, 2025:

Range of Exercise Prices

Number of Options

Weighted-Average Exercise Price

Weighted-Average Remaining Life (Years)

Number of Options

Weighted-Average Exercise Price

Weighted-Average Remaining Life (Years)

The following summarizes information about stock options outstanding and exercisable as of February 1, 2026:

Outstanding Exercisable

Range of Exercise Prices Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Life (Years) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Life (Years)

(In thousands, except per share amounts and years)

11 unchanged sentences

Intrinsic value $ 586 $ 418

$ 84,990 $ 64,006

As of February 1, 2026, the unrecognized compensation cost related to these options was $ 49.2 million, which is expected to be recognized over a weighted-average period of 3.0 years.

The weighted-average grant date fair value of options granted during 2025, 2024, and 2023 was $ 90.53 , $ 130.87 , and $ 130.75 , respectively.

The following table summarizes the intrinsic value of options exercised and awards that vested during 2024, 2023, and 2022:

The following table summarizes the intrinsic value of options exercised and awards that vested:

2025 2024 2023

10 unchanged sentences

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

During each of 2024, 2023, and 2022, there were 0.1 million shares purchased.

During 2025, 2024, and 2023, there were 0.2 million, 0.1 million, and 0.1 million shares purchased, respectively.

As of February 1, 2026, 4.1 million shares remain authorized to be purchased under the ESPP.

Defined contribution pension plans

The Company offers defined contribution pension plans to its eligible employees.

Participating employees may elect to defer and contribute a portion of their eligible compensation to a plan up to limits stated in the plan documents, not to exceed the dollar amounts set by applicable laws.

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 offers defined contribution pension plans to eligible employees who may elect to defer and contribute a portion of their eligible compensation to a plan up to limits stated in the plan documents, not to exceed the dollar amounts set by applicable laws.

The Company matches 50 % to 75 % of the contribution depending on the participant's length of service, and the Company's contribution is subject to a two-year vesting period.

The Company's net expense for the defined contribution plans was $ 23.7 million, $ 22.2 million, and $ 19.8 million during 2025, 2024, and 2023, respectively.

1 unchanged sentence

Assets and liabilities measured at fair value on a recurring basis

As of February 2, 2025 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 February 1, 2026 and February 2, 2025, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis:

February 1, 2026 Level 1 Level 2 Level 3 Balance Sheet Classification

1 unchanged sentence

Money market funds $ 354,731 $ 354,731 $ — $ — Cash and cash equivalents

Term deposits 8 — 8 — Cash and cash equivalents

Forward currency contract assets 30,996 — 30,996 — Prepaid expenses and other current assets

Forward currency contract liabilities 36,476 — 36,476 — Other current liabilities

January 28, 2024 Level 1 Level 2 Level 3 Balance Sheet Classification

February 2, 2025 Level 1 Level 2 Level 3 Balance Sheet Classification

(In thousands)

4 unchanged sentences

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.

The fair values consider the credit risk of the Company and its counterparties.

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

However, the Company records all derivatives on its consolidated balance sheets at fair value and does not offset derivative assets and liabilities.

Assets and liabilities measured at fair value on a non-recurring basis

The Company has also recorded lease termination liabilities at fair value on a non-recurring basis, determined using Level 3 inputs based on remaining lease rentals and reduced by estimated sublease income.

During 2023 and 2022, the Company recorded impairment charges for goodwill, intangible assets, cloud computing arrangement implementation costs, and property and equipment, as disclosed in Note 9.

Impairment of Goodwill and Other Assets, Restructuring Costs.

That note includes details on the discounted cash flow model used to estimate fair value, which is a Level 3 valuation technique.

Derivative Financial Instruments

13 unchanged sentences

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

February 2, 2025 January 28, 2024

February 1, 2026 February 2, 2025

Gross Notional Assets Liabilities Gross Notional Assets Liabilities

7 unchanged sentences

As of February 1, 2026, there were derivative assets of $ 31.0 million and derivative liabilities of $ 36.5 million subject to enforceable netting arrangements.

