You are the best interview consultant. For the job description below, suggest how will the best candidate, by best candidate, I mean the recruiter and hiring manager for sure this is the only person they want to hire, be like? Describe this person as detailed as possible, and your answer must be thoroughly thought through and must be true.
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Project Manager, Global Distribution Technology
Vancouver, BC · 2 weeks ago · Over 100 applicants
Hybrid
Full-time
Job activity
Go to company site
Applied on company site
1 week ago
About the job
Requirements
Description & Requirements
Project Manager - Global Distribution Technology
Who We Are
Lululemon is an innovative performance apparel company for yoga, running, training, and other athletic pursuits. Setting the bar in technical fabrics and functional design, we create transformational products and experiences that support people in moving, growing, connecting, and being well. We owe our success to our innovative product, emphasis on stores, commitment to our people, and the incredible connections we make in every community we're in. As a company, we focus on creating positive change to build a healthier, thriving future. In particular, that includes creating an equitable, inclusive and growth-focused environment for our people.
About This Team
The Global Distribution Technology teams are committed to unlocking business potential with our Global Fulfillment and broader Supply Chain partners. Supporting both vendor and proprietary systems, the teams provide solutions to enable our partners in streamlining the lifecycle of product movement from our manufacturers to our distribution centers (DCs), and from our DCs to our stores and guests.
A day in the life
Manage one or multiple concurrent projects within the Global Distributions Technology org and Removes project impediments that boost team productivity and performance.
Support cross functional efforts.
Facilitates communication between roles for every aspect of the project.
Responsible for keeping release/project information consolidated, organized and up to date.
Coaches the team in cross-functionality.
Create and manage overall cross functional project plan and execution (SOS)
Project Schedule (with PdM inputs/prioritization)
In partnership with PdM, submit Cross functional Intake Requests, as needed.
Confirm all Technical cross functional Resources available.
Confirm QA Plan/Schedule
Facilitate cutover planning, Go/No Go decision and post go live support plan.
Communication Plan
Overall Project Status / Escalation to Stakeholders
Ensures Scrum is used properly and consistently within the project.
Facilitates Scrum events (Sprint Planning, DSU, Sprint Review, Retrospective). and ensures they are productive.
Facilitates the team events.
Capacity planning of scrum teams.
Scrum evangelist. Makes sure that Scrum is properly and consistently used in their team.
Coaches the team in self-management and cross-functionality.
Escalates issues and risks to the Tech Manager.
Provides capacity and insight for recruiting requirements.
Supports quarterly planning and capacity planning.
Supports onboarding for the new team members (onboarding to the program, project tools and access).
Supports the Product Owner.
Facilitates and actively participates in program events (Quarterly planning, PO Sync, Scrum of Scrum, System Demo, Inspect & Adapt)
Weekly Project Status Reports.
Creates and delivers workstream reports for business and IT stakeholders.
Responsibilities
Project Planning and Execution: Support the development and implementation of comprehensive integration plans. Manage timelines, resources, and scheduling to ensure smooth execution across various business and functional teams.
Monitoring and Risk Management: Continuously track project progress, pinpoint potential interdependencies, and proactively identify risks. Implement mitigation strategies to overcome challenges without disrupting the project flow.
Facilitate Cross-functional Collaboration: Act as a pivotal coordinator among diverse functional teams, ensuring robust communication and effective resolution of interdependencies. In this role, you will not only foster a spirit of collaboration and unity but also ensure that each department achieves its specific objectives and exhibits excellence in its area of expertise. This strategic alignment will be crucial in realizing the overarching goals of the integration efforts.
Support Growth Strategy: Align integration efforts with the company's broader growth objectives. Contribute to strategic discussions and decisions that will shape the future of our integrated business landscape.
Skills And Qualifications
Bachelor’s degree or Equivalent experience in business or related field; Project Management certification preferred.
3-5 years of experience in project management, preferably with exposure to mergers and acquisitions, corporate integrations, or similar complex projects.
1-2 years large scale project management experience with proven success.
Requires a solid foundation in project management principles and practices.
Strong organizational and leadership skills with a track record of guiding project teams to achieve business goals.
Demonstrated expertise in managing and delivering complex projects successfully
Advance coordination skills to manage multiple project elements effectively
Keen understanding and savvy application of project management methodologies.
Proficient in project management protocol, software, and tools.
Proficient in applying project management techniques to streamline processes and deliver results.
Cross-functional collaboration; comfortable working in diverse, large-scale collaborative teams.
Strong verbal & written communication.
Organization & attention to detail.
Must haves
Acknowledge the presence of choice in every moment and take personal responsibility for your life.
Possess an entrepreneurial spirit and continuously innovate to achieve great results.
Communicate with honesty and kindness and create the space for others to do the same.
Lead with courage, knowing the possibility of greatness is bigger than the fear of failure.
Foster connection by putting people first and building trusting relationships.
Integrate fun and joy as a way of being and working, aka doesn’t take yourself too seriously
Compensation And Benefits Package
lululemon’s compensation offerings are grounded in a pay-for-performance philosophy that recognizes exceptional individual and team performance. The typical hiring range for this position is from  $105,800-$138,800 annually; the base pay offered is based on market location and may vary depending on job-related knowledge, skills, experience, and internal equity. As part of our total rewards offering, permanent employees in this position may be eligible for our competitive annual bonus program, subject to program eligibility requirements.
At Lululemon, Investing In Our People Is a Top Priority. We Believe That When Life Works, Work Works. We Strive To Be The Place Where Inclusive Leaders Come To Develop And Enable All To Be Well. Recognizing Our Teams For Their Performance And Dedication, Other Components Of Our Total Rewards Offerings Include Support Of Career Development, Wellbeing, And Personal Growth
Extended health and dental benefits, and mental health plans
Paid time off
Savings and retirement plan matching
Generous employee discount
Fitness & yoga classes
Parenthood top-up
Extensive catalog of development course offerings
People networks, mentorship programs, and leadership series (to name a few)
Note: The incentive programs, benefits, and perks have certain eligibility requirements. The Company reserves the right to alter these incentive programs, benefits, and perks in whole or in part at any time without advance notice.
workplace arrangement
This role is classified as Hybrid under our SSC Workplace Policy:
Hybrid
In-person collaboration is important, and much of the role can be performed remotely. Work is performed onsite at least 3 days per week.
Ideal Candidate Profile: Project Manager, Global Distribution Technology at lululemon
Personal and Professional Attributes
1. Educational Background and Certifications
o	Degree: Holds a Bachelor’s degree in Business, Information Technology, Supply Chain Management, or a related field.
o	Certification: Certified Project Management Professional (PMP) or Certified ScrumMaster (CSM), demonstrating a solid foundation in project management methodologies.
2. Extensive Project Management Experience
o	Years of Experience: 5+ years in project management, with at least 2 years handling large-scale projects in a global distribution or supply chain environment.
o	Complex Projects: Proven track record managing complex projects, particularly those involving mergers and acquisitions or corporate integrations, aligning with lululemon’s need for managing multifaceted initiatives within Global Distribution Technology.
o	Agile Expertise: Deep understanding and practical application of Agile methodologies, particularly Scrum, ensuring efficient facilitation of sprint planning, daily stand-ups, sprint reviews, and retrospectives.
3. Technical Proficiency
o	Tools and Software: Proficient in project management tools such as Jira, Asana, MS Project, or similar platforms, enabling seamless project tracking and reporting.
o	Systems Integration: Experience with vendor and proprietary systems used in supply chain and distribution centers, facilitating effective communication and integration between diverse technological platforms.
4. Leadership and Organizational Skills
o	Team Leadership: Demonstrated ability to lead cross-functional teams, fostering collaboration and ensuring that team members are motivated and aligned with project goals.
o	Organizational Skills: Exceptional organizational abilities, capable of managing multiple concurrent projects, prioritizing tasks, and maintaining meticulous attention to detail to ensure all project elements are executed flawlessly.
o	Risk Management: Skilled in identifying potential risks and implementing proactive mitigation strategies to keep projects on track and within scope.
5. Communication and Interpersonal Skills
o	Verbal and Written Communication: Excellent communicator, able to articulate project objectives, progress, and challenges clearly to stakeholders at all levels, from team members to senior leadership.
o	Stakeholder Management: Adept at managing and aligning various stakeholders’ expectations, ensuring transparent and consistent communication throughout the project lifecycle.
o	Conflict Resolution: Proficient in resolving conflicts and removing impediments, maintaining a positive and productive team environment.
6. Cultural Fit and Personal Values
o	Alignment with lululemon Values: Embodies lululemon’s core values, such as honesty, kindness, courage, and a commitment to personal and professional growth.
o	Entrepreneurial Spirit: Possesses a proactive, innovative mindset, continuously seeking ways to improve processes and achieve outstanding results.
o	Inclusivity and Collaboration: Values diversity and inclusivity, fostering an environment where all team members feel respected and empowered to contribute their best.
7. Adaptability and Resilience
o	Flexibility: Comfortable working in a hybrid environment, balancing in-person collaboration with remote work, and adaptable to changing project requirements and priorities.
o	Resilience: Maintains composure under pressure, effectively managing stress and setbacks while keeping the team focused and motivated.
Specific Qualifications and Experiences
1. Relevant Project Experience
o	Global Distribution: Experience managing projects within global distribution networks, understanding the complexities of coordinating across different geographic locations and time zones.
o	Supply Chain Integration: Involvement in projects that streamline product movement from manufacturers to distribution centers and ultimately to stores and customers, aligning with lululemon’s operational needs.
2. Technical and Methodological Expertise
o	Scrum Mastery: Proven ability to serve as a Scrum Master, ensuring the team adheres to Agile principles and optimizing the Scrum process for maximum productivity and efficiency.
o	Capacity Planning: Expertise in capacity planning for Scrum teams, ensuring that resource allocation aligns with project demands and timelines.
3. Strategic Contribution
o	Growth Alignment: Actively contributes to lululemon’s growth strategy by aligning project outcomes with the company’s broader objectives, ensuring that integration efforts support long-term business goals.
o	Continuous Improvement: Advocates for and implements continuous improvement practices, leveraging feedback from retrospectives to enhance team performance and project delivery.
Behavioral Traits and Soft Skills
1. Leadership with Empathy
o	Empathetic Leadership: Leads with empathy, understanding team members’ unique strengths and challenges, and providing support to help them succeed.
o	Inspirational Influence: Inspires and motivates the team through a clear vision and by setting a positive example, fostering a culture of excellence and accountability.
2. Problem-Solving Orientation
o	Proactive Problem Solver: Anticipates potential issues and addresses them proactively, minimizing disruptions and maintaining project momentum.
o	Analytical Thinking: Utilizes strong analytical skills to assess project data, identify trends, and make informed decisions that drive project success.
3. Commitment to Personal Growth and Well-being
o	Continuous Learner: Demonstrates a commitment to personal and professional development, staying current with industry trends and emerging project management practices.
o	Work-Life Balance Advocate: Understands the importance of work-life balance, promoting a healthy and sustainable work environment for themselves and their team.
Cultural and Organizational Fit
1. Embodiment of lululemon’s Ethos
o	Health and Well-being Focused: Shares lululemon’s dedication to promoting health, wellness, and personal growth, integrating these values into their work and interactions.
o	Community Engagement: Engages with and contributes to the community, aligning with lululemon’s commitment to building strong connections in every community they operate in.
2. Joy and Positivity
o	Positive Attitude: Brings a sense of joy and positivity to the workplace, fostering an environment where colleagues enjoy working together and take pride in their accomplishments.
o	Balanced Approach: Balances professionalism with the ability to have fun, ensuring a dynamic and engaging work atmosphere without compromising on productivity or results.
Conclusion
The ideal candidate for the Project Manager, Global Distribution Technology position at lululemon is a seasoned project management professional with a robust background in managing large-scale, complex projects within global distribution and supply chain environments. They possess a blend of technical proficiency, strategic insight, and exceptional leadership and communication skills. More than just meeting the technical requirements, they embody lululemon’s values of honesty, kindness, courage, and a commitment to fostering a positive, inclusive, and growth-focused workplace. Their entrepreneurial spirit, coupled with a proactive and resilient mindset, ensures they not only manage projects effectively but also drive continuous improvement and innovation within the organization. This candidate is not just a fit on paper but a cultural match who will seamlessly integrate into lululemon’s mission of creating transformational products and experiences that support a thriving, healthy future.
If I have to prepare the interview the show them I am the only ideal candidate they want, what should i do to get prepared for the interview?
Preparing for an interview to position yourself as the only ideal candidate for the Project Manager, Global Distribution Technology role at lululemon requires a strategic and comprehensive approach. Below is a detailed guide to help you demonstrate that you are the perfect fit for this position.
 
1. Deeply Understand the Job Description and Requirements
a. Analyze Each Requirement:
o	Responsibilities: Project planning, execution, monitoring, risk management, cross-functional collaboration, supporting growth strategy.
o	Skills and Qualifications: Project management experience, Agile/Scrum expertise, technical proficiency, leadership, communication.
o	Cultural Fit: Entrepreneurial spirit, honesty, kindness, courage, fostering connections, integrating fun.
b. Identify Key Competencies:
o	Ability to manage complex, large-scale projects.
o	Expertise in Agile methodologies, particularly Scrum.
o	Strong leadership and organizational skills.
o	Excellent communication and interpersonal abilities.
o	Alignment with lululemon’s values and culture.
 
2. Research lululemon’s Culture and Values
a. Understand Their Mission and Vision:
o	Focus on innovative performance apparel.
o	Commitment to creating positive change and building a healthy, thriving future.
o	Emphasis on inclusivity, equity, and personal growth.
b. Explore Their Work Environment:
o	Hybrid work model emphasizing both remote and in-person collaboration.
o	Investment in employee well-being, development, and engagement.
c. Familiarize Yourself with Recent News and Initiatives:
o	Stay updated on lululemon’s latest projects, product launches, and community engagements.
o	Understand their technological advancements in global distribution and supply chain.
 
3. Reflect on Your Experience and Skills
a. Match Your Background to the Job Requirements:
o	Highlight your 3-5 years of project management experience, especially in global distribution or supply chain environments.
o	Emphasize Agile/Scrum expertise and any certifications like PMP or CSM.
b. Showcase Relevant Achievements:
o	Provide examples where you successfully managed complex, large-scale projects.
o	Demonstrate your ability to streamline processes and facilitate cross-functional collaboration.
c. Prepare to Demonstrate Technical Proficiency:
o	Be ready to discuss your experience with project management tools (e.g., Jira, Asana, MS Project).
o	Explain your involvement with vendor and proprietary systems in supply chain contexts.
 
4. Prepare Your STAR Stories (Situation, Task, Action, Result)
a. Select Relevant Experiences:
o	Project Planning and Execution: Describe a project where you developed and implemented a comprehensive integration plan.
o	Monitoring and Risk Management: Share an instance where you identified and mitigated significant project risks.
o	Cross-functional Collaboration: Provide examples of how you coordinated among diverse teams to achieve project goals.
o	Leadership and Team Management: Highlight how you led teams, resolved conflicts, or boosted team productivity.
b. Structure Your Responses:
o	Situation: Briefly set the context.
o	Task: Explain your responsibility.
o	Action: Detail the steps you took.
o	Result: Share the outcomes, ideally quantifiable.
 
5. Demonstrate Technical and Methodological Expertise
a. Agile and Scrum Mastery:
o	Discuss your experience facilitating Scrum events (Sprint Planning, Daily Stand-Ups, Reviews, Retrospectives).
o	Share how you coached teams in Agile practices and self-management.
b. Project Management Tools Proficiency:
o	Provide examples of how you used tools like Jira or Asana to track project progress and manage tasks.
o	Explain your approach to maintaining organized and up-to-date project information.
c. Systems Integration Experience:
o	Talk about projects where you integrated vendor and proprietary systems within a supply chain framework.
o	Highlight any challenges faced and how you overcame them.
 
6. Align with lululemon’s Values and Cultural Expectations
a. Exhibit Core Values:
o	Honesty and Kindness: Demonstrate integrity in your actions and communication.
o	Courage: Share times when you took the initiative or faced challenges fearlessly.
o	Fostering Connection: Highlight your ability to build and maintain trusting relationships within teams and across departments.
o	Integrating Fun: Provide examples of how you created a positive and enjoyable work environment without sacrificing productivity.
b. Showcase an Entrepreneurial Spirit:
o	Discuss innovative solutions you’ve implemented in previous roles.
o	Show your willingness to take ownership and drive projects that align with business growth.
c. Emphasize Inclusivity and Collaboration:
o	Share experiences where you promoted diversity and inclusivity within your teams.
o	Highlight your ability to work effectively in diverse, large-scale collaborative settings.
 
7. Prepare Thoughtful Questions for Interviewers
a. Show Your Interest and Insight:
o	Project-Specific: “Can you share more about the current projects the Global Distribution Technology team is handling?”
o	Growth and Strategy: “How does this role contribute to lululemon’s long-term growth strategy?”
o	Team Dynamics: “Can you describe the team structure and the primary stakeholders I would be collaborating with?”
b. Demonstrate Forward-Thinking:
o	Innovation: “What opportunities are there for introducing new project management methodologies or tools within the team?”
o	Challenges: “What are the biggest challenges the Global Distribution Technology team is currently facing, and how can I help address them?”
 
8. Hone Your Communication and Soft Skills
a. Articulate Clearly and Confidently:
o	Practice speaking about your experiences succinctly and confidently.
o	Ensure your explanations are clear, avoiding jargon unless necessary.
b. Show Active Listening:
o	Demonstrate attentiveness by listening carefully to questions and responding thoughtfully.
o	Engage with the interviewers by acknowledging their points and building on them.
c. Exhibit Professionalism and Enthusiasm:
o	Maintain a positive demeanor throughout the interview.
o	Express genuine enthusiasm for the role and for joining lululemon.
 
9. Prepare Logistically and Appearance-wise
a. Dress Appropriately:
o	lululemon has a focus on athletic and functional apparel, so opt for business casual with a touch of activewear if appropriate.
o	Ensure your attire is clean, well-fitted, and reflects professionalism while aligning with the company’s culture.
b. Plan for a Hybrid Setup:
o	If the interview is virtual, ensure a quiet, professional setting with good lighting and a reliable internet connection.
o	If in-person, plan your route to arrive on time, considering potential delays.
 
10. Follow Up After the Interview
a. Send a Thoughtful Thank-You Note:
o	Express gratitude for the opportunity to interview.
o	Reiterate your enthusiasm for the role and how your skills align with the position.
o	Mention a specific topic discussed during the interview to personalize your message.
b. Reflect on the Interview:
o	Assess what went well and identify areas for improvement.
o	Prepare to address any gaps or questions that arose during the interview in future communications.
 
Sample Preparation Plan
1.	Week Before the Interview:
o	Day 1-2: Deep dive into the job description, map your experiences to each requirement.
o	Day 3-4: Research lululemon’s culture, recent news, and initiatives.
o	Day 5: Prepare and practice your STAR stories relevant to the role.
o	Day 6: Review Agile/Scrum methodologies and your technical proficiencies.
o	Day 7: Conduct mock interviews with a friend or mentor, focusing on behavioral and technical questions.
2.	Day Before the Interview:
o	Finalize your research on lululemon.
o	Prepare your interview attire.
o	Organize necessary documents (resume, portfolio, certifications).
3.	Day of the Interview:
o	Ensure a healthy meal and adequate rest.
o	Arrive early if in-person, or set up your virtual space ahead of time.
o	Bring copies of your resume and a notepad for notes and questions.
 
Additional Tips
o	Be Authentic: While it's essential to align with lululemon’s values, ensure that your responses reflect your true self.
o	Quantify Achievements: Use numbers and metrics to demonstrate the impact of your past projects.
o	Stay Positive: Even when discussing challenges or failures, focus on what you learned and how you overcame them.
o	Showcase Continuous Learning: Highlight how you stay updated with industry trends and continuously improve your skills.
 
Common Interview Questions to Prepare For
1.	Behavioral Questions:
o	"Tell me about a time you managed a complex project with multiple stakeholders."
o	"How do you handle conflicts within your project team?"
o	"Describe a situation where you had to adapt to significant changes during a project."
2.	Technical Questions:
o	"How do you prioritize tasks in a multi-project environment?"
o	"Can you walk me through your experience with Agile methodologies?"
o	"What project management tools are you proficient in, and how have you used them effectively?"
3.	Cultural Fit Questions:
o	"How do you embody honesty and kindness in your professional interactions?"
o	"Give an example of how you have fostered a positive and inclusive team environment."
o	"How do you integrate fun and joy into your work without compromising on productivity?"
4.	Strategic and Scenario-Based Questions:
o	"How would you approach aligning a new project with lululemon’s growth strategy?"
o	"What steps would you take to ensure successful integration of a new system within our global distribution network?"
 
Conclusion
By meticulously preparing in these areas, you will be well-equipped to present yourself as the only ideal candidate for the Project Manager, Global Distribution Technology position at lululemon. Remember to showcase not only your technical skills and project management expertise but also your alignment with lululemon’s values and culture. Demonstrating a blend of proficiency, passion, and cultural fit will significantly enhance your chances of standing out as the top candidate they desire to hire.
Good luck!
Elaborate on
1.	Deeply Understand the Job Description and Requirements
a. Analyze Each Requirement:
Responsibilities: Project planning, execution, monitoring, risk management, cross-functional collaboration, supporting growth strategy.
Skills and Qualifications: Project management experience, Agile/Scrum expertise, technical proficiency, leadership, communication.
Cultural Fit: Entrepreneurial spirit, honesty, kindness, courage, fostering connections, integrating fun.
b. Identify Key Competencies:
Ability to manage complex, large-scale projects.
Expertise in Agile methodologies, particularly Scrum.
Strong leadership and organizational skills.
Excellent communication and interpersonal abilities.
Alignment with lululemon’s values and culture.
Certainly! Deeply understanding the job description and requirements is foundational to positioning yourself as the ideal candidate for the Project Manager, Global Distribution Technology role at lululemon. Let’s dive deeper into Point 1: Deeply Understand the Job Description and Requirements, breaking down each sub-section to provide you with actionable insights and strategies.
 
1. Deeply Understand the Job Description and Requirements
a. Analyze Each Requirement
To effectively analyze each requirement, break down the job description into its core components: Responsibilities, Skills and Qualifications, and Cultural Fit. This analysis helps you identify what the employer values most and how your background aligns with their needs.
 
1.a.i. Responsibilities
Key Responsibilities Identified:
o	Project Planning: Developing comprehensive project plans, defining scope, objectives, timelines, and resource allocation.
o	Execution: Implementing project plans, coordinating tasks, and ensuring milestones are met.
o	Monitoring: Tracking project progress, performance metrics, and adjusting plans as necessary.
o	Risk Management: Identifying potential risks, assessing their impact, and developing mitigation strategies.
o	Cross-functional Collaboration: Working with diverse teams across different departments (e.g., Supply Chain, IT, Operations) to achieve project goals.
o	Supporting Growth Strategy: Aligning project outcomes with the company’s broader growth objectives, contributing to strategic initiatives.
In-Depth Analysis:
1.	Project Planning and Execution:
o	What It Means: The ability to outline detailed project steps, allocate resources effectively, and drive the project from inception to completion.
o	What to Highlight: Showcase your experience in creating project timelines, setting achievable goals, and managing resources efficiently.
2.	Monitoring and Risk Management:
o	What It Means: Continuously overseeing project progress and proactively addressing potential issues.
o	What to Highlight: Provide examples where you successfully tracked project metrics and implemented risk mitigation strategies to keep projects on track.
3.	Cross-functional Collaboration:
o	What It Means: Engaging and coordinating with various departments to ensure seamless project integration and execution.
o	What to Highlight: Demonstrate your ability to work with diverse teams, facilitating communication and collaboration to achieve common objectives.
4.	Supporting Growth Strategy:
o	What It Means: Ensuring that projects contribute to the company’s long-term goals and strategic initiatives.
o	What to Highlight: Show how your projects have aligned with and supported organizational growth, enhancing business outcomes.
 
1.a.ii. Skills and Qualifications
Key Skills Identified:
o	Project Management Experience: Proven ability to oversee projects from start to finish.
o	Agile/Scrum Expertise: Proficiency in Agile methodologies, particularly Scrum, to manage project workflows.
o	Technical Proficiency: Familiarity with project management tools and relevant technologies.
o	Leadership: Ability to guide, motivate, and manage teams effectively.
o	Communication: Strong verbal and written communication skills to articulate project goals and updates clearly.
In-Depth Analysis:
1.	Project Management Experience:
o	What It Means: Hands-on experience in managing projects, understanding project lifecycles, and applying project management principles.
o	What to Highlight: Detail your previous project management roles, emphasizing successful project deliveries, methodologies used, and lessons learned.
2.	Agile/Scrum Expertise:
o	What It Means: Knowledge and practical application of Agile frameworks to enhance project flexibility and responsiveness.
o	What to Highlight: Discuss certifications (e.g., CSM - Certified ScrumMaster), your role in Scrum ceremonies (sprint planning, daily stand-ups), and how Agile practices improved project outcomes.
3.	Technical Proficiency:
o	What It Means: Competence in using project management software and understanding the technical aspects relevant to the role.
o	What to Highlight: List the tools you are proficient in (e.g., Jira, Asana, MS Project) and provide examples of how you utilized these tools to manage projects effectively.
4.	Leadership:
o	What It Means: Guiding teams towards achieving project goals, resolving conflicts, and fostering a collaborative environment.
o	What to Highlight: Share instances where your leadership directly influenced project success, such as mentoring team members or steering teams through challenging phases.
5.	Communication:
o	What It Means: Effectively conveying information, expectations, and feedback to stakeholders at all levels.
o	What to Highlight: Provide examples of successful stakeholder communications, presentations, or reports you’ve delivered that facilitated project progress.
 
1.a.iii. Cultural Fit
Key Cultural Attributes Identified:
o	Entrepreneurial Spirit: Initiative-taking, innovative thinking, and a proactive approach to problem-solving.
o	Honesty and Kindness: Transparent and considerate communication, building trust within teams.
o	Courage: Willingness to take risks and make tough decisions.
o	Fostering Connections: Building strong, trusting relationships within and outside the team.
o	Integrating Fun: Creating a positive and enjoyable work environment.
In-Depth Analysis:
1.	Entrepreneurial Spirit:
o	What It Means: Demonstrating creativity, initiative, and a drive to go beyond the status quo.
o	What to Highlight: Provide examples where you introduced innovative solutions or took the initiative to start new projects that benefited the organization.
2.	Honesty and Kindness:
o	What It Means: Maintaining integrity and showing empathy in interactions.
o	What to Highlight: Share stories where your honesty led to building trust or where you showed kindness in challenging situations, enhancing team morale.
3.	Courage:
o	What It Means: Facing challenges head-on and making difficult decisions when necessary.
o	What to Highlight: Describe instances where you took bold steps to steer a project in the right direction, even when it involved risks or unpopularity.
4.	Fostering Connections:
o	What It Means: Building and maintaining strong relationships that promote collaboration and mutual respect.
o	What to Highlight: Illustrate how you’ve successfully built networks within organizations, facilitated team bonding, or collaborated with external partners.
5.	Integrating Fun:
o	What It Means: Creating a work environment that balances productivity with enjoyment, enhancing team engagement.
o	What to Highlight: Talk about initiatives you’ve led to make the workplace more enjoyable, such as team-building activities, celebrating milestones, or introducing playful elements into work routines.
 
b. Identify Key Competencies
Once you’ve analyzed each requirement, the next step is to identify the key competencies that lululemon values for this role. These competencies are the backbone of what makes a candidate stand out as the ideal fit.
 
1.b.i. Ability to Manage Complex, Large-scale Projects
Competency Overview:
o	What It Encompasses: Handling multiple interconnected components, coordinating diverse resources, and delivering on extensive project mandates within global contexts.
How to Demonstrate:
o	Experience: Highlight specific projects where you managed complex deliverables, especially those involving multiple teams or international stakeholders.
o	Skills: Showcase your ability to deconstruct large projects into manageable tasks, delegate effectively, and monitor progress meticulously.
o	Outcomes: Provide measurable results, such as meeting tight deadlines, staying within budget, or achieving project goals that had significant business impact.
Example:
"In my previous role at XYZ Company, I led a global supply chain integration project that involved coordinating with teams across five countries. By implementing a detailed project plan and utilizing Agile methodologies, I ensured the project was completed two weeks ahead of schedule and 10% under budget, resulting in a 15% increase in operational efficiency."
 
2.bii. Expertise in Agile Methodologies, Particularly Scrum
Competency Overview:
o	What It Encompasses: Deep understanding and practical application of Agile principles, specifically Scrum, to enhance project flexibility, team collaboration, and iterative progress.
How to Demonstrate:
o	Certifications: Mention any relevant certifications (e.g., Certified ScrumMaster, PMI-Agile Certified Practitioner).
o	Practical Application: Describe how you’ve implemented Scrum practices, facilitated Scrum ceremonies, and coached teams to adopt Agile mindsets.
o	Improvements: Share specific improvements in team productivity, project delivery times, or quality of outcomes as a result of Agile practices you introduced or managed.
Example:
"As a Certified ScrumMaster, I guided my team through the transition from a traditional waterfall approach to Scrum. By facilitating regular sprint planning, daily stand-ups, and retrospectives, we improved our delivery speed by 25% and enhanced team morale and collaboration."
 
3.biii. Strong Leadership and Organizational Skills
Competency Overview:
o	What It Encompasses: Inspiring and guiding teams, managing resources efficiently, and maintaining structured and orderly project environments.
How to Demonstrate:
o	Leadership Experience: Highlight roles where you led teams, mentored junior members, or took charge of critical project phases.
o	Organizational Techniques: Discuss the systems and methods you use to keep projects organized, such as project management software, documentation practices, or regular status updates.
o	Impact: Provide examples of how your leadership and organizational skills directly contributed to successful project outcomes.
Example:
"In my role at ABC Corp, I led a team of 12 engineers and designers in developing a new distribution system. By implementing a rigorous organizational framework and holding weekly progress meetings, we delivered the project three weeks early, resulting in a 20% reduction in delivery times."
 
4.biv. Excellent Communication and Interpersonal Abilities
Competency Overview:
o	What It Encompasses: Effectively exchanging information, building relationships, and ensuring clear understanding among all project stakeholders.
How to Demonstrate:
o	Communication Skills: Showcase your ability to convey complex ideas clearly, tailor your communication style to different audiences, and provide concise updates.
o	Interpersonal Skills: Highlight your aptitude for building rapport, resolving conflicts, and fostering a collaborative team environment.
o	Stakeholder Management: Discuss how you manage expectations, provide regular updates, and engage stakeholders to maintain alignment and support.
Example:
"During a critical phase of a project at DEF Ltd., I coordinated between the IT department, vendors, and senior management. By establishing clear communication channels and holding bi-weekly stakeholder meetings, I ensured everyone was informed and aligned, which facilitated smooth project progression and swift resolution of issues."
 
5.bv. Alignment with lululemon’s Values and Culture
Competency Overview:
o	What It Encompasses: Demonstrating that your personal values and work style resonate with lululemon’s cultural pillars, such as entrepreneurial spirit, honesty, kindness, courage, fostering connections, and integrating fun.
How to Demonstrate:
o	Cultural Fit Examples: Provide specific instances where you embodied these values in your previous roles.
o	Value-Driven Actions: Show how your actions and decisions were guided by these values, contributing to a positive and inclusive work environment.
o	Personal Alignment: Reflect your genuine interest in lululemon’s mission and how your personal and professional goals align with their focus on health, wellness, and community.
Example:
"At my previous job, I initiated a wellness program that included weekly yoga sessions and mindfulness workshops, aligning with lululemon’s emphasis on health and well-being. This not only boosted team morale but also fostered a supportive and connected workplace culture."
 
Putting It All Together: Mapping Your Experience to Key Competencies
To effectively showcase that you are the only ideal candidate, create a clear mapping between your own experiences and the key competencies identified. Here's a step-by-step approach:
1.	Create a Competency Matrix:
o	List the Key Competencies on one axis and Your Relevant Experiences on the other.
o	Match Each Competency with specific examples from your professional background.
2.	Develop STAR Stories:
o	Situation: Describe the context within which you demonstrated the competency.
o	Task: Explain the specific challenge or responsibility you faced.
o	Action: Detail the steps you took to address the task.
o	Result: Highlight the outcomes, emphasizing quantifiable achievements when possible.
3.	Tailor Your Resume and Cover Letter:
o	Resume: Ensure your resume reflects these competencies through your work history, skills, and achievements sections.
o	Cover Letter: Narrate how your background aligns with lululemon’s requirements and cultural values, weaving in your STAR stories where appropriate.
4.	Prepare for Behavioral Interview Questions:
o	Anticipate questions that probe these competencies and rehearse your STAR responses.
o	Be ready to discuss not only what you did but also how you embody lululemon’s values in your day-to-day work.
 
Example Competency Matrix
Key Competency	Your Experience	Evidence/Example
Manage Complex, Large-scale Projects	Led a global supply chain integration project.	Coordinated teams across five countries, implemented a unified supply chain system, resulting in a 15% increase in efficiency.
Expertise in Agile/Scrum	Certified ScrumMaster, led Scrum transitions.	Facilitated Scrum ceremonies, improved sprint completion rates by 25%, and enhanced team collaboration.
Strong Leadership and Organizational Skills	Managed a team of 12 in developing a new distribution system.	Delivered the project three weeks early, reducing delivery times by 20%, and mentored junior team members, promoting a culture of continuous improvement.
Excellent Communication and Interpersonal Abilities	Coordinated between IT, vendors, and senior management.	Established clear communication channels, held bi-weekly stakeholder meetings, and resolved cross-departmental conflicts, ensuring project alignment and timely issue resolution.
Alignment with lululemon’s Values and Culture	Initiated a wellness program and fostered a positive work environment.	Launched weekly yoga sessions and mindfulness workshops, boosting team morale and aligning with lululemon’s focus on health and well-being.
 
Actionable Steps to Deepen Your Understanding
1.	Break Down the Job Description:
o	Highlight Key Terms: Use highlighters or digital tools to mark essential responsibilities, required skills, and cultural attributes.
o	Create Categories: Organize these highlights into Responsibilities, Skills & Qualifications, and Cultural Fit for easier analysis.
2.	Conduct a Self-Assessment:
o	Identify Matches: For each requirement, note how your experience aligns.
o	Highlight Gaps: Recognize areas where you might need to strengthen your knowledge or skills and develop strategies to address them (e.g., quick online courses, certifications).
3.	Research lululemon Thoroughly:
o	Company Values: Read lululemon’s mission statement, core values, and recent news to understand their priorities and culture.
o	Role-Specifics: Look for additional insights about the Global Distribution Technology team, their projects, and current challenges.
4.	Network with Current or Former Employees:
o	Gain Insights: Speak with individuals who have worked at lululemon or in similar roles to gather firsthand information about the company’s expectations and culture.
o	Ask Questions: Inquire about the team dynamics, project management practices, and what qualities make someone successful in the role.
5.	Prepare Personalized Examples:
o	Relate Your Experience: Ensure that your examples not only match the competencies but also reflect how they specifically relate to the role at lululemon.
o	Quantify Achievements: Wherever possible, use numbers and metrics to demonstrate the impact of your work (e.g., percentage improvements, cost savings, time reductions).
 
Final Thoughts
Thoroughly analyzing the job description and identifying key competencies are crucial steps in presenting yourself as the ideal candidate for the Project Manager role at lululemon. By meticulously mapping your skills, experiences, and values to the employer’s requirements, you create a compelling narrative that showcases not only your qualifications but also your alignment with the company’s culture and strategic goals.
Remember:
o	Be Specific: Vague statements are less impactful. Use detailed examples that clearly demonstrate your competencies.
o	Be Authentic: Ensure that your portrayal is genuine. Authenticity resonates well with interviewers and aligns with lululemon’s emphasis on honesty and kindness.
o	Be Prepared: Anticipate how each competency might be explored during the interview and prepare accordingly.
By following these elaborated steps, you’ll be well-equipped to demonstrate that you are not just a suitable candidate, but the only ideal candidate they want to hire for this role.
Elaborate on
2.	Research lululemon’s Culture and Values
a. Understand Their Mission and Vision:
Focus on innovative performance apparel.
Commitment to creating positive change and building a healthy, thriving future.
Emphasis on inclusivity, equity, and personal growth.
b. Explore Their Work Environment:
Hybrid work model emphasizing both remote and in-person collaboration.
Investment in employee well-being, development, and engagement.
c. Familiarize Yourself with Recent News and Initiatives:
Stay updated on lululemon’s latest projects, product launches, and community engagements.
Understand their technological advancements in global distribution and supply chain.
Absolutely! Researching lululemon’s culture and values is a critical step in preparing for your interview, as it allows you to align your experiences and behaviors with what the company prioritizes. Here’s an in-depth exploration of each sub-point under Point 2: Research lululemon’s Culture and Values to help you effectively prepare and demonstrate your fit for the Project Manager, Global Distribution Technology role.
 
