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Published: 2022-06-02

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 1, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33608

lululemon athletica inc.

(Exact name of registrant as specified in its charter)

Delaware

20-3842867

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1818 Cornwal Avenue, Vancouver, British Columbia V6J 1C7

(Address of principal executive offices)

Registrant's telephone number, including area code:

604-732-6124

Former name, former address and former fiscal year, if changed since last report:

N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.005 per share

LULU

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed al reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the

past 90 days. Yes

☑ No ☐

Indicate by check mark whether the registrant has submitted electronical y every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T during the preceding 12 months (of for such shorter period that the registrant was required to submit such files). Yes

☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smal er reporting company, or an emerging

growth company. See the definitions of "large accelerated filer," "accelerated filer," "smal er reporting company," and "emerging growth company" in Rule 12b-2

of the Exchange Act. (Check one):

Large Accelerated Filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smal er reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or

revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shel company (as defined in Rule 12b-2 of the Exchange Act). Yes

☐ No ☑

As of May 27, 2022, there were 122,439,795 shares of the registrant's common stock, par value $0.005 per share, outstanding.Exchangeable and Special Voting Shares:As of May 27, 2022, there were outstanding 5,203,012 exchangeable shares of Lulu Canadian Holding, Inc., a whol y-owned subsidiary of the registrant.

Exchangeable shares are exchangeable for an equal number of shares of the registrant's common stock.In addition, as of May 27, 2022, the registrant had outstanding 5,203,012 shares of special voting stock, through which the holders of exchangeable shares of Lulu

Canadian Holding, Inc. may exercise their voting rights with respect to the registrant. The special voting stock and the registrant's common stock general y vote

together as a single class on al matters on which the common stock is entitled to vote.

		Table of Contents
TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements:	3
		Consolidated Balance Sheets	3
		Consolidated Statements of Operations and Comprehensive Income	4
		Consolidated Statements of Stockholders' Equity	5
		Consolidated Statements of Cash Flows	6
		Index for Notes to the Unaudited Interim Consolidated Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	30
	Item 1A. Risk Factors		30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 6.	Exhibits	44
	Signatures		45
				2

		Table of Contents
PART I
	FINANCIAL INFORMATION
		ITEM 1. FINANCIAL STATEMENTS
	lululemon athletica inc.
	CONSOLIDATED BALANCE SHEETS
			(Unaudited; Amounts in thousands, except per share amounts)
				May 1,	January 30,
				2022	2022
		ASSETSCurrent assets
		Cash and cash equivalents		$	649,016 $	1,259,871
		Accounts receivable			78,391		77,001
		Inventories			1,275,040	966,481
		Prepaid and receivable income taxes			116,281	118,928
		Prepaid expenses and other current assets			184,512	192,572
					2,303,240	2,614,853
		Property and equipment, net			974,784	927,710
		Right-of-use lease assets			819,998	803,543
		Goodwil			386,837	386,880
		Intangible assets, net			69,103		71,299
		Deferred income tax assets			6,090		6,091
		Other non-current assets			137,160	132,102
				$	4,697,212 $	4,942,478
		LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities
		Accounts payable		$	308,086 $	289,728
		Accrued liabilities and other			362,938	330,800
		Accrued compensation and related expenses			119,482	204,921
		Current lease liabilities			178,273	188,996
		Current income taxes payable			22,279	133,852
		Unredeemed gift card liability			183,910	208,195
		Other current liabilities			31,923		48,842
					1,206,891	1,405,334
		Non-current lease liabilities			726,270	692,056
		Non-current income taxes payable			28,555		38,074
		Deferred income tax liabilities			53,061		53,352
		Other non-current liabilities			14,385		13,616
					2,029,162	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; 5,203 and 5,203 issued and outstanding					—	—
		Special voting stock, $0.000005 par value: 60,000 shares authorized; 5,203 and 5,203 issued and
		outstanding					—	—
		Common stock, $0.005 par value: 400,000 shares authorized; 122,732 and 123,297 issued and outstanding					614	616
		Additional paid-in capital			412,713	422,507
		Retained earnings			2,471,432	2,512,840
		Accumulated other comprehensive loss			(216,709)	(195,917)
					2,668,050	2,740,046
				$	4,697,212 $	4,942,478
								See accompanying notes to the unaudited interim consolidated financial statements
3

