| Table of Contents |
| 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 29, 2023 and January 30, 2022, 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 29, 2023, |
| January 30, 2022, and January 31, 2021, including the related notes (col ectively referred to as the consolidated financial |
| statements). We also have audited the Company’s internal control over financial reporting as of January 29, 2023, 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 al material respects, the |
| financial position of the Company as of January 29, 2023 and January 30, 2022, and the results of its operations and its cash |
| flows for each of the 52-week years ended January 29, 2023, January 30, 2022, and January 31, 2021 in conformity with |
| accounting principles general y accepted in the United States of America. Also in our opinion, the Company maintained, in al |
| material respects, effective internal control over financial reporting as of January 29, 2023, 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 2022 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 al 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 wel as evaluating the overal 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 |
| general y 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; (i ) provide reasonable assurance that transactions are recorded as |
| necessary to permit preparation of financial statements in accordance with general y 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 (i i) 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. |
| | | 2 |
| Table of Contents |
| 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 matters communicated below are matters arising from the current period audit of the consolidated |
| financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to |
| accounts or disclosures that are material to the consolidated financial statements and (i ) involved our especial y chal enging, |
| 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 matters below, |
| providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. |
| 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 29, 2023, the |
| Company’s consolidated net inventories balance was $1,447.4 mil ion inclusive of the inventory provision of $124.6 mil ion. |
| 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, sel ing 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 |
| overal 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; (i ) evaluating the appropriateness of |
| management’s process for developing the estimates of net realizable value; (i i) 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, sel ing 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. |
| Goodwil Impairment Assessment – lululemon Studio (formerly known as MIRROR) Reporting Unit |
| As described in Notes 6 and 8 to the consolidated financial statements, the Company recorded a goodwil impairment in |
| the amount of $362.5 mil ion during the year ended January 29, 2023. Goodwil is tested annual y for impairment on the first |
| day of the fourth quarter, or more frequently when an event or circumstance indicates that goodwil might be impaired. |
| Management determined that there were indicators of impairment and therefore conducted an impairment test as of January |
| 29, 2023. The fair value of the lululemon Studio reporting unit was estimated by management by using a discounted cash flow |
| model, which resulted in the recognition of a goodwil impairment charge of $362.5 mil ion. The key assumptions used in the |
| discounted cash flow model were the revenue growth rates, operating profit margins, and the discount rate. |
| The principal considerations for our determination that performing procedures relating to the goodwil impairment |
| assessment of the lululemon Studio reporting unit is a critical audit matter are (i) the significant judgment by management |
| when developing the fair value of the reporting unit; (i ) the high degree of auditor judgment, subjectivity, and effort in |
| performing procedures and evaluating management’s discounted cash flow model including the key assumptions related to |
| the revenue growth rates, operating profit margins, and the discount rate; and (i i) the audit effort, which involved the use of |
| professionals with specialized skil and knowledge. |
| Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our |
| overal opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls |
| relating to management's goodwil impairment assessment, including controls over the fair value estimate of the lululemon |
| Studio reporting unit. These procedures also included, among others, (i) testing management's process for developing the fair |
| value estimate; (i ) testing the completeness and accuracy of the underlying data used in the model; and (i i) evaluating the |
| reasonableness of the key assumptions used by management related to the revenue growth rates, operating profit margins, |
| and the discount rate. Evaluating the reasonableness of the revenue growth rates and operating profit margins involved |
| | 3 |
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| lululemon athletica inc. |
| CONSOLIDATED BALANCE SHEETS |
| (Amounts in thousands, except per share amounts) |
| | January 29, | January 30, |
| | 2023 | 2022 |
| | | | ASSETSCurrent assets |
| | | | Cash and cash equivalents | $ | 1,154,867 $ | 1,259,871 |
| | | | Accounts receivable, net | | 132,906 | | | 77,001 |
| | | | Inventories | | 1,447,367 | 966,481 |
| | | | Prepaid and receivable income taxes | | 185,641 | 118,928 |
| | | | Prepaid expenses and other current assets | | 238,672 | 192,572 |
| | | 3,159,453 | 2,614,853 |
| | | | Property and equipment, net | | 1,269,614 | 927,710 |
| | | | Right-of-use lease assets | | 969,419 | 803,543 |
| | | | Goodwil | | | | | 24,144 | 386,880 |
| | | | Intangible assets, net | | | | | 21,961 | 71,299 |
| | | | Deferred income tax assets | | | | | 6,402 | 6,091 |
| | | | Other non-current assets | | 156,045 | 132,102 |
| | $ | 5,607,038 $ | 4,942,478 |
| | | | LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities |
| | | | Accounts payable | $ | 172,732 $ | 289,728 |
| | | | Accrued liabilities and other | | 399,223 | 330,800 |
| | | | Accrued compensation and related expenses | | 248,167 | 204,921 |
| | | | Current lease liabilities | | 207,972 | 188,996 |
| | | | Current income taxes payable | | 174,221 | 133,852 |
| | | | Unredeemed gift card liability | | 251,478 | 208,195 |
| | | | Other current liabilities | | | | | 38,405 | 48,842 |
| | | 1,492,198 | 1,405,334 |
| | | | Non-current lease liabilities | | 862,362 | 692,056 |
| | | | Non-current income taxes payable | | | | | 28,555 | 38,074 |
| | | | Deferred income tax liabilities | | | | | 55,084 | 53,352 |
| | | | Other non-current liabilities | | | | | 20,040 | 13,616 |
| | | 2,458,239 | 2,202,432 |
| | | | Commitments and contingenciesStockholders' 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 5,203 issued and outstanding | | | | | — | — |
| | | | Special voting stock, $0.000005 par value: 60,000 shares authorized; 5,116 and 5,203 issued and |
| | | | outstanding | | | | | — | — |
| | | | Common stock, $0.005 par value: 400,000 shares authorized; 122,205 and 123,297 issued and outstanding | | 611 | 616 |
| | | | Additional paid-in capital | | 474,645 | 422,507 |
| | | | Retained earnings | | 2,926,127 | 2,512,840 |
| | | | Accumulated other comprehensive loss | | (252,584) | (195,917) |
| | | 3,148,799 | 2,740,046 |
| | $ | 5,607,038 $ | 4,942,478 |
| | | | | | | See accompanying notes to the consolidated financial statements |
| | | | | | | | 5 |
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| lululemon athletica inc. |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
| | (Amounts in thousands, except per share amounts) |
| | | | Fiscal Year Ended |
| | | | | January 29, | January 30, | | | January 31, |
| | | | | 2023 | 2022 | 2021 |
| | | Net revenue | | $ | 8,110,518 $ 6,256,617 $ 4,401,879 |
| | | Cost of goods sold | | | 3,618,178 | 2,648,052 | 1,937,888 |
| | | Gross profit | | | 4,492,340 | 3,608,565 | 2,463,991 |
| | | Sel ing, general and administrative expenses | | | 2,757,447 | 2,225,034 | 1,609,003 |
| | | Amortization of intangible assets | | | | | 8,752 | 8,782 | | | 5,160 |
| | | Impairment of goodwil and other assets | | | 407,913 | | | | | — | — |
| | | Acquisition-related expenses | | | — | | 41,394 | | | 29,842 |
| | | Gain on disposal of assets | | | | | (10,180) | | — | — |
| | | Income from operations | | | 1,328,408 | 1,333,355 | 819,986 |
| | | Other income (expense), net | | | | | 4,163 | | 514 | (636) |
| | | Income before income tax expense | | | 1,332,571 | 1,333,869 | 819,350 |