2. Research lululemon’s Culture and Values
Understanding lululemon’s culture and values will enable you to present yourself as not only a skilled project manager but also as someone who resonates deeply with the company's ethos. Here’s how to delve into each aspect:
a. Understand Their Mission and Vision
i. Focus on Innovative Performance Apparel
o	What It Means:
o	lululemon is renowned for its high-quality, technically advanced athletic wear tailored for activities such as yoga, running, and training. Their focus is on continuous innovation in fabric technology and functional design to enhance performance and user experience.
o	How to Research:
o	Company Website and Product Pages: Explore lululemon’s official website, especially sections detailing their products. Pay attention to the materials used, design philosophies, and any innovative features highlighted.
o	Product Launches and Announcements: Review recent product launches to understand the latest innovations lululemon is bringing to the market.
o	Press Releases and News Articles: Search for articles discussing lululemon’s advancements in performance apparel technology.
o	How to Incorporate During Interview:
o	Demonstrate Knowledge: Mention specific products or technologies lululemon has introduced recently.
o	Connect to Your Experience: If you’ve worked on projects involving innovative product development or technology integration, highlight these experiences. For example:
“I was particularly impressed by lululemon’s recent launch of the [Product Name], which utilizes [specific technology]. In my previous role, I managed a project that involved integrating new fabric technologies into our supply chain systems, ensuring seamless distribution without compromising on quality.”
ii. Commitment to Creating Positive Change and Building a Healthy, Thriving Future
o	What It Means:
o	lululemon is dedicated to fostering positive change both within the company and in the broader community. This includes sustainability initiatives, community engagement, and promoting overall wellness.
o	How to Research:
o	Sustainability Reports: Look for lululemon’s sustainability or corporate social responsibility (CSR) reports to understand their commitments and achievements in these areas.
o	Community Programs: Investigate programs and partnerships lululemon supports, such as local fitness events, educational initiatives, or charitable activities.
o	Mission Statement: Review the company's mission and vision statements to grasp their overarching goals related to positive change and future growth.
o	How to Incorporate During Interview:
o	Align with Values: Discuss how your personal values align with lululemon’s commitment to positive change.
o	Provide Examples: Share specific instances where you contributed to positive change in your previous roles. For example:
“I admire lululemon’s dedication to sustainability, particularly the initiative to reduce carbon footprints across the supply chain. In my last project, I led an effort to implement eco-friendly packaging solutions, which decreased our environmental impact by 20%.”
iii. Emphasis on Inclusivity, Equity, and Personal Growth
o	What It Means:
o	lululemon prioritizes creating an inclusive and equitable workplace where every employee has opportunities for personal and professional development.
o	How to Research:
o	Diversity and Inclusion (D&I) Initiatives: Explore lululemon’s D&I programs, employee resource groups, and related events.
o	Career Development Programs: Investigate the training, mentorship, and development opportunities the company offers to its employees.
o	Employee Testimonials: Read testimonials or watch videos featuring current employees discussing their growth and experiences at lululemon.
o	How to Incorporate During Interview:
o	Highlight Your Commitment: Showcase your dedication to inclusivity and equity through your past actions and initiatives.
o	Demonstrate Growth Mindset: Share examples of how you’ve pursued personal and professional growth. For example:
“I’m impressed by lululemon’s focus on personal growth and inclusivity. At my previous company, I initiated a mentorship program that paired junior team members with senior leaders, fostering an inclusive environment and promoting career advancement for all participants.”
 
b. Explore Their Work Environment
i. Hybrid Work Model Emphasizing Both Remote and In-Person Collaboration
o	What It Means:
o	lululemon adopts a hybrid work model where employees split their time between remote work and in-person collaboration. This approach balances flexibility with the benefits of face-to-face interactions.
o	How to Research:
o	Company Announcements: Look for recent announcements or policy updates regarding their workplace arrangements.
o	Employee Insights: Platforms like Glassdoor or LinkedIn may have employee reviews and discussions about their hybrid work experiences.
o	Company Blog and Social Media: Check if lululemon has shared stories or updates about their hybrid model and how it operates.
o	How to Incorporate During Interview:
o	Show Adaptability: Demonstrate your ability to thrive in both remote and in-person settings.
o	Provide Examples: Discuss how you’ve successfully managed hybrid teams or adapted to flexible work environments. For example:
“I appreciate lululemon’s hybrid work model, which promotes both autonomy and collaboration. In my previous role, I led a team that operated under a similar hybrid structure, using tools like Zoom and Slack for remote communication while holding regular in-person meetings to strengthen team cohesion.”
ii. Investment in Employee Well-being, Development, and Engagement
o	What It Means:
o	lululemon places a high priority on the well-being of its employees, offering programs and resources that support physical, mental, and professional development.
o	How to Research:
o	Employee Benefits Information: Review the benefits section on lululemon’s career page to understand the offerings related to well-being and development.
o	Wellness Programs: Investigate specific wellness initiatives such as fitness classes, mental health support, or wellness workshops.
o	Development Opportunities: Look into training programs, leadership development courses, and opportunities for career advancement.
o	How to Incorporate During Interview:
o	Express Appreciation: Acknowledge and appreciate lululemon’s commitment to employee well-being and development.
o	Share Personal Practices: Highlight your own commitment to well-being and continuous learning. For example:
“I am impressed by lululemon’s comprehensive wellness programs and dedication to employee development. Personally, I prioritize continuous learning and have completed several courses in Agile project management to stay current with industry best practices. I believe that supporting employee growth leads to better project outcomes and a more engaged team.”
 
c. Familiarize Yourself with Recent News and Initiatives
i. Stay Updated on lululemon’s Latest Projects, Product Launches, and Community Engagements
o	What It Means:
o	Keeping abreast of lululemon’s latest activities helps you understand the company’s current focus areas, strategic initiatives, and community involvement.
o	How to Research:
o	Official Newsroom: Visit lululemon’s newsroom or press release section on their website for official updates.
o	Business News Platforms: Check reputable business news sites like Bloomberg, Forbes, or Reuters for articles about lululemon’s recent ventures.
o	Social Media: Follow lululemon’s social media channels (LinkedIn, Twitter, Instagram) for real-time updates and announcements.
o	Industry Publications: Read industry-specific publications that may feature lululemon’s innovations and market strategies.
o	How to Incorporate During Interview:
o	Reference Recent Projects: Mention specific recent projects or initiatives and express your enthusiasm or insight about them.
o	Connect to Your Role: Explain how your skills and experiences can contribute to ongoing or upcoming initiatives. For example:
“I recently read about lululemon’s expansion into [new market or product line]. With my experience in managing global distribution projects, I’m excited about the opportunity to contribute to your expansion efforts by ensuring efficient and scalable distribution processes across new regions.”
ii. Understand Their Technological Advancements in Global Distribution and Supply Chain
o	What It Means:
o	lululemon leverages advanced technologies to optimize their global distribution and supply chain operations, ensuring efficiency, scalability, and resilience.
o	How to Research:
o	Technology Blogs and Case Studies: Look for case studies or technology-focused blog posts that detail lululemon’s supply chain and distribution strategies.
o	Interviews and Webinars: Seek out interviews with lululemon’s leadership or webinars where they discuss their technological advancements.
o	Company Reports: Review annual reports or business reviews that may highlight technology-driven initiatives in their supply chain.
o	Industry Conferences: Check if lululemon has presented at industry conferences or events, sharing insights into their distribution technology.
o	How to Incorporate During Interview:
o	Show Technical Understanding: Demonstrate your knowledge of specific technologies or methodologies lululemon uses or could benefit from.
o	Propose Ideas: Suggest how your expertise can support or enhance their technological advancements. For example:
“I understand that lululemon is investing in AI-driven inventory management systems to streamline global distribution. In my previous role, I implemented a similar system that reduced stockouts by 30% and improved supply chain visibility. I’m eager to bring that experience to lululemon to further enhance your distribution efficiency.”
 
Actionable Steps to Research and Integrate Cultural Understanding
Here’s a step-by-step approach to effectively research and utilize the information about lululemon’s culture and values:
1.	Visit the Official lululemon Website:
o	Mission and Vision: Start with the “About Us” section to understand their mission, vision, and core values.
o	Careers Page: Explore the careers section for insights into their work environment, employee benefits, and cultural expectations.
2.	Read Recent Press Releases and News Articles:
o	Company Newsroom: Regularly check for the latest press releases to stay updated on new projects, partnerships, and strategic initiatives.
o	Business News: Use platforms like Google News to search for recent articles featuring lululemon.
3.	Follow lululemon on Social Media:
o	LinkedIn: Great for professional updates, employee highlights, and company announcements.
o	Instagram and Twitter: Useful for visual content, community engagement, and real-time updates.
4.	Review Annual Reports and Sustainability Reports:
o	Financial Health: Understand their business performance and strategic priorities.
o	Sustainability Efforts: Gain insights into their commitment to environmental and social responsibility.
5.	Engage with Employee-Generated Content:
o	Glassdoor: Read reviews from current and former employees to get a sense of the company culture, leadership style, and employee satisfaction.
o	LinkedIn: Connect with current employees and review their profiles for a better understanding of typical career paths and experiences within the company.
6.	Participate in Industry Webinars and Conferences:
o	Presentations by lululemon Executives: Listen to talks or panels where lululemon leaders discuss their strategies and future plans.
7.	Network with Current or Former Employees:
o	Informational Interviews: If possible, arrange brief conversations with lululemon employees to ask about their experiences and gather firsthand insights.
8.	Analyze Community Engagement and CSR Activities:
o	Community Events: Learn about their involvement in local communities, sustainability projects, and wellness initiatives.
o	Volunteer Programs: Understand how they encourage employees to participate in community service.
 
Integrating Your Research into Your Interview Preparation
1. Tailor Your Responses:
o	Use Specific Examples: When answering questions, incorporate details from your research to show you’re informed and genuinely interested.
o	Align with Values: Demonstrate how your personal and professional values align with lululemon’s mission and culture.
2. Prepare Customized Questions:
o	Show Your Interest: Ask insightful questions about lululemon’s recent initiatives or future plans.
o	Engage in Dialogue: For example:
“I noticed that lululemon recently launched [specific initiative]. Can you share how this project has impacted your global distribution strategy and what role the Project Manager might play in its continued success?”
3. Highlight Relevant Experiences:
o	Match Your Background: Emphasize how your previous projects and roles align with lululemon’s current and future needs.
o	Showcase Cultural Fit: Provide examples of how you’ve thrived in similar work environments or contributed to similar values in your past roles.
4. Demonstrate Enthusiasm and Authenticity:
o	Express Genuine Interest: Let your excitement about lululemon’s culture and values shine through your responses.
o	Be Authentic: Share honest stories and experiences that reflect your true self and how you embody the values that lululemon prioritizes.
5. Prepare for Behavioral Questions:
o	Reflect Values in Your Stories: Use the STAR (Situation, Task, Action, Result) method to highlight how you’ve demonstrated lululemon’s values in your previous work.
o	Example:
Question: “Can you describe a time when you had to foster connections within a cross-functional team?”
Response: “In my previous role, I led a project that required collaboration between the IT, marketing, and supply chain departments. I organized regular inter-departmental meetings and team-building activities to build trust and improve communication. As a result, we completed the project two weeks ahead of schedule and exceeded our performance targets by 15%, demonstrating the power of strong, interconnected teams.”
 
Summary
By thoroughly researching and understanding lululemon’s mission, vision, culture, and recent initiatives, you can effectively position yourself as the ideal candidate for the Project Manager, Global Distribution Technology role. Here’s a quick recap of the steps:
1.	Understand Their Mission and Vision:
o	Focus on innovative performance apparel.
o	Commitment to positive change and a thriving future.
o	Emphasis on inclusivity, equity, and personal growth.
2.	Explore Their Work Environment:
o	Hybrid work model blending remote and in-person collaboration.
o	Investment in employee well-being, development, and engagement.
3.	Familiarize Yourself with Recent News and Initiatives:
o	Stay updated on their latest projects, product launches, and community engagements.
o	Understand technological advancements in global distribution and supply chain.
Final Tips:
o	Be Proactive: Regularly update your knowledge about lululemon even after your initial research to stay current with their evolving strategies and initiatives.
o	Connect Personally: Think about how lululemon’s values resonate with your personal and professional life, and be prepared to share those connections during your interview.
o	Be Specific and Detailed: Vague or generic responses won’t stand out. Specific examples and detailed knowledge demonstrate your genuine interest and commitment.
By following this comprehensive approach, you’ll demonstrate not only that you have the skills and experience necessary for the role but also that you are a cultural fit who will thrive and contribute positively to lululemon’s ongoing success.
Good luck with your interview preparation!
As the best interview consultant, what is the most exhaustive list of questions that you think the interviewers will ask in the interview for this role.
Absolutely! Crafting a comprehensive list of potential interview questions tailored to the Project Manager, Global Distribution Technology role at lululemon will significantly enhance your preparedness and confidence. Below is an exhaustive compilation of questions categorized by type, reflecting the key responsibilities, skills, qualifications, and cultural fit emphasized in the job description.
 
1. Behavioral Questions
These questions aim to understand how you've handled situations in the past, showcasing your skills, decision-making, and alignment with lululemon’s values.
a. Project Planning and Execution
o	"Tell me about a time you successfully developed and implemented a comprehensive project plan."
o	"Describe a project you managed from inception to completion. What were the key milestones, and how did you ensure they were met?"
b. Monitoring and Risk Management
o	"Can you provide an example of a project where you identified significant risks? How did you mitigate them?"
o	"Describe a situation where a project you were managing was falling behind schedule. What steps did you take to get it back on track?"
c. Cross-functional Collaboration
o	"Share an experience where you had to coordinate with multiple departments to achieve a project goal."
o	"How have you facilitated communication between different teams or stakeholders in past projects?"
d. Leadership and Team Management
o	"Describe a time when you had to lead a diverse team. How did you ensure everyone was aligned and motivated?"
o	"Tell me about a situation where you had to resolve a conflict within your project team."
e. Adaptability and Resilience
o	"Give an example of a project that required you to adapt to significant changes. How did you handle it?"
o	"Describe a challenging project you managed. What obstacles did you face, and how did you overcome them?"
f. Alignment with Values
o	"How have you embodied honesty and kindness in your professional interactions?"
o	"Can you share an instance where you took a courageous step in a project, knowing there was a risk of failure?"
o	"Provide an example of how you integrated fun and joy into a work setting."
 
2. Technical and Project Management Questions
These questions assess your technical expertise, project management methodologies, and proficiency with tools relevant to the role.
a. Project Management Principles
o	"What project management methodologies are you most familiar with, and why?"
o	"How do you prioritize tasks in a multi-project environment?"
b. Agile/Scrum Expertise
o	"Can you walk me through your experience with Scrum? How have you implemented Scrum practices in past projects?"
o	"Describe a time when you coached a team in Agile methodologies. What challenges did you face, and how did you address them?"
c. Technical Proficiency
o	"Which project management tools are you proficient in, and how have you used them to manage projects effectively?"
o	"Have you worked with vendor and proprietary systems in supply chain contexts? Please elaborate."
d. Systems Integration
o	"Describe a project where you had to integrate multiple technological systems. What approach did you take?"
o	"How do you ensure seamless communication and integration between different technological platforms?"
e. Capacity Planning and Resource Management
o	"How do you approach capacity planning for Scrum teams?"
o	"Can you provide an example of how you managed resource allocation in a large-scale project?"
 
3. Leadership and Management Questions
These questions evaluate your leadership style, ability to manage teams, and drive project success.
o	"How do you motivate your team to achieve project goals?"
o	"Describe your leadership style. How has it contributed to the success of your projects?"
o	"Can you provide an example of how you have mentored or developed team members?"
o	"How do you handle underperforming team members?"
o	"What strategies do you use to ensure your team remains productive and engaged?"
 
4. Communication and Interpersonal Skills Questions
Effective communication is crucial for a project manager. These questions explore your ability to convey information and build relationships.
o	"How do you ensure clear and consistent communication with stakeholders throughout a project?"
o	"Describe a time when you had to present complex project information to a non-technical audience."
o	"How do you manage and align different stakeholders’ expectations?"
o	"Can you share an example of how you resolved a miscommunication issue within a project?"
o	"How do you facilitate effective meetings and ensure productive outcomes?"
 
5. Cultural Fit Questions
lululemon places significant emphasis on cultural alignment. These questions assess how well you resonate with the company’s values and work environment.
a. Entrepreneurial Spirit and Innovation
o	"Can you share an example of an innovative solution you implemented in a project?"
o	"Describe a situation where you identified an opportunity for improvement and took the initiative to act on it."
b. Honesty and Kindness
o	"Tell me about a time when you had to deliver difficult news to your team or a stakeholder. How did you handle it?"
o	"How do you build trust within your team?"
c. Courage and Risk-taking
o	"Describe a project where you had to make a tough decision despite potential risks. What was the outcome?"
o	"Can you provide an example of when you took a calculated risk in a project?"
d. Fostering Connections
o	"How do you build and maintain strong relationships within a cross-functional team?"
o	"Share an experience where you successfully brought together different departments to achieve a common goal."
e. Integrating Fun and Joy
o	"How do you create a positive and enjoyable work environment for your team?"
o	"Provide an example of a team-building activity or initiative you led that enhanced team morale."
f. Inclusivity and Equity
o	"How have you promoted diversity and inclusion within your project teams?"
o	"Can you share an example of how you ensured equitable participation and contribution from all team members?"
 
6. Strategic and Scenario-Based Questions
These questions evaluate your strategic thinking, problem-solving abilities, and how you handle real-world project challenges.
a. Aligning Projects with Growth Strategy
o	"How do you ensure that your projects align with the company’s strategic growth objectives?"
o	"Describe a project where you contributed to the long-term growth strategy of your organization."
b. Handling Complex Project Scenarios
o	"Imagine you are managing a project with tight deadlines and limited resources. How would you ensure its success?"
o	"If a key stakeholder suddenly changes project requirements mid-way, how would you handle it?"
c. Technological Advancements and Integration
o	"How would you approach implementing a new technology in the global distribution process?"
o	"Describe a time when you had to stay updated with technological advancements to manage a project effectively."
d. Supporting Growth and Scalability
o	"How do you plan projects to accommodate future growth and scalability?"
o	"Provide an example of how you scaled a project to meet increasing demands."
e. Conflict Resolution in Projects
o	"How would you handle a situation where two key team members have a disagreement affecting the project?"
o	"Describe a time when you had to mediate a conflict among stakeholders."
 
7. Questions Specific to lululemon and the Role
These questions reflect your understanding of lululemon’s specific needs and how you can contribute to their Global Distribution Technology team.
o	"What interests you about working in lululemon’s Global Distribution Technology team?"
o	"How do you think your background in global supply chain projects will benefit lululemon’s distribution technology initiatives?"
o	"What do you know about lululemon’s current global distribution and supply chain operations?"
o	"How would you leverage lululemon’s focus on innovative performance apparel in your role as a Project Manager?"
o	"What strategies would you employ to enhance collaboration between lululemon’s Global Fulfillment and Supply Chain partners?"
o	"How do you envision supporting lululemon’s commitment to creating a healthy, thriving future through your projects?"
 
8. Questions About Tools and Methodologies
Understanding the specific tools and methodologies lululemon uses can be crucial. These questions delve into your proficiency and adaptability with their systems.
o	"Which project management software are you most comfortable with, and how have you utilized it in past projects?"
o	"How do you keep your project documentation organized and up-to-date?"
o	"Can you describe your experience with Agile project management tools like Jira or Asana?"
o	"How do you manage and track project dependencies and interdependencies?"
o	"What techniques do you use for effective cutover planning and Go/No Go decisions?"
 
9. Questions on Continuous Improvement and Learning
These questions assess your commitment to personal and professional growth, aligning with lululemon’s emphasis on development and well-being.
o	"How do you stay current with the latest project management trends and methodologies?"
o	"Can you provide an example of a time you implemented a continuous improvement practice within your team?"
o	"What steps do you take to ensure your professional development aligns with your career goals?"
o	"How have you fostered a culture of continuous learning and improvement within your project teams?"
 
10. Compensation and Career Development Questions
While compensation-related questions are usually directed at the interviewer, being prepared to discuss your expectations and career aspirations can be beneficial.
o	"What are your salary expectations for this role?" (If asked)
o	"How does lululemon support your long-term career growth and development?"
o	**"What motivates you to excel in your career as
a project manager?"**
o	"Where do you see yourself in five years, and how does this role align with your career aspirations?"
 
Bonus: Questions You Might Ask the Interviewers
Asking insightful questions demonstrates your interest in the role and helps you assess if the company is the right fit for you.
o	"Can you describe the current projects the Global Distribution Technology team is handling?"
o	"How does this role contribute to lululemon’s long-term growth strategy?"
o	"What are the biggest challenges the Global Distribution Technology team is currently facing?"
o	"How does lululemon measure the success of its project managers?"
o	"Can you tell me more about the team structure and the primary stakeholders I would be collaborating with?"
o	"What opportunities are there for introducing new project management methodologies or tools within the team?"
o	"How does lululemon support continuous learning and professional development for its employees?"
o	"What is the company's approach to fostering an inclusive and equitable work environment?"
o	"How does the hybrid work model function in practice for this role?"
o	"What are the next steps in the interview process?"
 
Preparation Tips for Handling These Questions
1.	Develop STAR Responses:
o	Situation: Set the context for your story.
o	Task: Describe the challenge or responsibility.
o	Action: Explain the specific actions you took.
o	Result: Highlight the outcomes, emphasizing measurable achievements.
2.	Align Your Responses with lululemon’s Values:
o	Emphasize honesty, kindness, courage, fostering connections, and integrating fun in your answers.
o	Showcase your entrepreneurial spirit and commitment to personal and professional growth.
3.	Highlight Relevant Experiences:
o	Focus on experiences that directly relate to global distribution technology, project management in supply chain contexts, and Agile/Scrum methodologies.
4.	Demonstrate Technical Proficiency:
o	Be ready to discuss specific tools and systems you’ve used, providing examples of how they benefited your projects.
5.	Show Cultural Fit:
o	Share examples that reflect your ability to thrive in a hybrid work environment, your commitment to inclusivity and equity, and how you balance professionalism with a positive work atmosphere.
6.	Research and Personalize:
o	Reference specific lululemon initiatives, recent news, or product launches in your responses to demonstrate your genuine interest and knowledge about the company.
7.	Practice Communication Skills:
o	Clearly and concisely articulate your answers, maintaining enthusiasm and professionalism throughout the interview.
 
Conclusion
By preparing for these comprehensive questions, you’ll be well-equipped to demonstrate that you are not only technically qualified but also a perfect cultural fit for lululemon’s Project Manager, Global Distribution Technology role. Remember to intertwine your experiences with lululemon’s values, showcasing your ability to drive projects to success while fostering a positive and inclusive work environment.
Good luck with your interview preparation!
You are the best interview consultant? May I ask is this the most comprehensive list of potential interview questions? Please draft the most comprehensive list to ensure I will get the best preparation and make sure i can show the interviewers I am the best candidate
Absolutely! As the best interview consultant, I understand the importance of being thoroughly prepared to demonstrate that you are the only ideal candidate for the Project Manager, Global Distribution Technology role at lululemon. Below is the most comprehensive list of potential interview questions tailored specifically for this position. This exhaustive compilation ensures that you cover every possible aspect the interviewers might explore to assess your suitability for the role.
 
1. Behavioral Questions
Behavioral questions help interviewers understand how you've handled situations in the past, which can be indicative of your future performance.
a. Project Planning and Execution
1.	"Tell me about a time you successfully developed and implemented a comprehensive project plan."
2.	"Describe a project you managed from inception to completion. What were the key milestones, and how did you ensure they were met?"
3.	"Can you provide an example of a project where your planning directly contributed to its success?"
4.	"How do you handle changes to project scope after the project has started?"
b. Monitoring and Risk Management
5.	"Can you provide an example of a project where you identified significant risks? How did you mitigate them?"
6.	"Describe a situation where a project you were managing was falling behind schedule. What steps did you take to get it back on track?"
7.	"How do you prioritize risks in a project?"
8.	"Tell me about a time when you had to manage multiple risks simultaneously. How did you handle it?"
c. Cross-functional Collaboration
9.	"Share an experience where you had to coordinate with multiple departments to achieve a project goal."
10.	"How have you facilitated communication between different teams or stakeholders in past projects?"
11.	"Describe a time when collaboration across functions led to a successful project outcome."
12.	"How do you handle conflicting priorities between different functional teams?"
d. Leadership and Team Management
13.	"Describe a time when you had to lead a diverse team. How did you ensure everyone was aligned and motivated?"
14.	"Tell me about a situation where you had to resolve a conflict within your project team."
15.	"How do you motivate your team to achieve project goals?"
16.	"Can you provide an example of how you have mentored or developed team members?"
e. Adaptability and Resilience
17.	"Give an example of a project that required you to adapt to significant changes. How did you handle it?"
18.	"Describe a challenging project you managed. What obstacles did you face, and how did you overcome them?"
19.	"How do you stay resilient during high-pressure projects?"
20.	"Can you share a time when you had to pivot a project strategy due to unforeseen circumstances?"
f. Alignment with lululemon’s Values
21.	"How have you embodied honesty and kindness in your professional interactions?"
22.	"Can you share an instance where you took a courageous step in a project, knowing there was a risk of failure?"
23.	"Provide an example of how you integrated fun and joy into a work setting."
24.	"Describe a time when you promoted inclusivity and equity within your team."
 
2. Technical and Project Management Questions
These questions assess your technical expertise, project management methodologies, and proficiency with tools relevant to the role.
a. Project Management Principles
25.	"What project management methodologies are you most familiar with, and why?"
26.	"How do you prioritize tasks in a multi-project environment?"
27.	"Describe your approach to developing project timelines and budgets."
28.	"How do you ensure that a project stays within scope?"
b. Agile/Scrum Expertise
29.	"Can you walk me through your experience with Scrum? How have you implemented Scrum practices in past projects?"
30.	"Describe a time when you coached a team in Agile methodologies. What challenges did you face, and how did you address them?"
31.	"How do you handle sprint planning and ensure that sprints are productive?"
32.	"What metrics do you use to evaluate the effectiveness of Scrum practices within your team?"
c. Technical Proficiency
33.	"Which project management tools are you proficient in, and how have you used them to manage projects effectively?"
34.	"Have you worked with vendor and proprietary systems in supply chain contexts? Please elaborate."
35.	"How do you stay updated with the latest project management software and tools?"
36.	"Describe your experience with data analysis and how you use data to drive project decisions."
d. Systems Integration
37.	"Describe a project where you had to integrate multiple technological systems. What approach did you take?"
38.	"How do you ensure seamless communication and integration between different technological platforms?"
39.	"What challenges have you faced in systems integration projects, and how did you overcome them?"
40.	"Can you provide an example of a successful systems integration that improved business operations?"
e. Capacity Planning and Resource Management
41.	"How do you approach capacity planning for Scrum teams?"
42.	"Can you provide an example of how you managed resource allocation in a large-scale project?"
43.	"How do you handle resource constraints in a project?"
44.	"Describe a time when you had to adjust resource allocation due to project changes."
f. Supply Chain and Distribution Technology
45.	"What experience do you have with global supply chain management?"
46.	"How have you optimized distribution processes in your previous roles?"
47.	"Describe a project where you improved supply chain visibility and efficiency."
48.	"How do you handle logistics challenges in global distribution projects?"
 
3. Leadership and Management Questions
These questions evaluate your leadership style, ability to manage teams, and drive project success.
49.	"Describe your leadership style. How has it contributed to the success of your projects?"
50.	"How do you handle underperforming team members?"
51.	"What strategies do you use to ensure your team remains productive and engaged?"
52.	"Can you provide an example of a time when your leadership directly influenced a project's success?"
53.	"How do you delegate tasks effectively within your team?"
54.	"Describe a time when you had to lead a project with a tight deadline. How did you manage your team and resources?"
55.	"How do you balance team motivation with accountability?"
 
4. Communication and Interpersonal Skills Questions
Effective communication is crucial for a project manager. These questions explore your ability to convey information and build relationships.
56.	"How do you ensure clear and consistent communication with stakeholders throughout a project?"
57.	"Describe a time when you had to present complex project information to a non-technical audience."
58.	"How do you manage and align different stakeholders’ expectations?"
59.	"Can you share an example of how you resolved a miscommunication issue within a project?"
60.	"How do you facilitate effective meetings and ensure productive outcomes?"
61.	"Describe a situation where effective communication led to a project’s success."
62.	"How do you handle giving and receiving feedback within your team?"
 
5. Cultural Fit Questions
lululemon places significant emphasis on cultural alignment. These questions assess how well you resonate with the company’s values and work environment.
a. Entrepreneurial Spirit and Innovation
63.	"Can you share an example of an innovative solution you implemented in a project?"
64.	"Describe a situation where you identified an opportunity for improvement and took the initiative to act on it."
65.	"How do you encourage creativity and innovation within your team?"
b. Honesty and Kindness
66.	"Tell me about a time when you had to deliver difficult news to your team or a stakeholder. How did you handle it?"
67.	"How do you build trust within your team?"
68.	"Describe a situation where your honesty positively impacted a project or team dynamic."
c. Courage and Risk-taking
69.	"Describe a project where you had to make a tough decision despite potential risks. What was the outcome?"
70.	"Can you provide an example of when you took a calculated risk in a project?"
71.	"How do you approach making decisions when faced with uncertainty?"
d. Fostering Connections
72.	"How do you build and maintain strong relationships within a cross-functional team?"
73.	"Share an experience where you successfully brought together different departments to achieve a common goal."
74.	"How do you ensure that remote team members feel connected and included?"
e. Integrating Fun and Joy
75.	"How do you create a positive and enjoyable work environment for your team?"
76.	"Provide an example of a team-building activity or initiative you led that enhanced team morale."
77.	"How do you balance the seriousness of project management with creating a fun work atmosphere?"
f. Inclusivity and Equity
78.	"How have you promoted diversity and inclusion within your project teams?"
79.	"Can you share an example of how you ensured equitable participation and contribution from all team members?"
80.	"What steps do you take to create an inclusive environment in your projects?"
 
6. Strategic and Scenario-Based Questions
These questions evaluate your strategic thinking, problem-solving abilities
, and how you handle real-world project challenges.
a. Aligning Projects with Growth Strategy
81.	"How do you ensure that your projects align with the company’s strategic growth objectives?"
82.	"Describe a project where you contributed to the long-term growth strategy of your organization."
83.	"How do you balance short-term project goals with long-term strategic objectives?"
b. Handling Complex Project Scenarios
84.	"Imagine you are managing a project with tight deadlines and limited resources. How would you ensure its success?"
85.	"If a key stakeholder suddenly changes project requirements mid-way, how would you handle it?"
86.	"How would you manage a project where different stakeholders have conflicting priorities?"
c. Technological Advancements and Integration
87.	"How would you approach implementing a new technology in the global distribution process?"
88.	"Describe a time when you had to stay updated with technological advancements to manage a project effectively."
89.	"How do you evaluate and integrate new technologies to improve project outcomes?"
d. Supporting Growth and Scalability
90.	"How do you plan projects to accommodate future growth and scalability?"
91.	"Provide an example of how you scaled a project to meet increasing demands."
92.	"How do you ensure that your projects are scalable and adaptable to future business needs?"
e. Conflict Resolution in Projects
93.	"How would you handle a situation where two key team members have a disagreement affecting the project?"
94.	"Describe a time when you had to mediate a conflict among stakeholders."
95.	"What strategies do you use to resolve conflicts within a project team?"
f. Change Management
96.	"How do you manage change within a project to minimize resistance and ensure smooth transitions?"
97.	"Describe a project where you successfully implemented significant changes. What was your approach?"
98.	"How do you prepare your team for changes in project scope or objectives?"
 
7. Questions Specific to lululemon and the Role
These questions reflect your understanding of lululemon’s specific needs and how you can contribute to their Global Distribution Technology team.
99.	"What interests you about working in lululemon’s Global Distribution Technology team?"
100.	"How do you think your background in global supply chain projects will benefit lululemon’s distribution technology initiatives?"
101.	"What do you know about lululemon’s current global distribution and supply chain operations?"
102.	"How would you leverage lululemon’s focus on innovative performance apparel in your role as a Project Manager?"
103.	"What strategies would you employ to enhance collaboration between lululemon’s Global Fulfillment and Supply Chain partners?"
104.	"How do you envision supporting lululemon’s commitment to creating a healthy, thriving future through your projects?"
105.	"Can you discuss how lululemon’s sustainability initiatives could influence your project management approach?"
106.	"How would you contribute to lululemon’s mission of building strong community connections through your role?"
 
8. Questions About Tools and Methodologies
Understanding the specific tools and methodologies lululemon uses can be crucial. These questions delve into your proficiency and adaptability with their systems.
107.	"Which project management software are you most comfortable with, and how have you utilized it in past projects?"
108.	"How do you keep your project documentation organized and up-to-date?"
109.	"Can you describe your experience with Agile project management tools like Jira or Asana?"
110.	"How do you manage and track project dependencies and interdependencies?"
111.	"What techniques do you use for effective cutover planning and Go/No Go decisions?"
112.	"Describe how you have used data visualization tools to report project status to stakeholders."
113.	"How do you utilize collaboration tools to enhance team productivity in a hybrid work environment?"
 
9. Questions on Continuous Improvement and Learning
These questions assess your commitment to personal and professional growth, aligning with lululemon’s emphasis on development and well-being.
114.	"How do you stay current with the latest project management trends and methodologies?"
115.	"Can you provide an example of a time you implemented a continuous improvement practice within your team?"
116.	"What steps do you take to ensure your professional development aligns with your career goals?"
117.	"How have you fostered a culture of continuous learning and improvement within your project teams?"
118.	"Describe a time when you sought feedback to improve your project management skills."
119.	"What certifications or training have you pursued to enhance your project management expertise?"
120.	"How do you encourage your team to engage in continuous learning and development?"
 
10. Compensation and Career Development Questions
While compensation-related questions are usually directed at the interviewer, being prepared to discuss your expectations and career aspirations can be beneficial.
121.	"What are your salary expectations for this role?" (If asked)
122.	"How does lululemon support your long-term career growth and development?"
123.	"What motivates you to excel in your career as a project manager?"
124.	"Where do you see yourself in five years, and how does this role align with your career aspirations?"
125.	"How do you evaluate opportunities for advancement within an organization?"
126.	"What aspects of career development are most important to you?"
 
11. Situational and Hypothetical Questions
These questions evaluate how you would handle specific situations relevant to the role.
127.	"If you were assigned a project with unclear objectives, how would you proceed?"
128.	"How would you handle a situation where your project team is missing deadlines?"
129.	"Imagine a key vendor fails to deliver on time, threatening your project timeline. What steps would you take?"
130.	"How would you manage a project that requires integrating legacy systems with new technologies?"
131.	"If a project you’re managing is over budget, how would you address it?"
132.	"Describe your approach to managing stakeholder expectations during a project crisis."
133.	"How would you ensure quality control in a project involving multiple international teams?"
134.	"What would you do if you discovered a major flaw in the project plan just before a critical milestone?"
 
12. Questions About Global and Cross-Cultural Management
Given the global aspect of the role, these questions assess your ability to manage international projects and diverse teams.
135.	"What experience do you have managing projects across different countries and cultures?"
136.	"How do you address cultural differences within international project teams?"
137.	"Can you provide an example of how you successfully managed a project with multilingual stakeholders?"
138.	"How do you handle time zone differences in global projects?"
139.	"Describe a time when you had to adapt your management style to fit a different cultural context."
140.	"What strategies do you use to ensure effective communication in a geographically dispersed team?"
 
13. Questions on Supply Chain and Distribution Technology
These questions delve into your specific experience with supply chain, distribution, and related technologies.
141.	"How have you optimized supply chain processes in your previous roles?"
142.	"Describe a project where you improved distribution efficiency through technology."
143.	"What are the key challenges in global distribution technology, and how have you addressed them?"
144.	"How do you incorporate sustainability into supply chain and distribution projects?"
145.	"What role does data analytics play in your decision-making process for distribution projects?"
146.	"How have you used automation to enhance distribution center operations?"
147.	"Describe your experience with inventory management systems in large-scale distribution projects."
 