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lululemon athletica inc.
	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
		(Unaudited; Amounts in thousands, except per share amounts)
			Quarter Ended
			May 1,	May 2,
			2022	2021
					Net revenue	$ 1,613,463 $ 1,226,465
					Cost of goods sold		743,070	526,151
					Gross profit		870,393	700,314
					Sel ing, general and administrative expenses		607,851	496,634
					Amortization of intangible assets		2,195	2,195
					Acquisition-related expenses		—	7,664
					Income from operations		260,347	193,821
					Other income (expense), net		(22)		227
					Income before income tax expense		260,325	194,048
					Income tax expense		70,327	49,092
					Net income	$	189,998 $	144,956
					Other comprehensive income (loss), net of tax:
					Foreign currency translation adjustment	$	(25,848) $	67,241
					Net investment hedge gains (losses)		5,056	(23,605)
					Other comprehensive income (loss), net of tax	$	(20,792) $	43,636
					Comprehensive income	$	169,206 $	188,592
					Basic earnings per share	$	1.48 $		1.11
					Diluted earnings per share	$	1.48 $		1.11
					Basic weighted-average number of shares outstanding		128,077	130,358
					Diluted weighted-average number of shares outstanding		128,541	130,984
	See accompanying notes to the unaudited interim consolidated financial statements

								4

			Table of Contents
lululemon athletica inc.
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited; Amounts in thousands)
		Quarter Ended May 1, 2022
				Exchangeable
				Stock	Special Voting Stock	Common Stock					Accumulated
					Additional		Other
					Paid-in	Retained	Comprehensive	Par
					Capital	Earnings	Loss	Total		Shares	Shares	Value		Shares	Par Value
			Balance as of January
			30, 2022		5,203								5,203 $	— 123,297 $								616 $ 422,507 $ 2,512,840 $	(195,917) $ 2,740,046
			Net income				189,998		189,998
			Other comprehensive
			income (loss), net of tax								(20,792) (20,792)
			Stock-based
			compensation expense			18,358				18,358
			Common stock issued
			upon settlement of
			stock-based
			compensation										239			2	5,141				5,143
			Shares withheld related
			to net share settlement
			of stock-based
			compensation										(96)			—	(32,059)			(32,059)
			Repurchase of common
			stock										(708)			(4)	(1,234) (231,406)			(232,644)
			Balance as of May 1,
			2022		5,203								5,203 $	— 122,732 $								614 $ 412,713 $ 2,471,432 $	(216,709) $ 2,668,050
		Quarter Ended May 2, 2021
				Exchangeable
							Accumulated
				Stock	Special Voting Stock	Common Stock
					Additional		Other
					Paid-in	Retained	Comprehensive	Par
					Capital	Earnings	Loss	Total		Shares					Shares	Value		Shares	Par Value
			Balance as of January 31,
			2021		5,203								5,203 $	— 125,150 $								626 $ 388,667 $ 2,346,428 $	(177,155) $ 2,558,566
			Net income				144,956		144,956
			Other comprehensive
			income (loss), net of tax								43,636	43,636
			Stock-based
			compensation expense			14,932				14,932
			Common stock issued
			upon settlement of
			stock-based
			compensation										324			2	4,493				4,495
			Shares withheld related
			to net share settlement
			of stock-based
			compensation										(135)			(1)	(42,898)			(42,899)
			Repurchase of common
			stock										(270)			(2)						(451)	(83,378)	(83,831)
			Balance as of May 2,
			2021		5,203								5,203 $	— 125,069 $								625 $ 364,743 $ 2,408,006 $	(133,519) $ 2,639,855
				See accompanying notes to the unaudited interim consolidated financial statements
		5

					Table of Contents
lululemon athletica inc.
	CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Amounts in thousands)
		Quarter Ended
			May 1, 2022	May 2, 2021
					Cash flows from operating activities
					Net income	$	189,998 $		144,956
					Adjustments to reconcile net income to net cash provided by (used in) operating activities:
					Depreciation and amortization		64,470			50,485
					Stock-based compensation expense		18,358			14,932
					Settlement of derivatives not designated in a hedging relationship		(10,378)			21,515
					Changes in operating assets and liabilities:
					Inventories		(320,607)			(74,218)
					Prepaid and receivable income taxes		2,646			767
					Prepaid expenses and other current assets		4,296			(11,104)
					Other non-current assets		(4,523)			1,105
					Accounts payable		20,630			19,623
					Accrued liabilities and other		28,113			38,181
					Accrued compensation and related expenses		(84,123)			22,764
					Current and non-current income taxes payable		(119,959)			(5,433)
					Unredeemed gift card liability		(23,816)			(15,838)
					Right-of-use lease assets and current and non-current lease liabilities		7,115			1,820
					Other current and non-current liabilities		(15,476)			4,554
					Net cash provided by (used in) operating activities		(243,256)		214,109
					Cash flows from investing activities
					Purchase of property and equipment		(111,352)			(64,225)
					Settlement of net investment hedges		10,024			(21,239)
					Net cash used in investing activities		(101,328)			(85,464)
					Cash flows from financing activities
					Proceeds from settlement of stock-based compensation		5,143			4,495
					Shares withheld related to net share settlement of stock-based compensation		(32,059)			(42,899)
					Repurchase of common stock		(232,644)			(83,831)
					Net cash used in financing activities		(259,560)		(122,235)
					Effect of foreign currency exchange rate changes on cash and cash equivalents		(6,711)			22,812
					Increase (decrease) in cash and cash equivalents		(610,855)			29,222
					Cash and cash equivalents, beginning of period	$ 1,259,871 $ 1,150,517
					Cash and cash equivalents, end of period	$	649,016 $ 1,179,739
							See accompanying notes to the unaudited interim consolidated financial statements
								6