| | | Income tax expense | | | 477,771 | 358,547 | 230,437 |
| | | Net income | | $ | 854,800 $ | 975,322 $ | 588,913 |
| | | Other comprehensive income (loss), net of tax: |
| | | Foreign currency translation adjustment | | $ | | | (65,571) $ | (28,494) $ | | | 72,731 |
| | | Net investment hedge gains (losses) | | | | | 8,904 | 9,732 | (25,305) |
| | | Other comprehensive income (loss), net of tax | | | | | (56,667) | (18,762) | | | 47,426 |
| | | Comprehensive income | | $ | 798,133 $ | 956,560 $ | 636,339 |
| | | Basic earnings per share | | $ | 6.70 $ | | 7.52 $ | | | 4.52 |
| | | Diluted earnings per share | | $ | 6.68 $ | | 7.49 $ | | | 4.50 |
| | | Basic weighted-average number of shares outstanding | | | 127,666 | 129,768 | 130,289 |
| | | Diluted weighted-average number of shares outstanding | | | 128,017 | 130,295 | 130,871 |
| | | |
| | | | | | | | | | | See accompanying notes to the consolidated financial statements |
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| lululemon athletica inc. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Amounts in thousands) |
| | | Fiscal Year Ended |
| | | | January 29, | January 30, | | | January 31, |
| | | | 2023 | 2022 | 2021 |
| | Cash flows from operating activities |
| | Net income | | $ | 854,800 $ | 975,322 $ | 588,913 |
| | Adjustments to reconcile net income to net cash provided by operating activities: |
| | | | | | | Depreciation and amortization | | 291,791 | 224,206 | 185,478 |
| | | | | | | Impairment of goodwil and other assets | | 407,913 | | | | — | — |
| | | | | | | Gain on disposal of assets | | (10,180) | | | | — | — |
| | | | | | | Stock-based compensation expense | | | | | | | 78,075 | 69,137 | | | | 50,797 |
| | | | | | | Derecognition of unredeemed gift card liability | | (23,337) | (18,699) | (13,696) |
| | | | | | | Settlement of derivatives not designated in a hedging relationship | | (38,649) | 15,191 | | | | 4,485 |
| | | | | | | Deferred income taxes | | | | | | | 3,042 | (5,180) | | | | 34,908 |
| | | | | | | Changes in operating assets and liabilities: |
| | | | | | | Inventories | | (510,510) | (323,609) | (96,548) |
| | | | | | | Prepaid and receivable income taxes | | (66,714) | 20,108 | (53,966) |
| | | | | | | Prepaid expenses and other current assets | | (113,820) | (82,404) | (70,999) |
| | | | | | | Other non-current assets | | (36,518) | (17,556) | (49,056) |
| | | | | | | Accounts payable | | (107,280) | 117,655 | | | | 82,663 |
| | | | | | | Accrued liabilities and other | | | | | | | 65,364 | 103,878 | | | | 99,161 |
| | | | | | | Accrued compensation and related expenses | | | | | | | 47,254 | 75,273 | | | | (6,692) |
| | | | | | | Current and non-current income taxes payable | | | | | | | 35,986 | 120,778 | (24,125) |
| | | | | | | Unredeemed gift card liability | | | | | | | 68,266 | 71,441 | | | | 47,962 |
| | | | | | | Right-of-use lease assets and current and non-current lease liabilities | | | | | | | 23,905 | 13,494 | | | | 13,267 |
| | | | | | | Other current and non-current liabilities | | | | | | | (2,925) | 30,073 | | | | 10,784 |
| | Net cash provided by operating activities | | | 966,463 | 1,389,108 | 803,336 |
| | Cash flows from investing activities |
| | Purchase of property and equipment | | | (638,657) | (394,502) | (229,226) |
| | Settlement of net investment hedges | | | | | | | | 47,804 | (23,389) | (14,607) |
| | Acquisition, net of cash acquired | | | — | | | | | — | (452,581) |
| | Other investing activities | | | | | | | | 20,916 | (10,000) | | | | 882 |
| | Net cash used in investing activities | | | (569,937) | (427,891) | (695,532) |
| | Cash flows from financing activities |
| | Proceeds from settlement of stock-based compensation | | | | | | | | 11,704 | 18,194 | | | | 15,263 |
| | Shares withheld related to net share settlement of stock-based compensation | | | (35,158) | (49,809) | (32,388) |
| | Repurchase of common stock | | | (444,001) | (812,602) | (63,663) |
| | Other financing activities | | | (32) | | (770) | | | | — |
| | Net cash used in financing activities | | | (467,487) | (844,987) | (80,788) |
| | Effect of foreign currency exchange rate changes on cash and cash equivalents | | | (34,043) | (6,876) | | | | 29,996 |
| | Increase (decrease) in cash and cash equivalents | | | (105,004) | 109,354 | | | | 57,012 |
| | Cash and cash equivalents, beginning of period | | $ 1,259,871 $ 1,150,517 $ 1,093,505 |
| | Cash and cash equivalents, end of period | | $ 1,154,867 $ 1,259,871 $ 1,150,517 |
| | | | | | | | | | | See accompanying notes to the consolidated financial statements |
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| | Table of Contents |
| 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 technical athletic apparel, footwear, |
| | and accessories, which are sold through company-operated stores, direct to consumer through e-commerce, outlets, sales to |
| | wholesale accounts, license and supply arrangements, recommerce, and sales from temporary locations. Recommerce is the |
| | sale of repurchased product via the Company's "Like New" program. The Company operates stores in the United States, the |
| | People's Republic of China ("PRC"), Canada, Australia, the United Kingdom, South Korea, Germany, New Zealand, Singapore, |
| | Japan, France, Ireland, Spain, Malaysia, Sweden, the Netherlands, Norway, and Switzerland. There were 655, 574, and 521 |
| | company-operated stores in operation as of January 29, 2023, January 30, 2022, and January 31, 2021, respectively. The |
| | Company also engages in the design and retail of in-home connected fitness equipment and associated content subscriptions |
| | through lululemon Studio, which was rebranded from the Company's former MIRROR brand during fiscal 2022. |
| | COVID-19 Pandemic |
| | | The outbreak of a novel strain of coronavirus ("COVID-19") caused governments and public health officials to impose |
| | restrictions and recommend precautions to mitigate the spread of the virus. |
| | | The Company temporarily closed almost al of its retail locations for a significant portion of the first half of fiscal 2020. |
| | While most of the Company's retail locations have been open since then, certain locations were temporarily closed based on |
| | government and health authority guidance, including certain closures during 2022 in the PRC. |
| | | In response to the COVID-19 pandemic, various government programs were announced which provide financial relief |
| | for affected businesses. The most significant relief measures which the Company qualified for are the Employee Retention |
| | Credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") in the United States, and the Canada |
| | Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan in Canada. During fiscal 2020 the Company |
| | recognized payrol subsidies totaling $37.1 mil ion under these wage subsidy programs and similar plans in other jurisdictions. |
| | The Company utilized the grant accounting model and these subsidies were recorded as a reduction in the associated wage |
| | costs which the Company incurred, and were recognized in sel ing, general and administrative expenses. These subsidies |
| | partial y offset the wages paid to employees while its retail locations were temporarily closed due to COVID-19. The Company |
| | did not recognize any payrol subsidies in fiscal 2022 and fiscal 2021. |
| | | The COVID-19 pandemic material y impacted the Company's operations. The extent to which COVID-19 continues to |
| | impact the Company's operations, and in turn, its operating results and financial position wil depend on future developments, |
| | which are highly uncertain and cannot be predicted. |
| | Basis of presentation |
| | | The consolidated financial statements have been presented in U.S. dol ars and are prepared in accordance with United |
| | States general y accepted accounting principles ("GAAP"). |
| | | The Company's fiscal year ends on the Sunday closest to January 31 of the fol owing year, typical y resulting in a 52- |
| | week year, but occasional y giving rise to an additional week, resulting in a 53-week year. Fiscal 2022, fiscal 2021, and fiscal |
| | 2020 were each 52-week years. Fiscal 2022, 2021, and 2020 ended on January 29, 2023, January 30, 2022, and January 31, |
| | 2021, respectively, and are referred to as "2022," "2021," and "2020," respectively. |
| | | The Company's business is affected by the pattern of seasonality common to most retail apparel businesses. |
| | Historical y, 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 whol y-owned |
| | subsidiaries. Al intercompany balances and transactions have been eliminated. |
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| Cash and cash equivalents |