14. Questions on Quality Assurance and Testing
Quality assurance is critical in technology projects. These questions explore your approach to maintaining quality standards.
148.	"How do you ensure that project deliverables meet quality standards?"
149.	"Describe your experience with developing and implementing QA plans."
150.	"How do you handle defects or issues identified during the testing phase?"
151.	"What strategies do you use to maintain high quality in a fast-paced project environment?"
152.	"Can you provide an example of how you improved QA processes in a previous project?"
153.	"How do you collaborate with QA teams to ensure project success?"
 
15. Questions on Budgeting and Financial Management
Managing project budgets is a crucial aspect of project management. These questions assess your financial acumen.
154.	"How do you develop and manage project budgets?"
155.	"Describe a time when you had to adjust your project budget. What caused the change, and how did you handle it?"
156.	"How do you track and report on project financials to stakeholders?"
157.	"What steps do you take to ensure a project stays within budget?"
158.	"Can you provide an example of a project where you successfully reduced costs without compromising quality?"
 
16. Questions on Vendor and Stakeholder Management
Managing external vendors and various stakeholders is often part of project management. These questions explore your effectiveness in these areas.
159.	"How do you select and manage vendors for your projects?"
160.	"Describe a time when you had to negotiate with a vendor to meet project requirements."
161.	"How do you handle disagreements or conflicts with vendors?"
162.	"What strategies do you use to ensure stakeholder alignment and satisfaction?"
163.	**"Can you provide an example of how
you managed a difficult stakeholder to achieve a project goal?"**
 
17. Questions on Innovation and Continuous Improvement
These questions assess your ability to drive innovation and implement continuous improvement practices.
164.	"Can you share an example of an innovative solution you implemented in a project?"
165.	"Describe a situation where you identified an opportunity for improvement and took the initiative to act on it."
166.	"How do you foster a culture of innovation within your project teams?"
167.	"What continuous improvement methodologies are you familiar with, and how have you applied them?"
168.	"How do you encourage your team to think creatively and suggest improvements?"
169.	"Can you provide an example of how you used feedback to improve a project process?"
 
18. Questions on Performance Measurement and KPIs
These questions explore how you measure project success and track key performance indicators.
170.	"What KPIs do you use to measure the success of your projects?"
171.	"How do you track and report on these KPIs throughout the project lifecycle?"
172.	"Can you provide an example of how you used KPIs to improve project outcomes?"
173.	"How do you align project KPIs with the organization’s strategic goals?"
174.	"How do you handle a situation where your project KPIs indicate the project is not meeting its objectives?"
 
19. Questions on Change Management
Change management is crucial for successful project implementation. These questions assess your ability to manage change effectively.
175.	"How do you manage change within a project to minimize resistance and ensure smooth transitions?"
176.	"Describe a project where you successfully implemented significant changes. What was your approach?"
177.	"How do you prepare your team for changes in project scope or objectives?"
178.	"Can you provide an example of a time when you had to lead a team through a major organizational change?"
179.	"What strategies do you use to communicate changes to all stakeholders involved in a project?"
 
20. Questions on Time Management and Prioritization
Effective time management is essential for project success. These questions evaluate your ability to manage time and prioritize tasks.
180.	"How do you prioritize tasks in a multi-project environment?"
181.	"Describe a time when you had to manage multiple deadlines simultaneously. How did you ensure all were met?"
182.	"What time management techniques do you find most effective in your work?"
183.	"How do you handle unexpected tasks or emergencies that impact your project schedule?"
184.	"Can you provide an example of how you improved time management within your project team?"
 
21. Questions on Decision-Making and Problem-Solving
These questions explore your ability to make informed decisions and solve complex problems.
185.	"Describe a difficult decision you had to make during a project. What was the outcome?"
186.	"How do you approach problem-solving in your projects?"
187.	"Can you provide an example of a complex problem you solved in a project?"
188.	"How do you ensure that your decisions are data-driven and objective?"
189.	"Describe a time when you had to make a decision with incomplete information. How did you handle it?"
 
22. Questions on Ethical Considerations and Integrity
These questions assess your ethical standards and integrity in professional settings.
190.	"Tell me about a time when you faced an ethical dilemma in a project. How did you resolve it?"
191.	"How do you ensure that your projects adhere to ethical standards and regulations?"
192.	"Describe a situation where you had to advocate for ethical practices within your team or organization."
193.	"How do you handle situations where stakeholders pressure you to compromise on ethical standards?"
194.	"Can you provide an example of how you maintained integrity in a challenging project scenario?"
 
23. Questions on Customer Focus and User Experience
These questions evaluate your focus on delivering value to customers and enhancing user experience.
195.	"How do you incorporate customer feedback into your projects?"
196.	"Describe a project where improving user experience was a key objective. How did you achieve it?"
197.	"How do you ensure that your projects deliver value to the end-users?"
198.	"Can you provide an example of how you balanced technical requirements with user needs?"
199.	"How do you gather and utilize user insights during the project lifecycle?"
 
24. Questions on Agile Transformation and Implementation
Given the emphasis on Agile/Scrum, these questions delve deeper into your experience with Agile transformations.
200.	"Can you describe a successful Agile transformation you led? What were the key factors that contributed to its success?"
201.	"How do you handle resistance to Agile methodologies within a team?"
202.	"What metrics do you use to measure the success of Agile implementation?"
203.	"How do you tailor Agile practices to fit the specific needs of a project or organization?"
204.	"Can you provide an example of how you improved Agile processes in a previous role?"
 
25. Questions on Global Distribution Technology
These questions focus on your expertise in global distribution technology and how it applies to lululemon's operations.
205.	"What are the key challenges in managing global distribution technology initiatives?"
206.	"How do you ensure technology scalability in a global distribution network?"
207.	"Describe your experience with implementing technology solutions in a global supply chain."
208.	"How do you manage data consistency and integrity across multiple distribution centers?"
209.	"Can you provide an example of how you improved global distribution efficiency through technology?"
210.	"How do you stay updated with the latest trends and technologies in global distribution?"
 
Summary of Comprehensive Questions
To ensure you are fully prepared, here is a summary list of all the questions categorized for quick reference:
1. Behavioral Questions
o	Project Planning and Execution
o	Monitoring and Risk Management
o	Cross-functional Collaboration
o	Leadership and Team Management
o	Adaptability and Resilience
o	Alignment with lululemon’s Values
2. Technical and Project Management Questions
o	Project Management Principles
o	Agile/Scrum Expertise
o	Technical Proficiency
o	Systems Integration
o	Capacity Planning and Resource Management
o	Supply Chain and Distribution Technology
3. Leadership and Management Questions
4. Communication and Interpersonal Skills Questions
5. Cultural Fit Questions
o	Entrepreneurial Spirit and Innovation
o	Honesty and Kindness
o	Courage and Risk-taking
o	Fostering Connections
o	Integrating Fun and Joy
o	Inclusivity and Equity
6. Strategic and Scenario-Based Questions
7. Questions Specific to lululemon and the Role
8. Questions About Tools and Methodologies
9. Questions on Continuous Improvement and Learning
10. Compensation and Career Development Questions
11. Situational and Hypothetical Questions
12. Questions About Global and Cross-Cultural Management
13. Questions on Supply Chain and Distribution Technology
14. Questions on Quality Assurance and Testing
15. Questions on Budgeting and Financial Management
16. Questions on Vendor and Stakeholder Management
17. Questions on Innovation and Continuous Improvement
18. Questions on Performance Measurement and KPIs
19. Questions on Change Management
20. Questions on Time Management and Prioritization
21. Questions on Decision-Making and Problem-Solving
22. Questions on Ethical Considerations and Integrity
23. Questions on Customer Focus and User Experience
24. Questions on Agile Transformation and Implementation
25. Questions on Global Distribution Technology
 
Preparation Tips for Handling These Questions
1.	Develop STAR Responses:
o	Situation: Set the context for your story.
o	Task: Describe the challenge or responsibility.
o	Action: Explain the specific actions you took.
o	Result: Highlight the outcomes, emphasizing measurable achievements.
2.	Align Your Responses with lululemon’s Values:
o	Emphasize honesty, kindness, courage, fostering connections, and integrating fun in your answers.
o	Showcase your entrepreneurial spirit and commitment to personal and professional growth.
3.	Highlight Relevant Experiences:
o	Focus on experiences that directly relate to global distribution technology, project management in supply chain contexts, and Agile/Scrum methodologies.
4.	Demonstrate Technical Proficiency:
o	Be ready to discuss specific tools and systems you’ve used, providing examples of how they benefited your projects.
5.	Show Cultural Fit:
o	Share examples that reflect your ability to thrive in a hybrid work environment, your commitment to inclusivity and equity, and how you balance professionalism with a positive work atmosphere.
6.	Research and Personalize:
o	Reference specific lululemon initiatives, recent news, or product launches in your responses to demonstrate your genuine interest and knowledge about the company.
7.	Practice Communication Skills:
o	Clearly and concisely articulate your answers, maintaining enthusiasm and professionalism throughout the interview.
8.	Prepare Thoughtful Questions:
o	Have a list of insightful questions ready to ask the interviewers, showing your deep interest in the role and the company.
 
Final Tips
o	Be Specific: Vague statements are less impactful. Use detailed examples that clearly demonstrate your competencies.
o	Be Authentic: Ensure that your portrayal is genuine. Authenticity resonates well with interviewers and aligns with lululemon’s emphasis on honesty and kindness.
o	Be Prepared: Anticipate how each competency might be explored during the interview and prepare accordingly.
o	Stay Organized: Use tools or notes to keep track of which questions you’ve prepared for and where you need more practice.
o	Practice, Practice, Practice: Conduct mock interviews with a friend or mentor to refine your responses and receive constructive feedback.
 
By thoroughly preparing for this exhaustive list of potential interview questions, you'll be well-equipped to showcase not only your technical skills and project management expertise but also your alignment with lululemon’s values and culture. This comprehensive preparation will position you as the only ideal candidate they want to hire for the Project Manager, Global Distribution Technology role.
Good luck with your interview preparation! You've got this!

  Annual Report | 2023

 To our shareholders
In 2023, we celebrated our 25th anniversary and our teams continued to deliver strong and balanced results. As our product innovations, guest experiences, and market expansions connected us with our guests and communities, we saw growth across each of our categories, channels, and regions, and ended the year with $9.6 billion in net revenue, representing a year-over-year increase of 19%.
I am grateful to our teams around the world for driving our performance and our goals to advance the wellbeing of people and the planet through our Impact Agenda. Community has been at the core of lululemon since day one, and we believe the deep, genuine connections across our global collective are a true differentiator for our brand.
Our Growth Pillars
We remain committed to our Power of Three ×2 growth plan, which is grounded in our goals to double our men’s business, double our digital business, and quadruple our international business – to ultimately double our revenue from 2021 levels to $12.5 billion by 2026. In 2023, we advanced our plan with progress across each of our three growth pillars, and I am proud of all that we achieved as we continued to navigate a dynamic consumer and macro environment.
Within product innovation, we continued to put product at the center of everything we do, leveraging the latest research, technologies, and materials to solve for the unmet needs of our guests. We grew our men’s business by 15%, our women’s business by 17%, and net revenue from our other categories increased 36%.
We believe one of our competitive advantages is our ability to consistently bring newness and innovation into our assortment, and that our proprietary fabrics, innovative designs, and functional technology set us apart. With our focus on feel, functionality, fit, and versatility, people of all ages and backgrounds can see themselves in lululemon.
Our core and new product launches continued to resonate with guests. We saw strength in many of our key franchises including Align, Scuba, and ABC, and leveraged the versatility of our core assortment to expand our offerings within our Play categories including golf and tennis. We also engineered new sensations within collections such as Wundermost bodywear for women, expanded our casual offerings for men with Steady State and Soft Jersey loungewear, and launched updated and enhanced versions of our Blissfeel and Chargefeel footwear styles.
Looking to 2024, I am excited by our impressive pipeline of product innovation, from our first-ever men’s footwear collection to innovations created with and inspired by world- class athletes from Team Canada and our FURTHER women’s ultramarathon.
Within guest experience, our omni-operating model continued to serve our guests both in-store and online. We saw strength across both channels, with company-operated store net revenue increasing 21% and e-commerce net revenue increasing 17%, as well as our single biggest day of traffic and revenue in company history on Black Friday.
We continued to leverage our successful grassroots approach to cultivating relationships with our guests at the local level. By creating connection points across both the physical and digital, we engage with guests in ways that go beyond a transaction, creating an ecosystem of connection that helps build our brand awareness and drive loyalty.
In-store and online, our Educators supported guests in learning about our products and innovations. In our communities, our teams created unforgettable experiences at the local and global level, from store events to larger-scale community activations such as 10K runs. Through our membership program, which has grown to more than 17 million members in the first year, we gained deeper knowledge on what aspects of our brand are most meaningful to them. And we announced a multi-year strategic partnership between lululemon and Peloton, expanding our reach and awareness.
We also accelerated our efforts to increase consideration for lululemon through global brand campaigns and activations. For example, in Los Angeles, we hosted a Dupe Swap event, where about 50% of the guests who traded in product dupes were new to our brand. And in China Mainland, our World Mental Health Day activations brought
in over 9,000 participants across six cities.
We believe our community-building approach resonates across geographies, generations, and cultures, and led to gains in brand awareness throughout key growth markets around the world over the past year – the US increased from 25% to 31%, and China Mainland increased from 9% to 14%. Relative to peers, our brand awareness globally represents an opportunity for lululemon. We believe our runway for growth is substantial, and I am optimistic about the future as we continue to expand our business.
Our Impact
We are committed to advancing our Impact Agenda goals and multi-year strategies for the wellbeing of people and the planet. This work supports our growth strategy as a critical business function, as our company continues to grow and serve more guests and communities around the world.
For our people, we are committed to our goals of supporting physical, mental, and social wellbeing for all, and creating environments that are equitable, inclusive, and welcoming for every person within our global collective. We continued to advance our Inclusion, Diversity, Equity, and Action (IDEA) commitments across our business and invest in the wellbeing of the people who make our products.
We also released lululemon’s third annual Global Wellbeing Report uncovering the state of wellbeing around the world, and announced the formation of our Mental Wellbeing Global Advisory Board to help deepen the impact of wellbeing initiatives across our industry. And, through our lululemon Centre for Social Impact, we expanded our partnerships with global and community-led wellbeing organizations to accelerate their work, investing a total of $44.8 million to date.1
For our planet, we are on a journey to contribute to a climate-stable future through our products and actions. We believe sustainable innovation will play a critical role, and we continue to advance our material innovation through strategic industry partnerships, as we know collaboration is essential to achieving a circular ecosystem and helping to address global challenges. Looking to the future, we remain focused on driving innovations across our business that contribute to supporting the health of our planet.
In Closing
On behalf of myself and the entire leadership team, I want to express our sincere gratitude to the people across lululemon who champion our brand every day and made our strong results possible.
To our shareholders, thank you for your continued support. As we drive the business forward, we will remain agile and continue to adapt to all that is around us. My confidence in our leadership and our people remains high, as we have consistently demonstrated the strength and resilience of our brand.
We are pleased with our momentum and know that we remain in the early innings of our growth story. We recognize the significant opportunity in front of us to elevate lululemon to the next level around the world in 2024 and beyond, and I remain excited and energized for what lies ahead for our brand.
 Within market expansion, our business remained strong across our global regions with 12% growth in the Americas, 67% in China Mainland, and 43% in Rest of World. We entered new markets in EMEA and APAC, including our first store in Bangkok, Thailand. In China Mainland, we were proud to celebrate our 10-year anniversary and end the year approaching $1 billion in revenue. In total, we opened 56 net new company-operated stores across the globe contributing to 15% square footage growth, ending 2023 with 711 company-operated stores worldwide.
Calvin McDonald
Chief Executive Officer
1 Included within our Impact Agenda is a goal to invest a total of $75.0 million USD to advance equity in wellbeing by 2025. As of January 28, 2024, we have contributed $44.8 million to lululemon’s Centre for Social Impact, $32.4 million of which has been contributed directly to social impact organizations. The remaining $12.4 million primarily consists of contributions toward a donor-advised fund for future grant making.
AR | 2023

 ☐
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
☑
Washington, D.C. 20549 _______________________________________
Form 10-K _______________________________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 28, 2024 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to Commission file number 001-33608 _______________________________________
lululemon athletica inc.
(Exact name of registrant as specified in its charter) _______________________________________
 Delaware
(State or other jurisdiction of incorporation or organization)
20-3842867
(I.R.S. Employer Identification Number)
1818 Cornwall Avenue, Vancouver, British Columbia V6J 1C7
(Address of principal executive offices)
Registrant's telephone number, including area code: (604) 732-6124 Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s)
Common Stock, par value $0.005 per share LULU
_______________________________________
Name of each exchange on which registered
Nasdaq Global Select Market
Yes ☑ No ☐
Large Accelerated Filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting stock held by non-affiliates of the registrant on July 28, 2023 was approximately $40,905,000,000. Such aggregate market value was computed by reference to the closing price of the common stock as reported on the Nasdaq Global Select Market on July 28, 2023. For purposes of determining this amount only, the registrant has defined affiliates as including the executive officers, directors, and owners of 10% or more of the outstanding voting stock of the registrant on July 28, 2023.
Common Stock: At March 15, 2024 there were 120,892,132 shares of the registrant's common stock, par value $0.005 per share, outstanding.
Exchangeable and Special Voting Shares: At March 15, 2024, there were outstanding 5,115,961 exchangeable shares of Lulu Canadian Holding, Inc., a wholly-owned subsidiary of the registrant. Exchangeable shares are exchangeable for an equal number of shares of the registrant's common stock.
In addition, at March 15, 2024, the registrant had outstanding 5,115,961 shares of special voting stock, through which the holders of exchangeable shares of Lulu Canadian Holding, Inc. may exercise their voting rights with respect to the registrant. The special voting stock and the registrant's common stock generally vote together as a single class on all matters on which the common stock is entitled to vote.
_______________________________________ DOCUMENTS INCORPORATED BY REFERENCE
   Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Portions of the Proxy Statement for the 2024 Annual Meeting of Stockholders have been incorporated by reference into Part III of this Annual Report on Form 10-K.
 
TABLE OF CONTENTS
  Page
  PART I
Item 1. Business   1
Item 1A. Risk Factors   10
Item 1C. Cybersecurity   22
Item 2. Properties   24
Item 3. Legal Proceedings   24
Item 4. Mine Safety Disclosures   24
  PART II
 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25
Item 6. Selected Consolidated Financial Data   26
 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44
Item 8. Financial Statements   46
 Index for Notes to the Consolidated Financial Statements 54
Item 9A. Controls and Procedures   79
Item 9B. Other Information   80
 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 81
  PART III
 Item 10. Directors, Executive Officers and Corporate Governance 82
Item 11. Executive Compensation   82
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 82
 Item 13. Certain Relationships and Related Transactions, and Director Independence 83
Item 14. Principal Accountant Fees and Services   83
  PART IV
Item 15. Exhibits and Financial Statement Schedule   84
Item 16. Form 10-K Summary   86
Signatures   87
   
[This page intentionally left blank]

PART I
Special Note Regarding Forward-Looking Statements
This report and some documents incorporated herein by reference include estimates, projections, statements relating to our business plans, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We use words such as "anticipates," "believes," "estimates," "may," "intends," "expects," and similar expressions to identify forward-looking statements. Discussions containing forward-looking statements may be found in the material set forth under "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations", and in other sections of the report. All forward-looking statements are inherently uncertain as they are based on our expectations and assumptions concerning future events. Any or all of our forward-looking statements in this report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. They may be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including the risks, uncertainties and assumptions described in the section entitled "Item 1A. Risk Factors" and elsewhere in this report. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur as contemplated, and our actual results could differ materially from those anticipated or implied by the forward-looking statements. All forward-looking statements in this report are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.
This annual report includes website addresses and references to additional materials found on those websites. These websites and information contained on or accessible through these websites are not incorporated by reference into, and do not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to any websites are intended to be inactive textual references only.
ITEM 1. BUSINESS
General
lululemon athletica inc. is principally a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. We have a vision to create transformative products and experiences that build meaningful connections, unlocking greater possibility and wellbeing for all. Since our inception, we have fostered a distinctive corporate culture; we promote a set of core values in our business which include taking personal responsibility, acting with courage, valuing connection and inclusion, and choosing to have fun. These core values attract passionate and motivated employees who are driven to achieve personal and professional goals, and share our purpose "to elevate human potential by helping people feel their best."
In this Annual Report on Form 10-K for the fiscal year ended January 28, 2024, lululemon athletica inc. (together with its subsidiaries) is referred to as "lululemon," "the Company," "we," "us," or "our." We refer to the fiscal year ended January 28, 2024 as "2023," the fiscal year ended January 29, 2023 as "2022," and the fiscal year ended January 30, 2022 as "2021." Our next fiscal year ends on February 2, 2025 and is referred to as "2024."
Components of this discussion of our business include:
• Our Products
• Our Markets and Segments
• Integrated Marketing
• Product Design and Development
• Sourcing and Manufacturing
• Distribution Facilities
• Competition
• Seasonality
• Human Capital
• Intellectual Property
• Securities and Exchange Commission Filings
Our Products
We offer a comprehensive line of performance apparel, footwear, and accessories marketed under the lululemon brand. Our apparel assortment includes items such as pants, shorts, tops, and jackets designed for a healthy lifestyle including
1

athletic activities such as yoga, running, training, and most other activities. We also offer apparel designed for being on the move and fitness-inspired accessories. We expect to continue to broaden our merchandise offerings through expansion across these product areas.
Our design and development team continues to source technically advanced fabrics, with new feel and fit, and craft innovative functional features for our products. Through our vertical retail strategy and direct connection with our customers, whom we refer to as guests, we are able to collect feedback and incorporate unique performance and fashion needs into our design process. In this way, we believe we are better positioned to address the needs of our guests, helping us advance our product lines and differentiate us from our competitors.
During 2023, our women's range represented 64% of net revenue and our men's range represented 23% of net revenue. Our comprehensive men's line is a key pillar of our strategic growth plans. We believe net revenue from our men's range is growing as more guests discover the technical rigor and premium quality of our men's products, and are attracted by our distinctive brand.
We continue to innovate and introduce new products for our guests. This includes introducing new product categories and expanding our accessories assortment. We believe this is another way in which we can attract new guests and enable them to experience our products. Net revenue from our other product categories represented 13% of net revenue in 2023.
Our Markets and Segments
We operate in over 25 countries around the world and organize our operations into four regional markets: Americas, China Mainland, Asia Pacific ("APAC"), and Europe and the Middle East ("EMEA").
We report three segments, Americas, China Mainland, and Rest of World, which is comprised of the APAC and EMEA regions on a combined basis.
2023 Net Revenue
China Rest of
2022 Net Revenue
China
Rest of
2021 Net Revenue
China Rest of Mainland World
Mainland World
World
10% 11% 7% 9% 7% 8%
Mainland
         Americas 79%
Americas 84%
Americas 85%
During the fourth quarter of 2023, we revised the financial information which our Chief Executive Officer, who is our chief operating decision maker ("CODM"), uses to evaluate performance and allocate resources. This resulted in a change in our identified operating segments. As we have further executed on our omni-channel retail strategy, and continued to expand our operations in international markets, our performance reviews and resource allocation decisions have evolved to be made on a regional market basis. Our segment results have been recast to reflect our regional market-based structure. Historically, our segments were based on selling channel. We continue to monitor our revenue performance by our selling channels which are further described below.
We operate an omni-channel retail model and aim to efficiently and effectively serve our guests in the ways most convenient to them. We continue to evolve and integrate our digital and physical channels in order to enrich our interactions with our guests, and to provide a seamless omni-channel experience. We have invested in technologies which enable our omni-channel retailing model. Our capabilities differ by market and include:
• Buy online pick-up in store - guests can purchase our products via our website or digital app and then collect that product from a retail location;
• Back-back room - our store educators can access inventory located at our other locations and have product shipped directly to a guest's address or a store;
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• Ship from store – we are able to fulfill e-commerce orders by accessing inventory at both our distribution centers and at our retail locations, expanding the pool of accessible inventory;
• Returns processing – e-commerce guests are able to return products either online or in-store; and
• One inventory pool – we are able to view and allocate the product held at our distribution centers to either our
physical retail locations, or make it available to fulfill online demand.
We operate a combination of physical retail locations and e-commerce services via our websites, other region-specific websites, digital marketplaces, and mobile apps. Our physical retail locations remain a key part of our growth strategy and we view them as a valuable tool in helping us build our brand and product line as well as enabling our omni-channel capabilities. We plan to continue to expand square footage and open new company-operated stores to support our growth objectives.
Americas
We have operated in the Americas for over 25 years. We opened our first ever store in Vancouver, Canada in 1998. In 2023, the net revenue we generated in the Americas represented 79% of our total net revenue.
Our operations in the Americas are core to our business and we aim to continue to grow our net revenue in this market through ongoing product innovation and by building brand awareness. We also plan to continue to invest in our omni-channel capabilities, to open new retail locations, and to relocate, optimize, and renovate our existing locations as needed.
We generate net revenue in the Americas through our lululemon branded retail locations which include different sizes of company-operated stores, outlets, pop-ups, other temporary locations, and stores operated by a third-party under a supply and license agreement in Mexico. We also serve our guests via our e-commerce website www.lululemon.com, our mobile app, our “Like New” re-commerce program, and through certain wholesale arrangements including certain yoga and fitness studios, university campus retailers, and other select partners.
China Mainland
We opened our first store in China Mainland in fiscal 2014. In 2023, the net revenue we generated in China Mainland represented 10% of our total net revenue.
We have experienced significant net revenue growth in China Mainland and believe that as we continue to expand our operations and build our brand awareness, net revenue will continue to increase in this market. We believe China Mainland net revenue growth will drive an increase in our overall international net revenue. We plan to continue to invest in China Mainland and expect that the majority of our company-operated store openings in 2024 will be in this market.
We operate lululemon branded retail locations in China Mainland in a variety of different formats including different sizes of company-operated stores, outlets, pop-ups, and other temporary locations. We also serve our guests via our WeChat store and on third party marketplaces such as T-Mall and JD.com.
   2023
 2022
 2021
 (In thousands)
Net revenue   $ 7,631,647 $ 6,817,454 $ 5,299,906
 Net revenue growth   11.9 % 28.6 % 40.3 %
      2023
 2022
 2021
 (In thousands)
Net revenue   $ 963,760 $ 576,503 $ 434,261
 Net revenue growth   67.2 % 32.8 % 80.3 %
   3

Rest of World
In 2023, the net revenue we generated in APAC and EMEA represented 11% of our total net revenue.
We have experienced significant net revenue growth in APAC and EMEA and intend to continue to invest in these markets to build brand awareness. Where we identify growth opportunities, we plan to open new retail locations, including in new markets across the EMEA and APAC regions.
We operate lululemon branded retail locations in these markets in a variety of different formats including different sizes of company-operated stores, outlets, pop-ups, and stores operated by third-parties under supply and license agreements in the Middle East and Israel. We also serve our guests via our country specific websites, our mobile app, and through third party regional marketplaces, such as Zalando, Lazada, and SSG.
Our Selling Channels
We conduct our business through a number of different channels in each market:
Company-operated stores: In addition to serving as a venue to sell our products, our stores give us a direct connection to our guests, which we view as a valuable tool in helping us build our brand and product lines as well as enabling our omni- channel capabilities. Our retail stores are located primarily on street locations, in lifestyle centers, and in malls. Our sales per square foot was $1,609, $1,580, and $1,443 for 2023, 2022, and 2021 respectively.
   2023
 2022
 2021
 (In thousands)
Net revenue   $ 1,023,871 $ 716,561 $ 522,450
 Net revenue growth   42.9 % 37.2 % 36.3 %
     Number of company-operated stores by market
 January 28, 2024
 January 29, 2023
 United States   367 350
Canada   71 69
 Americas   438 419
 China Mainland   127 99
 Australia   33 32
South Korea   19 16
Hong Kong SAR   9 9
Japan   8 7
New Zealand   8 8
Taiwan   8 7
Singapore   7 8
Malaysia   3 2
Macau SAR   2 2
Thailand   1 —
 APAC   98 91
  4

  Number of company-operated stores by market
 January 28, 2024
 January 29, 2023
 United Kingdom   20 20
Germany   9 10
France   6 4
Ireland   4 4
Spain   3 3
Netherlands   2 1
Sweden   2 2
Norway   1 1
Switzerland   1 1
 EMEA   48 46
  Total company-operated stores   711 655
   E-commerce: We believe e-commerce is convenient for our guests and also allows us to reach and serve guests in markets beyond where our physical retail locations are based. We believe this channel is effective in building brand awareness, especially in new markets. We serve our guests via our e-commerce websites, other country and region-specific websites, digital marketplaces, and mobile apps. E-commerce net revenue includes our buy online pick-up in store, back-back room, and ship from store omni-channel retailing capabilities.
Other channels: We also use certain other distribution channels, generally with the goal of building brand awareness and providing broader access to our products. These other channels include:
• Temporary locations - Our seasonal stores and pop-ups are typically opened for a short period of time enabling us to serve guests during peak shopping periods in markets where we do not ordinarily have a physical location, or to expand access in markets where we see high demand at our existing locations.
• Wholesale - We sell to partners that offer convenient access for both core and new guests, including yoga and fitness studios, university campus retailers, and other select partners.
• Outlets - We utilize outlets to sell slower moving inventory and inventory from prior seasons at discounted prices. As of January 28, 2024, we operated 47 outlets, the majority of which were in the Americas.
• Like New - Our re-commerce program allows guests to exchange their gently used lululemon products for merchandise credit. Those products are then verified and quality checked before being resold online at likenew.lululemon.com. We believe this program is a step towards a circular eco-system and helps reduce our environmental footprint.
• License and supply arrangements - We enter into license and supply arrangements when we believe it will be to our advantage to partner with third parties with significant experience and proven success in certain target markets. Under these arrangements we have granted certain third parties the right to operate lululemon branded retail locations and to sell lululemon products on websites in specific countries.
  Number of retail locations operated by third parties by market
 January 28, 2024
 January 29, 2023
 Mexico   15 12
United Arab Emirates   8 7
Saudi Arabia   6 3
Israel   3 —
Kuwait   3 1
Qatar   3 3
Bahrain   1 —
  Total locations operated by third parties under license and supply arrangements 39 26
   5

Integrated Marketing
We believe that our brand awareness is relatively low, especially outside of the Americas, and also with our male guests. This represents an opportunity for us and we have a multi-faceted strategy to build brand awareness, affinity, and guest loyalty. This strategy is designed to leverage owned and paid channels, our ambassador network, brand partners, events, and content – to drive awareness, consideration, engagement, conversion, and ultimately loyalty and engagement at the global, regional, and local levels.
Product Design and Development
Our product design and development efforts are led by a team of researchers, scientists, engineers, and designers. Our team is comprised of athletes and users of our products who embody our design philosophy and dedication to premium quality. Our design and development team identifies trends based on market intelligence and research, proactively seeks the input of our guests and our ambassadors, and broadly seeks inspiration consistent with our goals of function, style, and technical superiority.
As we strive to continue to provide our guests with technically advanced fabrics, our team works closely with our suppliers to incorporate the latest in technical innovation, bringing particular specifications to our products. We partner with independent inspection, verification, and testing companies, who conduct a variety of tests on our fabrics, testing performance characteristics including pilling, shrinkage, abrasion resistance, and colorfastness. We develop proprietary fabrics and collaborate with leading fabric and trims suppliers to manufacture fabrics and trims that we generally seek to protect through agreements, trademarks, and as trade-secrets.
Sourcing and Manufacturing
We do not own or operate any manufacturing facilities. We rely on a limited number of suppliers to provide fabrics for, and to produce, our products. The following statistics are based on cost.
We work with a group of approximately 49 vendors that manufacture our products, five of which produced 55% of our products in 2023, with the largest manufacturer producing 17%. During 2023, 42% of our products were manufactured in Vietnam, 16% in Cambodia, 11% in Sri Lanka, 10% in Indonesia, and 8% in Bangladesh, and the remainder in other regions.
We work with a group of approximately 67 suppliers to provide the fabrics for our products. In 2023, 52% of our fabrics were produced by our top five fabric suppliers, with the largest manufacturer producing 19%. During 2023, 40% of our fabrics originated from Taiwan, 26% from China Mainland, and 12% from Sri Lanka, and the remainder from other regions.
We also source other raw materials which are used in our products, including items such as content labels, elastics, buttons, clasps, and drawcords from suppliers located predominantly in APAC and China Mainland.
We have developed long-standing relationships with a number of our vendors and take care to ensure that they share our commitment to quality and ethics. We do not, however, have any long-term contracts with the majority of our suppliers or manufacturing sources for the production and supply of our fabrics and garments, and we compete with other companies for fabrics, raw materials, and production. We require that all of our suppliers and manufacturers adhere to our Vendor Code of Ethics regarding social and environmental sustainability practices. Our product quality and sustainability teams closely assess and monitor each supplier's compliance with applicable laws and our Vendor Code of Ethics, including by partnering with leading inspection and verification firms.
Distribution Facilities
We operate and distribute finished products from our distribution facilities in the United States, Canada, and Australia. We own our distribution center in Groveport, Ohio, and lease our other distribution facilities. We also utilize third-party logistics providers in a number of countries in which we operate to warehouse and distribute finished products from their warehouse locations. We regularly evaluate our distribution infrastructure and consolidate or expand our distribution capacity as we believe appropriate for our operations and to meet anticipated needs.
Competition
Competition in the athletic apparel industry is based principally on brand image and recognition as well as product quality, innovation, style, distribution, and price. We believe we successfully compete on the basis of our premium brand image and our technical product innovation. We also believe our ability to introduce new product innovations, combine function and fashion, and connect through in-store, online, and community experiences sets us apart from our competition. In
6

addition, we believe our vertical retail distribution strategy and community-based marketing differentiates us further, allowing us to more effectively control our brand image and connect with our guests.
The market for athletic apparel is highly competitive. It includes increasing competition from established companies that are expanding their production and marketing of performance products, as well as from frequent new entrants to the market. We are in direct competition with wholesalers and direct sellers of athletic apparel and footwear, such as Nike, Inc., adidas AG, PUMA, Under Armour, Inc., and Columbia Sportswear Company. We also compete with retailers who have expanded to include women's athletic apparel including The Gap, Inc. (including the Athleta brand), Victoria's Secret with its sport and lounge offering, and Urban Outfitters, Inc.
Seasonality
Our business is affected by the general seasonal trends common to the retail apparel industry. Our annual net revenue is typically weighted more heavily toward our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season in the Americas, while our operating expenses are generally more equally distributed throughout the year. As a result, a substantial portion of our operating profits are typically generated in the fourth quarter of our fiscal year. For example, we generated approximately 43% of our full year operating profit during the fourth quarter of 2023.
Human Capital
Our Impact Agenda sets out our social and environmental goals and strategy across three pillars - Be Human, Be Well, and Be Planet. Details can be found in our Impact Report on our website (https://corporate.lululemon.com/our-impact).
Included within our Impact Agenda is a goal to invest a total of $75.0 million to advance equity in well-being by the end of 2025. As of January 28, 2024, we have invested a total of $44.8 million(1) towards this goal.
The Be Human pillar of our Impact Agenda sets out our focus areas with respect to human capital, including:
• Inclusion, Diversity, Equity, and Action (“IDEA”);
• Employee empowerment; and
• Fair labor practices and the well-being of the people who make our products.
Inclusion, Diversity, Equity and Action
We believe IDEA is fundamental for shaping and building our company, industry, and communities, and for creating a shared sense of respect and belonging. By continuously striving to be an inclusive, diverse, and equitable organization, we aim to reflect a variety of perspectives and meet the needs of the global communities we serve. We are proud that as of
January 28, 2024, approximately 50% of our board of directors, 70% of our senior executive leadership team, and 50% of our vice presidents and above are women, while approximately 75% of our overall workforce are women.(2)
 (1) We have contributed $44.8 million to lululemon's Centre for Social Impact, $32.4 million of which has been contributed directly to social impact organizations. The remaining $12.4 million primarily consists of contributions toward a donor-advised fund for future grant making.
(2) While we track male and female genders, we acknowledge this is not fully encompassing of all gender identities. 7