The forward currency contracts designated as net investment hedges outstanding as of February 2, 2025 mature on different dates between February 2025 and October 2025.

The forward currency contracts not designated in a hedging relationship outstanding as of February 2, 2025 mature on different dates between February 2025 and November 2025.

The forward currency contracts designated as net investment hedges outstanding as of February 1, 2026 mature on different dates between February 2026 and July 2026.

The forward currency contracts not designated in a hedging relationship outstanding as of February 1, 2026 mature on different dates between February 2026 and July 2026.

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

40 unchanged sentences

The weighted-average remaining lease terms and weighted-average discount rates were as follows:

February 2, 2025 January 28, 2024

February 1, 2026 February 2, 2025

Weighted-average remaining lease term 6.59 years 6.68 years

Weighted-average discount rate 4.4 % 4.3 %

The Company's domestic and foreign income before income tax expense and current and deferred income taxes from federal, state, and foreign sources are as follows:

The Company's domestic and foreign income before income tax expense and current and deferred income taxes from federal, state, and foreign sources were as follows:

2025 2024 2023

(In thousands)

Income (loss) before income tax expense

$ 479,956 $ 458,041 $ ( 98,764 )

2,096,121 1,717,694 1,431,335

Income before income tax expense

Domestic $ 598,174 $ 479,956 $ 458,041

Foreign 1,640,793 2,096,121 1,717,694

$ 2,238,967 $ 2,576,077 $ 2,175,735

Current income tax expense

$ 86,851 $ 140,726 $ 34,752

31,983 42,476 33,369

584,248 469,090 400,250

Federal $ 177,390 $ 86,851 $ 140,726

State 36,771 31,983 42,476

Foreign 494,677 584,248 469,090

$ 708,838 $ 703,082 $ 652,292

Deferred income tax expense (recovery)

$ 61,386 $ ( 14,741 ) $ 8,932

14,047 ( 3,097 ) 2,363

( 17,054 ) ( 8,909 ) ( 1,895 )

Federal $ ( 41,413 ) $ 61,386 $ ( 14,741 )

State ( 9,733 ) 14,047 ( 3,097 )

Foreign 2,092 ( 17,054 ) ( 8,909 )

$ ( 49,054 ) $ 58,379 $ ( 26,747 )

Income tax expense $ 659,784 $ 761,461 $ 625,545

$ 761,461 $ 625,545 $ 477,771

The Company's income tax expense for 2023 and 2022 include certain discrete tax amounts, as follows:

2024 2023 2022

(In thousands)

Impairment of goodwill and other assets, restructuring costs $ — $ ( 26,085 ) $ ( 28,171 )

Gain on disposal of assets — — 1,661

Total discrete income tax expense (recovery) $ — $ ( 26,085 ) $ ( 26,510 )

The Company's income tax expense for 2023 included a discrete income tax recovery of $ 26.1 million related to the impairment of assets and restructuring costs.

Please refer to Note 10.

Property and Equipment and Note 9.

Impairment of Goodwill and Other Assets, Restructuring Costs for further information.

Impairment of Assets and Restructuring Costs for further information.

As of February 1, 2026, the Company's net investment in its Canadian subsidiaries was $ 3.3 billion, of which $ 1.6 billion was determined to be indefinitely reinvested.

A deferred income tax liability of $ 107.0 million has been recognized in relation to the portion of the Company's net investment in its Canadian subsidiaries that is not indefinitely reinvested, representing the Canadian withholding taxes and U.S.

A deferred income tax liability of $ 80.7 million has been recognized in relation to the portion of the Company's net investment in its Canadian and Hong Kong SAR subsidiaries that is not indefinitely reinvested, representing the Canadian withholding taxes and U.S.

state income taxes which would be due upon repatriation.

2 unchanged sentences

The unrecognized deferred income tax liability on the indefinitely reinvested amount is approximately $ 89.1 million.

No deferred income tax liabilities have been recognized on any of the undistributed earnings of the Company's other foreign subsidiaries as these earnings are permanently reinvested outside of the United States.