| Cash and cash equivalents consist of cash on hand, bank balances, 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 duty receivables, sales to wholesale accounts, and license and supply |
| arrangements. The al owance for doubtful accounts represents management's best estimate of probable credit losses in |
| accounts receivable. Receivables are written off against the al owance when management believes that the amount |
| receivable wil not be recovered. As of January 29, 2023, January 30, 2022, and January 31, 2021, the Company recorded an |
| insignificant al owance 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 al costs incurred to deliver inventory to |
| the Company's distribution centers including freight, non-refundable taxes, duty, and other landing costs. |
| The Company periodical y 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, sel ing |
| 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 reserve in the period in which it made such a |
| determination. |
| 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 reserve 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 al ocated to |
| the fair values of the tangible and intangible assets acquired and liabilities assumed, with any excess recorded as goodwil . |
| These fair value determinations require judgment and may involve the use of significant estimates and assumptions. The |
| purchase price al ocation 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. |
| Goodwil |
| Goodwil represents the excess of the aggregate of the consideration transferred, the fair value of any non-control ing |
| 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. Goodwil is al ocated to the reporting unit which is expected to receive the benefit |
| from the synergies of the combination. |
| Goodwil is tested annual y for impairment or more frequently when an event or circumstance indicates that goodwil |
| might be impaired. General y, 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 |
| goodwil of the reporting unit is determined to be impaired and the Company wil record an impairment equal to the excess of |
| the carrying value over its fair value. |
| | 12 |
| Table of Contents |
| 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. Al 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 individual y 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. Al other |
| property and equipment are depreciated using the declining balance method as fol ows: |
| Furniture and fixtures | | 20% |
| Computer hardware and software | | | 20% - 50% |
| Equipment and vehicles | | | 20% - 30% |
| 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, including intangible assets with finite lives, 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 principal y 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 general y 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 wil be exercised. The present value of the lease liability is determined using the Company's incremental col ateralized |
| borrowing rate at the lease commencement. |
| Minimum lease payments include base rent, fixed escalation of rental payments, and rental payments that are adjusted |
| periodical y 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 general y 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 initial y 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 |
| | | | 13 |
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| 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 contractual y 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 initial y 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. |
| Revenue recognition |
| Net revenue is comprised of company-operated store net revenue, direct to consumer net revenue through websites |
| and mobile apps, including mobile apps on in-store devices that al ow demand to be fulfil ed 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 wel as sales of the Company's products to licensees, recommerce |
| revenue, revenue from temporary locations, and lululemon Studio revenue. Al revenue is reported net of markdowns, |
| discounts, sales taxes col ected from customers on behalf of taxing authorities, and returns. |
| lululemon Studio generates net revenue from the sale of in-home fitness equipment and associated content |
| subscriptions. Certain in-home fitness contracts contain multiple performance obligations, including hardware and a |
| subscription service commitment. For customer contracts that contain multiple performance obligations the Company |
| accounts for individual performance obligations if they are distinct. The transaction price, net of discounts, is al ocated to each |
| performance obligation based on its standalone sel ing price. |
| 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 |
| substantial y al 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. Direct to consumer 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 initial y recorded as deferred revenue, and recognized as revenue in the |
| period when control is transferred to the customer. |
| Revenue is presented net of an al owance 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 29, 2023 |
| and January 30, 2022, the sales return al owance was $55.5 mil ion and $41.7 mil ion, respectively. |
| Shipping fees bil ed to customers are recorded as revenue, and shipping costs are recognized within sel ing, general and |
| administrative expenses in the same period the related revenue is recognized. |
| Proceeds from the sale of gift cards are initial y 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 wil continue to |
| honor al 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 |
| | 14 |
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| recognition method. For 2022, 2021, and 2020, net revenue recognized on unredeemed gift card balances was $23.3 mil ion, |
| $18.7 mil ion, and $13.7 mil ion, 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, including the costs of content creation, studio overhead, and |
| related production departments. |
| Sel ing, general and administrative expenses |
| Sel ing, general and administrative expenses consist of al operating costs not otherwise included in cost of goods sold, |
| intangible asset amortization, or acquisition-related expenses. The Company's sel ing, 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 2022, 2021, and 2020, the Company incurred costs to transport its products from its distribution facilities to its retail |
| locations and e-commerce guests of $353.7 mil ion, $270.8 mil ion, and $232.4 mil ion, respectively. |
| Advertising and Marketing Costs |
| Advertising costs, including the costs to produce advertising, are expensed as incurred. Advertising expenses were |
| $328.6 mil ion, $297.5 mil ion, and $216.0 mil ion for 2022, 2021, and 2020, respectively, and are included within sel ing, |
| general and administrative expenses. |
| Store pre-opening costs |
| Operating costs incurred prior to the opening of new stores are expensed as incurred as sel ing, general and |
| administrative expenses. |
| Income taxes |
| The Company fol ows 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 al owance, if based on the weight of available evidence, it is |
| more likely than not that some portion or al of the deferred tax assets wil 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 |
| | 15 |
| Table of Contents |
| 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 other income (expense), net. 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 sel 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.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. Unless otherwise noted, it is management's |
| opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. |
| 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 15. 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 general y the applicable local currency. Assets and liabilities of each foreign entity are translated into |
| U.S. dol ars 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 sel ing, 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. |
| | 16 |
| Table of Contents |
| 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 wil subsequently be reclassified to net earnings in the period in which the hedged investment is either sold or |
| substantial y 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 economical y 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 sel ing, 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 al ow 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 15. Fair Value Measurement and Note 16. Derivative Financial |
| Instruments. |
| Concentration of credit risk |