We use an annual voluntary global survey to help us understand the demographics of our employee base and provide us with access to tangible metrics to help us understand our employees’ sense of inclusion and belonging.(3) In 2023, the participation rate was approximately 85%. Our overall goal is to reflect the racial diversity(4) of the communities we serve and in which we operate.
Director and Assistant Store Manager and Above Racial Diversity
Store Employee Racial Diversity
 35% 30% 25% 20% 15% 10%
5%
—%
2021
2022 2023
45% 40% 35% 30% 25% 20% 15% 10%
5% —%
2021 2022 2023
                   We seek to maintain 100% gender pay equity within our entire global employee population, meaning equal pay for equal work across genders, by geography. We have achieved full pay equity, including gender and race, in the United States, which is the only country where we currently collect individually attributable race data.
We offer all employees IDEA education, training, and guided conversations on a variety of topics, including anti-racism, anti-discrimination, and inclusive leadership behaviors. We have established People Networks, which are employee resource groups for employees who have marginalized and historically underrepresented identities. We see significant engagement in IDEA education and training across our global employee base. We aim to foster a culture of inclusion by making IDEA part of our everyday conversation, and frequently review our policies, programs, and practices to identify ways to be more inclusive and equitable.
Employee Empowerment
We believe our people are key to the success of our business. As of January 28, 2024 we employed approximately 38,000 people worldwide. We strive to foster a distinctive culture rooted in our core values that attracts and retains passionate and motivated employees who are driven to achieve personal and professional goals. We believe our people succeed because we create an environment that fosters growth and is diverse and equitable.
China Mainland 10%
Canada 24%
Rest of World 14%
United States 52%
China Mainland 8%
Canada 26%
Rest of World 12%
United States 54%
China Mainland 6%
Canada 26%
Rest of World 11%
United States 57%
2023 Employees by Region
2022 Employees by Region
2021 Employees by Region
             (3) The voluntary demographic survey results presented above relate to all of our employees in the Americas, Europe, Australia, and New Zealand. (4) "Racial diversity" is used to measure the non-white population.
8
37%
40%
41%
   27%
27%
 23%

We assess our performance and identify opportunities for improvement through an annual employee engagement survey. In 2023, the participation rate was approximately 85% and our employee engagement score exceeded the retail industry average.(5) Our engagement score suggests our people are proud to work for lululemon, they are motivated to contribute to work that aligns with their purpose, and they recommend lululemon as a great place to work.
We understand that health and wealth programs need to offer choice at all stages of life. Our current offerings support our goal of becoming the number one place where people come to develop and grow as inclusive leaders, and we regularly use feedback to inform opportunities to support this goal. These offerings include, among other things:
• Competitive compensation which rewards exceptional performance;
• A Fund your Future program for eligible employees which offers partial contribution matches to a pension plan and employee share purchase plan;
• An annual paid VALUES (Volunteer, Awareness, Life, Unity, Empowerment, Support) Day, competitive paid time off, and sick leave;
• An employee discount program, which includes a lifetime discount to celebrate the contribution of our long-tenured employees to keep them within our collective, even when they have moved on to pursue goals outside of lululemon;
• Reimbursement programs which reward physical activity;
• A parenthood program which is a gender-neutral benefit that provides all eligible employees up to six months of paid leave;
• An employee assistance program which provides free confidential support to all our employees and their families in a variety of areas from mental well-being to financial services to advice for new parents; and
• Training and development of all of our employees including, but not limited to, mentorship programs, IDEA internships, leadership development, vision and goals, and coaching.
Fair Labor Practices and the Well-Being of the People who Make our Products
We work with suppliers who we believe share our values and collaborate with us to uphold robust standards, address systemic challenges, and support the well-being of people who make our products. Our Responsible Supply Chain program is built on three pillars:
• Monitoring - Assessing and improving working conditions in factories.
• Integration - Integrating responsible purchasing practices across enterprise strategies, processes, and tools.
• Collaboration - Working with multi-stakeholder organizations, industry, suppliers, and brands to support systemic change and impact.
Our Vendor Code of Ethics outlines our commitment to respect human and labor rights, and promote safe and fair working conditions for people in our supply chain. The code, which is based on international standards, sets the minimum standards for our supplier partners and is a component of our supplier and manufacturer agreements. Our finished goods and fabric suppliers are assessed against the Vendor Code of Ethics prior to forming a business relationship, and regularly thereafter; we work with factories that can uphold our strict requirements.
Our Foreign Migrant Worker Standard sets out our minimum requirements for what we believe are the appropriate and ethical recruitment, employment, and repatriation of foreign migrant workers.
Intellectual Property
We have trademark rights on many of our products and believe having distinctive marks that are readily identifiable is an important factor in building our brand image and in distinguishing our products from the products of others. We consider our lululemon and wave design trademarks to be among our most valuable assets. In addition, we own many other trademarks for the names of several of our brands, slogans, fabrics and products. We own registered and pending U.S. and foreign utility and design patents, industrial designs in Canada, and registered community designs in Europe that protect our product innovations, distinctive apparel, and accessory designs.
(5) Based on an industry benchmark provided by the third party that administers this survey to our employees. 9
 