Excluding its Canadian subsidiaries, cumulative undistributed earnings of the Company's foreign subsidiaries as of February 2, 2025 were $ 599.1 million.

As of February 2, 2025, the Company had cash and cash equivalents of $ 1.3 billion outside of the United States.

A summary reconciliation of the effective tax rate is as follows:

As of February 1, 2026, the Company had cash and cash equivalents of $ 935.1 million outside of the United States.

The reconciliation of the federal statutory income tax rate to the Company's effective tax rate was as follows:

2025 2024 2023

Amount Percent Amount Percent Amount Percent

(In thousands, except percentages)

Federal income tax at statutory rate $ 470,183 21.0 % $ 540,976 21.0 % $ 456,904 21.0 %

Foreign tax rate differentials 4.3 4.1 6.8

state taxes 0.9 1.0 ( 0.4 )

Non-deductible compensation expense 0.5 0.6 0.7

Excess tax benefits from stock-based compensation ( 0.1 ) ( 0.4 ) ( 0.5 )

Tax on unremitted foreign earnings 2.6 2.6 1.4

Impairment of goodwill and other assets, gain on disposal of assets — — 7.8

Permanent and other 0.4 ( 0.1 ) ( 0.9 )

Domestic federal reconciling items:

Tax credits ( 4,746 ) ( 0.2 ) ( 5,923 ) ( 0.2 ) ( 5,289 ) ( 0.2 )

Nontaxable or nondeductible items 2,309 0.1 3,891 0.2 4,207 0.2

Effect of cross-border tax laws ( 9,251 ) ( 0.4 ) 2,004 0.1 1,970 0.1

Changes in valuation allowances 9,513 0.4 5,769 0.2 — —

( 28,629 ) ( 1.3 ) ( 6,155 ) ( 0.2 ) ( 8,913 ) ( 0.4 )

State and local income tax, net of federal income tax effect

State income taxes (2)

31,269 1.4 27,802 1.1 20,280 0.9

Other 7,420 0.3 8,098 0.3 4,793 0.2

Foreign tax effects

Foreign tax rate differential ( 74,710 ) ( 3.3 ) ( 117,327 ) ( 4.6 ) ( 82,994 ) ( 3.8 )

Provincial local taxes (3)

152,044 6.8 235,159 9.1 167,333 7.7

Tax on unremitted earnings, net 50,881 2.3 58,835 2.3 52,498 2.4

Other 10,987 0.5 5,284 0.2 4,877 0.2

China Mainland

Nontaxable or nondeductible items 25,987 1.2 8,776 0.3 ( 733 ) —

Other 10,996 0.5 4,588 0.2 4,332 0.2

Other foreign jurisdictions 5,531 0.2 ( 10,316 ) ( 0.4 ) 6,280 0.3

Effective tax rate $ 659,784 29.5 % $ 761,461 29.6 % $ 625,545 28.8 %

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities as of February 2, 2025 and January 28, 2024 are presented below:

February 2, 2025 January 28, 2024

(1) The other category within domestic federal reconciling items is comprised of individually insignificant items.

For 2025, it primarily relates to tax benefits related to foreign exchange losses.

(2) California, New York, Florida, Illinois, New Jersey, Pennsylvania, Massachusetts, and Minnesota made up the majority (greater than 50%) of this category for each of 2025, 2024, and 2023.

(3) British Columbia makes up the majority (greater than 50%) of this category for each of 2025, 2024, and 2023.

Cash paid for income taxes, net of refunds, was as follows:

2025 2024 2023

(In thousands)

$ 183,977 $ 133,064 $ 126,980

44,106 46,438 57,073

228,083 179,502 184,053

682,486 339,446 578,385

China Mainland

64,034 34,966 23,092

40,841 25,264 38,683

787,361 399,676 640,160

Cash paid for income taxes, net of refunds

$ 1,015,444 $ 579,178 $ 824,213

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:

February 1, 2026 February 2, 2025

(In thousands)

Deferred income tax assets:

Net operating loss carryforwards $ 2,174 $ 2,385

Inventories $ 32,630 $ 33,801

Accrued bonuses 9,376 19,075

Unredeemed gift card liability 21,163 18,956

1 unchanged sentence

Research and experimental expenditures 77,869 71,579

Foreign-derived intangible income ("FDII") 43,369 —

Foreign tax credits 15,282 5,769

Stock-based compensation 14,738 20,883

Net operating loss carryforwards

Other 30,684 26,022

15 unchanged sentences

The majority of the net operating loss carryforwards expire, if unused, between fiscal 2030 and fiscal 2045.