| Accounts receivable are primarily from inventory duty receivables, wholesale accounts, and from license and supply |
| arrangements. The Company general y does not require col ateral 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 al owance 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. |
| 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 North American 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 |
| wil 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, and |
| the grant date fair value of restricted shares, performance-based restricted stock units, and restricted stock units is based on |
| | 17 |
| Table of Contents |
| the closing price of the Company's common stock on the grant date. Restricted stock units that are 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. This |
| fair value is 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 equivalent of common shares in al material respects. Al classes of stock have |
| in effect the same rights and share equal y 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 us, 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 wel 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 al Accounting Standard Updates ("ASUs"). ASUs adopted during |
| 2022 not listed below were assessed, and determined to be either not applicable or are expected to have minimal impact on |
| its consolidated financial position or results of operations. |
| In November 2021, the FASB issued ASC 832, Government Assistance to require annual disclosures about the nature of |
| certain government assistance received, the accounting policy used to account for the transactions, the location in the |
| financial statements where such transactions were recorded and significant terms and conditions associated with such |
| transactions. The Company adopted this update prospectively during the first quarter of 2022 and it did not have a material |
| impact on the Company's consolidated financial statements. |
| 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 its consolidated financial position or results of operations. |
| In September 2022, the FASB issued ASC 405-50, Liabilities - Supplier Finance Programs, to require annual and interim |
| disclosures about the key terms of supplier finance programs used in connection with the purchase of goods and services |
| along with information about the obligations under these programs, including the amount outstanding at the end of each |
| reporting period and a rol forward of those obligations. The guidance is effective for fiscal years beginning after December 15, |
| 2022, including interim periods in those fiscal years, with early adoption permitted. The Company is currently evaluating the |
| impact that this new guidance may have on its consolidated financial statements. |
| | 18 |
| Table of Contents |
| Note 3. Inventories |
| January 29, | January 30, |
| 2023 | 2022 |
| | | (In thousands) |
| Inventories, at cost | $ 1,571,981 $ 1,004,526 |
| Provision to reduce inventories to net realizable value: |
| Obsolescence provision | | (84,231) | (11,325) |
| Damages provision | | (38,996) | (24,404) |
| Shrink provision | | | (1,387) | (2,316) |
| | (124,614) | (38,045) |
| Inventories | $ 1,447,367 $ | 966,481 |
| | | | | The obsolescence provision as of January 29, 2023 included $62.9 mil ion related to lululemon Studio hardware |
| recognized during the fourth quarter of 2022. Please refer to Note 8. Impairment of Goodwil and Other Assets for further |
| details. |
| Note 4. Prepaid Expenses and Other Current Assets |
| January 29, | January 30, |
| 2023 | 2022 |
| | | (In thousands) |
| Prepaid inventories | $ | | 1,082 $ | 42,691 |
| Other prepaid expenses | | 140,921 | | | 98,254 |
| Forward currency contract assets | | | 16,707 | 19,077 |
| Other current assets | | | 79,962 | 32,550 |
| Prepaid expenses and other current assets | $ | 238,672 $ | 192,572 |
| Note 5. Property and Equipment |
| January 29, | January 30, |
| 2023 | 2022 |
| | | (In thousands) |
| Land | $ | | 80,692 $ | 74,297 |
| Buildings | | | 28,850 | 30,880 |
| Leasehold improvements | | 818,071 | 676,762 |
| Furniture and fixtures | | 144,572 | 125,213 |
| Computer hardware | | 166,768 | 130,393 |
| Computer software | | 742,295 | 532,819 |
| Equipment and vehicles | | | 30,766 | 23,060 |
| Work in progress | | 244,898 | 163,420 |
| Property and equipment, gross | | 2,256,912 | 1,756,844 |
| Accumulated depreciation | | (987,298) | (829,134) |
| Property and equipment, net | $ 1,269,614 $ | 927,710 |
| | | | | There were capitalized computer software costs of $67.9 mil ion, $35.8 mil ion, and $23.5 mil ion in 2022, 2021, and |
| 2020, respectively, associated with internal y developed software. |
| | | | | Depreciation expense related to property and equipment was $282.7 mil ion, $215.3 mil ion, and $180.1 mil ion for |
| 2022, 2021, and 2020, 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 mil ion. The income tax effect of the gain on disposal of assets was an expense of $1.7 mil ion. |
| | | | | | 19 |
| Table of Contents |
| Note 6. Goodwil |
| The changes in the carrying amounts of goodwil were as fol ows: |
| | Goodwill |
| | (In thousands) |
| Balance as of January 31, 2021 | | $ | 386,877 |
| Effect of foreign currency translation | | | 3 |
| Balance as of January 30, 2022 | | $ | 386,880 |
| Impairment of goodwil | | | (362,492) |
| Effect of foreign currency translation | | | (244) |
| Balance as of January 29, 2023 | | $ | 24,144 |
| The Company recognized an impairment of $362.5 mil ion related to the lululemon Studio reporting unit as of |
| January 29, 2023 on the goodwil that arose from the acquisition of MIRROR. lululemon Studio is included within Other in the |
| Company's segment disclosures. Please refer to Note 8. Impairment of Goodwil and Other Assets for further information. |
| Al of the Company's $24.1 mil ion of goodwil as of January 29, 2023 relates to the company-operated stores segment. |
| Note 7. Intangible Assets |
| A summary of the balances of the Company's intangible assets as of January 29, 2023, January 30, 2022, is presented |
| below: |
| | | | January 29, 2023 | January 30, 2022 |
| | | | | | Gross | | Net | Remaining | Gross | Net | Remaining |
| | | | | | Carrying | Accumulated | Carrying | Useful Life | Carrying | Accumulated | | | | | | Carrying | Useful Life |
| | | | | | Amount | Amortization Impairment | Amount | (Years) | Amount | Amortization | | | | | | Amount | (Years) |
| | | | | | | | (In thousands, except in years) |
| MIRROR brand | | | | | | $ 26,500 $ | (3,423) $ (20,077) $ | | | | 3,000 | | | | 3.0 $ 26,500 $ | (2,098) $ 24,402 | 18.4 |
| Customer |
| relationships | | | | | | | 28,000 | (7,492) (20,508) | | | | — | | | | n/a | 28,000 | (4,592) | | | | | | 23,408 | 8.4 |
| Technology | | | | | | | 25,500 | (8,956) | | | | | | | | | — | 16,544 | | | | 3.0 | 25,500 | (5,489) | | | | | | 20,011 | 5.9 |
| Content | | | | | | | 5,000 | (2,583) | | | | | | | | | — | 2,417 | | | | 2.4 | 5,000 | (1,583) | | | | | | 3,417 | 3.4 |
| Other | | | | | | | 270 | (270) | | | | | | | | | — | — | | | | n/a | 270 | (209) | 61 | 0.7 |
| Intangible assets | | | | | | $ 85,270 $ (22,724) $ (40,585) $ 21,961 | | | | | | 2.9 $ 85,270 $ (13,971) $ 71,299 | 10.9 |
| Amortization of intangible assets was $8.8 mil ion, $8.8 mil ion, and $5.2 mil ion in 2022, 2021, and 2020, respectively. |
| As of January 29, 2023, the Company recorded an impairment charge of $40.6 mil ion related to the intangible assets in the |
| lululemon Studio reporting unit. Please refer to Note 8. Impairment of Goodwil and Other Assets for further information. |
| There were no impairment charges in 2021 and 2020. |
| The fol owing table presents the future expected amortization expense as of January 29, 2023: |
| | January 29, |
| | 2023 |
| | (In thousands) |
| 2023 | | $ | 7,515 |
| 2024 | | | 7,515 |
| 2025 | | | 6,931 |
| Total estimated future amortization expense | | $ | 21,961 |
| Note 8. Impairment of Goodwil and Other Assets |
| Events as of January 29, 2023 indicated the Company should conduct an impairment test for the goodwil , intangible |
| assets, and property and equipment related to lululemon Studio (formerly MIRROR). Sales of hardware units did not meet the |
| | | | | | | | 20 |
| Table of Contents |
| Company's fourth quarter expectations and the Company revised its short and long term forecasts for lululemon Studio, with |
| an adverse impact on expected cash flows. As a result, the Company updated its strategy for the lululemon Studio reporting |
| unit. |
| During the fourth quarter of 2022, the Company recorded impairment of goodwil and other assets related to the |
| lululemon Studio business unit. The fol owing table summarizes the amounts recognized: |