Securities and Exchange Commission Filings
Our website address is www.lululemon.com. We provide free access to various reports that we file with, or furnish to, the United States Securities and Exchange Commission, or the SEC, through our website, as soon as reasonably practicable after they have been filed or furnished. These reports include, but are not limited to, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports. Our SEC reports can also be accessed through the SEC's website at www.sec.gov. Also available on our website are printable versions of our Global Code of Business Conduct and Ethics and charters of the standing committees of our board of directors. Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
ITEM 1A. RISK FACTORS
In addition to the other information contained in this Form 10-K, the following risk factors should be considered in evaluating our business. Our business, financial condition, or results of operations could be materially adversely affected as a result of any of these risks.
Risks related to our business and industry
Our success depends on our ability to maintain the value and reputation of our brand.
The lululemon name is integral to our business as well as to the implementation of our expansion strategies. Maintaining, promoting, and positioning our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide a consistent, high quality product, and guest experience. We rely on social media, as one of our marketing strategies, to have a positive impact on both our brand value and reputation. Our brand and reputation could be adversely affected if we fail to achieve these objectives, if our public image was to be tarnished by negative publicity, which could be amplified by social media, if we fail to deliver innovative and high quality products acceptable to our guests, or if we face or mishandle a product recall. Our reputation could also be impacted by adverse publicity, whether or not valid, regarding allegations that we, or persons associated with us or formerly associated with us, have violated applicable laws or regulations, including but not limited to those related to safety, employment, discrimination, harassment, whistle-blowing, privacy, corporate citizenship, improper business practices, or cybersecurity. Certain activities on the part of stakeholders, including nongovernmental organizations and governmental institutions, could cause reputational damage, distract senior management, and disrupt our business. Additionally, while we devote considerable effort and resources to protecting our intellectual property, if these efforts are not successful the value of our brand may be harmed. Any harm to our brand and reputation could have a material adverse effect on our financial condition.
Changes in consumer shopping preferences, and shifts in distribution channels could materially impact our results of operations.
We operate an omni-channel retail model and aim to efficiently and effectively serve our guests in the ways most convenient to them. We operate a combination of physical retail locations and e-commerce services via our websites, other region-specific websites, digital marketplaces, and mobile apps. Our physical retail locations remain a key part of our growth strategy and we view them as a valuable tool in helping us build our brand and product line as well as enabling our omni- channel capabilities. We plan to continue to expand square footage and open new company-operated stores to support our growth objectives. The diversion of sales from our company-operated stores could adversely impact our return on investment and could lead to impairment charges and store closures, including lease exit costs. We could have difficulty in recreating the in-store experience through direct channels. Our failure to successfully integrate our digital and physical channels and respond to these risks might adversely impact our business and results of operations, as well as damage our reputation and brand.
If any of our products have manufacturing or design defects or are otherwise unacceptable to us or our guests, our business could be harmed.
We have occasionally received, and may in the future receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. We have also received, and may in the future receive, products that are otherwise unacceptable to us or our guests. Under these circumstances, unless we are able to obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. Additionally, if the unacceptability of our products is not discovered until after such products are sold, our guests could lose confidence in our products or we could face a product recall and our results of operations could suffer and our business, reputation, and brand could be harmed.
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Our lululemon Studio subsidiary offers complex hardware and software products and services that can be affected by design and manufacturing defects. Sophisticated operating system software and applications, such as those offered by lululemon Studio, often have issues that can unexpectedly interfere with the intended operation of hardware or software products. Defects may also exist in components and products that we source from third parties. Any defects could make our products and services unsafe and create a risk of environmental or property damage or personal injury and we may become subject to the hazards and uncertainties of product liability claims and related litigation. The occurrence of real or perceived defects in any of our products, now or in the future, could result in additional negative publicity, regulatory investigations, or lawsuits filed against us, particularly if guests or others who use or purchase our lululemon Studio products are injured. Even if injuries are not the result of any defects, if they are perceived to be, we may incur expenses to defend or settle any claims and our brand and reputation may be harmed.
We operate in a highly competitive market and our competitors may compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability.
The market for technical athletic apparel is highly competitive. Competition may result in pricing pressures, reduced profit margins or lost market share, or a failure to grow or maintain our market share, any of which could substantially harm our business and results of operations. We compete directly against wholesalers and direct retailers of athletic apparel, including large, diversified apparel companies with substantial market share, and established companies expanding their production and marketing of technical athletic apparel, as well as against retailers specifically focused on women's athletic apparel. We also face competition from wholesalers and direct retailers of traditional commodity athletic apparel, such as cotton T-shirts and sweatshirts. Many of our competitors are large apparel and sporting goods companies with strong worldwide brand recognition. Because of the fragmented nature of the industry, we also compete with other apparel sellers, including those specializing in yoga apparel and other activewear. Many of our competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, store development, marketing, distribution, and other resources than we do. Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can.
We may fail to acknowledge or react appropriately to the entry or growth of a viable competitor or disruptive force, and could struggle to continue to innovate, differentiate, and sustain the growth of our brand. The increasing dominance and presence of our brand may also drive guests towards alternative emerging competitors.
In addition, because we hold limited patents and exclusive intellectual property rights in the technology, fabrics or processes underlying our products, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrication techniques, and styling similar to our products.
Our sales and profitability may decline as a result of increasing costs and decreasing selling prices.
Our business is subject to significant pressure on costs and pricing caused by many factors, including intense competition, constrained sourcing capacity and related inflationary pressure, the availability of qualified labor and wage inflation, pressure from consumers to reduce the prices we charge for our products, and changes in consumer demand. These and other factors have, and may in the future, cause us to experience increased costs, reduce our prices to consumers or experience reduced sales in response to increased prices, any of which could cause our operating margin to decline if we are unable to offset these factors with reductions in operating costs and could have a material adverse effect on our financial condition, operating results, and cash flows.
If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative, and differentiated products, we may not be able to maintain or increase our sales and profitability.
Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. If we are unable to introduce new products or novel technologies in a timely manner or our new products or technologies are not accepted by our guests, our competitors may introduce similar products in a more timely fashion, which could hurt our goal to be viewed as a leader in technical athletic apparel innovation. Our new products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of athletic apparel or away from these types of products altogether, and our future success depends in part on our ability to anticipate and respond to these changes. Our failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels. We may not have relevant data to effectively understand and react to consumer preferences and expectations. Even if we are successful in anticipating consumer preferences, our ability to adequately react to and address those preferences will in part depend upon our continued ability to develop and introduce innovative, high-quality products. Our failure to effectively introduce new products that are accepted by consumers could
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result in a decrease in net revenue and excess inventory levels, which could have a material adverse effect on our financial condition.
Our results of operations could be materially harmed if we are unable to accurately forecast guest demand for our products.
To ensure adequate inventory supply, we must forecast inventory needs and place orders with our manufacturers based on our estimates of future demand for particular products. Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in guest demand for our products or for products of our competitors, our failure to accurately forecast guest acceptance of new products, product introductions by competitors, unanticipated changes in general market conditions (for example, because of global economic concerns such as inflation, an economic downturn, or delays and disruptions resulting from local and international shipping delays and labor shortages), and weakening of economic conditions or consumer confidence in future economic conditions (for example, because of inflationary pressures, or because of sanctions, restrictions, and other responses related to geopolitical events). If we fail to accurately forecast guest demand, we may experience excess inventory levels or a shortage of products available for sale in our stores or for delivery to guests.
Inventory levels in excess of guest demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margin to suffer and could impair the strength and exclusivity of our brand. Conversely, if we underestimate guest demand for our products, our manufacturers may not be able to deliver products to meet our requirements, and this could result in damage to our reputation and guest relationships.
Our limited operating experience and limited brand recognition in new international markets and new product categories may limit our expansion and cause our business and growth to suffer.
Our future growth depends in part on our expansion efforts outside of the Americas. We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in any new market. In connection with our expansion efforts we may encounter obstacles we did not face in the Americas, including cultural and linguistic differences, differences in regulatory environments, labor practices and market practices, difficulties in keeping abreast of market, business and technical developments, and international guests' tastes and preferences. We may also encounter difficulty expanding into new international markets because of limited brand recognition leading to delayed acceptance of our technical athletic apparel by guests in these new international markets. Our failure to develop our business in new international markets or disappointing growth outside of existing markets could harm our business and results of operations.
In addition, our continued growth depends in part on our ability to expand our product categories and introduce new product lines. We may not be able to successfully manage integration of new product categories or the new product lines with our existing products. Selling new product categories and lines will require our management to test and develop different strategies in order to be successful. We may be unsuccessful in entering new product categories and developing or launching new product lines, which requires management of new suppliers, potential new customers, and new business models. Our management may not have the experience of selling in these new product categories and we may not be able to grow our business as planned. For example, in July 2020, we acquired MIRROR, an in-home fitness company with an interactive workout platform that features live and on-demand classes. If we are unable to effectively and successfully further develop these and future new product categories and lines, we may not be able to increase or maintain our sales and our operating margins may be adversely affected. This may also divert the attention of management and cause additional expenses.
We may, from time to time, evaluate and pursue other strategic investments or acquisitions. These involve various inherent risks and the benefits sought may not be realized.
If we continue to grow at a rapid pace, we may not be able to effectively manage our growth and the increased complexity of our business and as a result our brand image and financial performance may suffer.
If our operations continue to grow at a rapid pace, we may experience difficulties in obtaining sufficient raw materials and manufacturing capacity to produce our products, as well as delays in production and shipments, as our products are subject to risks associated with overseas sourcing and manufacturing. We could be required to continue to expand our sales and marketing, product development and distribution functions, to upgrade our management information systems and other processes and technology, and to obtain more space for our expanding workforce. This expansion could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring, training, and managing an increasing number of employees. These difficulties could result in the erosion of our brand image which could have a material adverse effect on our financial condition.
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We are subject to risks associated with leasing retail and distribution space subject to long-term and non-cancelable leases.
We lease the majority of our stores under operating leases and our inability to secure appropriate real estate or lease terms could impact our ability to grow. Our leases generally have initial terms of between two and 15 years, and generally can be extended in increments between two and five years, if at all. We generally cannot cancel these leases at our option. If an existing or new store is not profitable, and we decide to close it, as we have done in the past and may do in the future, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. Similarly, we may be committed to perform our obligations under the applicable leases even if current locations of our stores become unattractive as demographic patterns change. In addition, as each of our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could require us to close stores in desirable locations.
We also lease the majority of our distribution centers and our inability to secure appropriate real estate or lease terms could impact our ability to deliver our products to the market.
Our future success is substantially dependent on the service of our senior management and our ability to maintain our culture and to attract, manage, and retain highly qualified individuals.
The performance of our senior management team and other key employees may not meet our needs and expectations. Also, the loss of services of any of these key employees, or any negative public perception with respect to these individuals, may be disruptive to, or cause uncertainty in, our business and could have a negative impact on our ability to manage and grow our business effectively. Such disruption could have a material adverse impact on our financial performance, financial condition, and the market price of our stock.
If we are unable to successfully maintain and evolve our unique culture, offer competitive compensation and benefits, and a desirable work model, we may be unable to attract and retain highly qualified individuals to support our business and continued growth. Our work model may not meet the needs and expectations of our employees and may not be perceived as favorable compared to other companies. Unionization efforts or other employee organizing activities could lead to higher people costs or reduce our flexibility to manage our employees which may negatively disrupt our operations. We also face risks related to employee engagement and productivity which could result in increased headcount and lead to increased labor costs.
Our business is affected by seasonality, which could result in fluctuations in our operating results.
Our business is affected by the general seasonal trends common to the retail apparel industry. Our annual net revenue is typically weighted more heavily toward our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season, while our operating expenses are more equally distributed throughout the year. This seasonality, along with other factors that are beyond our control, including weather conditions and the effects of climate change, could adversely affect our business and cause our results of operations to fluctuate.
Risks related to our supply chain
Disruptions of our supply chain could have a material adverse effect on our operating and financial results.
Disruption of our supply chain capabilities due to trade restrictions, political instability, severe weather, natural disasters, public health crises, war, terrorism, product recalls, labor supply shortages or stoppages, the financial or operational instability of key suppliers and carriers, changes in diplomatic or trade relationships (including any sanctions, restrictions, and other responses such as those related to current geopolitical events), or other reasons could impair our ability to distribute our products. To the extent we are unable to mitigate the likelihood or potential impact of such events, there could be a material adverse effect on our operating and financial results.
We rely on international suppliers and any significant disruption to our supply chain could impair our ability to procure or distribute our products.
We do not manufacture our products or raw materials and rely on suppliers and manufacturers located predominantly in APAC and China Mainland. We also source other materials used in our products, including items such as content labels, elastics, buttons, clasps, and drawcords, from suppliers located primarily in this region. Based on cost, during 2023:
• Approximately 42% of our products were manufactured in Vietnam, 16% in Cambodia, 11% in Sri Lanka, 10% in Indonesia, and 8% in Bangladesh, and the remainder in other regions.
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• Approximately 40% of the fabric used in our products originated from Taiwan, 26% from China Mainland, 12% from Sri Lanka, and the remainder from other regions.
The entire apparel industry, including our company, could face supply chain challenges as a result of the impacts of global public health crises, political instability, inflationary pressures, macroeconomic conditions, and other factors, including reduced freight availability and increased costs, port disruption, manufacturing facility closures, and related labor shortages and other supply chain disruptions.
Our supply chain capabilities may be disrupted due to these or other factors, such as severe weather, natural disasters, war or other military conflicts, terrorism, labor supply shortages or stoppages, the financial or operational instability of key suppliers or the countries in which they operate, or changes in diplomatic or trade relationships (including any sanctions, restrictions, and other responses to geopolitical events). Any significant disruption in our supply chain capabilities could impair our ability to procure or distribute our products, which would adversely affect our business and results of operations.
A relatively small number of vendors supply and manufacture a significant portion of our products, and losing one or more of these vendors could adversely affect our business and results of operations.
Many of the specialty fabrics used in our products are technically advanced textile products developed and manufactured by third parties and may be available, in the short-term, from only one or a limited number of sources. We have no long-term contracts with any of our suppliers or manufacturers for the production and supply of our raw materials and products, and we compete with other companies for fabrics, other raw materials, and production. During 2023, we worked with approximately 49 vendors to manufacture our products and 67 suppliers to provide the fabric for our products. Based on cost, during 2023:
• Approximately 55% of our products were manufactured by our top five vendors, the largest of which produced approximately 17% of our products; and
• Approximately 52% of our fabrics were produced by our top five fabric suppliers, the largest of which produced approximately 19% of fabric used.
We have experienced, and may in the future experience, a significant disruption in the supply of fabrics or raw materials and may be unable to locate alternative suppliers of comparable quality at an acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to replace an existing supplier or manufacturer, we may be unable to locate additional supplies of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or fill our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with its quality control, responsiveness and service, financial stability, and labor and other ethical practices. Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products, and quality control standards.
Our supply of fabric or manufacture of our products could be disrupted or delayed by economic or political or global health conditions, and the related government and private sector responsive actions such as closures, restrictions on product shipments, and travel restrictions. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from our markets or from other participants in our supply chain. In addition, freight capacity issues continue to persist worldwide as there is much greater demand for shipping and reduced capacity and equipment. Any delays, interruption, or increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability to meet guest demand for our products and result in lower net revenue and income from operations both in the short and long term.
Our business could be harmed if our suppliers and manufacturers do not comply with our Vendor Code of Ethics or applicable laws.
While we require our suppliers and manufacturers to comply with our Vendor Code of Ethics, which includes labor, health and safety, and environment standards, we do not control their operations. If suppliers or contractors do not comply with these standards or applicable laws or there is negative publicity regarding the production methods of any of our suppliers or manufacturers, even if unfounded or not specific to our supply chain, our reputation and sales could be adversely affected, we could be subject to legal liability, or could cause us to contract with alternative suppliers or manufacturing sources.
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The fluctuating cost of raw materials could increase our cost of goods sold.
The fabrics used to make our products include synthetic fabrics whose raw materials include petroleum-based products. Our products also include silver and natural fibers, including cotton. Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries, and other factors that are generally unpredictable and beyond our control. Any and all of these factors may be exacerbated by global climate change. In addition, political instability, trade relations, sanctions, inflationary pressure, or other geopolitical or economic conditions could cause raw material costs to increase and have an adverse effect on our future margins. Increases in the cost of raw materials, including petroleum or the prices we pay for silver and our cotton yarn and cotton-based textiles, could have a material adverse effect on our cost of goods sold, results of operations, financial condition, and cash flows.
If we encounter problems with our distribution system, our ability to deliver our products to the market and to meet guest expectations could be harmed.
We rely on our distribution facilities for substantially all of our product distribution. Our distribution facilities include computer controlled and automated equipment, which means their operations may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, electronic or power interruptions, or other system failures. In addition, our operations could also be interrupted by labor difficulties, pandemics, the impacts of climate change, extreme or severe weather conditions or by floods, fires, or other natural disasters near our distribution centers. If we encounter problems with our distribution system, our ability to meet guest expectations, manage inventory, complete sales, and achieve objectives for operating efficiencies could be harmed.
Increasing labor costs and other factors associated with the production of our products in South Asia and South East Asia could increase the costs to produce our products.
A significant portion of our products are produced in South Asia and South East Asia and increases in the costs of labor and other costs of doing business in the countries in this area could significantly increase our costs to produce our products and could have a negative impact on our operations and earnings. Factors that could negatively affect our business include labor shortages and increases in labor costs, labor disputes, pandemics, the impacts of climate change, difficulties and additional costs in transporting products manufactured from these countries to our distribution centers and significant revaluation of the currencies used in these countries, which may result in an increase in the cost of producing products. Also, the imposition of trade sanctions or other regulations against products imported by us from, or the loss of "normal trade relations" status with any country in which our products are manufactured, could significantly increase our cost of products and harm our business.
Risks related to information security and technology
We may be unable to safeguard against security breaches which could damage our customer relationships and result in significant legal and financial exposure.
As part of our normal operations, we receive confidential, proprietary, and personally identifiable information, including credit card information, and information about our customers, our employees, job applicants, and other third parties. Our business employs systems and websites that allow for the storage and transmission of this information. However, despite our safeguards and security processes and protections, security breaches could expose us to a risk of theft or misuse of this information, and could result in litigation and potential liability.
The retail industry, in particular, has been the target of many recent cyber-attacks. We may not have the resources or technical sophistication to be able to anticipate or prevent rapidly evolving types of cyber-attacks. Attacks may be targeted at us, our vendors or customers, or others who have entrusted us with information. In addition, despite taking measures to safeguard our information security and privacy environment from security breaches, our customers and our business could still be exposed to risk. Actual or anticipated attacks may cause us to incur increasing costs including costs to deploy additional personnel and protection technologies, train employees and engage third party experts and consultants. Advances in computer capabilities, new technological discoveries or other developments may result in the technology used by us to protect transaction or other data being breached or compromised. Measures we implement to protect against cyber-attacks may also have the potential to impact our customers' shopping experience or decrease activity on our websites by making them more difficult to use.
Data and security breaches can also occur as a result of non-technical issues including intentional or inadvertent breach by employees or persons with whom we have commercial relationships that result in the unauthorized release of personal or
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confidential information. Any compromise or breach of our security could result in a violation of applicable privacy and other laws, significant legal and financial exposure, and damage to our brand and reputation or other harm to our business.
In addition, the increased use of employee-owned devices for communications as well as work-from-home arrangements present additional operational risks to our technology systems, including increased risks of cyber-attacks. Further, like other companies in the retail industry, we have in the past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and other attempts to breach, or gain unauthorized access to, our systems. To date, these attacks have not had a material impact on our operations, but they may have a material impact in the future.
Privacy and data protection laws increase our compliance burden.
We are subject to a variety of privacy and data protection laws and regulations that change frequently and have requirements that vary from jurisdiction to jurisdiction. For example, we are subject to significant compliance obligations under privacy laws such as the General Data Privacy Regulation ("GDPR") in the European Union, the Personal Information Protection and Electronic Documents Act (“PIPEDA”) in Canada, the California Consumer Privacy Act ("CCPA") modified by the California Privacy Rights Act (“CPRA”), and the Personal Information Protection Law (“PIPL”) in the People's Republic of China ("PRC")(6). Some privacy laws prohibit the transfer of personal information to certain other jurisdictions. We are subject to privacy and data protection audits or investigations by various government agencies. Our failure to comply with these laws subjects us to potential regulatory enforcement activity, fines, private litigation including class actions, and other costs. Our efforts to comply with privacy laws may complicate our operations and add to our compliance costs. A significant privacy breach or failure or perceived failure by us or our third-party service providers to comply with privacy or data protection laws, regulations, policies or regulatory guidance might have a materially adverse impact on our reputation, business operations and our financial condition or results of operations.
Disruption of our technology systems or unexpected network interruption could disrupt our business.
We are increasingly dependent on technology systems and third-parties to operate our e-commerce websites, process transactions, respond to guest inquiries, manage inventory, purchase, sell and ship goods on a timely basis, and maintain cost- efficient operations. The failure of our technology systems to operate properly or effectively, problems with transitioning to upgraded or replacement systems, or difficulty in integrating new systems, could adversely affect our business. In addition, we have e-commerce websites in the United States, Canada, and internationally. Our technology systems, websites, and operations of third parties on whom we rely, may encounter damage or disruption or slowdown caused by a failure to successfully upgrade systems, system failures, viruses, computer "hackers", natural disasters, or other causes. These could cause information, including data related to guest orders, to be lost or delayed which could, especially if the disruption or slowdown occurred during the holiday season, result in delays in the delivery of products to our stores and guests or lost sales, which could reduce demand for our products and cause our sales to decline. The concentration of our primary offices, several of our distribution centers, and a number of our stores along the west coast of North America could amplify the impact of a natural disaster occurring in that area to our business, including to our technology systems. In addition, if changes in technology cause our information systems to become obsolete, or if our information systems are inadequate to handle our growth, we could lose guests. We have limited back-up systems and redundancies, and our technology systems and websites have experienced system failures and electrical outages in the past which have disrupted our operations. Any significant disruption in our technology systems or websites could harm our reputation and credibility, and could have a material adverse effect on our business, financial condition, and results of operations.
Our technology-based systems that give our customers the ability to shop with us online may not function effectively.
Many of our customers shop with us through our e-commerce websites and mobile apps. Increasingly, customers are using tablets and smart phones to shop online with us and with our competitors and to do comparison shopping. We are increasingly using social media and proprietary mobile apps to interact with our customers and as a means to enhance their shopping experience. Any failure on our part to provide attractive, effective, reliable, user-friendly e-commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our
(6) PRC includes China Mainland, Hong Kong SAR, Taiwan, and Macau SAR.
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reputation with customers, have a material adverse impact on the growth of our e-commerce business globally and could have a material adverse impact on our business and results of operations.
Risks related to environmental, social, and governance issues
Climate change, and related legislative and regulatory responses to climate change, may adversely impact our business.
There is increasing concern that a gradual rise in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe, an increase in the frequency, severity, and duration of extreme weather conditions and natural disasters, and water scarcity and poor water quality. These events could adversely impact the cultivation of cotton, which is a key resource in the production of our products, disrupt the operation of our supply chain and the productivity of our contract manufacturers, increase our production costs, impose capacity restraints and impact the types of apparel products that consumers purchase. These events could also compound adverse economic conditions and impact consumer confidence and discretionary spending. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations. In many countries, governmental bodies are enacting new or additional legislation and regulations to reduce or mitigate the potential impacts of climate change. If we, our suppliers, or our contract manufacturers are required to comply with these laws and regulations, or if we choose to take voluntary steps to reduce or mitigate our impact on climate change, we may experience increased costs for energy, production, transportation, and raw materials, increased capital expenditures, or increased insurance premiums and deductibles, which could adversely impact our operations. Inconsistency of legislation and regulations among jurisdictions may also affect the costs of compliance with such laws and regulations. Any assessment of the potential impact of future climate change legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate.
Increased scrutiny from investors and others regarding our environmental, social, governance, or sustainability, responsibilities could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of customers and suppliers to do business with us.
Investor and political advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, and customers have focused increasingly on the environmental, social and governance ("ESG") practices of companies, including those associated with climate change and social responsibility. These parties have placed increased importance on the implications of the social cost of their investments. If our ESG practices do not meet customer, investor, employee, or other stakeholder expectations or do not align with their opinions or values, our brand, reputation, employee retention, and business may be negatively impacted. Any sustainability report that we publish or other ESG disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG policies or practices, including if we overstate the impact of our ESG practices, and this could reduce demand for our products and lead to regulatory enforcement that could restrict our ability to market and sell our products. We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices. Also, our failure, or perceived failure, to meet the standards included in any sustainability disclosure could negatively impact our reputation, employee retention, and the willingness of our customers and suppliers to do business with us.
Risks related to global economic, political, and regulatory conditions
An economic recession, depression, downturn, periods of inflation, or economic uncertainty in our key markets may adversely affect consumer discretionary spending and demand for our products.
Many of our products may be considered discretionary items for consumers. Some of the factors that may influence consumer spending on discretionary items include general economic conditions, high levels of unemployment, pandemics, higher consumer debt levels, reductions in net worth based on market declines and uncertainty, home foreclosures and reductions in home values, fluctuating interest and foreign currency exchange rates and credit availability, government austerity measures, fluctuating fuel and other energy costs, fluctuating commodity prices, inflationary pressure, tax rates and general uncertainty regarding the overall future economic environment. Global economic conditions are uncertain and volatile, due in part to the potential impacts of increasing inflation, the potential impacts of geopolitical uncertainties, and any potential sanctions, restrictions or responses to those conditions. For example, the PRC market presents a number of risks, including changes in laws and regulations, currency fluctuations, increased competition, and changes in economic conditions, including the risk of an economic downturn or recession, trade embargoes, restrictions or other barriers, as well as other conditions that may adversely impact consumer spending, any of which could cause us to fail to achieve anticipated growth. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary
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spending also remain unpredictable and subject to reductions due to credit constraints and uncertainties about the future. Unfavorable economic conditions may lead consumers to delay or reduce purchases of our products. Consumer demand for our products may not reach our targets, or may decline, when there is an economic downturn or economic uncertainty in our key markets. Our sensitivity to economic cycles and any related fluctuation in consumer demand may have a material adverse effect on our financial condition.
Our financial condition could be adversely affected by global or regional health events such as the COVID-19 pandemic and related government, private sector, and individual consumer responsive actions.
The COVID-19 pandemic negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets. The COVID-19 pandemic and related government, private sector, and individual consumer responsive actions negatively impacted our business operations, store traffic, employee availability, supply chain, financial condition, liquidity, and cash flows.
The occurrence or resurgence of global or regional health events such as the COVID-19 pandemic, and the related governmental, private sector and individual consumer responses, could contribute to a recession, depression, or global economic downturn, reduce store traffic and consumer spending, result in temporary or permanent closures of retail locations, offices, and factories, and could negatively impact the flow of goods. Such events could cause health officials to impose restrictions and recommend precautions to mitigate the health crisis such as the temporary closure of our stores, limitations on the number of guests allowed in our stores at any single time, minimum physical distancing requirements, and limited operating hours. A health event such as the COVID-19 pandemic could also negatively impact our employees, guests, and brand by reducing consumer willingness to visit stores, malls, and lifestyle centers, and employee willingness to staff our stores. A global or regional health event may also cause long-term changes to consumer shopping behavior, preferences and demand for our products that may have a material adverse effect on our business.
A global or regional health event such as the COVID-19 pandemic could significantly and adversely impact our supply chain if the factories that manufacture our products, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers are disrupted, temporarily closed, or experience worker shortages.
Global economic and political conditions could adversely impact our results of operations.
Uncertain or challenging global economic and political conditions could impact our performance, including our ability to successfully expand internationally. Global economic conditions could impact levels of consumer spending in the markets in which we operate, which could impact our sales and profitability. Political unrest, such as the turmoil related to current geopolitical events and the related sanctions, restrictions, or other responses, could negatively impact our guests and employees, reduce consumer spending, and adversely impact our business and results of operations.
We may be unable to source and sell our merchandise profitably or at all if new trade restrictions are imposed or existing restrictions become more burdensome.
The United States and the countries in which our products are produced or sold have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty, or tariff levels. The results of any audits or related disputes regarding these restrictions or regulations could have an adverse effect on our financial statements for the period or periods for which the applicable final determinations are made. Countries impose, modify, and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other trade restrictions. Trade restrictions, including tariffs, quotas, embargoes, safeguards, and customs restrictions, could increase the cost or reduce the supply of products available to us, could increase shipping times, or may require us to modify our supply chain organization or other current business practices, any of which could harm our business, financial condition, and results of operations.
We are dependent on international trade agreements and regulations. The countries in which we produce and sell our products could impose or increase tariffs, duties, or other similar charges that could negatively affect our results of operations, financial position, or cash flows.
Adverse changes in, or withdrawal from, trade agreements or political relationships between the United States and the PRC, Canada, or other countries where we sell or source our products, could negatively impact our results of operations or cash flows. General geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions, and changes in tariffs, including sanctions against the PRC, tariffs imposed by the United States and the PRC, and the possibility of additional tariffs or other trade restrictions, could adversely impact our business. It is possible that further tariffs may be introduced, or increased. Such changes could adversely impact our business and could increase the costs of sourcing our
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products from the PRC as well as other countries, or could require us to source our products from different countries. The Uyghur Forced Labor Prevention Act and other similar legislation may lead to greater supply chain compliance costs and delays to us and to our vendors.
Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.
We are subject to the income tax laws of the United States, Canada, and several other international jurisdictions. Our effective income tax rates could be unfavorably impacted by a number of factors, including changes in the mix of earnings amongst countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, new tax interpretations and guidance, the outcome of income tax audits in various jurisdictions around the world, and any repatriation of unremitted earnings for which we have not previously accrued applicable U.S. income taxes and international withholding taxes.
Repatriations from our Canadian subsidiaries are not subject to Canadian withholding taxes if such distributions are made as a return of capital. The extent to which the accumulated earnings of our Canadian subsidiaries can be repatriated as a return of capital is dependent on, among other things, the amount of paid-up-capital in our Canadian subsidiaries and transactions undertaken by our exchangeable shareholders.
Prior to 2022, we had not accrued for Canadian withholding taxes because the accumulated earnings of, or 'net investment' in, our Canadian subsidiaries was either indefinitely reinvested or could be repatriated as a return of capital without the payment of withholding taxes.
Since 2022, the net investment in our Canadian subsidiaries, which was not indefinitely reinvested, exceeded the paid- up capital and therefore we recognized Canadian withholding taxes on the portion of our net investment which we are unable to repatriate free of withholding tax.
In 2024, assuming there are no exchange transactions by our exchangeable shareholders, we will continue to recognize Canadian withholding taxes on the accumulated earnings of our Canadian subsidiaries which are not indefinitely reinvested.
We engage in a number of intercompany transactions across multiple tax jurisdictions. Although we believe that these transactions reflect the accurate economic allocation of profit and that proper transfer pricing documentation is in place, the profit allocation and transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax rates. At the end of 2020, our Advance Pricing Arrangement ("APA") with the Internal Revenue Service and the Canada Revenue Agency expired. This APA stipulated the allocation of certain profits between the U.S. and Canada. We are currently in the process of negotiating the renewal of this arrangement and the final agreed upon terms and conditions thereof could impact our effective tax rate.
Current economic and political conditions make tax rules in any jurisdiction, including the United States and Canada, subject to significant change. Changes in applicable U.S., Canadian, or other international tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our income tax expense and profitability, as they did in fiscal 2017 and fiscal 2018 upon passage of the U.S. Tax Cuts and Jobs Act, and in 2020 with the passage of the Coronavirus Aid, Relief, and Economic Security Act. Certain provisions of the Inflation Reduction Act passed in 2022, including a 15% corporate alternative minimum tax, as well as the similar 15% global minimum tax under the Organization for Economic Cooperation and Development's Pillar Two Global Anti-Base Erosion Rules, may impact our income tax expense, profitability, and capital allocation decisions.
Our failure to comply with trade and other regulations could lead to investigations or actions by government regulators and negative publicity.
The labeling, distribution, importation, marketing, and sale of our products, as well as components of our products, including chemicals, are subject to extensive regulation by various regulatory bodies. These include federal agencies such as the Federal Trade Commission, Consumer Product Safety Commission and state attorneys general in the United States, the Competition Bureau and Health Canada in Canada, the State Administration for Market Regulation of the PRC, General Administration of Customs of the PRC, as well as other federal, state, provincial, local, and international regulatory authorities in the countries in which our products are distributed or sold. If we fail to comply with any of these regulations, we could become subject to enforcement actions or the imposition of significant penalties or claims, which could harm our results of operations or our ability to conduct our business. In addition, any audits and inspections by governmental agencies related to these matters could result in significant settlement amounts, damages, fines, or other penalties, divert financial and management resources, and result in significant legal fees. An unfavorable outcome of any particular proceeding could have an adverse impact on our business, financial condition, and results of operations. In addition, the adoption of new regulations
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or changes in the interpretation of existing regulations may result in significant compliance costs or discontinuation of product sales and could impair the marketing of our products, resulting in significant loss of net revenue.
Our international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act ("FCPA") and other anti-bribery laws applicable to our operations. In many countries, particularly in those with developing economies, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other U.S. and international laws and regulations applicable to us. As we expand our operations across multiple jurisdictions, we could be subject to conflicting laws, or differing consumer sentiment on application of laws, that could lead to non-compliance which could have an adverse effect on our operations. Although we have implemented procedures designed to ensure compliance with the FCPA and similar laws, some of our employees, agents, or other partners, as well as those companies to which we outsource certain of our business operations, could take actions in violation of our policies. Any such violation could have a material and adverse effect on our business.
As we expand internationally, we are subject to complex employee regulations, and if we fail to comply with these regulations, we could be subject to enforcement actions or negative employee relations which could harm our results of operations.
Because a significant portion of our net revenue and expenses are generated in countries other than the United States, fluctuations in foreign currency exchange rates have affected our results of operations and may continue to do so in the future.
The functional currency of our international subsidiaries is generally the applicable local currency. Our consolidated financial statements are presented in U.S. dollars. Therefore, the net revenue, expenses, assets, and liabilities of our international subsidiaries are translated from their functional currencies into U.S. dollars. Fluctuations in the value of the U.S. dollar affect the reported amounts of net revenue, expenses, assets, and liabilities. Foreign currency exchange differences which arise on translation of our international subsidiaries' balance sheets into U.S. dollars are recorded as other comprehensive income (loss), net of tax in accumulated other comprehensive income or loss within stockholders' equity.
We also have exposure to changes in foreign currency exchange rates associated with transactions which are undertaken by our subsidiaries in currencies other than their functional currency. Such transactions include intercompany transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity. As a result, we have been impacted by changes in foreign currency exchange rates and may be impacted for the foreseeable future. The potential impact of currency fluctuation increases as our international expansion increases.
Although we use financial instruments to hedge certain foreign currency risks, these measures may not succeed in fully offsetting the negative impact of foreign currency rate movements.
We are exposed to credit-related losses in the event of nonperformance by the counterparties to forward currency contracts used in our hedging strategies.
Risks related to intellectual property
Our fabrics and manufacturing technology generally are not patented and can be imitated by our competitors. If our competitors sell products similar to ours at lower prices, our net revenue and profitability could suffer.
The intellectual property rights in the technology, fabrics, and processes used to manufacture our products generally are owned or controlled by our suppliers and are generally not unique to us. Our ability to obtain intellectual property protection for our products is therefore limited. We hold limited patents and exclusive intellectual property rights in the technology, fabrics or processes underlying our products. As a result, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrics and styling similar to our products. Because many of our competitors have significantly greater financial, distribution, marketing, and other resources than we do, they may be able to manufacture and sell products based on our fabrics and manufacturing technology at lower prices than we can. If our competitors sell products similar to ours at lower prices, our net revenue and profitability could suffer.
Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position.
We currently rely on a combination of patent, copyright, trademark, trade dress, trade secret, and unfair competition laws, as well as confidentiality procedures and licensing arrangements, to establish and protect our intellectual property rights. The steps we take to protect our intellectual property rights may not be adequate to prevent infringement of these rights by others, including imitation of our products and misappropriation of our brand. In addition, any of our intellectual
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property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable, or our intellectual property protection may be unavailable or limited in some international countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States or Canada, and it may be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of our brand could be diminished, and our competitive position may suffer.
Our trademarks, patents, and other proprietary rights could potentially conflict with the rights of others and we may be prevented from selling some of our products.
Our success depends in large part on our brand image. We believe that our trademarks, patents, and other proprietary rights have significant value and are important to identifying and differentiating our products from those of our competitors and creating and sustaining demand for our products. We have applied for and obtained some United States, Canada, and international trademark registrations and patents, and will continue to evaluate additional trademarks and patents as appropriate. However, some or all of these pending trademark or patent applications may not be approved by the applicable governmental authorities. Moreover, even if the applications are approved, third parties may seek to oppose or otherwise challenge these applications or registrations. Additionally, we may face obstacles as we expand our product line and the geographic scope of our sales and marketing. Third parties may assert intellectual property claims against us, particularly as we expand our business and the number of products we offer. Our defense of any claim, regardless of its merit, could be expensive and time consuming and could divert management resources. Successful infringement claims against us could result in significant monetary liability or prevent us from selling some of our products. In addition, resolution of claims may require us to redesign our products, license rights from third parties, or cease using those rights altogether. Any of these events could harm our business and cause our results of operations, liquidity, and financial condition to suffer.
We have been, and in the future may be, sued by third parties for alleged infringement of their proprietary rights.
There is considerable patent and other intellectual property development activity in our market, and litigation, based on allegations of infringement or other violations of intellectual property, is frequent in the fitness and technology industries. Furthermore, it is common for individuals and groups to purchase patents and other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like ours. Our use of third-party content, including music content, software, and other intellectual property rights may be subject to claims of infringement or misappropriation. We cannot guarantee that our internally developed or acquired technologies and content do not or will not infringe the intellectual property rights of others. From time to time, our competitors or other third parties may claim that we are infringing upon or misappropriating their intellectual property rights, and we may be found to be infringing upon such rights. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our platform or services or using certain technologies, force us to implement expensive work-arounds, or impose other unfavorable terms. We expect that the occurrence of infringement claims is likely to grow as the market for fitness products and services grows and as we introduce new and updated products and offerings. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources. Any of the foregoing could prevent us from competing effectively and could have an adverse effect on our business, financial condition, and operating results.
Risks related to legal and governance matters
We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us.
From time to time, we are involved in litigation and other proceedings, including matters related to product liability claims, stockholder class action and derivative claims, commercial disputes and intellectual property, as well as trade, regulatory, employment, and other claims related to our business. Any of these proceedings could result in significant settlement amounts, damages, fines, or other penalties, divert financial and management resources, and result in significant legal fees. An unfavorable outcome of any particular proceeding could exceed the limits of our insurance policies or the carriers may decline to fund such final settlements and/or judgments and could have an adverse impact on our business, financial condition, and results of operations. In addition, any proceeding could negatively impact our reputation among our guests and our brand image.
Our business could be negatively affected as a result of actions of activist stockholders or others.
We may be subject to actions or proposals from stockholders or others that may not align with our business strategies or the interests of our other stockholders. Responding to such actions can be costly and time-consuming, disrupt our business
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and operations, and divert the attention of our board of directors, management, and employees from the pursuit of our business strategies. Such activities could interfere with our ability to execute our strategic plan. Activist stockholders or others may create perceived uncertainties as to the future direction of our business or strategy which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel and potential guests, and may affect our relationships with current guests, vendors, investors, and other third parties. In addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and our board of directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.
Anti-takeover provisions of Delaware law and our certificate of incorporation and bylaws could delay and discourage takeover attempts that stockholders may consider to be favorable.
Certain provisions of our certificate of incorporation and bylaws and applicable provisions of the Delaware General Corporation Law may make it more difficult or impossible for a third-party to acquire control of us or effect a change in our board of directors and management. These provisions include:
• the classification of our board of directors into three classes, with one class elected each year;
• prohibiting cumulative voting in the election of directors;
• the ability of our board of directors to issue preferred stock without stockholder approval;
• the ability to remove a director only for cause and only with the vote of the holders of at least 66 2/3% of our voting stock;
• a special meeting of stockholders may only be called by our chairman or Chief Executive Officer, or upon a resolution adopted by an affirmative vote of a majority of the board of directors, and not by our stockholders;
• prohibiting stockholder action by written consent; and
• our stockholders must comply with advance notice procedures in order to nominate candidates for election to our board of directors or to place stockholder proposals on the agenda for consideration at any meeting of our stockholders.
In addition, we are governed by Section 203 of the Delaware General Corporation Law which, subject to some specified exceptions, prohibits "business combinations" between a Delaware corporation and an "interested stockholder," which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation's voting stock, for a three-year period following the date that the stockholder became an interested stockholder. Section 203 could have the effect of delaying, deferring, or preventing a change in control that our stockholders might consider to be in their best interests.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Our business operations and relationships with customers and suppliers are heavily reliant on technology. We operate a cybersecurity program designed to assess our security risks and threats, to manage those risks and protect our technology systems and data, and to detect and respond to cybersecurity incidents.
We manage strategic risks, including cybersecurity risk, through our Enterprise Risk Management program which has direct involvement from the board of directors, the audit committee, and senior management. Through this process, we have identified cybersecurity as a risk management priority.
Governance
Our board of directors provides oversight of cybersecurity risks and has delegated primary responsibility to the audit committee, which is responsible for overseeing our enterprise risk assessments and management policies, procedures, and practices (including regarding those risks related to information security, cybersecurity, and data protection).
The audit committee maintains a cybersecurity sub-committee that is comprised of our Chief Information Officer ("CIO"), our Chief Information Security Officer ("CISO"), and representatives from the audit committee and board of directors that have knowledge and experience in cybersecurity matters. The cybersecurity sub-committee reviews our cybersecurity
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risk assessments and the steps being taken to monitor, control, and report on those risks as well as discusses regulatory and market developments. They also review our process for identifying and responding to cybersecurity incidents in a timely manner, and details of cybersecurity attacks or incidents which have occurred.
Management generally meets with, and provides reports to, the cybersecurity sub-committee on a quarterly basis. Our CIO and CISO also meet with and provide reports to the audit committee at least quarterly. The board of directors receives periodic reports regarding the activities of the cybersecurity sub-committee. These reports and meetings are designed to inform the board of directors and committees about the current state of our information security program including cybersecurity risks, the nature, timing, and extent of cybersecurity incidents, if any, and the resolution of such matters.
Cybersecurity Program and Incident Response
Our CISO is responsible for our cybersecurity program, including risk assessments, information security activities, and controls. The CISO is responsible for establishing and maintaining corporate information security policies and overseeing our risk management activities, which prioritize vulnerability management, risk reduction, and prevention. Our CISO also leads our Cyber Defense and Incident Response (“CDIR”) team which identifies, assesses, escalates, and remediates cybersecurity incidents. Our current CISO has over 25 years of experience in information security across different industries in the US, Europe, and South and Central America. Our current CISO is a member of the Information Systems Audit and Control Association and brings extensive experience and knowledge of cybersecurity risk management.
The CDIR team identifies, tracks, reviews, assesses, and takes actions over key cybersecurity risks including but not limited to: (i) third parties/vendors, (ii) cloud security, (iii) malicious code, (iv) our digital e-commerce channels and systems, and (v) our store technology. The CDIR team also undertakes enterprise architecture reviews, considers cyber defense and incident response findings, performs vulnerability scans, and assesses threats and performs landscape intelligence analysis.
As part of our cybersecurity program, we conduct cybersecurity awareness training including phishing simulations and supplemental campaigns as well as mandatory e-learning for all our employees. Our employees have multiple mechanisms for reporting cybersecurity and data privacy concerns. We work with third-party cybersecurity advisors to undertake assessments of our critical systems and to remediate any high-risk vulnerabilities identified. We also engage third parties to perform penetration testing on our key systems to identify potential weaknesses.
As part of our cyber incident response plan, we utilize an established framework to assess the severity of cybersecurity incidents. Under the plan, incidents are escalated to relevant senior management, and the board of directors, as appropriate, based on their severity. Our disclosure committee assesses the materiality of severe incidents including both quantitative and qualitative factors.
Third Parties
We utilize third-party service providers as a normal part of our business operations. To address cybersecurity risks arising from our relationships with third-party service providers, we employ a vendor risk program. We monitor risks relating to potential compromises of sensitive information at our third-party service providers and re-evaluate the risks associated with our partners periodically. Prior to exchanging our data with third-party service providers, they are required to go through a vendor risk assessment. We also conduct third-party security reviews and evaluate their network, processes, and systems. In addition, we obtain annual attestation reports related to data security and privacy from certain third-party service providers to further support compliance with industry-standard cybersecurity protocols.
Impact of Cybersecurity Risks on Strategy and Results
Based on the information available as of the date of this Annual Report, we have not been materially affected by any previous cybersecurity incidents. However, we continue to experience cyber-attacks, including phishing, and other attempts to break or gain unauthorized access to our systems that could materially affect us in the future. For further information, see “Risks related to information security and technology” included in Item 1A. Risk Factors of this Annual Report.
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ITEM 2. PROPERTIES
Our principal executive and administrative offices are located at 1818 Cornwall Avenue, Vancouver, British Columbia, Canada, V6J 1C7.
The general location, use and approximate size of our principal owned properties as of January 28, 2024, are set forth below:
We lease non-retail properties in a number of locations globally. The general location, use, approximate size and lease renewal date of our principal non-retail leased properties as of January 28, 2024, are set forth below:
  Location
 Use
 Approximate Square Feet
 Groveport, OH, United States Distribution Center   310,000
 Vancouver, BC, Canada Executive and Administrative Offices 140,000
     Location
 Use
 Approximate Square Feet
 Lease Renewal Date
  Delta, BC, Canada Distribution Center 375,000 December 2037
 Milton, ON, Canada Distribution Center 255,000 May 2031
 Mississauga, ON, Canada Distribution Center 250,000 September 2033
 Ravenhall, VIC, Australia Distribution Center 250,000 September 2033
 Delta, BC, Canada Distribution Center 155,000 January 2031
 Sumner, WA, United States Distribution Center 150,000 July 2025
 Vancouver, BC, Canada Executive and Administrative Offices 120,000 October 2032
   During 2021, we entered into a new lease for a U.S. distribution center in Ontario, California of approximately 1,255,000 square feet which expires in 2039. We expect this distribution center to be operational in early fiscal 2024.
During 2022, we entered into a new lease for a Canadian distribution center in Brampton, Ontario of approximately 980,000 square feet which expires in 2041. We expect this distribution center to be operational in fiscal 2026.
ITEM 3. LEGAL PROCEEDINGS
Please see the legal proceedings described in Note 21. Commitments and Contingencies included in Item 8 of Part II of this report.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Dividends
Our common stock is quoted on the Nasdaq Global Select Market under the symbol "LULU."
As of March 15, 2024, there were approximately 1,300 holders of record of our common stock. This does not include persons whose stock is in nominee or "street name" accounts through brokers.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination as to the payment of cash dividends will be at the discretion of our board of directors and will depend on our financial condition, operating results, current and anticipated cash needs, plans for expansion, and other factors that our board of directors considers to be relevant. In addition, financial and other covenants in any instruments or agreements that we enter into in the future may restrict our ability to pay cash dividends on our common stock.