			Table of Contents
lululemon athletica inc.
	INDEX FOR NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL
		STATEMENTS
			Note 1	Nature of Operations and Basis of Presentation	8
			Note 2	Recent Accounting Pronouncements	8
			Note 3	Acquisition-Related Expenses	9
			Note 4	Revolving Credit Facilities	9
			Note 5	Stock-Based Compensation and Benefit Plans	10
			Note 6	Fair Value Measurement	11
			Note 7	Derivative Financial Instruments	12
			Note 8	Earnings Per Share	14
			Note 9	Supplementary Financial Information	15
			Note 10	Segmented Information	16
			Note 11	Net Revenue by Geography and Category	17
			Note 12	Legal Proceedings and Other Contingencies	17
			Note 13	Subsequent Event	17
						7

			Table of Contents
lululemon athletica inc.
	NOTES TO THE UNAUDITED INTERIM 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 a chain of company-operated stores, direct to consumer through e-commerce,
			outlets, sales from temporary locations, sales to wholesale accounts, and license and supply arrangements. 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, Japan, Singapore, Ireland, France, Malaysia, Sweden, the Netherlands, Norway, and
			Switzerland. There were 579 and 574 company-operated stores as of May 1, 2022 and January 30, 2022, respectively. The
			Company also engages in the design and retail of in-home fitness equipment and associated content subscriptions through its
			MIRROR brand.
			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. While most of the Company's retail locations
			were open throughout the first quarter of fiscal 2022 and 2021, certain locations were temporarily closed based on
			government and health authority guidance. Certain stores and the Company's third party distribution center in the PRC
			experienced temporary closures during the first quarter of 2022, and there is uncertainty regarding the ongoing impact of
			COVID-19 on its operations in the PRC. The pandemic has impacted its suppliers and its distribution and logistics providers,
			including in the PRC. There has been disruption in transportation and port congestion, an increase in freight costs, and the
			Company has increased its use of air freight.
			Basis of presentation
				The unaudited interim consolidated financial statements as of May 1, 2022 and for the quarters ended May 1, 2022 and
			May 2, 2021 are presented in U.S. dol ars and have been prepared by the Company under the rules and regulations of the
			Securities and Exchange Commission ("SEC"). The financial information is presented in accordance with United States
			general y accepted accounting principles ("GAAP") for interim financial information and, accordingly, does not include al of
			the information and footnotes required by GAAP for complete financial statements. The financial information as of
			January 30, 2022 is derived from the Company's audited consolidated financial statements and related notes for the fiscal
			year ended January 30, 2022, which are included in Item 8 in the Company's fiscal 2021 Annual Report on Form 10-K filed with
			the SEC on March 29, 2022. These unaudited interim consolidated financial statements reflect al adjustments which are, in
			the opinion of management, necessary to a fair statement of the results for the interim periods presented. These unaudited
			interim consolidated financial statements should be read in conjunction with the Company's consolidated financial
			statements and related notes included in Item 8 in the Company's fiscal 2021 Annual Report on Form 10-K. Note 2. Recent
			Accounting Pronouncements sets out the impact of recent accounting pronouncements.
				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 wil end on January 29,
			2023 and wil be a 52-week year. Fiscal 2021 was a 52-week year and ended on January 30, 2022. Fiscal 2022 and fiscal 2021
			are referred to as "2022," and "2021," respectively. The first quarter of 2022 and 2021 ended on May 1, 2022 and May 2,
			2021, 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. Recent Accounting Pronouncements
			Recently adopted accounting pronouncements
				The Company considers the applicability and impact of al Accounting Standard Updates ("ASUs"). ASUs adopted by the
			Company during the first quarter of 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.
					8

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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 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.
	Note 3. Acquisition-Related Expenses
On July 7, 2020, the Company acquired al of the outstanding shares of MIRROR, an in-home fitness company with an
	interactive workout platform that features live and on-demand classes. In connection with the acquisition, the Company
	recognized certain acquisition-related expenses which were expensed within acquisition-related expenses in the consolidated
	statements of operations. The fol owing table summarizes the acquisition-related expenses recognized:
		First Quarter
		2022	2021
		(in thousands)
	Acquisition-related expenses:
Transaction and integration costs				$	— $		496
Acquisition-related compensation					—	7,168
				$	— $	7,664
	Income tax effects of acquisition-related expenses			$	— $	(372)
	Note 4. 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 May 1, 2022, aside from letters of credit of $3.1 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
	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.
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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 May 1, 2022,