| | 2022 |
| | (In thousands) |
| Costs recorded in cost of goods sold: |
| Obsolescence provision | | $ | 62,928 |
| Costs recorded in operating expenses: |
| Impairment of goodwil | | $ | 362,492 |
| Impairment of intangible assets | | | 40,585 |
| Impairment of property and equipment | | | 4,836 |
| Impairment of goodwil and other assets | | | 407,913 |
| Total pre-tax charges | | $ | 470,841 |
| Income tax effects of charges | | $ | (28,171) |
| Total after-tax charges | | $ | 442,670 |
| Goodwil |
| To perform the goodwil impairment test on 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 goodwil of $362.5 mil ion. 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 is a Level 3 fair value measurement. |
| Intangible assets |
| Undiscounted cash flows of the lululemon Studio asset group to which the intangible assets belong 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 impairments of $40.6 mil ion relating to the MIRROR brand, which is associated with in-home |
| hardware, and to the customer relationship intangible assets that were recognized as part of the acquisition. The carrying |
| value of individual long-lived assets was not reduced to lower than their fair value. The fair values of the brand and the |
| customer relationships were based on a relief from royalty method and a discounted cash flow model respectively, and are |
| Level 3 fair value measurements. |
| Inventories |
| The change in strategy related to lululemon Studio to focus on digital app-based services means the Company no longer |
| expects to be able to sel al of the lululemon Studio hardware inventory above cost and it recognized an obsolescence |
| provision of $62.9 mil ion as of January 29, 2023. The net realizable value was determined based on hardware sales forecasts |
| and assumptions regarding liquidation value. If the Company does not achieve its hardware sales forecasts, has to sel the |
| hardware at prices lower than forecast, or is unable to liquidate excess inventory this could result in additional expense in the |
| period in which such a determination is made. |
| Note 9. Acquisition-Related Expenses |
| In connection with the acquisition of MIRROR, the Company recognized certain expenses which were recognized 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. The amounts |
| recognized were $41.4 mil ion and $29.8 mil ion in 2021 and 2020, respectively. There were no acquisition-related expenses |
| recognized in 2022. |
| | | 21 |
| Table of Contents |
| Note 10. Other Non-Current Assets |
| January 29, | January 30, |
| 2023 | 2022 |
| | | (In thousands) |
| Cloud computing arrangement implementation costs | $ | 114,700 $ | | | 89,334 |
| Security deposits | | | 28,447 | 24,083 |
| Other | | | 12,898 | 18,685 |
| Other non-current assets | $ | 156,045 $ | 132,102 |
| | | | | As of January 29, 2023 and January 30, 2022, cloud computing arrangement implementation costs consisted of deferred |
| costs of $212.4 mil ion and $138.4 mil ion, respectively, and associated accumulated amortization of $97.7 mil ion and $49.0 |
| mil ion, respectively. |
| Note 11. Accrued Liabilities and Other |
| January 29, | January 30, |
| 2023 | 2022 |
| | | (In thousands) |
| Accrued operating expenses | $ | 169,429 $ | 116,822 |
| Accrued freight | | | 57,692 | 71,390 |
| Sales return al owances | | | 55,528 | 41,690 |
| Forward currency contract liabilities | | | 25,625 | 18,985 |
| Accrued duty | | | 21,046 | 27,182 |
| Sales tax col ected | | | 20,183 | 13,540 |
| Accrued capital expenditures | | | 19,365 | 9,616 |
| Accrued rent | | | 12,223 | 11,254 |
| Accrued inventory liabilities | | | 4,345 | 4,005 |
| Other | | | 13,787 | 16,316 |
| Accrued liabilities and other | $ | 399,223 $ | 330,800 |
| Note 12. Revolving Credit Facilities |
| North America 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 mil ion 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). |
| | | | | As of January 29, 2023, aside from letters of credit of $6.5 mil ion, 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. Additional y, 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 |
| | | | | | 22 |
| Table of Contents |
| 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 al |
| or substantial y al 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 29, |
| 2023, 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 mil ion Chinese Yuan ($19.2 |
| mil ion) revolving credit facility with terms that are reviewed on an annual basis. The credit facility was increased to |
| 230.0 mil ion Chinese Yuan ($33.9 mil ion) during 2020. It is comprised of a revolving loan of up to 200.0 mil ion Chinese Yuan |
| ($29.5 mil ion) and a financial guarantee facility of up to 30.0 mil ion Chinese Yuan ($4.4 mil ion), 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 fol ow certain covenants. As of January 29, 2023, the Company was in |
| compliance with the covenants and, aside from letters of credit of 14.3 mil ion Chinese Yuan ($2.1 mil ion), there were no |
| other borrowings or guarantees outstanding under this credit facility. |
| 364-Day revolving credit facility |
| In June 2020, the Company obtained a 364-day $300.0 mil ion committed and unsecured revolving credit facility. In |
| December 2020, the Company elected to terminate this credit facility. |
| Note 13. 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 wil be cancel ed 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 economical y 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 mil ion exchangeable shares are |
| outstanding, or in the event of certain events such as a change in control. |
| Note 14. 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 2014, the Company's stockholders approved the adoption of the lululemon athletica inc. 2014 Equity Incentive |
| Plan ("2014 Plan"). The 2014 Plan provides for awards in the form of stock options, stock appreciation rights, restricted stock |
| purchase rights, restricted share 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. |
| | 23 |
| Table of Contents |
| The Company has granted stock options, performance-based restricted stock units, restricted stock units, and restricted |
| shares. Stock options granted to date general y have a four-year vesting period and vest at a rate of 25% each year on the |
| anniversary date of the grant. Stock options general y expire on the earlier of seven years from the date of grant, or a |
| specified period of time fol owing termination. Performance-based restricted stock units issued general y vest three years |
| from the grant date and restricted shares general y vest one year from the grant date. Restricted stock units granted general y |
| 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 $77.2 mil ion, $66.4 mil ion, and $56.6 mil ion |
| for 2022, 2021, and 2020, respectively. |
| Total unrecognized compensation cost for al stock-based compensation plans was $118.0 mil ion as of January 29, |
| 2023, which is expected to be recognized over a weighted-average period of 2.1 years, and was $96.7 mil ion as of January 30, |
| 2022 over a weighted-average period of 2.0 years. |
| A summary of the balances of the Company's stock-based compensation plans as of January 29, 2023, January 30, 2022, |
| and January 31, 2021, and changes during the fiscal years then ended is presented below: |
| | | Performance-Based | | | Restricted Stock Units |
| | Stock Options | Restricted Stock Units | Restricted Shares | Restricted Stock Units | (Liability Accounting) |
| | | | | | | | Weighted | Weighted | Weighted |
| | | | | | | Weighted | -Average | -Average | -Average |
| | | | | | | -Average | Grant | Grant | Grant | Weighted |
| | | | | | | Exercise | Date Fair | Date Fair | Date Fair | -Average |
| | Number | | | | | Price | Number | | | | | Value | Number | | | | | Value | Number | | | | | Value | Number | | | | | Fair Value |
| | | | | | | | (In thousands, except per share amounts) |
| Balance as of February |
| 2, 2020 | | | 776 $ 113.41 | 238 $ 103.52 | 7 $ 175.82 | 333 $ 108.44 | | | | | | 29 $ 239.39 |
| Granted | | | 241 182.78 | 140 122.21 | 4 299.09 | 130 208.35 | | | | | | — | — |
| Exercised/vested | | | 182 83.89 | 171 63.03 | 7 175.82 | 175 87.31 | | | | | | 14 366.42 |
| Forfeited/expired | | | 31 155.33 | | | | | | 8 155.08 | — | — | | | | | 13 162.60 | — | — |
| 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 | | | | | | — $ | — |
| A total of 12.3 mil ion shares of the Company's common stock have been authorized for future issuance under the |
| Company's 2014 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 wil 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 are 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. This fair value is based on the |