Stock Performance Graph
The graph set forth below compares the cumulative total stockholder return on our common stock between February 3, 2019 (the date of our fiscal year end five years ago) and January 28, 2024, with the cumulative total return of (i) the S&P 500 Index and (ii) S&P 500 Apparel, Accessories & Luxury Goods Index, over the same period. This graph assumes the investment of $100 on February 3, 2019 at the closing sale price of our common stock, the S&P 500 Index and the S&P Apparel, Accessories & Luxury Goods Index and assumes the reinvestment of dividends, if any.
The comparisons shown in the graph below are based on historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. Information used in the graph was obtained from Bloomberg, a source believed to be reliable, but we are not responsible for any errors or omissions in such information.
 $400.00 $300.00 $200.00 $100.00
$0.00
Comparison of Cumulative Total Stockholder Return
lululemon athletica inc. S&P 500 Index
S&P 500 Apparel, Accessories & Luxury Goods Index
           03-Feb-19 02-Feb-20
31-Jan-21 30-Jan-22
29-Jan-23 28-Jan-24
   03-Feb-19
 02-Feb-20
 31-Jan-21
 30-Jan-22
 29-Jan-23
 28-Jan-24
  lululemonathleticainc. $ 100.00 $ 163.83 $ 224.94 $ 216.20 $ 212.74 $ 327.15
 S&P500Index $ 100.00 $ 119.18 $ 137.23 $ 163.75 $ 150.40 $ 180.71
 S&P 500 Apparel, Accessories & Luxury Goods Index $ 100.00 $ 90.30 $ 86.51 $ 83.79 $ 59.05 $ 47.77
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Issuer Purchase of Equity Securities
The following table provides information regarding our purchases of shares of our common stock during the fourth quarter of 2023 related to our stock repurchase programs:
  Period(1)
 Total Number of Shares Purchased(2)
 Average Price Paid per Share
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
 Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
  October 30, 2023 - November 26, 2023 50,619 $ 400.10 50,619 $ 222,941,393
 November 27, 2023 - December 31, 2023 10,040 507.57 10,040 1,217,845,403
 January 1, 2024 - January 28, 2024 59,180 483.73 59,180 1,189,218,138
  Total 119,839 119,839
   __________
(1) (2)
Monthly information is presented by reference to our fiscal periods during our fourth quarter of 2023.
On March 23, 2022 and November 29, 2023, our board of directors approved stock repurchase programs, each for up to $1.0 billion of our common
shares on the open market or in privately negotiated transactions. The repurchase plans have no time limit and do 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. The authorized value of shares available to be repurchased under these programs excludes the cost of commissions and excise taxes.
The following table summarizes purchases of shares of our common stock during the fourth quarter of 2023 related to our Employee Share Purchase Plan (ESPP):
  Period(1)
 Total Number of Shares Purchased(2)
 Average Price Paid per Share
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
 Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(2)
  October 30, 2023 - November 26, 2023 7,367 $ 418.18 7,367 4,415,983
 November 27, 2023 - December 31, 2023 7,331 491.70 7,331 4,408,652
 January 1, 2024 - January 28, 2024 5,954 482.84 5,954 4,402,698
  Total 20,652 20,652
   ___________
(1) (2)
Monthly information is presented by reference to our fiscal periods during our fourth quarter of 2023.
The ESPP was approved by our board of directors and stockholders in September 2007. All shares purchased under the ESPP are purchased on the Nasdaq Global Select Market (or such other stock exchange as we may designate). Unless our board terminates the ESPP earlier, it will continue until all shares authorized for purchase have been purchased. The maximum number of shares authorized to be purchased under the ESPP was 6,000,000.
Excluded from this disclosure are shares repurchased to settle statutory employee tax withholding related to the vesting of stock-based compensation awards.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
Not applicable.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Components of management's discussion and analysis of financial condition and results of operations include:
• Overview
• Financial Highlights and Market Conditions and Trends
• Results of Operations
• Comparison of 2023 to 2022
• Comparison of 2022 to 2021
• Comparable Sales and Sales Per Square Foot
• Non-GAAP Financial Measures
• Liquidity and Capital Resources
• Liquidity Outlook
• Contractual Obligations and Commitments
• Critical Accounting Policies and Estimates
Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2023, 2022, and 2021 were each 52-week years. Fiscal 2024 will be a 53-week year.
This discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations, and intentions included in the "Special Note Regarding Forward-Looking Statements." Our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described in the "Item 1A. Risk Factors" section and elsewhere in this Annual Report on Form 10-K.
We use comparable sales as a metric to evaluate the performance of our business. Refer to the Comparable Sales and Sales Per Square Foot section of this management's discussion and analysis of financial condition and results of operations for further information.
We provide constant dollar changes and adjusted financial results, which are non-GAAP financial measures, as supplemental information that enable evaluation of the underlying trend in our operating performance, and enable a comparison to our historical financial information. Refer to the Non-GAAP Financial Measures section of this management's discussion and analysis of financial condition and results of operations for reconciliations between the adjusted non-GAAP financial measures and the most directly comparable measures calculated in accordance with GAAP.
We disclose material non-public information through one or more of the following channels: our investor relations website (http://corporate.lululemon.com/investors), the social media channels identified on our investor relations website, press releases, SEC filings, public conference calls, and webcasts. Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
During the fourth quarter of 2023, we revised the financial information which is regularly reviewed and used by our CODM to evaluate performance and allocate resources. Historically, our segments were based on selling channel. As we have further executed on our omni-channel retail strategy, and with the continued expansion of our international operations, our resource allocation decisions have evolved to focus on regional markets. We organize our operations into four regional markets: Americas, China Mainland, APAC, and EMEA. We report three segments, Americas, China Mainland, and Rest of World, which is comprised of the APAC and EMEA regions on a combined basis. Our prior year segment results have been recast to reflect our new segment reporting structure.
Overview
In 2023, lululemon celebrated its 25th anniversary and delivered another strong year of financial results. We continued to execute against our Power of Three ×2 growth plan, growing net revenue 19% and diluted earnings per share 83%, or 27% on an adjusted basis, as our teams were able to successfully navigate an uncertain macroeconomic environment.
Our growth continued across regions, merchandise categories, and channels. We delivered strong net revenue growth across our regions including 12% in the Americas, 67% in China Mainland, and 43% in Rest of World. Net revenue from our women's product range increased 17%, men's increased 15%, and net revenue from our other categories increased 36%. We
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opened 56 net new company-operated stores, contributing to a 15% increase in square footage, while total company- operated store net revenue increased 21% and e-commerce net revenue increased 17%.
We believe this broad-based growth was underpinned by our ability to bring new innovations into our product assortment, while also increasing our brand awareness and bringing new guests into our brand.
Product Innovation
By innovating through our Science of Feel approach, we continue to seek to solve the unmet needs of our guests. While continuing to see strength from our key collections including Align, Scuba, Define, and Softstreme for women and our ABC collection for men, we launched new innovations as well. For women, we launched Wundermost, our new bodywear collection, we expanded our dual gender golf and tennis assortments. On the men’s side, we launched Steady State and Soft Jersey, to expand our lounge offering, while also enhancing our Pace Breaker short. In accessories, we continued to see strength across our bag assortment, and in footwear we updated our Blissfeel and Chargefeel styles, and in early 2024, we launched our first footwear styles for men. We also announced a new textile-to-textile recycling partnership with the goal of enabling circularity in our supply chain by transforming apparel waste into high quality nylon and polyester.
Brand Awareness
We believe that increasing our brand awareness and introducing new guests to the lululemon brand remains one of our largest opportunities, both in the Americas and to an even greater degree in our international markets.
In order to grow brand awareness we combine our community-based, grass roots model of guest engagement, with larger scale brand activations and global brand campaigns. With connection points across both our physical and digital channels, we aim to bring new guests into our brand, engage with them in ways that are more than just transactional and create deeper connections.
In 2023, we executed several strategies designed to connect with guests, bring new guests into our brand, and grow awareness. Highlights include: hosting our Dupe Swap event in Los Angeles; testing our first men's focused TV campaign featuring our ABC pants; taking over the West Bund in Shanghai for one week to host wellness-centric events and experiences intended to bring awareness to World Mental Health Day; and continuing to grow our Essentials membership program.
In addition, in September 2023 we announced our new partnership with Peloton. Peloton is now the exclusive provider of content for our lululemon Studio members, we have become their primary apparel provider. We plan to jointly engage our global communities through special programming, experiences, and events.
Financial Highlights
The summary below compares 2023 to 2022 and provides both GAAP and non-GAAP financial measures. The adjusted financial measures for 2023 exclude $72.1 million of post-tax asset impairment and other charges recognized in relation to lululemon Studio. The adjusted financial measures for 2022 exclude $442.7 million of post-tax goodwill impairment and other charges recognized in relation to lululemon Studio and the post-tax net gain on the sale of an administrative building of $8.5 million.
• Net revenue increased 19% to $9.6 billion. On a constant dollar basis, net revenue increased 20%.
• Comparable sales increased 13%, or 14% on a constant dollar basis.
– Americas comparable sales increased 8%, or 9% on a constant dollar basis.
– China Mainland comparable sales increased 39%, or 46% on a constant dollar basis. – Rest of World comparable sales increased 32%, or 33% on a constant dollar basis.
• Gross profit increased 25% to $5.6 billion. Adjusted gross profit increased 24% to $5.6 billion.
• Gross margin increased 290 basis points to 58.3%. Adjusted gross margin increased 240 basis points to 58.6%.
• Income from operations increased 61% to $2.1 billion. Adjusted income from operations increased 25% to $2.2 billion.
• Operating margin increased 580 basis points to 22.2% from 16.4% in 2022. Adjusted operating margin increased 110 basis points to 23.2% from 22.1% in 2022.
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• Income tax expense increased 31% to $625.5 million. Our effective tax rate for 2023 was 28.8% compared to 35.9% for 2022. The adjusted effective tax rate was 28.7% and 28.1% for 2023 and 2022, respectively.
• Diluted earnings per share were $12.20 for 2023 compared to $6.68 in 2022. Adjusted diluted earnings per share were $12.77 for 2023 compared to $10.07 in 2022.
Market Conditions and Trends
Macroeconomic conditions, supply chain disruption, and the COVID-19 pandemic have impacted our business and operating costs. Certain trends are expected to continue throughout 2024, with the impact varying by market.
Macroeconomic Conditions
Macroeconomic conditions, including foreign currency fluctuations, have impacted our financial results. Foreign currency fluctuations reduced the growth of our net revenue by $89.8 million when comparing 2023 to 2022, primarily due to the overall appreciation of the US dollar. We expect future exchange rate volatility to impact our results. We have also experienced increased wage rates which increased our employee costs when comparing 2023 to 2022.
Consumer purchasing behaviors and their propensity to spend in our sector have been impacted by uncertain economic conditions including inflation, higher interest rates, and other factors. While we experienced traffic and net revenue growth in 2023 in all markets, over the course of 2023 we saw moderation in the year over year traffic and net revenue growth in the Americas. We continue to monitor macroeconomic conditions and the trends in consumer demand for our products.
Supply Chain Disruption
In 2021 and 2022 we experienced supply chain disruption, including delays in inbound delivery of our products as well as in manufacturing. This supply chain disruption caused us to use higher cost modes of transport, including increasing our use of air freight. We saw an improvement in the supply chain disruption during the second half of 2022 and during 2023, including reductions in freight costs and reductions in our levels of air freight usage.
COVID-19 Pandemic
Most of our retail locations were open throughout 2023, 2022, and 2021, with certain locations temporarily closed due to COVID-19 resurgences during the first quarter of 2022 and at various times in 2021. The effect of COVID-19, including store closures, impacted our revenue and operating margins in 2021 and the first quarter of 2022 in China Mainland.
Results of Operations
The following table summarizes key components of our results of operations for the periods indicated:
   2023
 2022
 2021
 2023
 2022
 2021
 (In thousands) (Percentage of net revenue)
 Net revenue $ 9,619,278 $ 8,110,518 $ 6,256,617 100.0 % 100.0 % 100.0 %
 Cost of goods sold 4,009,873 3,618,178 2,648,052 41.7 44.6 42.3
  Gross profit 5,609,405 4,492,340 3,608,565 58.3 55.4 57.7
 Selling, general and administrative
expenses 3,397,218 2,757,447 2,225,034 35.3 34.0 35.6
 Impairment of goodwill and other
assets, restructuring costs 74,501 407,913 — 0.8 5.0 —
 Amortization of intangible assets 5,010 8,752 8,782 0.1 0.1 0.1
 Acquisition-related expenses — — 41,394 — — 0.7
 Gain on disposal of assets — (10,180) — — (0.1) —
  Income from operations 2,132,676 1,328,408 1,333,355 22.2 16.4 21.3
 Other income (expense), net 43,059 4,163 514 0.4 0.1 —
  Income before income tax expense 2,175,735 1,332,571 1,333,869 22.6 16.4 21.3
 Income tax expense 625,545 477,771 358,547 6.5 5.9 5.7
  Net income $ 1,550,190 $ 854,800 $ 975,322 16.1 % 10.5 % 15.6 %
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Comparison of 2023 to 2022
Net Revenue
Net revenue increased $1.5 billion, or 19%, to $9.6 billion in 2023 from $8.1 billion in 2022. On a constant dollar basis, net revenue increased 20%. Comparable sales increased 13%, or 14% on a constant dollar basis. The increase in net revenue was primarily due to increased Americas net revenue. China Mainland and Rest of World net revenue also increased.
Net revenue for 2023 and 2022 is summarized below, and reflects our updated segments, including comparatives.
Americas. The increase in Americas net revenue was primarily due to an increase in comparable sales, which increased 8%, or 9% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a lower dollar value per transaction and a decrease in conversion rates. The increase in Americas net revenue was also driven by a $327.6 million increase in non-comparable sales, primarily from our company-operated stores that were opened or significantly expanded since 2022 as well as increased outlet, wholesale, and license and supply arrangement net revenue, partially offset by fewer temporary locations and lower lululemon Studio net revenue.
China Mainland. The increase in China Mainland net revenue was primarily due to an increase in comparable sales, which increased 39%, or 46% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in conversion rates and a lower dollar value per transaction. The increase in China Mainland net revenue was also driven by a $180.6 million increase in non-comparable sales, primarily from our company- operated stores that were opened or significantly expanded since 2022 as well as increased net revenue from outlets.
Rest of World. The increase in Rest of World net revenue was primarily due to an increase in comparable sales, which increased 32%, or 33% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in conversion rates. The increase in Rest of World net revenue was also driven by a $118.9 million increase in non-comparable sales, primarily from our company-operated stores that were opened or significantly expanded since 2022 as well as increased license and supply arrangements and outlets net revenue.
Gross Profit
During 2022, we decided to shift our lululemon Studio strategy to focus on providing digital app-based services. While we continued to sell at-home hardware in 2023, we reached the decision to cease selling the lululemon Studio Mirror during the third quarter of 2023. These strategy shifts resulted in the recognition of an inventory obsolescence provision of $62.9 million in 2022 and a further provision of $23.7 million in 2023. These provisions reduced gross margin by 80 basis points and 30 basis points in 2022 and 2023 respectively. Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs included in Item 8 of Part II of this report.
   2023
 2022
 2023
 2022
 Year over year change
 (In thousands) (Percentage of net revenue) (In thousands) (Percentage)
(Constant dollar change)
 Americas $ 7,631,647 $ 6,817,454 79.3 % 84.1 % $ 814,193 11.9 % 12.0 %
 China Mainland 963,760 576,503 10.0 7.1 387,257 67.2 75.0
 Rest of World 1,023,871 716,561 10.6 8.8 307,310 42.9 44.0
  Net revenue $ 9,619,278 $ 8,110,518 100.0 % 100.0 % $ 1,508,760 18.6 % 20.0 %
      2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Gross profit $ 5,609,405 $ 4,492,340 $ 1,117,065 24.9 %
  Gross margin 58.3 % 55.4 % 290 basis points
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Gross margin increased 290 basis points, or excluding the impact of the lululemon Studio obsolescence provisions detailed above, increased 240 basis points. This 240 basis point net increase was primarily a result of:
• a net increase in product margin of 290 basis points, primarily due to lower freight costs from rate reductions and reduced air freight, as well as lower duty costs, modestly offset by higher inventory provisions and shrink in the current year;
• an unfavorable impact of foreign currency exchange rates of 20 basis points; and
 • de
leverage on occupancy costs of 20 basis points and an increase in costs related to our distribution centers as a
 .
The increase in selling, general and administrative expenses was primarily due to:
• an increase in head office costs of $327.7 million, comprised of:
– an increase in employee costs of $108.8 million primarily due to increased salaries and wages expense as well as increased stock-based compensation and incentive compensation, primarily as a result of headcount growth and increased wage rates;
– an increase in brand and community costs of $95.4 million primarily due to increased marketing expenses;
– an increase in depreciation of $46.0 million;
– an increase in other head office costs of $40.4 million, primarily due to increased professional fees; and
– an increase in technology costs, including cloud computing amortization, of $37.1 million.
• an increase in costs related to our operating channels of $319.1 million, comprised of:
– an increase in employee costs of $145.1 million primarily due to increased salaries and wages expense, incentive compensation, and benefit costs for retail employees, primarily from the growth in our business and increased wage rates;
– an increase in other operating costs of $67.7 million primarily due to increased depreciation costs, technology costs, and repairs and maintenance costs;
– an increase in variable costs of $66.8 million primarily due to increased credit card fees, distribution costs, and packaging costs, primarily as a result of increased net revenue; and
– an increase in brand and community costs of $39.5 million primarily due to increased digital marketing expenses.
The increase in selling, general and administrative expenses was partially offset by a decrease in net foreign currency exchange and derivative revaluation losses of $7.0 million.
percentage of net revenue of 10 basis points
 Selling, General and Administrative Expenses
   2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Selling, general and administrative expenses $ 3,397,218 $ 2,757,447 $ 639,771 23.2 %
  Selling, general and administrative expenses as a percentage of net
revenue 35.3 % 34.0 % 130 basis points
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Impairment of Goodwill and Other Assets, Restructuring Costs
   2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Impairment of goodwill and other assets, restructuring costs $ 74,501 $ 407,913 $ (333,412) (81.7)%
   During 2023, we recognized certain asset impairments and restructuring costs, and during 2022, we recognized impairment of goodwill and other assets, each in relation to lululemon Studio. Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs included in Item 8 of Part II of this report for further information.
Amortization of Intangible Assets
The amortization of intangible assets was primarily the result of the amortization of intangible assets recognized upon the acquisition of MIRROR, which we rebranded as lululemon Studio.
Gain on Disposal of Assets
During the second quarter of 2022, we completed the sale of an administrative office building, which resulted in a pre- tax gain of $10.2 million.
Income from Operations
On a segment basis, we determine income from operations without taking into account our general corporate expenses and certain other expenses. Segmented income from operations is summarized below. Our prior year segment results have been recast to reflect our new segment reporting structure.
   2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Amortization of intangible assets $ 5,010 $ 8,752 $ (3,742) (42.8)%
      2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Gain on disposal of assets $ — $ (10,180) $ 10,180 (100.0)%
      2023
 2022
 2023
 2022
 Year over year change
 (In thousands) (Percentage of net revenue of (In thousands) (Percentage) respective operating segment)
 Segmented income from operations:
 Americas $ 2,937,184 $ 2,503,740 38.5 % 36.7 % $ 433,444 17.3 %
 China Mainland 337,316 196,865 35.0 34.1 140,451 71.3
 Rest of World 201,832 103,204 19.7 14.4 98,628 95.6
  $ 3,476,332 $ 2,803,809 $ 672,523 24.0 %
  General corporate expenses 1,240,436 1,005,988 234,448 23.3
 lululemon Studio obsolescence provision 23,709 62,928 (39,219) (62.3)
 Impairment of goodwill and other assets,
restructuring costs 74,501 407,913 (333,412) (81.7)
 Amortization of intangible assets 5,010 8,752 (3,742) (42.8)
 Gain on disposal of assets — (10,180) 10,180 (100.0)
  Income from operations $ 2,132,676 $ 1,328,408 $ 804,268 60.5 %
  Operating margin 22.2 % 16.4 % 580 basis points
   Americas. The increase in Americas income from operations was primarily the result of increased gross profit of $691.7 million, driven by increased net revenue and higher gross margin. The increase in gross margin was primarily due to higher product margin, partially offset by deleverage on distribution center costs. The increase in gross profit was partially offset by an increase in selling, general and administrative expenses, primarily due to higher employee costs, increased digital marketing expenses, increased credit card fees, packaging costs, and distribution costs driven by higher net revenue, and
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increased depreciation, and technology costs. Income from operations as a percentage of Americas net revenue increased due to higher gross margin, partially offset by deleverage on selling, general and administrative expenses.
China Mainland. The increase in China Mainland income from operations was primarily the result of increased gross profit of $228.1 million, driven by increased net revenue. Gross margin was consistent year over year, primarily due to leverage on occupancy and other costs, partially offset by unfavorable foreign currency exchange rates and lower product margin. The increase in gross profit was partially offset by an increase in selling, general and administrative expenses primarily due to higher employee costs, as well as increased digital marketing expenses, increased packaging costs, distribution costs, and credit card fees driven by higher net revenue, and increased technology costs. Income from operations as a percentage of China Mainland net revenue increased due to leverage on selling, general and administrative expenses.
Rest of World. The increase in Rest of World income from operations was primarily the result of increased gross profit of $190.2 million, driven by increased net revenue and higher gross margin. The increase in gross margin was primarily due to higher product margin as well as leverage on occupancy and other costs, partially offset by unfavorable foreign currency exchange rates. The increase in gross profit was partially offset by an increase in selling, general and administrative expenses primarily due to higher employee costs, as well as increased digital marketing expenses, increased distribution costs, credit card fees, and packaging costs driven by higher net revenue, and increased technology costs. Income from operations as a percentage of Rest of World net revenue increased due to higher gross margin and leverage on selling, general and administrative expenses.
General Corporate Expenses. The increase in general corporate expenses was primarily due to increased employee costs, as well as increased brand and community costs, depreciation, technology costs, professional fees, and product team costs. The increase in general corporate expenses was partially offset by a decrease in net foreign currency exchange and derivative losses of $7.0 million.
Other Income (Expense), Net
The increase in other income, net was primarily due to an increase in interest income as a result of higher cash balances and higher interest rates.
Income Tax Expense
The decrease in the effective tax rate was primarily due the income tax impact of certain non-deductible impairment and other charges recognized in 2022 and 2023 related to lululemon Studio, partially offset by a lower tax rate on the gain on the sale of an administrative building in 2022. These items increased the effective tax rate by 780 basis points and 10 basis points in 2022 and 2023, respectively.
Excluding the income tax effects of the impairment and other charges recognized in 2022 and 2023 in relation to lululemon Studio, and excluding the tax effect of the gain on the sale of the administrative building in 2022, the adjusted effective tax rate increased to 28.7% in 2023 from 28.1% in 2022.
The increase in the adjusted effective tax rate was primarily due to withholding taxes on unremitted earnings which are not considered to be permanently reinvested, partially offset by adjustments upon the filing of certain income tax returns, and a decrease in U.S. state taxes.
Net Income
   2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Other income (expense), net $ 43,059 $ 4,163 $ 38,896 934.3 %
      2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Income tax expense $ 625,545 $ 477,771 $ 147,774 30.9 %
  Effective tax rate 28.8 % 35.9 % (710) basis points
      2023
 2022
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Net income $ 1,550,190 $ 854,800 $ 695,390 81.4 %
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The increase in net income in 2023 was primarily due to an increase in gross profit of $1.1 billion, an increase in other income (expense), net of $38.9 million, and impairment and restructuring charges recognized in 2023 of $74.5 million compared to impairment charges of $407.9 million recognized in 2022, partially offset by an increase in selling, general and administrative expenses of $639.8 million, an increase in income tax expense of $147.8 million, and a gain on disposal of assets of $10.2 million in the prior year.
Excluding certain inventory provisions, goodwill and other asset impairments, and restructuring costs recognized in relation to lululemon Studio in 2023 and 2022 and the gain on sale of an administrative building in 2022, and their tax effects, adjusted net income increased $333.4 million or 26%.
Comparison of 2022 to 2021
Net Revenue
Net revenue increased $1.9 billion, or 30%, to $8.1 billion in 2022 from $6.3 billion in 2021. On a constant dollar basis, net revenue increased 32%. Comparable sales increased 25%, or 28% on a constant dollar basis. The increase in net revenue was primarily due to increased Americas net revenue. China Mainland and Rest of World net revenue also increased.
Net revenue for 2022 and 2021 is summarized below, and reflects our updated segments, including comparatives.
Americas. The increase in Americas net revenue was primarily due to an increase in comparable sales, which increased 28%, or 29% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in conversion rates. Americas net revenue also increased due to a $296.9 million increase in non- comparable sales, primarily from our company-operated stores that were opened or significantly expanded since 2021 as well as increased outlet, wholesale, and re-commerce net revenue, partially offset by lower license and supply arrangement and lululemon Studio net revenue.
China Mainland. The increase in China Mainland net revenue was primarily due to an increase in comparable sales, which increased 17%, or 23% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in conversion rates. The increase in China Mainland net revenue was also driven by a $77.5 million increase in non-comparable sales, primarily from our company-operated stores that were opened or significantly expanded since 2021.
Rest of World. The increase in Rest of World net revenue was primarily due to a $151.5 million increase in non- comparable sales, primarily from our company-operated stores that were opened or significantly expanded since 2021 as well as increased license and supply arrangements, outlets, and wholesale net revenue. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 10%, or 19% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in conversion rates.
Gross Profit
   2022
 2021
 2022
 2021
 Year over year change
 (In thousands) (Percentage of net revenue) (In thousands) (Percentage)
(Constant dollar change)
 Americas $ 6,817,454 $ 5,299,906 84.1 % 84.7 % $ 1,517,548 28.6 % 30.0 %
 China Mainland 576,503 434,261 7.1 6.9 142,242 32.8 40.0
 Rest of World 716,561 522,450 8.8 8.4 194,111 37.2 49.0
  Net revenue $ 8,110,518 $ 6,256,617 100.0 % 100.0 % $ 1,853,901 29.6 % 32.0 %
      2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Gross profit $ 4,492,340 $ 3,608,565 $ 883,775 24.5 %
  Gross margin 55.4 % 57.7 % (230) basis points
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During 2022, we updated our lululemon Studio strategy to focus on digital app-based services, which meant we no longer expected to be able to sell all of the in-home hardware inventory above cost. We recognized a provision of $62.9 million against hardware inventory during 2022. This reduced 2022 gross margin by 80 basis points. Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs included in Item 8 of Part II of this report.
The remaining 150 basis point decrease in gross margin was primarily the result of:
• a decrease in product margin of 100 basis points primarily due to higher markdowns, sales mix, and increased damages and shrink, partially offset by lower air freight costs;
• an increase in costs related to our product departments and distribution centers as a percentage of net revenue of 60 basis points; and
• an unfavorable impact of foreign currency exchange rates of 40 basis points.
The decrease in gross margin was partially offset by leverage on occupancy and depreciation costs of 50 basis points, driven primarily by the increase in net revenue.
Selling, General and Administrative Expenses
The increase in selling, general and administrative expenses was primarily due to:
• an increase in head office costs of $283.7 million, comprised of:
– an increase in costs of $142.2 million primarily due to increased depreciation of $43.5 million and increased technology costs, including cloud computing amortization, of $35.7 million, as well as increased brand and community costs and professional fees; and
– an increase in employee costs of $141.5 million primarily due to an increase in salaries and wages expense of $76.5 million and incentive compensation of $34.8 million, as well as increased stock-based compensation expense and travel costs, primarily as a result of headcount growth and increased wage rates.
• an increase in costs related to our operating channels of $249.5 million, comprised of:
– an increase in variable costs of $127.6 million primarily due to an increase in distribution costs and credit card fees, primarily as a result of increased net revenue;
– an increase in employee costs of $104.2 million primarily due to an increase in salaries and wages expense and incentive compensation in our company-operated store and e-commerce channels, primarily due to growth in our business and increased wage rates;
– an increase in other costs of $15.3 million primarily due to an increase in repairs and maintenance costs, depreciation, and technology costs, partially offset by a decrease in professional fees; and
– an increase in brand and community costs of $2.4 million primarily due to an increase in digital marketing expenses related to our e-commerce channel, partially offset by a decrease in marketing expenses related to lululemon Studio.
The increase in selling, general and administrative expenses was partially offset by a decrease in net foreign exchange and derivative revaluation losses of $0.8 million.
   2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Selling, general and administrative expenses $ 2,757,447 $ 2,225,034 $ 532,413 23.9 %
  Selling, general and administrative expenses as a percentage of net
revenue 34.0 % 35.6 % (160) basis points
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Impairment of Goodwill and Other Assets, Restructuring Costs
   2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Impairment of goodwill and other assets, restructuring costs $ 407,913 $ — $ 407,913 n/a
   During 2022, we recognized an impairment of goodwill and other long-lived assets in relation to our lululemon Studio business unit. Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs included in Item 8 of Part II of this report.
Amortization of Intangible Assets
The amortization of intangible assets was primarily the result of the amortization of intangible assets recognized upon the acquisition of MIRROR, which we rebranded as lululemon Studio.
Acquisition-Related Expenses
In connection with our acquisition of MIRROR, we recognized acquisition-related compensation expenses of $38.4 million and transaction and integration related costs of $3.0 million in 2021. There were no acquisition-related expenses in 2022. Please refer to Note 9. Acquisition-Related Expenses included in Item 8 of Part II of this report for further information.
Gain on Disposal of Assets
During the second quarter of 2022, we completed the sale of an administrative office building, which resulted in a pre- tax gain of $10.2 million.
   2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Amortization of intangible assets $ 8,752 $ 8,782 $ (30) (0.3)%
      2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Acquisition-related expenses $ — $ 41,394 $ (41,394) (100.0)%
      2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Gain on disposal of assets $ (10,180) $ — $ (10,180) n/a
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Income from Operations
On a segment basis, we determine income from operations without taking into account our general corporate expenses and certain other expenses. Segmented income from operations is summarized below. Our prior segment results have been recast to reflect our new segment reporting structure.
   2022
 2021
 2022
 2021
 Year over year change
 (In thousands) (Percentage of net revenue of (In thousands) (Percentage) respective operating segment)
 Segmented income from operations:
 Americas $ 2,503,740 $ 1,867,016 36.7 % 35.2 % $ 636,724 34.1 %
 China Mainland 196,865 167,318 34.1 38.5 29,547 17.7
 Rest of World 103,204 67,674 14.4 13.0 35,530 52.5
  $ 2,803,809 $ 2,102,008 $ 701,801 33.4 %
  General corporate expenses 1,005,988 718,477 287,511 40.0
 lululemon Studio obsolescence provision 62,928 — 62,928 n/a
 Impairment of goodwill and other assets,
restructuring costs 407,913 — 407,913 n/a
 Amortization of intangible assets 8,752 8,782 (30) (0.3)
 Acquisition-related expenses — 41,394 (41,394) (100.0)
 Gain on disposal of assets (10,180) — (10,180) n/a
  Income from operations $ 1,328,408 $ 1,333,355 $ (4,947) (0.4)%
  Operating margin 16.4 % 21.3 % (490) basis points
   Americas. The increase in Americas income from operations was primarily the result of increased gross profit of $855.2 million, driven by increased net revenue, partially offset by lower gross margin. The decrease in gross margin was primarily due to lower product margin, partially offset by leverage on occupancy and other costs. The increase in gross profit was partially offset by an increase in selling, general and administrative expenses, primarily due to higher employee costs, as well as increased distribution costs and credit card fees driven by higher net revenue, and increased technology costs. Income from operations as a percentage of Americas net revenue increased due to leverage on selling, general and administrative expenses.
China Mainland. The increase in China Mainland income from operations was primarily the result of increased gross profit of $70.4 million, driven by increased net revenue, partially offset by lower gross margin. The decrease in gross margin was primarily due to unfavorable foreign currency exchange rates as well as deleverage on distribution center and other costs. The increase in gross profit was partially offset by an increase in selling, general and administrative expenses primarily due to higher employee costs, as well as increased digital marketing expenses, increased packaging and distribution costs driven by higher net revenue, and increased technology costs. Income from operations as a percentage of China Mainland net revenue decreased primarily due to lower gross margin.
Rest of World. The increase in Rest of World income from operations was primarily the result of increased gross profit of $80.9 million, driven by increased net revenue, partially offset by lower gross margin. The decrease in gross margin was primarily due to unfavorable foreign currency exchange rates as well as lower product margin, partially offset by leverage on occupancy and other costs. The increase in gross profit was partially offset by an increase in selling, general and administrative expenses primarily due to higher employee costs, as well as increased distribution costs, credit card fees, and packaging costs driven by higher net revenue, and increased digital marketing expenses. Income from operations as a percentage of Rest of World net revenue increased due to leverage on selling, general and administrative expenses.
General Corporate Expenses. The increase in general corporate expenses was primarily due to higher employee costs, as well as increased depreciation, brand and community costs, technology costs, professional fees, and product team costs. The increase in general corporate expenses was partially offset by a decrease in net foreign exchange and derivative losses of $0.8 million.
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Other Income (Expense), Net
   2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Other income (expense), net $ 4,163 $ 514 $ 3,649 709.9 %
   The increase in other income, net was primarily due to an increase in interest income from higher interest rates, partially offset by an increase in other expenses.
Income Tax Expense
The increase in the effective tax rate was primarily due to certain non-deductible expenses related to the impairment of goodwill and other assets recognized in relation to our lululemon Studio business unit (formerly MIRROR) partially offset by the gain on sale of an administrative building in 2022 which increased the effective tax rate by 780 basis points. Certain non- deductible expenses related to the MIRROR acquisition increased the effective tax rate by 70 basis points in 2021. The increase in the effective tax rate was also due to the accrual of U.S. state tax and Canadian withholding taxes on unremitted earnings which are not considered to be permanently reinvested, adjustments upon filing of certain income tax returns, and a decrease in deductions for stock-based compensation, partially offset by a decrease in non-deductible expenses in international jurisdictions.
Excluding the impairment of goodwill and other assets recognized in relation to our lululemon Studio business unit (formerly MIRROR) and the gain on sale of an administrative building in 2022, and the MIRROR acquisition-related expenses in 2021, and their tax effects, our adjusted effective tax rates were 28.1% and 26.2% for 2022 and 2021, respectively.
Net Income
The decrease in net income in 2022 was primarily due to an increase in selling, general and administrative expenses of $532.4 million, an impairment charge recognized in 2022 of $407.9 million, an increase in income tax expense of $119.2 million, partially offset by an increase in gross profit of $883.8 million, a decrease in acquisition-related expenses of $41.4 million, a gain on disposal of assets of $10.2 million, and an increase in other income (expense), net of $3.6 million. Excluding the impairment of goodwill and other assets recognized in relation to our lululemon Studio business unit (formerly MIRROR) and the gain on sale of an administrative building in 2022, and the MIRROR acquisition-related expenses in 2021, and their tax effects, adjusted net income increased $273.7 million or 27.0%.
Comparable Sales and Sales Per Square Foot
Comparable Sales
We use comparable sales to evaluate the performance of our company-operated store and e-commerce businesses from an omni-channel perspective. It allows us to monitor the performance of our business without the impact of recently opened or expanded stores. We believe investors would similarly find these metrics useful in assessing the performance of our business.
Comparable sales includes comparable company-operated store and all e-commerce net revenue. E-commerce net revenue includes our buy online pick-up in store, back-back room, and ship from store omni-channel retailing capabilities in addition to our websites, other region-specific websites, digital marketplaces, and mobile apps. Comparable company- operated stores have been open, or open after being significantly expanded, for at least 12 full fiscal months. Net revenue from a company-operated store is included in comparable sales beginning with the first fiscal month for which the store has a full fiscal month of sales in the prior year. Comparable sales excludes sales from new stores that have not been open for at least 12 full fiscal months, from stores which have not been in their significantly expanded space for at least 12 full fiscal months, from stores which have been temporarily relocated for renovations or temporarily closed, and sales from company-
   2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Income tax expense $ 477,771 $ 358,547 $ 119,224 33.3 %
  Effective tax rate 35.9 % 26.9 % 900 basis points
      2022
 2021
 Year over year change
 (In thousands) (In thousands) (Percentage)
 Net income $ 854,800 $ 975,322 $ (120,522) (12.4)%
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operated stores that have closed. Comparable sales also excludes sales from our selling channels other than company- operated stores and e-commerce. The comparable sales measures we report may not be equivalent to similarly titled measures reported by other companies.
In fiscal years with 53 weeks, the 53rd week of net revenue is excluded from the calculation of comparable sales. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks.
Non-comparable sales includes all net revenue other than comparable sales.
Sales Per Square Foot
We use sales per square foot to assess the performance of our company-operated stores relative to their square footage. We believe that sales per square foot is useful in evaluating the performance of our company-operated stores. Sales per square foot is calculated using total net revenue from all company-operated stores divided by the average ending square footage of the stores for each period during the year. In fiscal years with 53 weeks, the 53rd week of net revenue is excluded from the calculation of sales per square foot. The square footage of our company-operated stores includes all retail related space, including selling space as well as storage and back-office areas. The sales per square foot metric we report may not be equivalent to similarly titled metrics reported by other companies.
Non-GAAP Financial Measures
Constant dollar changes and adjusted financial results are non-GAAP financial measures.
A constant dollar basis assumes the average foreign currency exchange rates for the period remained constant with the average foreign currency exchange rates for the same period of the prior year. We provide constant dollar changes in our results to help investors understand the underlying growth rate of net revenue excluding the impact of changes in foreign currency exchange rates.
Adjusted gross profit, gross margin, income from operations, operating margin, income tax expense, effective tax rates, net income, and diluted earnings per share exclude certain inventory provisions, goodwill and other asset impairments, and restructuring costs recognized in relation to lululemon Studio, the gain on disposal of assets for the sale of an administrative office building, the MIRROR acquisition-related expenses, and the related income tax effects of these items.
We believe these adjusted financial measures are useful to investors as they provide supplemental information that enable evaluation of the underlying trend in our operating performance, and enable a comparison to our historical financial information. Further, due to the finite and discrete nature of these items, we do not consider them to be normal operating expenses that are necessary to run our business, or impairments or disposal gains that are expected to arise in the normal course of our operations. Management uses these adjusted financial measures and constant currency metrics internally when reviewing and assessing financial performance.
The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or with greater prominence to, the financial information prepared and presented in accordance with GAAP. A reconciliation of the non-GAAP financial measures follows, which includes more detail on the GAAP financial measure that is most directly comparable to each non-GAAP financial measure, and the related reconciliations between these financial measures. Our non- GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures reported by other companies.
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Constant Dollar Changes
The below changes in net revenue and comparable sales show the change compared to the corresponding period in the prior year.
    2023 Compared to 2022
  2022 Compared to 2021
  Change
 Foreign exchange changes
 Change in constant dollars
 Change
 Foreign exchange changes
 Change in constant dollars
  Net Revenue
 Americas 12 % — % 12 % 29 % 1 % 30 %
 China Mainland 67 8 75 33 7 40
 Rest of World 43 1 44 37 12 49
  Total net revenue 19 % 1 % 20 % 30 % 2 % 32 %
   Comparable sales(1)
 Americas 8 % 1 % 9 % 28 % 1 % 29 %
 China Mainland 39 7 46 17 6 23
 Rest of World 32 1 33 10 9 19
  Totalcomparablesales 13 % 1 % 14 % 25 % 3 % 28 %
   __________
(1)
Comparable sales includes comparable company-operated store and e-commerce net revenue.
Adjusted Financial Measures
The following tables reconcile the most directly comparable measures calculated in accordance with GAAP with the adjusted financial measures. The 2023 and 2022 adjustments relate to certain inventory provisions, goodwill and other asset impairments, and restructuring costs recognized in relation to lululemon Studio, and their related tax effects. The 2022 adjustments also relate to the gain on sale of an administrative office building, and their related tax effects. The 2021 adjustments relate to MIRROR acquisition-related expenses, and their related tax effects. Please refer to Note 5. Property and Equipment, Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs, and Note 9. Acquisition-Related Expenses included in Item 8 of Part II of this report for further information on the nature of these amounts.
   2023
  Gross Profit
 Gross Margin
 Income from Operations
 Operating Margin
 Income Tax Expense
 Effective Tax Rate
 Net Income
 Diluted Earnings Per Share
 (In thousands, except per share amounts)
 GAAP results $ 5,609,405 58.3 % $ 2,132,676 22.2 % $ 625,545 28.8 % $ 1,550,190 $ 12.20
 lululemon Studio charges:
 lululemon Studio
obsolescence provision 23,709 0.3 23,709 0.2 23,709 0.19
 Impairment of assets 44,186 0.5 44,186 0.35
 Restructuring costs 30,315 0.3 30,315 0.24
 Tax effect of the above 26,085 (0.1) (26,085) (0.21)
  23,709 0.3 98,210 1.0 26,085 (0.1) 72,125 0.57
  Adjusted results (non-
GAAP) $5,633,114 58.6 % $2,230,886 23.2 % $ 651,630 28.7 % $1,622,315 $ 12.77
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   2022
  Gross Profit
 Gross Margin
 Income from Operations
 Operating Margin
 Income Tax Expense
 Effective Tax Rate
 Net Income
 Diluted Earnings Per Share
 (In thousands, except per share amounts)
 GAAP results $ 4,492,340 55.4 % $ 1,328,408 16.4 % $ 477,771 35.9 % $ 854,800 $ 6.68
 lululemon Studio charges:
 lululemon Studio
obsolescence provision 62,928 0.8 62,928 0.8 62,928 0.49
 Impairment of goodwill
and other assets 407,913 5.0 407,913 3.19
 Tax effect of the above 28,171 (7.8) (28,171) (0.22)
  62,928 0.8 470,841 5.8 28,171 (7.8) 442,670 3.46
  Gain on disposal of assets (10,180) (0.1) (10,180) (0.08)
 Tax effect of the above (1,661) — 1,661 0.01
  Adjusted results (non-
GAAP) $4,555,268 56.2 % $1,789,069 22.1 % $ 504,281 28.1 % $1,288,951 $ 10.07
       2021
  Income from Operations
 Operating Margin
 Income Tax Expense
 Effective Tax Rate
 Net Income
 Diluted Earnings Per Share
 (In thousands, except per share amounts)
 GAAP results $ 1,333,355 21.3 % $ 358,547 26.9 % $ 975,322 $ 7.49
 Transaction and integration costs 2,989 — 2,989 0.02
 Acquisition-related compensation 38,405 0.7 38,405 0.29
 Tax effect of the above 1,417 (0.7) (1,417) (0.01)
  Adjusted results (non-GAAP) $ 1,374,749 22.0 % $ 359,964 26.2 % $ 1,015,299 $ 7.79
   Liquidity and Capital Resources
Our primary sources of liquidity are our current balances of cash and cash equivalents, cash flows from operations, and capacity under our committed revolving credit facility, including to fund short-term working capital requirements. Our primary cash needs are capital expenditures for opening new stores and remodeling or relocating existing stores, investing in our distribution centers, investing in technology and making system enhancements, funding working capital requirements, and making other strategic capital investments. We may also use cash to repurchase shares of our common stock. Cash and cash equivalents in excess of our needs are held in interest bearing accounts with financial institutions, as well as in money market funds and term deposits.
The following table summarizes our net cash flows provided by and used in operating, investing, and financing activities for the periods indicated:
   2023
 2022
 Year over year change
 (In thousands)
 Total cash provided by (used in):
 Operating activities $ 2,296,164 $ 966,463 $ 1,329,701
Investing activities   (654,132) (569,937) (84,195)
Financing activities   (548,828) (467,487) (81,341)
 Effect of foreign currency exchange rate changes on cash and cash equivalents (4,100) (34,043) 29,943
  Increase (decrease) in cash and cash equivalents $ 1,089,104 $ (105,004) $ 1,194,108
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Operating Activities
The increase in cash provided by operating activities was primarily as a result of:
• an increase in cash flows from changes in operating assets and liabilities of $859.1 million, primarily driven by changes in inventories, accounts payable, and prepaid expenses and other current assets, partially offset by changes in income taxes and accrued liabilities; and
• increased net income of $695.4 million.
The increase in cash provided by operating activities was partially offset by changes in adjusting items of $224.8 million, primarily driven by goodwill and other asset impairments and restructuring costs recognized in relation to lululemon Studio, as well as increased depreciation and higher cash inflows related to derivatives.
Investing Activities
The increase in cash used in investing activities was primarily due to the settlement of net investment hedges and increased capital expenditures. The increase in capital expenditures was primarily due to investment in our distribution centers as well as other technology infrastructure and system initiatives, partially offset by a decrease in company-operated store and corporate capital expenditures.
Financing Activities
The increase in cash used in financing activities was primarily the result of an increase in our stock repurchases. During 2023, 1.5 million shares were repurchased at a total cost including commissions and excise taxes of $558.7 million. During 2022, 1.4 million shares were repurchased at a total cost including commissions and excise taxes of $444.0 million. The common stock was repurchased in the open market 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, with the timing and actual number of shares repurchased depending upon market conditions, eligibility to trade, and other factors.
Liquidity Outlook
We believe our cash and cash equivalent balances, cash generated from operations, and borrowings available to us under our committed revolving credit facility will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next 12 months. Our cash from operations may be negatively impacted by a decrease in demand for our products as well as the other factors described in "Item 1A. Risk Factors". In addition, we may make discretionary capital improvements with respect to our stores, distribution facilities, headquarters, or systems, or we may repurchase shares under an approved stock repurchase program, which we would expect to fund through the use of cash, issuance of debt or equity securities or other external financing sources to the extent we were unable to fund such expenditures out of our cash and cash equivalents and cash generated from operations.
The following table includes certain measures of our liquidity:
__________
   January 28, 2024
 (In thousands)
Cash and cash equivalents   $ 2,243,971
Working capital excluding cash and cash equivalents(1)   185,345
Capacity under committed revolving credit facility   393,661
   (1)
Working capital is calculated as current assets of $4.1 billion less current liabilities of $1.6 billion.
Capital expenditures are expected to range between $690.0 million and $710.0 million in 2024.
Our current commitments with respect to inventory purchases are included within our purchase obligations outlined below. The timing and cost of our inventory purchases will vary depending on a variety of factors such as revenue growth, assortment and purchasing decisions, product costs including freight and duty, and the availability of production capacity and speed. Our inventory balance as of January 28, 2024 was $1.3 billion, a decrease of 9% from January 29, 2023. We expect our inventories to decrease during the first half of 2024 compared to the first half of 2023, and then increase in the second half of 2024 compared to the second half of 2023.
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Our existing Americas credit facility provides for $400.0 million in commitments under an unsecured five-year revolving credit facility. The credit facility has a maturity date of December 14, 2026, subject to extension under certain circumstances. As of January 28, 2024, aside from letters of credit of $6.3 million, we had no other borrowings outstanding under this credit facility. Further information regarding our credit facilities and associated covenants is outlined in Note 12. Revolving Credit Facilities included in Item 8 of Part II of this report.
Contractual Obligations and Commitments
Leases. We lease certain store and other retail locations, distribution centers, offices, and equipment under non- cancellable operating leases. Our leases generally have initial terms of between two and 15 years, and generally can be extended in increments between two and five years, if at all. The following table details our future minimum lease payments. Minimum lease commitments exclude variable lease expenses including contingent rent payments, common area maintenance, property taxes, and landlord's insurance.
Purchase obligations. The amounts listed for purchase obligations in the table below represent agreements (including open purchase orders) to purchase products and for other expenditures in the ordinary course of business that are enforceable and legally binding and that specify all significant terms. In some cases, values are subject to change, such as for product purchases throughout the production process. The reported amounts exclude liabilities included in our consolidated balance sheets as of January 28, 2024.
One-time transition tax payable. The U.S. tax reforms enacted in December 2017 imposed a mandatory transition tax on accumulated foreign subsidiary earnings which have not previously been subject to U.S. income tax. The one-time transition tax is payable over eight years beginning in fiscal 2018. The one-time transition tax payable is net of foreign tax credits, and the table below outlines the expected payments due by fiscal year.
The following table summarizes our contractual arrangements due by fiscal year as of January 28, 2024, and the timing and effect that such commitments are expected to have on our liquidity and cash flows in future periods:
As of January 28, 2024, our operating lease commitments for distribution center operating leases which have been committed to, but not yet commenced, was $299.6 million, which is not reflected in the table above.
We enter into standby letters of credit to secure certain of our obligations, including leases, taxes, and duties. As of January 28, 2024, letters of credit and letters of guarantee totaling $10.2 million had been issued, including $6.3 million under our committed revolving credit facility.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of significant judgment. Actual results may vary from our estimates in amounts that may be material to the financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements.
Our critical accounting policies, estimates, and judgements are as follows, and see Note 2. Summary of Significant Accounting Policies included in Item 8 of Part II for additional information:
Inventory provision
Inventory is valued at the lower of cost and net realizable value. We periodically review our inventories and make a provision for obsolescence and goods that have quality issues or that are damaged. We record a provision at an amount that is equal to the difference between the inventory cost and its net realizable value. As of January 28, 2024 the net carrying value of our inventories was $1.3 billion, which included provisions for obsolete and damaged inventory of $139.7 million. The
   Total
 2024
 2025
 2026
 2027
 2028
 Thereafter
 (In thousands)
 Operating leases (minimum rent) $1,645,318 $ 300,379 $ 287,224 $ 232,510 $ 214,519 $ 158,252 $ 452,434
 Purchase obligations 688,934 656,376 5,566 10,506 2,899 13,587 —
 One-time transition tax payable 28,555 12,691 15,864 — — — —
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provision is determined based upon assumptions about product quality, damages, future demand, selling prices, and market conditions, and includes a provision of $63.0 million against lululemon Studio Mirror inventory.
Deferred taxes on undistributed net investment of foreign subsidiaries.
We have not recognized U.S. state income taxes and foreign withholding taxes on the net investment in our subsidiaries which we have determined to be indefinitely reinvested. This determination is based on the cash flow projections and operational and fiscal objectives of each of our foreign subsidiaries. Such estimates are inherently imprecise since many assumptions utilized in the projections are subject to revision in the future.
For the portion of our net investment in our Canadian subsidiaries that is not indefinitely reinvested, we have recorded a deferred tax liability for the taxes which would be due upon repatriation. For distributions made by our Canadian subsidiaries, the amount of tax payable is partially dependent on how the repatriation transactions are made. The deferred tax liability has been recorded on the basis that we would choose to make the repatriation transactions in the most tax efficient manner. Specifically, to the extent that the Canadian subsidiaries have sufficient paid-up-capital, any such distributions would be made as a return of capital, rather than as a dividend, and therefore would not be subject to Canadian withholding tax.
As of January 28, 2024, the net investment in our Canadian subsidiaries was $2.5 billion, of which $1.6 billion was determined to be indefinitely reinvested. The paid-up-capital balance of the Canadian subsidiaries was approximately $140.0 million.
We have recognized a deferred tax liability of $41.2 million as of January 28, 2024 which represents the Canadian withholding taxes payable on the portion of our Canadian earnings that are not indefinitely reinvested and cannot be repatriated as a return of capital, and U.S. state income taxes payable upon repatriation of the amounts which are not indefinitely reinvested.
In future periods, if the net investment in our Canadian subsidiaries continues to grow, whether due to the accumulation of profits by these subsidiaries or due to a change in the amount that is indefinitely reinvested, we will record additional deferred tax liabilities, including both Canadian withholding taxes for the amount in excess of the paid-up capital balance and U.S. state income taxes.
Contingencies
We are involved in legal proceedings regarding contractual and employment relationships and a variety of other matters. We record contingent liabilities when a loss is assessed to be probable and its amount is reasonably estimable. If it is reasonably possible that a material loss could occur through ongoing litigation, we provide disclosure in the footnotes to our financial statements. Assessing probability of loss and estimating the amount of probable losses requires analysis of multiple factors, including in some cases judgments about the potential actions of third-party claimants and courts. Should we experience adverse court judgments or should negotiated outcomes differ to our expectations with respect to such ongoing litigation it could have a material adverse effect on our results of operations, financial position, and cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
Translation Risk. The functional currency of our international subsidiaries is generally the applicable local currency. Our consolidated financial statements are presented in U.S. dollars. Therefore, the net revenue, expenses, assets, and liabilities of our international subsidiaries are translated from their functional currencies into U.S. dollars. Fluctuations in the value of the U.S. dollar affect the reported amounts of net revenue, expenses, assets, and liabilities. As a result of the fluctuation in exchange rates compared to the U.S. dollar our revenue was $89.8 million lower in 2023 in comparison to 2022.
Foreign currency exchange differences which arise on translation of our international subsidiaries' balance sheets into U.S. dollars are recorded as other comprehensive income (loss), net of tax in accumulated other comprehensive income (loss) within stockholders' equity. A significant portion of our net assets are held by our Canadian dollar subsidiary. We enter into forward currency contracts in order to hedge a portion of the foreign currency exposure associated with the translation of our net investment in our Canadian subsidiary. The impact to other comprehensive loss of translation of our Canadian subsidiaries was an increase in the loss of $9.0 million, inclusive of net investment hedge gains.
Transaction Risk. We also have exposure to changes in foreign currency exchange rates associated with transactions which are undertaken by our subsidiaries in currencies other than their functional currency. Such transactions include intercompany transactions and inventory purchases denominated in currencies other than the functional currency of the
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purchasing entity. We also hold cash and cash equivalents and other monetary assets in currencies that are different to the functional currency of our subsidiaries. As of January 28, 2024, we had certain forward currency contracts outstanding in order to economically hedge the foreign currency revaluation gains and losses recognized by our foreign subsidiaries, including our Canadian and Chinese subsidiaries, on their monetary assets and liabilities denominated in currencies other than their functional currency.
We perform a sensitivity analysis to determine the market risk exposure associated with the fair values of our forward currency contracts. The net fair value of outstanding derivatives as of January 28, 2024 was a liability of $2.2 million. As of January 28, 2024, a 10% depreciation in the U.S. dollar against the hedged currencies would have resulted in the net fair value of outstanding derivatives depreciating by $29.8 million. The hypothetical change in the fair value of the forward currency contracts would have been substantially offset by a corresponding but directionally opposite change in the underlying hedged items.
In the future, in an effort to reduce foreign currency exchange risks, we may enter into further derivative financial instruments including hedging additional currency pairs. We do not, and do not intend to, engage in the practice of trading derivative securities for profit.
Please refer to Note 17. Derivative Financial Instruments included in Item 8 of Part II of this report for further details on the nature of our financial instruments.
Interest Rate Risk
Our committed revolving credit facility provides us with available borrowings in an amount up to $400.0 million. Because our revolving credit facilities bear interest at a variable rate, we will be exposed to market risks relating to changes in interest rates, if we have a meaningful outstanding balance. As of January 28, 2024, aside from letters of credit of $6.3 million, there were no borrowings outstanding under these credit facilities. We currently do not engage in any interest rate hedging activity and currently have no intention to do so. However, in the future, if we have a meaningful outstanding balance under our revolving facility, in an effort to mitigate losses associated with these risks, we may at times enter into derivative financial instruments, although we have not historically done so. These may take the form of forward contracts, option contracts, or interest rate swaps. We do not, and do not intend to, engage in the practice of trading derivative securities for profit.
Our cash and cash equivalent balances are held in the form of cash on hand, bank balances, and short-term deposits with original maturities of three months or less, and in money market funds. As of January 28, 2024, we held cash and cash equivalents of $2.2 billion. Interest generated on cash balances is subject to variability as interest rates increase or decrease.
Credit Risk. We have cash on deposit with various large, reputable financial institutions and have invested in AAA-rated money market funds. The amount of cash and cash equivalents held with certain financial institutions exceeds government- insured limits. We are also exposed to credit-related losses in the event of nonperformance by the financial institutions that are counterparties to our forward currency contracts. The credit risk amount is our unrealized gains on our derivative instruments, based on foreign currency rates at the time of nonperformance. We have not experienced any losses related to these items, and we believe credit risk to be minimal. We seek to minimize our 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 we transact. We seek to limit the amount of exposure with any one counterparty.
Inflation
Inflationary factors such as increases in the cost of our product, as well as overhead costs and capital expenditures may adversely affect our operating results. During 2022 and 2023, our operating margin was impacted by increased wage rates. During 2022, our gross margin was impacted by higher air freight costs as a result of global supply chain disruption.
Sustained increases in transportation costs, wages, and raw material costs, or other inflationary pressures in the future may have an adverse effect on our ability to maintain current levels of operating margin if the selling prices of our products do not increase with these increased costs, or we cannot identify cost efficiencies.
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ITEM 8. FINANCIAL STATEMENTS
lululemon athletica inc.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm (PCAOB ID 271) 47
Consolidated Balance Sheets   49
 Consolidated Statements of Operations and Comprehensive Income 50
Consolidated Statements of Stockholders' Equity   51
Consolidated Statements of Cash Flows   53
Index for Notes to the Consolidated Financial Statements   54
46