There was a $ 5.6 million net increase in the valuation allowance in 2024, compared to a $ 1.6 million net increase in 2023, and a $ 2.1 million net decrease in 2022.

The Company files income tax returns in the U.S., Canada, and various foreign and state jurisdictions.

There was a $ 9.6 million net increase in the valuation allowance in 2025, compared to a $ 5.6 million net increase in 2024, and a $ 1.6 million net increase in 2023.

The Company files income tax returns in the U.S., Canada, China Mainland, and various foreign and state jurisdictions.

The 2022 to 2024 tax years remain subject to examination by the U.S.

18 unchanged sentences

For 2025, 2024, and 2023, 127.7 thousand, 64.2 thousand, and 62.7 thousand stock options and awards, respectively, were anti-dilutive to earnings per share and therefore have been excluded from the computation of diluted earnings per share.

On January 31, 2019, the Company's board of directors approved a stock repurchase program for up to $ 500.0 million of the Company's common shares.

On December 1, 2020, it approved an increase in the remaining authorization from $ 263.6 million to $ 500.0 million, and on October 1, 2021, it approved an increase in the remaining authorization from $ 141.2 million to $ 641.2 million.

During the first quarter of 2022, the Company completed the remaining stock repurchases under this program.

On March 23, 2022, the Company's board of directors approved a stock repurchase program for up to $ 1.0 billion of the Company's common shares on the open market or in privately negotiated transactions.

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 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.

On each of May 29, 2024 and December 3, 2024, the Company's board of directors approved an additional increase of $ 1.0 billion 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.

Common shares repurchased on the open market are at prevailing market prices, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934.

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 February 2, 2025, the remaining authorized value was $ 1.6 billion.

During 2024, 2023, and 2022, 5.1 million, 1.5 million, and 1.4 million shares, respectively, were repurchased under the programs at a total cost including commissions and excise taxes of $ 1.6 billion, $ 558.7 million, and $ 444.0 million, respectively.

On March 23, 2022, the Company's board of directors approved a stock repurchase program authorizing up to $ 1.0 billion of common shares, which was fully utilized during the first quarter of 2024.

Subsequently, the board of directors approved a new repurchase program authorizing up to $ 4.0 billion in aggregate, including $ 1.0 billion initially authorized on November 29, 2023, and additional $ 1.0 billion increases on May 29, 2024, December 3, 2024, and December 3, 2025 .

This program does not have an expiration date or require a minimum number of shares to be repurchased.

Repurchases may be made on the open market at prevailing prices or through privately negotiated transactions, including under plans pursuant to Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934.

The timing and amount of repurchases will depend on market conditions, trading eligibility, and other factors.

As of February 1, 2026, the remaining authorized amount available under the program, excluding commissions and excise taxes, was $ 1.4 billion.

During 2025, 2024, and 2023, 5.0 million, 5.1 million, and 1.5 million shares, respectively, were repurchased under the programs at a total cost including commissions and excise taxes of $ 1.2 billion, $ 1.6 billion, and $ 558.7 million, respectively.

Subsequent to February 1, 2026, and up to March 11, 2026, 0.9 million shares were repurchased at a total cost including commissions and excise taxes of $ 159.6 million.

6 unchanged sentences

Under these arrangements, the Company supplies the partners with lululemon products, training, and other support.

As of February 2, 2025, there were 34 licensed locations, including ten in the United Arab Emirates, eight in Saudi Arabia, seven in Israel, four in Qatar, four in Kuwait, and one in Bahrain.