| closing price of the Company's common stock on the last business day before each period end. |
| | | | | | | | | | | | | 24 |
| Table of Contents |
| 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 |
| fol owing are weighted averages of the assumptions that were used in calculating the fair value of stock options granted |
| in 2022, 2021, and 2020: |
| | 2022 | 2021 | 2020 |
| Expected term | 3.75 years | 3.75 years | 3.61 years |
| Expected volatility | 40.00 % | 39.32 % | 40.01 % |
| Risk-free interest rate | 2.51 % | 0.50 % | 0.32 % |
| Dividend yield | | | | — % | — % | — % |
| The fol owing table summarizes information about stock options outstanding and exercisable as of January 29, 2023: |
| | | | | | | | Outstanding | Exercisable |
| | | | | | | | | | Weighted- | Weighted- |
| | | | | | | | Weighted- | | Average | Weighted- | Average |
| | | | | | | | | Number of | Average | | Remaining | Number of | Average | Remaining |
| Range of Exercise Prices | | | | | | | | Options | Exercise Price | | Life (Years) | Options | Exercise Price | Life (Years) |
| | | | | | | | | | | (In thousands, except per share amounts and years) |
| $2.78-$155.97 | | | | | | | | | | | 173 $ | 98.43 | | 2.1 | 173 $ | 98.43 | | | | 2.1 |
| $167.54-$174.52 | | | | | | | | | | | 170 | 167.78 | | 3.2 | 111 | 167.76 | | | | 3.2 |
| $188.84-$296.36 | | | | | | | | | | | 161 | 189.55 | | 4.2 | 69 | 189.61 | | | | 4.2 |
| $306.71-$326.39 | | | | | | | | | | | 179 | 307.53 | | 5.3 | 38 | 307.48 | | | | 5.1 |
| $327.22-$426.44 | | | | | | | | | | | 183 | 375.52 | | 6.1 | 4 | 362.50 | | | | 5.3 |
| | | | | | | | | | | | 866 $ | 230.78 | | 4.2 | 395 $ | 156.64 | | | | 3.1 |
| Intrinsic value | | | | | | | | $ | | | 81,280 | $ | 61,050 |
| As of January 29, 2023, the unrecognized compensation cost related to these options was $29.7 mil ion, 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 2022, 2021, and 2020 was $124.17, $94.09, and $74.91, respectively. |
| The fol owing table summarizes the intrinsic value of options exercised and awards that vested during 2022, 2021, and |
| 2020: |
| | 2022 | 2021 | 2020 |
| | | (In thousands) |
| Stock options | $ | 19,906 $ | 46,761 $ | 37,022 |
| Performance-based restricted stock units | | 37,672 | 52,495 | 32,384 |
| Restricted shares | | 1,152 | 1,364 | 2,115 |
| Restricted stock units | | 37,275 | 47,042 | 37,791 |
| Restricted stock units (liability accounting) | | | | — | 5,938 | 5,309 |
| | $ | 96,005 $ | 153,600 $ | 114,621 |
| 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 mil ion shares. Al shares purchased under the ESPP are purchased in the open market. During 2022, there were 0.1 |
| mil ion shares purchased. |
| | | | | | | | | | | 25 |
| Table of Contents |
| 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 dol ar 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 $14.0 mil ion, $11.8 mil ion, and $9.2 mil ion during 2022, 2021, and 2020, respectively. |
| Note 15. Fair Value Measurement |
| Assets and liabilities measured at fair value on a recurring basis |
| As of January 29, 2023 and January 30, 2022, the Company held certain assets and liabilities that are required to be |
| measured at fair value on a recurring basis: |
| | 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 |
| | January 30, |
| | 2022 | Level 1 | Level 2 | Level 3 | Balance Sheet Classification |
| | | | | | | (In thousands) |
| Money market funds | | $ | | | | | | | | | 38,475 $ | 38,475 $ | | | | | — $ | — Cash and cash equivalents |
| Term deposits | | | 318,698 | | | | | — | 318,698 | | | | | — Cash and cash equivalents |
| | | | | | Prepaid expenses and other |
| Forward currency contract assets | | | | | | | | | | | 19,077 | — | 19,077 | | | | | — | current assets |
| Forward currency contract |
| liabilities | | | | | | | | | | | 18,985 | — | 18,985 | | | | | — Other current liabilities |
| The Company has short-term, highly liquid investments classified as cash equivalents, which are invested in money |
| market funds and term deposits. 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 al ow net settlements under certain conditions. However, the Company records al 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. |
| As of January 29, 2023, the Company recorded impairment charges for goodwil , intangible assets, and property and |
| equipment, as disclosed in Note 8. Impairment of Goodwil and Other Assets. That note includes details on the discounted |
| cash flow model used to estimate fair value, which is a Level 3 valuation technique. |
| Note 16. Derivative Financial Instruments |
| The Company currently hedges against changes in the Canadian dol ar and Chinese Yuan to the U.S. dol ar exchange |
| rate and changes in the Euro and Australian dol ar to the Canadian dol ar exchange rate using forward currency contracts. |
| | | | | | | 26 |
| Table of Contents |
| 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. dol ars. 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. dol ars. These |
| 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 2022. |
| Derivatives not designated as hedging instruments |
| During 2022, the Company entered into certain forward currency contracts designed to economical y 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 sel ing, |
| general and administrative expenses. |
| Quantitative disclosures about derivative financial instruments |
| The notional amounts and fair values of forward currency contracts were as fol ows: |
| | January 29, 2023 | January 30, 2022 |
| | | | Gross | | Gross |
| | | | Notional | Assets | | | Liabilities | Notional | Assets | | | | Liabilities |
| | | | | | | | (In thousands) |
| Derivatives designated as net |
| investment hedges:Forward currency contracts |
| | | | $ 1,070,000 $ | | | | | — $ | 17,211 $ 1,502,000 $ | | | | | 18,468 $ | — |
| Derivatives not designated in a |
| hedging relationship:Forward currency contracts |
| | | | | 1,605,284 | | | | | 16,707 | 8,414 | 1,597,878 | | | | 609 | 18,985 |
| Net derivatives recognized on |
| consolidated balance sheets:Forward currency contracts |
| | $ | | | | | | | 16,707 $ | 25,625 | $ | | | | | | | 19,077 $ | 18,985 |
| As of January 29, 2023, there were derivative assets of $16.7 mil ion and derivative liabilities of $25.6 mil ion subject to |
| enforceable netting arrangements. |
| The forward currency contracts designated as net investment hedges outstanding as of January 29, 2023 mature on |
| different dates between February 2023 and August 2023. |
| The forward currency contracts not designated in a hedging relationship outstanding as of January 29, 2023 mature on |
| different dates between February 2023 and August 2023. |
| The pre-tax gains and losses on foreign currency exchange forward contracts recorded in accumulated other |
| comprehensive income or loss were as fol ows: |
| | | | | | | 2022 | | | | 2021 | 2020 |
| | | (In thousands) |
| Gains (losses) recognized in net investment hedge gains (losses): |
| Derivatives designated as net investment hedges | | | | | | $ | 12,125 $ | | | | 13,177 $ | (34,289) |
| | | | | | | | | 27 |
| Table of Contents |
| 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 |
| substantial y 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 fol ows: |
| | 2022 | 2021 | 2020 |
| | | (In thousands) |
| Gains (losses) recognized in sel ing, general and administrative expenses: |
| Foreign exchange gains (losses) | | $ | 4,410 $ | 11,511 $ | (26,053) |
| Derivatives not designated in a hedging relationship | | | (11,945) | (19,874) | 22,949 |
| Net foreign exchange and derivative losses | $ | (7,535) $ | (8,363) $ | (3,104) |
| Note 17. Leases |
| The Company has obligations under operating leases for its store and other retail locations, distribution centers, offices, |
| and equipment. As of January 29, 2023, the initial lease terms of the various leases general y 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 wil be exercised. |
| The fol owing 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. |
| | 2022 | 2021 | 2020 |
| | | (In thousands) |
| Net lease expense: |
| Operating lease expense | | | | | $ | 245,767 $ | 215,549 $ | 193,498 |
| Short-term lease expense | | | | | | 16,790 | 12,366 | 11,721 |
| Variable lease expense | | | | | | 114,441 | 90,852 | 60,991 |
| | | | | $ | 376,998 $ | 318,767 $ | 266,210 |
| The fol owing table presents future minimum lease payments by fiscal year and the impact of discounting. |
| | | | January 29, |
| | | | 2023 |
| | | | (In thousands) |
| 2023 | | | $ | 238,343 |
| 2024 | | | | 265,787 |
| 2025 | | | | 197,934 |
| 2026 | | | | 143,603 |
| 2027 | | | | 117,639 |
| Thereafter | | | | 210,718 |