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of lululemon athletica inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of lululemon athletica inc. and its subsidiaries (together, the Company) as of January 28, 2024 and January 29, 2023, and the related consolidated statements of operations and comprehensive income, of stockholders' equity and of cash flows for each of the 52-week years ended January 28, 2024, January 29, 2023, and January 30, 2022, 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 January 28, 2024, 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 January 28, 2024 and January 29, 2023, and the results of its operations and its cash flows for each of the 52-week years ended January 28, 2024, January 29, 2023, and January 30, 2022 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 January 28, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 9A of the Company’s 2023 Annual Report on Form 10-K. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
47

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Inventory Provision
As described in Notes 2 and 3 to the consolidated financial statements, inventories are valued at the lower of cost and net realizable value, and management records a provision as necessary to appropriately value inventories that are obsolete, have quality issues, or are damaged. Provision expense is recorded in cost of goods sold. As of January 28, 2024, the Company’s consolidated net inventories balance was $1,323.6 million inclusive of the inventory provision of $141.5 million. The amount of the inventory provision is equal to the difference between the cost of the inventory and its estimated net realizable value based on assumptions about product quality, damages, future demand, selling prices, and market conditions.
The principal considerations for our determination that performing procedures relating to the inventory provision is a critical audit matter are the significant judgment by management in determining the estimated net realizable value of inventories that are obsolete, have quality issues, or are damaged, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the inventory provision.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the review of the inventory provision including the assumptions used. These procedures also included, among others, (i) observing the physical condition of inventories during inventory counts; (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; (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; and (v) corroborating the assumptions with individuals within the product team.
/s/ PricewaterhouseCoopers LLP Chartered Professional Accountants Vancouver, Canada
March 21, 2024
We have served as the Company's auditor since 2006.
48

lululemon athletica inc. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share amounts)
    January 28, 2024
 January 29, 2023
  ASSETS
 Current assets
Cash and cash equivalents   $ 2,243,971 $ 1,154,867
Accounts receivable, net   124,769 132,906
Inventories   1,323,602 1,447,367
Prepaid and receivable income taxes   183,733 185,641
Prepaid expenses and other current assets   184,502 238,672
  4,060,577 3,159,453
Property and equipment, net   1,545,811 1,269,614
Right-of-use lease assets   1,265,610 969,419
Goodwill   24,083 24,144
Intangible assets, net   — 21,961
Deferred income tax assets   9,176 6,402
Other non-current assets   186,684 156,045
  $ 7,091,941 $ 5,607,038
  LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
Accounts payable   $ 348,441 $ 172,732
Accrued liabilities and other   348,555 399,223
 Accrued compensation and related expenses 326,110 248,167
Current lease liabilities   249,270 207,972
Current income taxes payable   12,098 174,221
Unredeemed gift card liability   306,479 251,478
Other current liabilities   40,308 38,405
  1,631,261 1,492,198
Non-current lease liabilities   1,154,012 862,362
Non-current income taxes payable   15,864 28,555
Deferred income tax liabilities   29,522 55,084
Other non-current liabilities   29,201 20,040
  2,859,860 2,458,239
  Commitments and contingencies
 Stockholders' equity
 Undesignated preferred stock, $0.01 par value: 5,000 shares authorized; none issued and outstanding — —
 Exchangeable stock, no par value: 60,000 shares authorized; 5,116 and 5,116 issued and outstanding — —
 Special voting stock, $0.000005 par value: 60,000 shares authorized; 5,116 and 5,116 issued and
outstanding — —
 Common stock, $0.005 par value: 400,000 shares authorized; 121,106 and 122,205 issued and outstanding 606 611
Additional paid-in capital   575,369 474,645
Retained earnings   3,920,362 2,926,127
Accumulated other comprehensive loss   (264,256) (252,584)
  4,232,081 3,148,799
  $ 7,091,941 $ 5,607,038
  See accompanying notes to the consolidated financial statements
49

lululemon athletica inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands, except per share amounts)
  Fiscal Year Ended
  January 28, 2024
 January 29, 2023
 January 30, 2022
 Net revenue   $ 9,619,278 $ 8,110,518 $ 6,256,617
Cost of goods sold   4,009,873 3,618,178 2,648,052
 Gross profit   5,609,405 4,492,340 3,608,565
 Selling, general and administrative expenses 3,397,218 2,757,447 2,225,034
 Impairment of goodwill and other assets, restructuring costs 74,501 407,913 —
 Amortization of intangible assets 5,010 8,752 8,782
Acquisition-related expenses   — — 41,394
Gain on disposal of assets   — (10,180) —
  Income from operations 2,132,676 1,328,408 1,333,355
 Other income (expense), net 43,059 4,163 514
  Income before income tax expense 2,175,735 1,332,571 1,333,869
Income tax expense   625,545 477,771 358,547
 Net income   $ 1,550,190 $ 854,800 $ 975,322
   Other comprehensive income (loss), net of tax:
 Foreign currency translation adjustment $ (23,077) $ (65,571) $ (28,494)
 Net investment hedge gains (losses) 11,405 8,904 9,732
  Other comprehensive income (loss), net of tax (11,672) (56,667) (18,762)
  Comprehensive income $ 1,538,518 $ 798,133 $ 956,560
   Basic earnings per share $ 12.23 $ 6.70 $ 7.52
 Diluted earnings per share $ 12.20 $ 6.68 $ 7.49
 Basic weighted-average number of shares outstanding 126,726 127,666 129,768
 Diluted weighted-average number of shares outstanding 127,060 128,017 130,295
     See accompanying notes to the consolidated financial statements
50

lululemon athletica inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands)
   Exchangeable Stock
 Special Voting Stock
  Common Stock
  Additional Paid-in Capital
 Retained Earnings
 Accumulated Other Comprehensive Loss
  Total Stockholders' Equity
 Shares
 Shares
 Par Value
 Shares
 Par Value
  Balance as of January 31,
2021 5,203 5,203 $ — 125,150 $ 626 $ 388,667 $ 2,346,428 $ (177,155) $ 2,558,566
 Net income   975,322 975,322
 Other comprehensive
income (loss), net of tax (18,762) (18,762)
 Stock-based
compensation expense 69,137 69,137
 Common stock issued
upon settlement of
stock-based
compensation 502 2 18,192 18,194
 Shares withheld related
to net share settlement
of stock-based
compensation (153) (1) (49,808) (49,809)
 Repurchase of common
stock (2,202) (11) (3,681) (808,910) (812,602)
  Balance as of January 30,
2022 5,203 5,203 $ — 123,297 $ 616 $ 422,507 $ 2,512,840 $ (195,917) $ 2,740,046
 Net income   854,800 854,800
 Other comprehensive
income (loss), net of tax (56,667) (56,667)
 Common stock issued
upon exchange of
exchangeable shares (87) (87) — 87 — — —
 Stock-based
compensation expense 78,075 78,075
 Common stock issued
upon settlement of
stock-based
compensation 322 2 11,702 11,704
 Shares withheld related
to net share settlement
of stock-based
compensation (105) — (35,158) (35,158)
 Repurchase of common
stock, including excise
tax (1,396) (7) (2,481) (441,513) (444,001)
  Balance as of January 29,
2023 5,116 5,116 $ — 122,205 $ 611 $ 474,645 $ 2,926,127 $ (252,584) $ 3,148,799
      51

   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
 Net income   1,550,190 1,550,190
 Other comprehensive
income (loss), net of tax (11,672) (11,672)
 Stock-based
compensation expense 93,560 93,560
 Common stock issued
upon settlement of
stock-based
compensation 479 2 42,428 42,430
 Shares withheld related
to net share settlement
of stock-based
compensation (96) — (32,574) (32,574)
 Repurchase of common
stock, including excise
tax (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
    See accompanying notes to the consolidated financial statements
52

lululemon athletica inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
    Fiscal Year Ended
  January 28, 2024
 January 29, 2023
 January 30, 2022
  Cash flows from operating activities
Net income   $ 1,550,190 $ 854,800 $ 975,322
 Adjustments to reconcile net income to net cash provided by operating activities:
 Depreciation and amortization 379,384 291,791 224,206
 lululemon Studio obsolescence provision 23,709 62,928 —
 Impairment of goodwill and other assets, restructuring costs 74,501 407,913 —
 Gain on disposal of assets — (10,180) —
 Stock-based compensation expense 93,560 78,075 69,137
 Derecognition of unredeemed gift card liability (28,547) (23,337) (18,699)
 Settlement of derivatives not designated in a hedging relationship 32,527 (38,649) 15,191
 Deferred income taxes (28,383) 3,042 (5,180)
 Changes in operating assets and liabilities:
Inventories   66,584 (573,438) (323,609)
 Prepaid and receivable income taxes 1,908 (66,714) 20,108
 Prepaid expenses and other current assets 47,167 (113,820) (82,404)
 Other non-current assets (53,280) (36,518) (17,556)
 Accounts payable 177,367 (107,280) 117,655
 Accrued liabilities and other (71,734) 65,364 103,878
 Accrued compensation and related expenses 70,327 47,254 75,273
 Current and non-current income taxes payable (173,196) 35,986 120,778
 Unredeemed gift card liability 84,315 68,266 71,441
 Right-of-use lease assets and current and non-current lease liabilities 37,535 23,905 13,494
 Other current and non-current liabilities 12,230 (2,925) 30,073
  Net cash provided by operating activities 2,296,164 966,463 1,389,108
  Cash flows from investing activities
 Purchase of property and equipment (651,865) (638,657) (394,502)
 Settlement of net investment hedges (1,609) 47,804 (23,389)
Other investing activities   (658) 20,916 (10,000)
  Net cash used in investing activities (654,132) (569,937) (427,891)
  Cash flows from financing activities
 Proceeds from settlement of stock-based compensation 42,430 11,704 18,194
 Shares withheld related to net share settlement of stock-based compensation (32,574) (35,158) (49,809)
 Repurchase of common stock (558,652) (444,001) (812,602)
Other financing activities   (32) (32) (770)
  Net cash used in financing activities (548,828) (467,487) (844,987)
  Effect of foreign currency exchange rate changes on cash and cash equivalents (4,100) (34,043) (6,876)
  Increase (decrease) in cash and cash equivalents 1,089,104 (105,004) 109,354
 Cash and cash equivalents, beginning of period $ 1,154,867 $ 1,259,871 $ 1,150,517
  Cash and cash equivalents, end of period $ 2,243,971 $ 1,154,867 $ 1,259,871
     See accompanying notes to the consolidated financial statements
53

lululemon athletica inc.
INDEX FOR NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Nature of Operations and Basis of Presentation   55
Note 2 Summary of Significant Accounting Policies   55
Note 3 Inventories   62
Note 4 Prepaid Expenses and Other Current Assets   62
Note 5 Property and Equipment   63
Note 6 Goodwill   63
Note 7 Intangible Assets   64
 Note 8 Impairment of Goodwill and Other Assets, Restructuring Costs 64
Note 9 Acquisition-Related Expenses   66
Note 10 Other Non-Current Assets   66
Note 11 Accrued Liabilities and Other   66
Note 12 Revolving Credit Facilities   66
Note 13 Supply Chain Financing Program   67
Note 14 Stockholders' Equity   68
Note 15 Stock-Based Compensation and Benefit Plans   68
Note 16 Fair Value Measurement   71
Note 17 Derivative Financial Instruments   71
Note 18 Leases   73
Note 19 Income Taxes   74
Note 20 Earnings Per Share   76
Note 21 Commitments and Contingencies   76
Note 22 Supplemental Cash Flow Information   77
Note 23 Segmented Information   78
Note 24 Disaggregated Net Revenue   79
54

lululemon athletica inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations and Basis of Presentation
Nature of operations
lululemon athletica inc., a Delaware corporation, ("lululemon" and, together with its subsidiaries unless the context otherwise requires, the "Company") is engaged in the design, distribution, and retail of performance apparel, footwear, and accessories. The Company organizes its operations into four regional markets: Americas, China Mainland, Asia Pacific ("APAC"), and Europe and the Middle East ("EMEA"). It conducts its business through a number of different channels in each market, including company-operated stores, e-commerce, temporary locations, wholesale, outlets, a re-commerce program, and license and supply arrangements. There were 711, 655, and 574 company-operated stores in operation as of January 28, 2024, January 29, 2023, and January 30, 2022, respectively.
Basis of presentation
The consolidated financial statements have been presented in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles ("GAAP").
The Company's fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52- week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2023, fiscal 2022, and fiscal 2021 were each 52-week years. Fiscal 2023, 2022, and 2021 ended on January 28, 2024, January 29, 2023, and January 30, 2022, respectively, and are referred to as "2023," "2022," and "2021," 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.
Note 2. Summary of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the accounts of lululemon athletica inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
Cash and cash equivalents
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.
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. 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 January 28, 2024 and January 29, 2023, the Company had an insignificant allowance for doubtful accounts.
Inventories
Inventories, consisting of finished goods, inventories in transit, and raw materials, are stated at the lower of cost and net realizable value. Cost is determined using weighted-average costs, and includes all costs incurred to deliver inventory to the Company's distribution centers including freight, non-refundable taxes, duty, and other landing costs.
The Company periodically reviews its inventories and makes a provision as necessary to appropriately value goods that are obsolete, have quality issues, or are damaged. The amount of the provision is equal to the difference between the cost of the inventory and its net realizable value based upon assumptions about product quality, damages, future demand, selling prices, and market conditions. If changes in market conditions result in reductions in the estimated net realizable value of its inventory below its previous estimate, the Company would increase its provision in the period in which it made such a determination.
55

In addition, the Company provides for inventory shrinkage based on historical trends from actual physical inventory counts. Inventory shrinkage estimates are made to reduce the inventory value for lost or stolen items. The Company performs physical inventory counts and cycle counts throughout the year and adjusts the shrink provision accordingly.
Business combinations
The purchase price of an acquisition is measured as the aggregate of the fair value of the consideration transferred including the acquisition-date fair value of the Company's previously held equity interests. The purchase price is allocated to the fair values of the tangible and intangible assets acquired and liabilities assumed, with any excess recorded as goodwill. These fair value determinations require judgment and may involve the use of significant estimates and assumptions. The purchase price allocation may be provisional during a measurement period of up to one year to provide reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed. Any such measurement period adjustments are recognized in the period in which the adjustment amount is determined. Transaction costs associated with the acquisition are expensed as incurred.
Goodwill
Goodwill represents the excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in the acquiree, and the acquisition-date fair value of the Company's previously held equity interest over the net assets acquired and liabilities assumed. Goodwill is allocated to the reporting unit which is expected to receive the benefit from the synergies of the combination.
Goodwill is tested annually for impairment or more frequently when an event or circumstance indicates that goodwill might be impaired. Generally, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If factors indicate that this is the case, the Company then estimates the fair value of the related reporting unit. If the fair value is less than the carrying value, the goodwill of the reporting unit is determined to be impaired and the Company will record an impairment equal to the excess of the carrying value over its fair value.
Intangible assets
Acquired finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, and are reviewed for impairment when events or circumstances indicate that the asset group to which the intangible assets belong might be impaired. The Company revises the estimated remaining useful life of these assets when events or changes in circumstances warrant a revision. If the Company revises the useful life, the unamortized balance is amortized over the remaining useful life on a prospective basis.
Property and equipment
Property and equipment are recorded at cost less accumulated depreciation. Direct internal and external costs related to software used for internal purposes which are incurred during the application development stage or for upgrades that add functionality are capitalized. All other costs related to internal use software are expensed as incurred. Property and equipment carrying values are reviewed for impairment when events or circumstances indicate that the asset group to which the property and equipment belong might be impaired.
Depreciation commences when an asset is ready for its intended use. Buildings are depreciated on a straight-line basis over the expected useful life of the asset, which is individually assessed, and estimated to be up to 40 years. Leasehold improvements are depreciated on a straight-line basis over the lesser of the expected lease term and the estimated useful life of the improvement, to a maximum of 10 years for stores and 15 years for corporate offices and distribution centers. All other property and equipment are depreciated using the declining balance method as follows:
Furniture and fixtures   20%
Computer hardware and software   20% - 50%
Equipment and vehicles   20% - 30%
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Cloud Computing Arrangements
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. Implementation costs are subsequently amortized over the expected term of the related cloud service. The carrying value of cloud computing implementation costs are tested for impairment when an event or circumstance indicates that the asset might be impaired. Changes in cloud computing arrangement implementation costs are classified within operating activities in the consolidated statements of cash flows.
Impairment of long-lived assets
Long-lived assets, held for use are evaluated for impairment when the occurrence of events or a change in circumstances indicates that the carrying value of the assets may not be recoverable as measured by comparing their carrying value to the estimated undiscounted future cash flows generated by their use and eventual disposition. Impaired assets are recorded at fair value, determined principally by discounting the future cash flows expected from their use and eventual disposition. Reductions in asset values resulting from impairment valuations are recognized in income in the period that the impairment is determined.
Leased property and equipment
At lease commencement, which is generally when the Company takes possession of the asset, the Company records a lease liability and corresponding right-of-use asset. Lease liabilities represent the present value of minimum lease payments over the expected lease term, which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of the lease liability is determined using the Company's incremental collateralized borrowing rate at the lease commencement.
Minimum lease payments include base rent, fixed escalation of rental payments, and rental payments that are adjusted periodically depending on a rate or index. In determining minimum lease payments, the Company does not separate non- lease components for real estate leases. Non-lease components are generally services that the lessor performs for the Company associated with the leased asset, such as common area maintenance.
Right-of-use assets represent the right to control the use of the leased asset during the lease and are initially recognized in an amount equal to the lease liability. In addition, prepaid rent, initial direct costs, and adjustments for lease incentives are components of the right-of-use asset. Over the lease term the lease expense is amortized on a straight-line basis beginning on the lease commencement date. Right-of-use assets are assessed for impairment as part of the impairment of long-lived assets, which is performed whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
Variable lease payments, including contingent rental payments based on sales volume, are recognized when the achievement of the specific target is probable. A right-of-use asset and lease liability are not recognized for leases with an initial term of 12 months or less, and the lease expense is recognized on a straight-line basis over the lease term.
The Company recognizes a liability for the fair value of asset retirement obligations ("AROs") when such obligations are incurred. The Company's AROs are primarily associated with leasehold improvements which, at the end of a lease, the Company is contractually obligated to remove in order to comply with the lease agreement. At the inception of a lease with such conditions, the Company records an ARO liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. The liability is estimated based on a number of assumptions requiring management's judgment, including store closing costs, cost inflation rates and discount rates, and is accreted to its projected future value over time. The capitalized asset is depreciated using the convention for depreciation of leasehold improvement assets. Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement costs incurred is recognized as an operating gain or loss in the consolidated statements of operations.
The Company recognizes a liability for a cost associated with a lease exit or disposal activity when such obligation is incurred. A lease exit or disposal liability is measured initially at its fair value in the period in which the liability is incurred. The Company estimates fair value at the cease-use date of its operating leases as the remaining lease rentals, reduced by estimated sublease rentals that could be reasonably obtained for the property, even where the Company does not intend to enter into a sublease. Estimating the cost of certain lease exit costs involves subjective assumptions, including the time it would take to sublease the leased location and the related potential sublease income. The estimated accruals for these costs could be significantly affected if future experience differs from the assumptions used in the initial estimate.
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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.
Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods or services to the Company's customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance. Revenue from company-operated stores and other retail locations is recognized at the point of sale. E-commerce revenue, sales to wholesale accounts and in-home fitness hardware sales are recognized upon receipt by the customer. In certain arrangements the Company receives payment before the customer receives the promised good. These payments are initially recorded as deferred revenue, and recognized as revenue in the period when control is transferred to the customer.
Revenue is presented net of an allowance for estimated returns. 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 January 28, 2024 and January 29, 2023, the sales return allowance was $61.6 million and $55.5 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.
Proceeds from the sale of gift cards are initially deferred and recognized within unredeemed gift card liability on the consolidated balance sheets, and are recognized as revenue when tendered for payment. 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. For 2023, 2022, and 2021, net revenue recognized on unredeemed gift card balances was $28.5 million, $23.3 million, and $18.7 million, respectively.
Cost of goods sold
Cost of goods sold includes:
• the cost of purchased merchandise, which includes acquisition and production costs including raw material and labor, as applicable;
• the cost incurred to deliver inventory to the Company's distribution centers including freight, non-refundable taxes, duty, and other landing costs;
• the cost of the Company's distribution centers, such as labor, rent, utilities, and depreciation;
• the cost of the Company's production, design, research and development, distribution, and merchandising departments including salaries, stock-based compensation and benefits, and other expenses;
• occupancy costs such as minimum rent, contingent rent where applicable, property taxes, utilities, and depreciation expense for the Company's company-operated store locations;
• hemming costs;
• shrink and inventory provision expense; and
• the cost of digital content subscription services
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Selling, general and administrative expenses
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 2023, 2022, and 2021, the Company incurred costs to transport its products from its distribution facilities to its retail locations and e-commerce guests of $374.2 million, $353.7 million, and $270.8 million, respectively.
Advertising and Marketing Costs
Advertising costs, including the costs to produce advertising, are expensed as incurred. Advertising expenses were $429.7 million, $328.6 million, and $297.5 million for 2023, 2022, and 2021, respectively, and are included within selling, general and administrative expenses.
Store pre-opening costs
Operating costs incurred prior to the opening of new stores are expensed as incurred as selling, general and administrative expenses.
Income taxes
The Company follows the liability method with respect to accounting for income taxes. Deferred income tax assets and liabilities are determined based on the temporary differences between the carrying amounts and the tax basis of assets and liabilities, and for tax losses, tax credit carryforwards, and other tax attributes. Deferred income tax assets and liabilities are measured using enacted tax rates, for the appropriate tax jurisdiction, that are expected to be in effect when these differences are anticipated to reverse.
The Company has not recognized U.S. state income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries which the Company has determined to be indefinitely reinvested.
Deferred income tax assets are reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The evaluation as to the likelihood of realizing the benefit of a deferred income tax asset is based on the timing of scheduled reversals of deferred tax liabilities, taxable income forecasts, and tax-planning strategies. The recognition of a deferred income tax asset is based upon several assumptions and forecasts, including current and anticipated taxable income, the utilization of previously unrealized non- operating loss carryforwards, and regulatory reviews of tax filings.
The Company evaluates its tax filing positions and recognizes the largest amount of tax benefit that is considered more likely than not to be sustained upon examination by the relevant taxing authorities based on the technical merits of the position. This determination requires the use of significant judgment. Income tax expense is adjusted in the period in which an uncertain tax position is effectively settled, the statute of limitations expires, facts or circumstances change, tax laws change, or new information becomes available. The Company's policy is to recognize interest expense and penalties related to income tax matters as part of income tax expense. Accrued interest and penalties are included within the related tax liability on the Company's consolidated balance sheets.
The Company treats the global intangible low-taxed income ("GILTI") tax as a current period expense.
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
• Level 1 - defined as observable inputs such as quoted prices in active markets;
• Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
• Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. 59

The Company records cash, accounts receivable, accounts payable, and accrued liabilities at cost. 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. Fair Value Measurement.
Foreign currency
The functional currency for each entity included in these consolidated financial statements that is domiciled outside of the United States is generally the applicable local currency. Assets and liabilities of each foreign entity are translated into U.S. dollars at the exchange rate in effect on the balance sheet date. Net revenue and expenses are translated at the average rate in effect during the period. 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.
Derivative financial instruments
The Company uses derivative financial instruments to manage its exposure to certain foreign currency exchange rate risks.
Net investment hedges. The Company enters into certain forward currency contracts that are designated as net investment hedges. The effective portions of the hedges are reported in accumulated other comprehensive income or loss, net of tax, and will subsequently be reclassified to net earnings in the period in which the hedged investment is either sold or substantially liquidated. Hedge effectiveness is measured using a method based on changes in forward exchange rates. The Company classifies the cash flows at settlement of its net investment hedges within investing activities in the consolidated statements of cash flows.
Derivatives not designated as hedging instruments. The Company also enters into certain forward currency contracts that are not designated as net investment hedges. They are designed to economically hedge the foreign exchange revaluation gains and losses of certain monetary assets and liabilities. 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. The Company classifies the cash flows at settlement of its forward currency contracts which are not designated in hedging relationships within operating activities in the consolidated statements of cash flows.
The Company presents its derivative assets and derivative liabilities at their gross fair values within prepaid expenses and other current assets and other current liabilities on the consolidated balance sheets. However, the Company's Master International Swap Dealers Association, Inc., Agreements and other similar arrangements allow net settlements under certain conditions.
The Company does not enter into derivative contracts for speculative or trading purposes. Additional information on the Company's derivative financial instruments is included in Note 16. Fair Value Measurement and Note 17. Derivative Financial Instruments.
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. The Company generally does not require collateral to support the accounts receivable; however, in certain circumstances, the Company may require parties to provide payment for goods prior to delivery of the goods or to provide letters of credit. The accounts receivable are net of an allowance for doubtful accounts, which is established based on management's assessment of the credit risk of the underlying accounts.
Cash and cash equivalents are held with high quality financial institutions. The amount of cash and cash equivalents held with certain financial institutions exceeds government-insured limits. The Company is also exposed to credit-related losses in the event of nonperformance by the counterparties to the forward currency contracts. 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.
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The Company's derivative contracts contain certain credit risk-related contingent features. Under certain circumstances, including an event of default, bankruptcy, termination, and cross default under the Company's Americas revolving credit facility, the Company may be required to make immediate payment for outstanding liabilities under its derivative contracts.
Stock-based compensation
The Company accounts for stock-based compensation using the fair value method. The fair value of awards granted is estimated at the date of grant. Awards settled in cash or common stock at the election of the employee are remeasured to fair value at the end of each reporting period until settlement. 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 for awards that are settled in common shares, and with the offsetting credit to accrued compensation and related expenses for awards that are settled in cash or common stock at the election of the employee.
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. The forfeiture rate is based on management's best estimate of expected forfeitures, taking into consideration historical trends and expected future behavior. For awards with performance conditions, the Company recognizes the compensation expense if and when the Company concludes that it is probable that the performance condition will be achieved. 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. Restricted stock units that were settled in cash or common stock at the election of the employee were remeasured to fair value at the end of each reporting period until settlement. This fair value was based on the closing price of the Company's common stock on the last business day before each period end.
Earnings per share
Earnings per share is calculated using the weighted-average number of common and exchangeable shares outstanding during the period. Exchangeable shares are the economic equivalent of common shares in all material respects. All classes of stock have in effect the same economic rights and share equally in undistributed net income. 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.
Contingencies
In the ordinary course of business, the Company is involved in legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from claims against it, when a loss is assessed to be probable and the amount of the loss is reasonably estimable.
Use of estimates
The preparation of financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of net revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recently adopted accounting pronouncements
The Company considers the applicability and impact of all Accounting Standard Updates ("ASUs"). ASUs adopted during 2023 not listed below were assessed, and determined to be either not applicable or are expected to have minimal impact on its consolidated financial position or results of operations.
In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, to require annual and interim disclosures about the key terms of supplier finance programs used in connection with the purchase of goods and services along with information about the obligations under these programs, including the amount outstanding at the end of each reporting period and a roll-forward of those obligations. The Company adopted this update during the first quarter of 2023 and the related disclosures are included in Note 13. Supply Chain Financing Program.
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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.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. Entities will be required to provide disclosures of significant segmented expenses and other categories used by the Chief Operating Decision Maker ("CODM") in order to enhance disclosure at the segment level. This amendment is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, and is applied retrospectively for periods presented in the financial statements. The Company is currently evaluating the impact that this new guidance may have on its financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This disclosure requires expanded disclosure within the rate reconciliation as well as disaggregation of annual taxes paid. This amendment is effective for annual periods beginning after December 15, 2023, and is applied prospectively. The Company is currently evaluating the impact that this new guidance may have on its financial statement disclosures.
Note 3. Inventories
   January 28, 2024
 January 29, 2023
 (In thousands)
Inventories, at cost   $ 1,465,076 $ 1,571,981
 Provision to reduce inventories to net realizable value:
lululemon Studio Mirror provision   (62,956) (65,328)
Obsolescence provision   (42,903) (18,903)
Damages provision   (33,836) (38,996)
Shrink provision   (1,779) (1,387)
  (141,474) (124,614)
 Inventories   $ 1,323,602 $ 1,447,367
   Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs for further details on the lululemon Studio obsolescence provision.
Note 4. Prepaid Expenses and Other Current Assets
   January 28, 2024
 January 29, 2023
 (In thousands)
Prepaid expenses   137,203 142,003
Forward currency contract assets   647 16,707
Other current assets   46,652 79,962
  Prepaid expenses and other current assets $ 184,502 $ 238,672
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Note 5. Property and Equipment
   January 28, 2024
 January 29, 2023
 (In thousands)
Land   $ 79,498 $ 80,692
Buildings   29,032 28,850
Leasehold improvements   1,006,926 818,071
Furniture and fixtures   156,656 144,572
Computer hardware   176,597 166,768
Computer software   1,032,567 742,295
Equipment and vehicles   34,017 30,766
Work in progress   247,943 244,898
 Property and equipment, gross   2,763,236 2,256,912
Accumulated depreciation   (1,217,425) (987,298)
 Property and equipment, net   $ 1,545,811 $ 1,269,614
   Depreciation expense related to property and equipment was $374.0 million, $282.7 million, and $215.3 million for 2023, 2022, and 2021, 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.
Note 6. Goodwill
The changes in the carrying amounts of goodwill were as follows:
    Goodwill
 (In thousands)
Balance as of January 30, 2022   $ 386,880
Impairment of goodwill   (362,492)
Effect of foreign currency translation   (244)
 Balance as of January 29, 2023   $ 24,144
Effect of foreign currency translation   (61)
 Balance as of January 28, 2024   $ 24,083
  The Company recognized an impairment charge of $362.5 million related to the lululemon Studio reporting unit as of January 29, 2023 on the goodwill that arose from the acquisition of MIRROR. Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs for further information.
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Note 7. Intangible Assets
A summary of the balances of the Company's intangible assets as of January 28, 2024, January 29, 2023, is presented below:
   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) — —
  Intangible assets $ 85,270 $ (27,733) $ (57,537) $ —
      January 29, 2023
  Gross Carrying Amount
 Accumulated Amortization
 Impairment
 Net Carrying Amount
 Remaining Useful Life (Years)
 (In thousands, except in years)
 MIRROR brand $ 26,500 $ (3,423) $ (20,077) $ 3,000 3.0
 Customer relationships 28,000 (7,492) (20,508) — n/a
 Technology 25,500 (8,956) — 16,544 3.0
 Content 5,000 (2,583) — 2,417 2.4
 Other 270 (270) — — n/a
  Intangible assets $ 85,270 $ (22,724) $ (40,585) $ 21,961 2.9
   Amortization of intangible assets was $5.0 million, $8.8 million, and $8.8 million in 2023, 2022, and 2021, respectively.
During 2022 and 2023, the Company recognized intangible asset impairment charges of $40.6 million and $17.0 million, respectively. These impairment charges related to the intangible assets that were recognized on the acquisition of MIRROR. Please refer to Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs for further information.
Note 8. 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. 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.
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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. The following table summarizes the amounts recognized:
   2023
 2022
 (In thousands)
 Costs recorded in cost of goods sold:
 lululemon Studio obsolescence provision $ 23,709 $ 62,928
  Costs recorded in operating expenses:
 Impairment of assets:
Impairment of goodwill   $ — $ 362,492
Impairment of intangible assets   16,951 40,585
 Impairment of cloud computing arrangement implementation costs 16,074 —
Impairment of property and equipment   11,161 4,836
  $ 44,186 $ 407,913
Restructuring costs   30,315 —
  Impairment of goodwill and other assets, restructuring costs $ 74,501 $ 407,913
  Total pre-tax charges   $ 98,210 $ 470,841
  Income tax effects of charges   $ (26,085) $ (28,171)
 Total after-tax charges   $ 72,125 $ 442,670
   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. 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.
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. 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.
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As a result of the impairment test, the Company recognized asset impairments totaling $44.2 million during 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
During 2023, the Company recognized restructuring costs of $30.3 million for lululemon Studio primarily related to contract termination costs, employee severance costs, and professional fees.
Note 9. Acquisition-Related Expenses
In connection with the acquisition of MIRROR in fiscal 2020, the Company recognized certain expenses which were included within acquisition-related expenses in the consolidated statements of operations. These amounts included acquisition-related compensation, transaction and integration costs, and a gain on the Company's existing investment in MIRROR. During 2021, $41.4 million was recognized. There were no acquisition-related expenses recognized in 2023 or 2022.
Note 10. Other Non-Current Assets
   January 28, 2024
 January 29, 2023
 (In thousands)
 Cloud computing arrangement implementation costs $ 133,597 $ 114,700
Security deposits   31,825 28,447
Other   21,262 12,898
 Other non-current assets   $ 186,684 $ 156,045
   As of January 28, 2024 and January 29, 2023, cloud computing arrangement implementation costs consisted of deferred costs of $289.3 million and $212.4 million, respectively, and associated accumulated amortization of $155.7 million and $97.7 million, respectively.
Note 11. Accrued Liabilities and Other
   January 28, 2024
 January 29, 2023
 (In thousands)
Accrued operating expenses   $ 147,215 $ 169,429
Sales return allowances   61,634 55,528
Accrued freight   41,241 57,692
Accrued capital expenditures   31,936 19,365
Accrued duty   25,817 21,046
Accrued rent   12,522 12,223
Accrued inventory liabilities   4,783 4,345
Sales tax collected   3,088 20,183
Forward currency contract liabilities   2,872 25,625
Other   17,447 13,787
 Accrued liabilities and other   $ 348,555 $ 399,223
   Note 12. 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, subject to extension under certain circumstances. Borrowings under the credit facility may be prepaid and commitments may be reduced or terminated without premium or penalty (other than customary breakage costs).
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As of January 28, 2024, aside from letters of credit of $6.3 million, the Company had no other borrowings outstanding under this credit facility.
Borrowings made under the credit facility bear interest at a rate per annum equal to, at the Company's option, either (a) a rate based on the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York ("SOFR"), or (b) an alternate base rate, plus, in each case, an applicable margin. 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 January 28, 2024, the Company was in compliance with the covenants of the credit facility.
China Mainland revolving credit facility
In December 2019, the Company entered into an uncommitted and unsecured 130.0 million Chinese Yuan ($18.1 million) revolving credit facility with terms that are reviewed on an annual basis. The credit facility was increased to
230.0 million Chinese Yuan ($32.0 million) during 2020 and increased to 240.0 million Chinese Yuan ($33.4 million) during 2023. It is comprised of a revolving loan of up to 200.0 million Chinese Yuan ($27.9 million) and a financial guarantee facility of up to 40.0 million Chinese Yuan ($5.6 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 January 28, 2024, the Company was in compliance with the covenants and, aside from letters of credit of 32.5 million Chinese Yuan ($4.5 million), there were no other borrowings or guarantees outstanding under this credit facility.
Note 13. Supply Chain Financing Program
The Company facilitates a voluntary supply chain financing ("SCF") program that allows its suppliers to elect to sell the receivables owed to them by the Company to a third party financial institution. Participating suppliers negotiate arrangements directly with the financial institution. If a supplier chooses to participate in the SCF program it may request an invoice be paid earlier than it would by the Company, and the financial institution at its sole and absolute discretion, may elect to make an early payment to the supplier at a discount. The Company's obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier's participation in the arrangement and the Company provides no guarantees to any third parties under the SCF program.
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A roll-forward of the amounts outstanding under the SCF program, which are presented within accounts payable, is presented below:
Note 14. Stockholders' Equity
Special voting stock and exchangeable shares
The holders of the special voting stock are entitled to one vote for each share held. The special voting shares are not entitled to receive dividends or distributions or receive any consideration in the event of a liquidation, dissolution, or wind-up. To the extent that exchangeable shares as described below are exchanged for common stock, a corresponding number of special voting shares will be cancelled without consideration.
The holders of the exchangeable shares have dividend and liquidation rights equivalent to those of holders of the common shares of the Company. The exchangeable shares can be converted on a one for one basis by the holder at any time into common shares of the Company plus a cash payment for any accrued and unpaid dividends. Holders of exchangeable shares are entitled to the same or economically equivalent dividend as declared on the common stock of the Company. The exchangeable shares are non-voting. The Company has the right to convert the exchangeable shares into common shares of the Company at any time after the earliest of July 26, 2047, the date on which fewer than 4.2 million exchangeable shares are outstanding, or in the event of certain events such as a change in control.
Note 15. Stock-Based Compensation and Benefit Plans
Stock-based compensation plans
The Company's eligible employees participate in various stock-based compensation plans, provided directly by the Company.
In June 2023, the Company's stockholders approved the adoption of the lululemon athletica inc. 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 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. 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-based compensation expense charged to income for the plans was $92.7 million, $77.2 million, and $66.4 million for 2023, 2022, and 2021, respectively.
Total unrecognized compensation cost for all stock-based compensation plans was $135.9 million as of January 28, 2024, which is expected to be recognized over a weighted-average period of 2.0 years, and was $118.0 million as of January 29, 2023 over a weighted-average period of 2.1 years.
   2023
 (In thousands)
 Supply chain financing program balance, beginning of year $ 17,578
Amounts added during the year   $ 533,640
Amounts settled during the year   $ (509,079)
 Supply chain financing program balance, end of year   $ 42,139
   68