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

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

As of February 1, 2026, there were 45 licensed locations, including 13 in the United Arab Emirates, nine in Saudi Arabia, eight in Israel, four in Kuwait, four in Qatar, three in Turkey, two in Belgium, one in Bahrain, and one in Denmark.

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.

Please refer to Note 7.

3 unchanged sentences

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.

The Company believes the ultimate resolution of any such legal proceedings, audits, and inspections will not have a material adverse effect on its consolidated balance sheets, results of operations or cash flows.

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.

The Company believes the ultimate resolution of any such legal proceedings, audits, and inspections is not reasonably likely to have a material adverse effect on its consolidated balance sheets, results of operations or cash flows;

however, litigation and regulatory matters are inherently uncertain, and it is possible that an adverse outcome in one or more matters could have a material impact in a particular reporting period.

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

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.

On September 16, 2024, plaintiffs filed an amended complaint, asserting claims under the Florida Deceptive and Unfair Trade Practices Act, New York General Business Law, California Consumer Legal Remedies Act, California Unfair Competition Law, 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 amended complaint seeks monetary damages, as well as non-monetary relief such as an injunction to end the alleged unlawful practices.

lululemon moved to dismiss the amended complaint, and on February 19, 2025, the Court granted lululemon's motion in full, dismissing the action without prejudice and without leave to amend.

On August 8, 2024, lululemon athletica inc.

4 unchanged sentences

The amended complaint currently seeks unspecified monetary damages.

On May 19, 2025, defendants moved to dismiss the amended complaint.

The Company intends to defend the action vigorously.

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:

Since November 4, 2024, six stockholder derivative complaints have been filed in the United States Court for the Southern District of New York:

McDonald et al.

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

1:24-cv-08405;

McDonald et al.

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

1:24-cv-08507;

McDonald et al.

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

1:24-cv-08572;

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 "IDEA" 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.

Supplemental Cash Flow Information

1:24-cv-08752;

McDonald et al.

1:24-cv-08839;

and Wasserman v.

McDonald et al.

1:25-cv-02793 (collectively, the "Derivative Actions.").

The complaints in the Derivative Actions are generally based on the same allegations alleged in the securities action complaint and assert claims against certain of the Company’s current and former directors and officers for, among other things, alleged breaches of fiduciary duty and violations of Sections 10(b), 14(a), and 20(a) of the Exchange Act.

Certain of the Derivative Actions also assert claims based on alleged false and misleading statements during the period October 28, 2020 to April 25, 2024 relating to the Company’s "IDEA" program.

The complaints seek, among other things, monetary damages and equitable relief on behalf of the Company, as well as an award of attorneys’ fees and costs.

On May 15, 2025, plaintiff in Bhavsar v.

McDonald et al.

voluntarily dismissed the complaint and that action has been terminated.

On August 1, 2025, the Derivative Actions were consolidated for all purposes under the caption In re lululemon athletica inc.

Stockholder Derivative Litigation , Master File No.

1:24-cv-08507.

The Derivative Actions are stayed pending a ruling on the motion to dismiss the securities class action.

On February 20, 2026, the U.S.

Supreme Court invalidated tariffs imposed under the International Emergency Economic Power Act (the "IEEPA").

Immediately following this IEEPA decision, the U.S.

Administration initiated new tariffs at different rates under alternative legislative powers.

Administration also confirmed that the IEEPA decision does not impact the removal of the de minimis exemption.

The IEEPA decision did not address the processes that will govern refund claims, and the timing of any potential refunds, and the ultimate amounts, if any, that we may recover remains uncertain.

Supplementary Financial Information

Certain supplementary cash flow information follows:

2025 2024 2023

(In thousands)

Cash paid for income taxes $ 579,178 $ 824,213 $ 502,136

Cash paid for amounts included in the measurement of lease liabilities $ 406,046 $ 378,250 $ 288,934

1 unchanged sentence

Interest paid 1,028 478 234

A summary of certain costs included within selling, general and administrative expenses follows:

2025 2024 2023

(In thousands)

Distribution costs

$ 359,732 $ 348,957 $ 374,170

Advertising expenses

617,525 541,488 429,681

Segmented Information

The Company's segments are based on the financial information the CODM, who is the Chief Executive Officer, uses to evaluate performance and allocate resources.