| Future minimum lease payments | | | $ 1,174,024 |
| Impact of discounting | | | | (103,690) |
| Present value of lease liabilities | | | $ 1,070,334 |
| Balance sheet classification: |
| Current lease liabilities | | | | $ | 207,972 |
| Non-current lease liabilities | | | | | 862,362 |
| | | | $ 1,070,334 |
| | | | | | 28 |
| Table of Contents |
| As of January 29, 2023, the Company's minimum lease commitment for distribution center operating leases which have |
| been committed to, but not yet commenced, was $632.0 mil ion, which is not reflected in the table above. |
| The weighted-average remaining lease term and weighted-average discount rate were as fol ows: |
| | January 29, |
| | 2023 |
| Weighted-average remaining lease term | 5.64 years |
| Weighted-average discount rate | | 3.1 % |
| Note 18. 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 fol ows: |
| | | | 2022 | 2021 | 2020 |
| | | | | (In thousands) |
| Income (loss) before income tax expense |
| Domestic | | | | $ | (98,764) $ | 204,350 $ | 122,573 |
| Foreign | | | | | 1,431,335 | 1,129,519 | 696,777 |
| | | | $ 1,332,571 $ 1,333,869 $ | 819,350 |
| Current income tax expense |
| Federal | | | | $ | 34,752 $ | 25,701 $ | 70 |
| State | | | | | 33,369 | 17,608 | 10,439 |
| Foreign | | | | | 400,250 | 322,105 | 185,803 |
| | | | $ | 468,371 $ | 365,414 $ | 196,312 |
| Deferred income tax expense (recovery) |
| Federal | | | | $ | 8,932 $ | 5,858 $ | 19,754 |
| State | | | | | 2,363 | 1,045 | 5,923 |
| Foreign | | | | | (1,895) | (13,770) | 8,448 |
| | | | $ | 9,400 $ | (6,867) $ | 34,125 |
| Income tax expense | | | $ | 477,771 $ | 358,547 $ | 230,437 |
| The Company's income tax expense for 2022, 2021, and 2020 include certain discrete tax amounts, as fol ows: |
| | | | 2022 | 2021 | 2020 |
| | | | | (In thousands) |
| Impairment of goodwil and other assets | | | $ | (28,171) $ | | — $ | — |
| Gain on disposal of assets | | | | 1,661 | | — | — |
| Acquisition-related expenses | | | | | | — | (1,417) | (3,133) |
| Total tax adjustments | | | $ | (26,510) $ | (1,417) $ | (3,133) |
| Please refer to Note 5. Property and Equipment, Note 8. Impairment of Goodwil and Other Assets, and Note 9. |
| Acquisition-Related Expenses for further information. |
| The U.S. tax reforms enacted in December 2017 required the Company to pay U.S. income taxes on accumulated |
| foreign subsidiary earnings not previously 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. |
| On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA contains a |
| number of revisions to the Internal Revenue Code, including a 15% corporate minimum income tax for tax years beginning |
| after December 31, 2022. It also assesses a 1% excise tax on repurchases of corporate stock. While this is not expected to |
| have a material adverse effect on the Company's results of operations going forward, the Company wil continue to evaluate |
| its impact as further information becomes available. |
| | | | | | | | 29 |
| Table of Contents |
| As of January 29, 2023, the Company's net investment in its Canadian subsidiaries was $2.4 bil ion, of which $1.3 bil ion |
| was determined to be indefinitely reinvested. A deferred income tax liability of $20.2 mil ion 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. Specifical y, to the extent that the Canadian subsidiaries have sufficient 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 $72.2 mil ion. 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 29, 2023 were $323.0 mil ion. |
| As of January 29, 2023, the Company had cash and cash equivalents of $470.6 mil ion outside of the United States. A summary reconciliation of the effective tax rate is as fol ows: |
| | 2022 | 2021 | 2020 |
| | | (Percentages) |
| Federal income tax at statutory rate | 21.0 % | 21.0 % | 21.0 % |
| Foreign tax rate differentials | 6.8 | 5.0 | 4.6 |
| U.S. state taxes | (0.4) | 0.8 | 0.8 |
| Non-deductible compensation expense | 0.7 | 0.7 | 2.1 |
| Excess tax benefits from stock-based compensation | (0.5) | (0.9) | (0.8) |
| Impairment of goodwil and other assets and gain on disposal of assets | 7.8 | | | — | — |
| Permanent and other | 0.5 | 0.3 | 0.4 |
| Effective tax rate | 35.9 % | 26.9 % | 28.1 % |
| | | | | | | 30 |
| Table of Contents |
| 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 29, 2023 and January 30, 2022 are presented below: |
| | January 29, | January 30, |
| | 2023 | 2022 |
| | | | (In thousands) |
| Deferred income tax assets: |
| Net operating loss carryforwards | | $ | | 2,312 $ | 6,686 |
| Inventories | | | | 43,471 | 16,326 |
| Intangible assets, net | | | | 778 | 873 |
| Non-current lease liabilities | | | 216,495 | 173,700 |
| Stock-based compensation | | | | 16,093 | 10,739 |
| Accrued bonuses | | | | 13,647 | 7,830 |
| Unredeemed gift card liability | | | | 12,877 | 9,804 |
| Foreign tax credits | | | | 1,909 | 2,003 |
| Other | | | | 6,958 | 10,116 |
| Deferred income tax assets | $ | 314,540 | 238,077 |
| Valuation al owance | | | (743) | (2,804) |
| Deferred income tax assets, net of valuation al owance | $ | 313,797 $ | 235,273 |
| Deferred income tax liabilities: |
| Property and equipment, net | | $ | (142,516) $ | (104,498) |
| Intangible assets, net | | | | (5,224) | (17,669) |
| Right-of-use lease assets | | | (192,221) | (154,634) |
| Other | | | (22,518) | | | (5,733) |
| Deferred income tax liabilities | | (362,479) | (282,534) |
| Net deferred income tax liabilities | $ | (48,682) $ | (47,261) |
| Balance sheet classification: |
| Deferred income tax assets | | $ | | 6,402 $ | 6,091 |
| Deferred income tax liabilities | | | (55,084) | (53,352) |
| Net deferred income tax liabilities | $ | (48,682) $ | (47,261) |
| As of January 29, 2023, the Company had net operating loss carryforwards of $8.2 mil ion. The majority of the net |
| operating loss carryforwards expire, if unused, between fiscal 2030 and fiscal 2040. |
| There was a $2.1 mil ion net decrease in the valuation al owance in 2022, compared to a $3.7 mil ion net decrease in |
| 2021, and a $0.8 mil ion net increase in 2020. |
| The Company files income tax returns in the U.S., Canada, and various foreign, state, and provincial jurisdictions. The |
| 2017 to 2020 tax years remain subject to examination by the U.S. federal and state tax authorities. The 2013 tax year is stil |
| open for certain state tax authorities. The 2016 to 2021 tax years remain subject to examination by Canadian tax authorities. |
| The 2016 to 2021 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. |
| | | | | | 31 |
| Table of Contents |
| Note 19. Earnings Per Share |
| The details of the computation of basic and diluted earnings per share are as fol ows: |
| | | 2022 | 2021 | 2020 |
| | (In thousands, except per share amounts) |
| Net income | | $ | 854,800 $ | 975,322 $ | 588,913 |
| Basic weighted-average number of shares outstanding | | | 127,666 | 129,768 | 130,289 |
| Assumed conversion of dilutive stock options and awards | | | | | 351 | 527 | 582 |
| Diluted weighted-average number of shares outstanding | | | 128,017 | 130,295 | 130,871 |
| Basic earnings per share | | $ | 6.70 $ | 7.52 $ | 4.52 |
| Diluted earnings per share | | $ | 6.68 $ | 7.49 $ | 4.50 |
| The Company's calculation of weighted-average shares includes the common stock of the Company as wel as the |
| exchangeable shares. Exchangeable shares are the equivalent of common shares in al material respects. Al classes of stock |
| have in effect the same rights and share equal y in undistributed net income. For 2022, 2021, and 2020, 43.5 thousand, 36.0 |
| thousand, and 30.8 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 mil ion of |
| the Company's common shares. On December 1, 2020, it approved an increase in the remaining authorization from |
| $263.6 mil ion to $500.0 mil ion, and on October 1, 2021, it approved an increase in the remaining authorization from |
| $141.2 mil ion to $641.2 mil ion. During the first quarter of 2022, the Company completed the remaining stock repurchases |
| under this program. |
| On March 23, 2022, the Company's board of directors approved a stock repurchase program for up to $1.0 bil ion of the |
| Company's common shares on the open market or in privately negotiated transactions. The repurchase plan has no time limit |
| and does not require the repurchase of a minimum number of shares. 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 wil depend upon |
| market conditions, eligibility to trade, and other factors, in accordance with Securities and Exchange Commission |
| requirements. The authorized value of shares available to be repurchased under this program excludes the cost of |
| commissions and excise taxes and as of January 29, 2023, the remaining authorized value was $743.8 mil ion. |