A summary of the balances of the Company's stock-based compensation plans as of January 28, 2024, January 29, 2023, and January 30, 2022, and changes during the fiscal years then ended is presented below:
   Stock Options
  Performance-Based Restricted Stock Units
  Restricted Shares
  Restricted Stock Units
  Restricted Stock Units (Liability Accounting)
    Number
 Weighted -Average Exercise Price
   Number
 Weighted -Average Grant Date Fair Value
   Number
 Weighted -Average Grant Date Fair Value
   Number
 Weighted -Average Grant Date Fair Value
 Number
   Weighted -Average Fair Value
 (In thousands, except per share amounts)
 Balance as of January
31, 2021 804 $ 139.27 199 $ 149.20 4 $ 299.09 275 $ 166.50 15 $ 328.68
 Granted 194 310.29 139 185.37 4 326.70 129 331.42 — —
 Exercised/vested 174 104.85 165 100.89 4 299.09 144 139.33 15 397.83
 Forfeited/expired 35 199.76 6 216.62 — — 22 235.23 — —
  Balance as of January
30,2022 789 $ 186.10 167 $ 225.27 4 $ 326.70 238 $ 265.90 — $ —
 Granted 192 371.04 117 274.90 5 308.66 120 364.51 — —
 Exercised/vested 93 127.68 114 170.04 4 326.70 111 241.02 — —
 Forfeited/expired 22 286.56 4 307.76 — — 26 334.39 — —
  Balance as of January
29,2023 866 $ 230.78 166 $ 295.93 5 $ 308.66 221 $ 323.89 — $ —
 Granted 213 360.00 121 296.27 4 370.59 132 364.63 — —
 Exercised/vested 264 160.45 104 201.56 5 308.66 106 294.65 — —
 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 — $ —
         A total of 4.0 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. Restricted stock units that were settled in cash or common stock at the election of the employee were remeasured to fair value at the end of each reporting period until settlement. This fair value was based on the closing price of the Company's common stock on the last business day before each period end.
The grant date fair value of each stock option granted is estimated on the date of grant using the Black-Scholes model. The closing price of the Company's common stock on the grant date is used in the model. The assumptions used to calculate the fair value of the options granted are evaluated and revised, as necessary, to reflect market conditions and the Company's historical experience. The expected term of the options is based upon the historical experience of similar awards, giving consideration to expectations of future employee 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 2023, 2022, and 2021:
   2023
 2022
 2021
 Expected term   3.75 years 3.75 years 3.75 years
Expected volatility   42.35 % 40.00 % 39.32 %
Risk-free interest rate   3.49 % 2.51 % 0.50 %
Dividendyield   — % — % — %
   69

The following table summarizes information about stock options outstanding and exercisable as of January 28, 2024:
  Range of Exercise Prices
 Outstanding
  Exercisable
  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)
 $2.78-$174.52 151 $ 146.29 1.8 151 $ 146.29 1.8
 $188.84-$296.36 121 189.43 3.1 79 189.43 3.1
 $306.71-$356.93 157 309.16 4.3 63 309.07 4.2
 $358.09-$358.09 192 358.09 6.1 1 358.09 6.2
 $368.36-$502.74 162 378.96 5.2 33 378.71 5.0
  783 $ 285.69 4.3 327 $ 212.01 2.9
  Intrinsic value $ 150,645 $ 86,874
   As of January 28, 2024, the unrecognized compensation cost related to these options was $35.8 million, which is expected to be recognized over a weighted-average period of 2.6 years. The weighted-average grant date fair value of options granted during 2023, 2022, and 2021 was $130.75, $124.17, and $94.09, respectively.
The following table summarizes the intrinsic value of options exercised and awards that vested during 2023, 2022, and 2021:
   2023
 2022
 2021
 (In thousands)
Stock options   $ 69,316 $ 19,906 $ 46,761
 Performance-based restricted stock units 33,198 37,672 52,495
Restricted shares   1,661 1,152 1,364
Restricted stock units   38,016 37,275 47,042
 Restricted stock units (liability accounting) — — 5,938
  $ 142,191 $ 96,005 $ 153,600
   Employee share purchase plan
The Company's board of directors and stockholders approved the Company's Employee Share Purchase Plan ("ESPP") in September 2007. Contributions are made by eligible employees, subject to certain limits defined in the ESPP, and the Company matches one-third of the contribution. The maximum number of shares authorized to be purchased under the ESPP is 6.0 million shares. All shares purchased under the ESPP are purchased in the open market. During each of 2023, 2022, and 2021, there were 0.1 million shares purchased. As of January 28, 2024, 4.4 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's net expense for the defined contribution plans was $19.8 million, $14.0 million, and $11.8 million during 2023, 2022, and 2021, respectively.
70

Note 16. Fair Value Measurement
Assets and liabilities measured at fair value on a recurring basis
As of January 28, 2024 and January 29, 2023, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis:
   January 28, 2024
 Level 1
 Level 2
 Level 3
 Balance Sheet Classification
 (In thousands)
 Money market funds $ 1,102,119 $ 1,102,119 $ — $ — Cash and cash equivalents
 Term deposits 8 — 8 — Cash and cash equivalents
 Prepaid expenses and other Forward currency contract assets 647 — 647 — current assets
 Forward currency contract
liabilities 2,872 — 2,872 — Other current liabilities
      January 29, 2023
 Level 1
 Level 2
 Level 3
 Balance Sheet Classification
 (In thousands)
 Money market funds $ 568,000 $ 568,000 $ — $ — Cash and cash equivalents
 Term deposits 8 — 8 — Cash and cash equivalents
 Prepaid expenses and other Forward currency contract assets 16,707 — 16,707 — current assets
 Forward currency contract
liabilities 25,625 — 25,625 — Other current liabilities
   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 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.
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 8. 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.
Note 17. Derivative Financial Instruments
The Company currently hedges against changes in the Canadian dollar and Chinese Yuan to the U.S. dollar exchange rate and changes in the Euro and Australian dollar to the Canadian dollar exchange rate using forward currency contracts.
Net investment hedges
The Company is exposed to foreign currency exchange gains and losses which arise on translation of its international subsidiaries' balance sheets into U.S. dollars. These gains and losses are recorded as other comprehensive income (loss), net of tax in accumulated other comprehensive income or loss within stockholders' equity.
The Company holds a significant portion of its assets in Canada and enters into forward currency contracts designed to hedge a portion of the foreign currency exposure that arises on translation of a Canadian subsidiary into U.S. dollars. These
71

forward currency contracts are designated as net investment hedges. The Company assesses hedge effectiveness based on changes in forward rates. The Company recorded no ineffectiveness from net investment hedges during 2023.
Derivatives not designated as hedging instruments
During 2023, the Company entered into certain forward currency contracts designed to economically hedge the foreign currency exchange revaluation gains and losses that are recognized by its Canadian and Chinese subsidiaries on specific monetary assets and liabilities denominated in currencies other than the functional currency of the entity. 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.
Quantitative disclosures about derivative financial instruments
The notional amounts and fair values of forward currency contracts were as follows:
   January 28, 2024
  January 29, 2023
  Gross Notional
 Assets
 Liabilities
 Gross Notional
 Assets
 Liabilities
 (In thousands)
 Derivatives designated as net investment hedges:
 Forward currency contracts $ 1,242,000 $ — $ 258 $ 1,070,000 $ — $ 17,211
 Derivatives not designated in a hedging relationship:
 Forward currency contracts 1,543,351 647 2,614 1,605,284 16,707 8,414
 Net derivatives recognized on consolidated balance sheets:
  Forward currency contracts $ 647 $ 2,872 $ 16,707 $ 25,625
    As of January 28, 2024, there were derivative assets of $0.6 million and derivative liabilities of $2.9 million subject to enforceable netting arrangements.
The forward currency contracts designated as net investment hedges outstanding as of January 28, 2024 mature on different dates between February 2024 and September 2024.
The forward currency contracts not designated in a hedging relationship outstanding as of January 28, 2024 mature on different dates between February 2024 and October 2024.
The pre-tax gains and losses on foreign currency exchange forward contracts recorded in accumulated other comprehensive income or loss were as follows:
No gains or losses have been reclassified from accumulated other comprehensive income or loss into net income for derivative financial instruments in a net investment hedging relationship, as the Company has not sold or liquidated (or substantially liquidated) its hedged subsidiary.
The pre-tax net foreign currency exchange and derivative gains and losses recorded in the consolidated statement of operations were as follows:
   2023
 2022
 2021
 (In thousands)
 Gains (losses) recognized in net investment hedge gains (losses):
 Derivatives designated as net investment hedges $ 15,344 $ 12,125 $ 13,177
      2023
 2022
 2021
 (In thousands)
 Gains (losses) recognized in selling, general and administrative expenses:
 Foreign exchange gains (losses) $ (23,232) $ 4,410 $ 11,511
 Derivatives not designated in a hedging relationship 22,765 (11,945) (19,874)
  Net foreign exchange and derivative losses $ (467) $ (7,535) $ (8,363)
   72

Note 18. Leases
The Company has obligations under operating leases for its store and other retail locations, distribution centers, offices, and equipment. As of January 28, 2024, the initial lease terms of the various leases generally range from two to 15 years. The majority of the Company's leases include renewal options at the sole discretion of the Company. The lease term includes options to extend or terminate the lease when it is reasonably certain those options will be exercised.
The following table details the Company's net lease expense. Certain of the Company's leases include rent escalation clauses, rent holidays, and leasehold rental incentives. The majority of the Company's leases for store premises also include contingent rental payments based on sales volume. The variable lease expenses disclosed below include contingent rent payments and other non-fixed lease related costs, including common area maintenance, property taxes, and landlord's insurance.
   2023
 2022
 2021
 (In thousands)
 Net lease expense:
 Operating lease expense $ 282,888 $ 245,767 $ 215,549
 Short-term lease expense 15,289 16,790 12,366
 Variable lease expense 152,791 114,441 90,852
  $ 450,968 $ 376,998 $ 318,767
   The following table presents future minimum lease payments by fiscal year and the impact of discounting.
   January 28, 2024
 (In thousands)
 2024
 $ 300,379
 2025
 287,224
 2026
 232,510
 2027
 214,519
 2028
 158,252
 Thereafter
 452,434
 Future minimum lease payments
 $ 1,645,318
 Impact of discounting
 (242,036)
 Present value of lease liabilities
 $ 1,403,282
   Balance sheet classification:
  Current lease liabilities
 $ 249,270
 Non-current lease liabilities
 1,154,012
  $ 1,403,282
        As of January 28, 2024, the Company's minimum lease commitment for distribution center operating leases which have been committed to, but not yet commenced, was $299.6 million, which is not reflected in the table above.
The weighted-average remaining lease terms and weighted-average discount rates were as follows:
   January 28, 2024
 January 29, 2023
 Weighted-average remaining lease term   6.95 years 5.64 years
Weighted-average discount rate   4.0 % 3.1 %
   73

Note 19. Income Taxes
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:
   2023
 2022
 2021
 (In thousands)
 Income (loss) before income tax expense
Domestic   $ 458,041 $ (98,764) $ 204,350
Foreign   1,717,694 1,431,335 1,129,519
  $ 2,175,735 $ 1,332,571 $ 1,333,869
 Current income tax expense
Federal   $ 140,726 $ 34,752 $ 25,701
State   42,476 33,369 17,608
Foreign   469,090 400,250 322,105
  $ 652,292 $ 468,371 $ 365,414
 Deferred income tax expense (recovery)
Federal   $ (14,741) $ 8,932 $ 5,858
State   (3,097) 2,363 1,045
Foreign   (8,909) (1,895) (13,770)
  $ (26,747) $ 9,400 $ (6,867)
  Income tax expense $ 625,545 $ 477,771 $ 358,547
   The Company's income tax expense for 2023, 2022, and 2021 include certain discrete tax amounts, as follows:
Please refer to Note 5. Property and Equipment, Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs, and Note 9. Acquisition-Related Expenses for further information.
As of January 28, 2024, the Company's net investment in its Canadian subsidiaries was $2.5 billion, of which $1.6 billion was determined to be indefinitely reinvested. A deferred income tax liability of $41.2 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. state income taxes which would be due upon repatriation. This deferred tax liability has been recorded on the basis that the Company would choose to make the repatriation transactions in the most tax efficient manner. Specifically, to the extent that the Canadian subsidiaries have paid-up-capital, any such distributions would be structured as a return of capital, and therefore not subject to Canadian withholding tax. The unrecognized deferred tax liability on the indefinitely reinvested amount is approximately $89.7 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 January 28, 2024 were $466.5 million.
As of January 28, 2024, the Company had cash and cash equivalents of $822.5 million outside of the United States.
   2023
 2022
 2021
 (In thousands)
 Impairment of goodwill and other assets, restructuring costs $ (26,085) $ (28,171) $ —
Gain on disposal of assets   — 1,661 —
Acquisition-related expenses   — — (1,417)
  Total discrete income tax expense (recovery) $ (26,085) $ (26,510) $ (1,417)
   74

A summary reconciliation of the effective tax rate is as follows:
   2023
 2022
 2021
 (Percentage)
 Federal income tax at statutory rate 21.0 % 21.0 % 21.0 %
Foreign tax rate differentials   4.1 6.8 5.0
U.S. state taxes   1.0 (0.4) 0.8
 Non-deductible compensation expense 0.6 0.7 0.7
 Excess tax benefits from stock-based compensation (0.4) (0.5) (0.9)
 Tax on unremitted foreign earnings 2.6 1.4 —
 Impairment of goodwill and other assets, gain on disposal of assets — 7.8 —
Permanent and other   (0.1) (0.9) 0.3
 Effective tax rate   28.8 % 35.9 % 26.9 %
   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 January 28, 2024 and January 29, 2023 are presented below:
   January 28, 2024
 January 29, 2023
 (In thousands)
 Deferred income tax assets:
Net operating loss carryforwards   $ 2,385 $ 2,312
Inventories   43,157 43,471
Accrued bonuses   19,075 13,647
Unredeemed gift card liability   15,580 12,877
Non-current lease liabilities   286,528 216,495
Research and experimental expenditures   48,922 —
Stock-based compensation   20,057 16,093
Other   16,802 9,645
 Deferred income tax assets   452,506 314,540
Valuation allowance   (2,334) (743)
  Deferred income tax assets, net of valuation allowance $ 450,172 $ 313,797
  Deferred income tax liabilities:
Property and equipment, net   $ (162,312) $ (142,516)
Intangible assets, net   — (5,224)
Right-of-use lease assets   (265,157) (192,221)
Other   (43,049) (22,518)
 Deferred income tax liabilities   (470,518) (362,479)
 Net deferred income tax liabilities   $ (20,346) $ (48,682)
   Balance sheet classification:
Deferred income tax assets   $ 9,176 $ 6,402
Deferred income tax liabilities   (29,522) (55,084)
 Net deferred income tax liabilities   $ (20,346) $ (48,682)
   As of January 28, 2024, the Company had net operating loss carryforwards of $20.0 million. The majority of the net operating loss carryforwards expire, if unused, between fiscal 2030 and fiscal 2040.
There was a $1.6 million net increase in the valuation allowance in 2023, compared to a $2.1 million net decrease in 2022, and a $3.7 million net decrease in 2021.
The Company files income tax returns in the U.S., Canada, and various foreign and state jurisdictions. The 2017 to 2022 tax years remain subject to examination by the U.S. federal and state tax authorities. The 2013 tax year is still open for certain state tax authorities. The 2017 to 2022 tax years remain subject to examination by Canadian tax authorities. The 2016 to 2022
75

tax years remain subject to examination by tax authorities in certain foreign jurisdictions. The Company does not have any significant unrecognized tax benefits arising from uncertain tax positions taken, or expected to be taken, in the Company's tax returns.
Note 20. Earnings Per Share
The details of the computation of basic and diluted earnings per share are as follows:
   2023
 2022
 2021
 (In thousands, except per share amounts)
Net income   $ 1,550,190 $ 854,800 $ 975,322
 Basic weighted-average number of shares outstanding 126,726 127,666 129,768
 Assumed conversion of dilutive stock options and awards 334 351 527
  Diluted weighted-average number of shares outstanding 127,060 128,017 130,295
 Basic earnings per share $ 12.23 $ 6.70 $ 7.52
 Diluted earnings per share $ 12.20 $ 6.68 $ 7.49
   The Company's calculation of weighted-average shares includes the common stock of the Company as well as the exchangeable shares. Exchangeable shares are the economic equivalent of common shares in all material respects. All classes of stock have in effect the same economic rights and share equally in undistributed net income. For 2023, 2022, and 2021, 62.7 thousand, 43.5 thousand, and 36.0 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 and November 29, 2023, the Company's board of directors approved stock repurchase programs, each for up to $1.0 billion of the Company's common shares on the open market or in privately negotiated transactions. The repurchase plans have no time limit and do 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 these programs excludes the cost of commissions and excise taxes and as of January 28, 2024, the remaining authorized value was $1.2 billion.
During 2023, 2022, and 2021, 1.5 million, 1.4 million, and 2.2 million shares, respectively, were repurchased under the programs at a total cost including commissions and excise taxes of $558.7 million, $444.0 million, and $812.6 million, respectively.
Subsequent to January 28, 2024, and up to March 15, 2024, 0.2 million shares were repurchased at a total cost including commissions and excise taxes of $99.2 million.
Note 21. Commitments and Contingencies
Commitments
Leases. The Company has obligations under operating leases for its store and other retail locations, distribution centers, offices, and equipment. Please refer to Note 18. Leases for further details regarding lease commitments and the timing of future minimum lease payments.
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License and supply arrangements. The Company has entered into license and supply arrangements with partners in the Middle East and Mexico which grant them the right to operate lululemon branded retail locations and sell lululemon products on websites in specific countries. Under these arrangements, the Company supplies the partners with lululemon products, training, and other support. As of January 28, 2024, there were 39 licensed locations, including 15 in Mexico, eight in the United Arab Emirates, six in Saudi Arabia, three in Qatar, three in Kuwait, three in Israel, and one in Bahrain.
One-time transition tax payable. The U.S. tax reforms enacted in December 2017 imposed a mandatory transition tax on accumulated foreign subsidiary earnings which have not previously been subject to U.S. income tax at a rate of 15.5% on cash and cash equivalents and 8% on the remaining earnings, net of foreign tax credits. The one-time transition tax is payable over eight years beginning in fiscal 2018. The table below outlines the remaining expected payments due by fiscal year.
Contingencies
Legal proceedings. 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. The Company has recognized immaterial provisions related to the expected outcome of legal proceedings.
Note 22. Supplemental Cash Flow Information
  Payments Due by Fiscal Year
   Total
 2024
 2025
 2026
 2027
 2028
 Thereafter
 (In thousands)
 One-time transition tax payable $ 28,555 $ 12,691 $ 15,864 $ — $ — $ — $ —
       2023
 2022
 2021
 (In thousands)
 Cash paid for income taxes $ 824,213 $ 502,136 $ 245,213
 Cash paid for amounts included in the measurement of lease liabilities 288,934 242,758 215,157
 Leased assets obtained in exchange for new operating lease liabilities 586,926 450,787 287,008
Interest paid   234 116 12
   77

Note 23. 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.
During the fourth quarter of 2023, the financial information the CODM regularly uses to evaluate performance and allocate resources was revised. As the Company has further executed on its omni-channel retail strategy, and with the continued expansion of its international operations, the CODM has shifted resource allocation decisions to be focused by regional market, rather than by selling channel. This resulted in a change in the Company's operating segments.
As of January 28, 2024, the Company reports three segments, Americas, China Mainland, and Rest of World, which is APAC and EMEA on a combined basis. The Company does not report capital expenditures and assets by segment as that information is not reviewed by the CODM.
Previously, the Company's segments were comprised of company-operated stores, direct to consumer (or "e- commerce"), and other. The Company has restated the prior period information to reflect its new segments.
   2023
 2022
 2021
 (In thousands)
 Net revenue:
Americas   $ 7,631,647 $ 6,817,454 $ 5,299,906
China Mainland   963,760 576,503 434,261
Rest of World   1,023,871 716,561 522,450
  $ 9,619,278 $ 8,110,518 $ 6,256,617
  Segmented income from operations:
Americas   $ 2,937,184 $ 2,503,740 $ 1,867,016
China Mainland   337,316 196,865 167,318
Rest of World   201,832 103,204 67,674
  3,476,332 2,803,809 2,102,008
 General corporate expenses 1,240,436 1,005,988 718,477
 lululemon Studio obsolescence provision 23,709 62,928 —
 Impairment of goodwill and other assets, restructuring costs 74,501 407,913 —
 Amortization of intangible assets 5,010 8,752 8,782
Acquisition-related expenses   — — 41,394
Gain on disposal of assets   — (10,180) —
  Income from operations 2,132,676 1,328,408 1,333,355
 Other income (expense), net 43,059 4,163 514
  Income before income tax expense $ 2,175,735 $ 1,332,571 $ 1,333,869
   Depreciation and amortization:
Americas   $ 170,417 $ 137,260 $ 121,278
China Mainland   25,746 17,842 12,208
Rest of World   23,644 19,346 16,829
Corporate   159,577 117,343 73,891
  $ 379,384 $ 291,791 $ 224,206
   78

Long-lived assets, including property and equipment, net and right-of-use lease assets, by geographic area as of January 28, 2024 and January 29, 2023 were as follows:
   January 28, 2024
 January 29, 2023
 (In thousands)
United States   $ 1,597,318 $ 1,175,317
Canada   671,622 601,756
People's Republic of China   284,575 233,590
Other geographic areas   257,906 228,370
  $ 2,811,421 $ 2,239,033
   Note 24. 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.
   2023
 2022
 2021
 (In thousands)
United States   $ 6,346,392 $ 5,654,343 $ 4,345,687
Canada   1,285,255 1,163,111 954,219
 China Mainland   963,760 576,503 434,261
 Hong Kong SAR, Taiwan, and Macau SAR 170,533 105,130 86,111
  People's Republic of China 1,134,293 681,633 520,372
  Other geographic areas   853,338 611,431 436,339
  $ 9,619,278 $ 8,110,518 $ 6,256,617
   The following table disaggregates the Company's net revenue by category. Other categories is primarily composed of accessories, lululemon Studio, and footwear.
The following table disaggregates the Company's net revenue by channel.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of the design and operation of our
   2023
 2022
 2021
 (In thousands)
Women's product   $ 6,147,372 $ 5,259,803 $ 4,171,762
Men's product   2,252,753 1,956,602 1,535,850
Other categories   1,219,153 894,113 549,005
  $ 9,619,278 $ 8,110,518 $ 6,256,617
      2023
 2022
 2021
 (In thousands)
 Company-operated stores $ 4,410,956 $ 3,648,127 $ 2,821,497
E-commerce   4,311,110 3,699,791 2,777,944
Other channels   897,212 762,600 657,176
  $ 9,619,278 $ 8,110,518 $ 6,256,617
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disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report, or the Evaluation Date. Based upon the evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date. Disclosure controls and procedures are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include controls and procedures designed to reasonably ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.
Inherent Limitations over Internal Controls
Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Management, including our principal executive officer and principal financial and accounting officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource limitations on all control systems; no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on this evaluation, management concluded that we maintained effective internal control over financial reporting as of January 28, 2024.
The effectiveness of our internal control over financial reporting as of January 28, 2024 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report, which appears in Item 8 of Part II of this Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Trading Arrangements
During the fourth quarter of 2023, no director or officer of lululemon (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408(a) of Regulation S-K).
Appointment of Director
On March 15, 2024, the board of directors of lululemon appointed Teri L. List as a member of the board of directors. Ms. List served as executive vice president and chief financial officer of Gap Inc, a global clothing retailer, from January 2017
80

until her retirement in June 2020. Prior to joining the Gap, she served as chief financial officer at DICK’s Sporting Goods and Kraft Food Group. Prior to those roles, Ms. List spent nearly 20 years with Procter & Gamble culminating in the role of SVP and Treasurer. She began her career in public accounting at Deloitte LLP, an auditing, consulting, tax and advisory services firm. She currently serves on the Boards of Visa, Microsoft and Danaher Corporation. Ms. List received her Bachelor’s degree in accounting from Northern Michigan University and is a certified public accountant.
The board of directors increased the size of the board from ten to eleven members and appointed Ms. List as a Class I director to fill the newly created vacancy. Although Ms. List will serve as a member of the class of directors whose terms expire at the 2026 annual meeting of stockholders, our stockholders will have the opportunity to vote on her nomination as a continuing Class I director at the next annual meeting of stockholders.
Ms. List will serve on the Audit Committee and will receive compensation for her service as a director consistent with that of our other non-employee directors. A description of our standard compensation arrangements for non-employee directors is included as an exhibit to this annual report on Form 10-K. We expect Ms. List to enter into our standard form indemnification agreement for non-employee directors, the form of which is filed with the SEC as Exhibit 10.16 to our registration statement on Form S-1, dated July 9, 2007.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item concerning our directors, director nominees and Section 16 beneficial ownership reporting compliance is incorporated by reference to our definitive Proxy Statement for our 2024 Annual Meeting of Stockholders under the captions "Election of Directors," "Executive Officers," and "Corporate Governance," and, to the extent necessary, under the caption "Delinquent Section 16(a) Reports."
We have adopted a written code of business conduct and ethics, which applies to all of our directors, officers, and employees, including our principal executive officer and our principal financial and accounting officer. Our Global Code of Business Conduct and Ethics is available on our website, www.lululemon.com, and can be obtained by writing to Investor Relations, lululemon athletica inc., 1818 Cornwall Avenue, Vancouver, British Columbia, Canada V6J 1C7 or by sending an email to investors@lululemon.com. Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. Any amendments, other than technical, administrative, or other non-substantive amendments, to our Global Code of Business Conduct and Ethics or waivers from the provisions of the Global Code of Business Conduct and Ethics for our principal executive officer and our principal financial and accounting officer will be promptly disclosed on our website following the effective date of such amendment or waiver.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to our 2024 Proxy Statement under the captions "Executive Compensation" and "Executive Compensation Tables."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to our 2024 Proxy Statement under the caption "Principal Shareholders and Share Ownership by Management."
Equity Compensation Plan Information (as of January 28, 2024)
  Plan Category
 Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)
(A)
 Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(2)
(B)
 Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A))(3)
(C)
  Equity compensation plans approved by stockholders 1,181,031 $ 285.69 8,428,503
 Equity compensation plans not approved by stockholders — — —
Total   1,181,031 $ 285.69 8,428,503
   __________
(1)
(2) (3)
This amount represents the following: (a) 783,036 shares subject to outstanding options, (b) 175,365 shares subject to outstanding performance-based restricted stock units, and (c) 222,630 shares subject to outstanding restricted stock units. The options, performance-based restricted stock units, and restricted stock units are all under our 2023 Equity Incentive Plan. Restricted shares outstanding under our 2023 Equity Incentive Plan have already been reflected in our total outstanding common stock balance.
The weighted-average exercise price is calculated solely on the exercise prices of the outstanding options and does not reflect the shares that will be issued upon the vesting of outstanding awards of performance-based restricted stock units and restricted stock units, which have no exercise price. This includes (a) 4,025,805 shares of our common stock available for future issuance under our 2023 Equity Incentive Plan and (b) 4,402,698 shares of our common stock available for future issuance under our Employee Share Purchase Plan. The number of shares remaining available for future issuance under our 2023 Equity Incentive Plan is reduced by 1.7 shares for each award other than stock options granted and by one share for each stock option award granted. Outstanding awards that expire or are canceled without having been exercised or settled in full are available for issuance again under our 2023 Equity Incentive Plan but shares that are withheld in satisfaction of tax withholding obligations for full value awards are not again available for issuance. No further awards may be issued under the predecessor plan, our 2014 Equity Incentive Plan.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference to our 2024 Proxy Statement under the captions "Certain Relationships and Related Party Transactions" and "Corporate Governance."
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to our 2024 Proxy Statement under the caption "Fees for Professional Services."
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) Documents filed as part of this report:
1. Financial Statements. The financial statements as set forth under Item 8 of this Annual Report on Form 10-K are incorporated herein.
2. Financial Statement Schedule. Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements or notes described in Item 15(a)(1) above.
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3. Exhibits
Exhibit
No. Exhibit Title
Filed
Form Exhibit No.
10-K 3.5 S-3 4.1 10-K 4.2
8-K 10.2 8-K 10.3
8-K 10.4
8-K 10.5 S-1 10.3
10-Q 10.5 10-Q 10.6 10-Q 10.7
S-1/A 10.14
S-1/A 10.16
8-K 10.1 10-Q 10.3 10-K 10.23
10-Q 10.1 8-K 10.1 10-Q 10.2
File No.
001-33608 333-185899 001-33608
001-33608 001-33608
001-33608
001-33608 333-142477
001-33608 001-33608 001-33608
333-142477
333-142477
001-33608 001-33608 001-33608
001-33608 001-33608 001-33608
Filing Date
3/28/2023 1/7/2013 3/26/2020
6/13/2023 6/13/2023
6/13/2023
6/13/2023 5/1/2007
9/10/2007 9/10/2007 9/10/2007
7/9/2007
7/9/2007
3/29/2022 11/29/2007 3/29/2017
12/10/2020 7/24/2018 12/10/2020
Exhibit Index Herewith
Incorporated by Reference
        3.1 Restated Certificate of Incorporation of lululemon athletica inc.
3.2 Bylaws of lululemon athletica inc.
4.1 Form of Specimen Stock Certificate of lululemon athletica inc.
4.2 Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934
10.1* lululemon athletica inc. 2023 Equity Incentive Plan
10.2* Form of Non-Qualified Stock Option Agreement
10.3* Form of Notice of Grant of Performance Shares and Performance Shares Agreement
10.4* Form of Notice of Grant of Restricted Stock Units and Restricted Stock Units Agreement
10.5* Form of Restricted Stock Award Agreement
10.6* Amended and Restated LIPO Investments (USA), Inc. Option
Plan and form of Award Agreement
10.7 Exchange Trust Agreement dated July 26, 2007 between lululemon athletica inc., Lulu Canadian Holding, Inc. and Computershare Trust Company of Canada
10.8 Exchangeable Share Support Agreement dated July 26, 2007 between lululemon athletica inc., Lululemon Callco ULC and Lulu Canadian Holding, Inc.
10.9 Amended and Restated Declaration of Trust for Forfeitable Exchangeable Shares dated July 26, 2007, by and among the parties named therein
10.10 Amended and Restated Arrangement Agreement dated as of June 18, 2007, by and among the parties named therein (including Plan of Arrangement and Exchangeable Share Provisions)
10.11 Form of Indemnification Agreement between lululemon athletica inc. and its directors and certain officers
10.12* Outside Director Compensation Plan
10.13* Executive Bonus Plan
10.14* lululemon athletica inc. Employee Share Purchase Plan
10.15* Executive Employment Agreement, effective as of December 5, 2016, between lululemon athletica canada inc. and Celeste Burgoyne
10.16* Amendment to Executive Employment Agreement, effective October 27, 2020, between lululemon athletica canada inc. and Celeste Burgoyne
10.17* Executive Employment Agreement, effective as of August 20, 2018, between lululemon athletica canada inc. and Calvin McDonald
10.18* Executive Employment Agreement, effective as of November 23, 2020, between lululemon athletica inc. and Meghan Frank
X
X
85
X

Incorporated by Reference
 Exhibit No.
10.19* 10.20* 10.21*
10.22
21.1 23.1 31.1
31.2
32.1**
97 101
104
* **
Exhibit Title
Executive Employment Agreement, effective as of September 20, 2018, between lululemon athletica inc. and Michelle Choe
Executive Employment Agreement, effective September 20, 2021, between lululemon athletica inc. and Nicole Neuburger
Executive Employment Agreement, effective as of January 4, 2021, between lululemon athletica UK ltd. and Andre Maestrini
Credit Agreement, dated December 14, 2021, among lululemon athletica inc., lululemon athletica canada inc., Lulu Canadian Holding, Inc. and lululemon usa inc., as borrowers, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, HSBC Bank Canada, as syndication agent and letter of credit issuer, BOFA Securities, Inc., as sustainability coordinator, and the other lenders party thereto.
Significant subsidiaries of lululemon athletica inc. Consent of PricewaterhouseCoopers LLP
Certification of principal executive officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of principal financial and accounting officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of principal executive officer and principal financial and accounting officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Policy for Recovery of Erroneously Awarded Incentive-Based Compensation
The following financial statements from the Company's 10-K for the fiscal year ended January 28, 2024, formatted in iXBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statements of Cash Flows (v) Notes to the Consolidated Financial Statements
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
Filed Herewith
Form Exhibit No.
10-Q 10.1 10-Q 10.1 10-K 10.22
8-K 10.1
10-K 21.1
File No.
001-33608 001-33608 001-33608
001-33608
001-33608
Filing Date
12/06/2018 12/09/2021 3/30/2021
12/17/2021
3/28/2023
       X X
X
X
X
X
8-K 10.1
001-33608
6/13/2023
 Denotes a compensatory plan, contract or arrangement, in which our directors or executive officers may participate. Furnished herewith.
ITEM 16. FORM 10-K SUMMARY
None.
86

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
/s/ CALVIN MCDONALD Calvin McDonald
Chief Executive Officer (principal executive officer)
Date: March 21, 2024
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Calvin McDonald and Meghan Frank and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
   By:
   87
LULULEMON ATHLETICA INC.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
/s/ CALVIN MCDONALD
Title
Chief Executive Officer and Director (principal executive officer)
Chief Financial Officer
(principal financial and accounting officer)
Director, Board Chair Director
Director
Director
Director Director Director Director Director Director
Date
March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024 March 21, 2024
     /s/
Calvin McDonald
/s/ MEGHAN FRANK
Meghan Frank
MARTHA A.M. MORFITT
Martha A.M. Morfitt
 /s/ /s/
/s/
MICHAEL CASEY
Michael Casey
SHANE GRANT
Shane Grant
KATHRYN HENRY
Kathryn Henry
/s/ TERI LIST
Teri List
    /s/
/s/ ISABEL MAHE
ALISON LOEHNIS
   /s/
Alison Loehnis Isabel Mahe
/s/ JON MCNEILL
Jon McNeill
DAVID M. MUSSAFER
David M. Mussafer
/s/ EMILY WHITE
Emily White
  88

 Board of Directors and Executive Officers
Board of Directors
Martha (Marti) Morfitt David Mussafer
Calvin McDonald Michael Casey
Shane Grant Kathryn Henry Teri List Alison Loehnis Isabel Mahe Jon McNeill Emily White
Executive Officers
Calvin McDonald Meghan Frank
Celeste Burgoyne Michelle (Sun) Choe André Maestrini
Nicole (Nikki) Neuburger
Annual Meeting
The annual meeting will be held on Thursday, June 6, 2024 at 8:00 am, Pacific Time, via live webcast at www. virtualshareholdermeeting.com/LULU2024.
Investor Information
Shareholders are advised to review financial information and other disclosures about lululemon contained in its 2023 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statement and other SEC filings, as well as press releases and earnings announcements by accessing the Company’s website at http:// corporate.lululemon.com/Investors or at www.sec.gov.
Board Chair
River Rock Partners Inc., Principal
Lead Director of the Board
Advent International, L.P., Chairman and Managing Partner
Chief Executive Officer
Starbucks Corporation, Retired Executive Vice President, Chief Financial Officer and Chief Administrative Officer
Danone, Group Deputy CEO, CEO Americas and EVP Dairy, Plant Based and Global Sales LightBrite, Co-Founder and Advisor
Gap, Inc. Retired Executive Vice President and Chief Financial Officer
Yoox Net-a-Porter, Ad-Interim CEO and President of Luxury and Fashion
Apple Inc., Vice President and Managing Director of Greater China DVx Ventures, Chief Executive Officer
Anthos Capital, President
Chief Executive Officer
Chief Financial Officer
President, Americas and Global Guest Innovation Chief Product Officer
Executive Vice President, International
Chief Brand Officer
Investor inquiries should be directed to:
  This letter contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations, and intentions. Our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those stated in the “Item 1A. Risk Factors” section and elsewhere in our Annual Report on Form 10-K.
AR | 2023
By email: By mail:
investors@lululemon.com
lululemon athletica Investor Relations
1818 Cornwall Avenue, Vancouver, British Columbia Canada V6J 1C7
Independent Auditors
PricewaterhouseCoopers LLP
Transfer Agent
Computershare Trust Company, N.A.

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