The CODM approves the annual budget on a segment level, and regularly assesses the performance of the Company's segments using key financial metrics, including net revenue and segmented income from operations.

The Company reports three segments:

Americas, China Mainland, and Rest of World, which is comprised of its non-significant operating segments APAC and EMEA reported on a combined basis.

Americas, China Mainland, and Rest of World, which is comprised of its non-

significant operating segments APAC and EMEA reported on a combined basis.

The Company's segments are based on the financial information the Chief Operating Decision Maker ("CODM") uses to evaluate performance and allocate resources.

Effective January 31, 2026, the Company's chief executive officer ("CEO") stepped down, and the Company's chief financial officer and its president and chief commercial officer were appointed as interim co-CEOs.

The CODM of the Company during 2025 was the CEO, and during the interim period, the interim co-CEOs are the Company's CODM.

The Company does not report capital expenditures and assets by segment as that information is not reviewed by the CODM.

The following outlines segmented information:

China Mainland

27 unchanged sentences

Selling, general and administrative expenses 1,934,649 328,868 401,245 2,664,762 1,097,617 3,762,379

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

Amortization of intangible assets — — — — 2,735 2,735

16 unchanged sentences

Selling, general and administrative expenses 1,834,163 230,645 333,505 2,398,313 998,905 3,397,218

Impairment of goodwill and other assets — — — — 407,913 407,913

Impairment of assets — — — — 74,501 74,501

Amortization of intangible assets — — — — 5,010 5,010

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

Income from operations $ 2,937,184 $ 337,316 $ 201,832 $ 3,476,332 $ ( 1,343,656 ) $ 2,132,676

6 unchanged sentences

Administrative corporate expenses include technology, brand and marketing, finance, human resources, legal, and other head office costs.

An inventory obsolescence provision in relation to lululemon Studio of $ 23.7 million and $ 62.9 million in 2023 and 2022, respectively, is included within product costs.

An inventory obsolescence provision in relation to lululemon Studio of $ 23.7 million in 2023 is included within product costs.

(2) Please refer to Note 2.

1 unchanged sentence

(3) The amounts of depreciation and amortization disclosed by reportable segment are included within other cost of sales and selling, general and administrative expenses.

Long-lived assets, including property and equipment, net and right-of-use lease assets, by geographic area as of February 2, 2025 and January 28, 2024 were as follows:

February 2, 2025 January 28, 2024

(In thousands)

United States $ 1,788,554 $ 1,597,318

Canada 675,048 671,622

People's Republic of China 326,621 284,575

Other geographic areas 406,650 257,906

$ 3,196,873 $ 2,811,421

Disaggregated Net Revenue

In addition to the disaggregation of net revenue by reportable segment in Note 23.

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

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.

2024 2023 2022

Long-lived assets, including property and equipment, net and right-of-use lease assets, by geographic area were as follows:

February 1, 2026 February 2, 2025

(In thousands)

1 unchanged sentence

Canada 802,444 675,048

Mexico 33,300 — —

Americas 7,928,156 7,631,647 6,817,454

China Mainland 1,361,337 963,760 576,503

Hong Kong SAR, Taiwan, and Macau SAR

180,092 170,533 105,130

People's Republic of China 400,902 326,621

1 unchanged sentence

$ 3,663,901 $ 3,196,873

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

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

2024 2023 2022

(In thousands)

Women's product $ 6,692,630 $ 6,147,372 $ 5,259,803

Men's product 2,558,380 2,252,753 1,956,602

Other categories 1,337,116 1,219,153 894,113

$ 10,588,126 $ 9,619,278 $ 8,110,518

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

2024 2023 2022

(In thousands)

Company-operated stores $ 5,007,872 $ 4,410,956 $ 3,648,127

E-commerce 4,570,446 4,311,110 3,699,791

Other channels 1,009,808 897,212 762,600

$ 10,588,126 $ 9,619,278 $ 8,110,518

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-K

Item 8. Financial Statements and Supplementary Data