| During 2022, 2021, and 2020, 1.4 mil ion, 2.2 mil ion, and 0.4 mil ion shares, respectively, were repurchased under the |
| programs at a total cost including commissions and excise taxes of $444.0 mil ion, $812.6 mil ion, and $63.7 mil ion, |
| respectively. |
| Subsequent to January 29, 2023, and up to March 22, 2023, 0.2 mil ion shares were repurchased at a total cost including |
| commissions and excise taxes of $49.6 mil ion. |
| Note 20. 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 17. Leases for further details regarding lease commitments and the timing of |
| future minimum lease payments. |
| | | | | | | | 32 |
| Table of Contents |
| 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 in the United Arab Emirates, |
| Kuwait, Qatar, Oman, Bahrain, Saudi Arabia, and Mexico. Under these arrangements, the Company supplies the partners with |
| lululemon products, training, and other support. An extension to the initial term of the agreement for the Middle East was |
| signed in 2020 and it extends the arrangement to December 2024. The initial term of the agreement for Mexico expires in |
| November 2026. As of January 29, 2023, there were 26 licensed locations, including 12 in Mexico, seven in the United Arab |
| Emirates, three in Qatar, three in Saudi Arabia, and one in Kuwait. There was also an e-commerce website operated through |
| the license and supply arrangements. |
| The fol owing table summarizes the Company's contractual arrangements as of January 29, 2023, and the timing and |
| effect that such commitments are expected to have on its liquidity and cash flows in future periods: |
| | Payments Due by Fiscal Year |
| | | Total | 2023 | 2024 | | | 2025 | 2026 | 2027 | Thereafter |
| | | | | (In thousands) |
| One-time transition tax payable | | $ 38,073 $ | 9,518 $ 12,691 $ 15,864 $ | | | | | — $ | — $ | | — |
| 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 above outlines the expected payments due by fiscal year. |
| Contingencies |
| Legal proceedings. In addition to the legal proceedings described below, the Company is, from time to time, involved in |
| routine legal matters, and audits and inspections by governmental agencies and other third parties which are incidental to the |
| conduct of its business. This includes legal matters such as initiation and defense of proceedings to protect intel ectual |
| property rights, personal injury claims, product liability claims, employment claims, and similar matters. The Company |
| believes the ultimate resolution of any such legal proceedings, audits, and inspections wil 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. |
| In April 2021, DISH Technologies L.L.C., and Sling TV L.L.C. (DISH) filed a complaint in the United States District Court for |
| the District of Delaware and, along with DISH DBS Corporation, also with the United States International Trade Commission |
| (ITC) under Section 337 of the Tariff Act of 1930 against the Company and its Curiouser Products subsidiary (MIRROR), along |
| with ICON Health & Fitness, Inc., FreeMotion Fitness, Inc., NordicTrack, Inc., and Peloton Interactive, Inc., al eging |
| infringement of various patents related to fitness devices containing internet-streaming enabled video displays. In the ITC |
| complaint, DISH seeks an exclusion order barring the importation of MIRROR fitness devices, streaming components and |
| systems containing components that infringe one or more of the asserted patents as wel as a cease and desist order |
| preventing the Company from carrying out commercial activities within the United States related to those products. In the |
| District of Delaware complaint, DISH is seeking an order permanently enjoining the Company from infringing the asserted |
| patents, an award of damages for the infringement of the asserted patents, and an award of damages for lost sales. In the ITC |
| investigation, an Administrative Law Judge issued an Initial Determination recommending an Exclusion Order and Cease and |
| Desist Order be entered against the Company. In February 2023, the parties finalized the details of a settlement agreement |
| resolving al litigation between DISH and the Company for an immaterial amount. |
| Note 21. Supplemental Cash Flow Information |
| | | | | 2022 | | 2021 | 2020 |
| | | | | | (In thousands) |
| Cash paid for income taxes | | | | $ | | | | | | 502,136 $ | 245,213 $ | 260,886 |
| Cash paid for amounts included in the measurement of lease liabilities | | | | | | | | | | 242,758 | 215,157 | 180,536 |
| Leased assets obtained in exchange for new operating lease liabilities | | | | | | | | | | 450,787 | 287,008 | 178,504 |
| Interest paid | | | | | 116 | 12 | | | 110 |
| | | | | | | | | | | | 33 |
| Table of Contents |
| Note 22. Segmented Information |
| The Company's segments are based on the financial information it uses in managing its business and comprise two |
| reportable segments: (i) company-operated stores and (i ) direct to consumer. The remainder of its operations which includes |
| outlets, sales to wholesale accounts, license and supply arrangements, recommerce, temporary locations, and lululemon |
| Studio, are included within Other. |
| | | 2022 | 2021 | 2020 |
| | | (In thousands) |
| Net revenue: |
| Company-operated stores | | $ 3,648,127 $ 2,821,497 $ 1,658,807 |
| Direct to consumer | | | 3,699,791 | 2,777,944 | 2,284,068 |
| Other | | | 762,600 | 657,176 | 459,004 |
| | $ 8,110,518 $ 6,256,617 $ 4,401,879 |
| Segmented income from operations: |
| Company-operated stores | | $ | 991,067 $ | 727,735 $ | 212,592 |
| Direct to consumer | | | 1,562,538 | 1,216,496 | 1,029,102 |
| Other | | | 107,083 | 77,283 | 10,502 |
| | | 2,660,688 | 2,021,514 | 1,252,196 |
| General corporate expenses | | | 862,867 | 637,983 | 397,208 |
| lululemon Studio obsolescence provision | | | 62,928 | | | — | — |
| Amortization of intangible assets | | | 8,752 | 8,782 | 5,160 |
| Impairment of goodwil and other assets | | | 407,913 | | | — | — |
| Acquisition-related expenses | | | | | | | — | 41,394 | 29,842 |
| Gain on disposal of assets | | | (10,180) | | | — | — |
| Income from operations | | | 1,328,408 | 1,333,355 | 819,986 |
| Other income (expense), net | | | 4,163 | | | 514 | (636) |
| Income before income tax expense | | $ 1,332,571 $ 1,333,869 $ | | 819,350 |
| Capital expenditures: |
| Company-operated stores | | $ | 303,697 $ | 189,629 $ | 134,203 |
| Direct to consumer | | | 57,086 | 81,679 | 37,245 |
| Corporate and other | | | 277,874 | 123,194 | 57,778 |
| | $ | 638,657 $ | 394,502 $ | 229,226 |
| Depreciation and amortization: |
| Company-operated stores | | $ | 132,715 $ | 116,107 $ | 100,776 |
| Direct to consumer | | | 36,128 | 29,877 | 14,847 |
| Corporate and other | | | 122,948 | 78,222 | 69,855 |
| | $ | 291,791 $ | 224,206 $ | 185,478 |
| Intercompany amounts are excluded from the above table as they are not included in the materials reviewed by the |
| chief operating decision maker. The amortization of intangible assets in the above table includes $8.7 mil ion, $8.7 mil ion, |
| and $5.2 mil ion related to lululemon Studio for 2022, 2021, and 2020, respectively. lululemon Studio is included within Other |
| in the Company's segment disclosures. |
| | | | | | | | 34 |
| | | | Table of Contents |
| Property and equipment, net by geographic area as of January 29, 2023 and January 30, 2022 were as fol ows: |
| January 29, | January 30, |
| 2023 | 2022 |
| | | (In thousands) |
| | | | United States | $ | 671,212 $ | 418,317 |
| | | | Canada | | 431,349 | 392,192 |
| | | | Outside of North America | | 167,053 | 117,201 |
| $ 1,269,614 $ | 927,710 |
| | | | Note 23. Net Revenue by Category and Geography |
| In addition to the disaggregation of net revenue by reportable segment in Note 22. Segmented Information, the |
| | | | fol owing table disaggregates the Company's net revenue by geographic area. |
| | | | | 2022 | 2021 | 2020 |
| (In thousands) |
| | | | United States | $ 5,654,343 $ 4,345,687 $ 3,105,133 |
| | | | Canada | | 1,163,111 | 954,219 | 672,607 |
| | | | People's Republic of China | | 681,633 | 520,372 | 297,690 |
| | | | Rest of world | | 611,431 | 436,339 | 326,449 |
| | | | | $ 8,110,518 $ 6,256,617 $ 4,401,879 |
| The fol owing table disaggregates the Company's net revenue by category. Other categories is primarily composed of |
| | | | accessories, lululemon Studio, and footwear. |
| | | | | 2022 | 2021 | 2020 |
| (In thousands) |
| | | | Women's product | $ 5,259,803 $ 4,171,762 $ 3,049,906 |
| | | | Men's product | | 1,956,602 | 1,535,850 | 953,183 |
| | | | Other categories | | 894,113 | 549,005 | 398,790 |
| | | | | $ 8,110,518 $ 6,256,617 $ 4,401,879 |
| | | | | | 35 |