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 ($19.7

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 ($34.8 mil ion) during 2020. It is comprised of a revolving loan of up to 200.0 mil ion Chinese Yuan

($30.3 mil ion) and a financial guarantee facility of up to 30.0 mil ion Chinese Yuan ($4.5 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 May 1, 2022, the Company was in compliance

with the covenants and, aside from letters of credit of 6.1 mil ion Chinese Yuan ($0.9 mil ion), there were no other borrowings

or guarantees outstanding under this credit facility.

Note 5. 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.

Stock-based compensation expense charged to income for the plans was $18.2 mil ion and $16.2 mil ion for the first

quarter of 2022 and 2021, respectively. Total unrecognized compensation cost for al stock-based compensation plans was

$170.0 mil ion as of May 1, 2022, which is expected to be recognized over a weighted-average period of 2.5 years.

A summary of the balances of the Company's stock-based compensation plans as of May 1, 2022, and changes during

the first quarter then ended, is presented below:

Performance-Based

Stock Options

Restricted Stock Units

Restricted Shares

Restricted Stock Units

Weighted-

Average

Exercise

Grant Date

Number

Price

Number

Fair Value

Number

Fair Value

Number

Fair Value

(In thousands, except per share amounts)

Balance as of January 30, 2022

789 $ 186.10

167 $ 225.27

4 $ 326.70

238 $ 265.90

Granted

172

376.92

114

273.49

—

376.92

Exercised/released

142.09

114

170.04

—

214.60

Forfeited/expired

261.38

304.24

—

317.78

Balance as of May 1, 2022

920 $ 223.21

165 $ 295.62

4 $ 326.70

238 $ 327.25

Exercisable as of May 1, 2022

415 $ 152.79

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.

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

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fol owing are weighted averages of the assumptions that were used in calculating the fair value of stock options granted

during the first quarter of 2022:

First Quarter

2022

Expected term

3.75 years

Expected volatility

40.00 %

Risk-free interest rate

2.51 %

Dividend yield

— %

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 the first quarter of 2022,

there were 21.6 thousand shares purchased.

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 $3.4 mil ion and $2.8 mil ion in the first quarter of 2022 and 2021, respectively.

Note 6. Fair Value Measurement

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.

Assets and liabilities measured at fair value on a recurring basis

The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. As of May 1,

2022 and January 30, 2022, the Company held certain assets and liabilities that are required to be measured at fair value on a

recurring basis:

May 1, 2022

Level 1

Level 2

Level 3

Balance Sheet Classification

(In thousands)

Money market funds

200,316 $

— $

— Cash and cash equivalents

Term deposits

136,127

—

136,127

— Cash and cash equivalents

Prepaid expenses and other

Forward currency contract assets

21,722

—

21,722

—

current assets

Forward currency contract

liabilities

15,353

—

15,353

— Other current liabilities

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January 30,

2022

Level 1

Level 2

Level 3

Balance Sheet Classification

(In thousands)

Money market funds

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 records cash, accounts receivable, accounts payable, and accrued liabilities at cost. The carrying values of

these instruments approximate their fair value due to their short-term maturities.

The Company 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.

Note 7. Derivative Financial Instruments

Foreign currency exchange risk

The Company is exposed to risks associated with changes in foreign currency exchange rates and uses derivative

financial instruments to manage its exposure to certain of these foreign currency exchange rate risks. The Company does not

enter into derivative contracts for speculative or trading purposes.

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.

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 the first quarter of

2022.

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 is exposed to gains and losses arising from changes in foreign currency exchange rates associated with

transactions which are undertaken by its subsidiaries in currencies other than their functional currency. Such transactions

include intercompany transactions and inventory purchases. These transactions result in the recognition of certain foreign

currency denominated monetary assets and liabilities which are remeasured to the quarter-end or settlement date foreign

currency exchange rate. The resulting foreign currency gains and losses are recorded in sel ing, general and administrative

expenses.

During the first quarter of 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

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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.

Quantitative disclosures about derivative financial instruments

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. As of May 1, 2022, there were derivative assets of $21.7 mil ion and derivative liabilities of $15.4 mil ion subject to

enforceable netting arrangements.

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

May 1, 2022

January 30, 2022

Gross

Notional

Assets

Liabilities

Notional

Assets

Liabilities

(In thousands)

Derivatives designated as net

investment hedges:

Forward currency contracts

$ 1,081,000 $

15,290 $

— $ 1,502,000 $

18,468 $

—

Derivatives not designated in a

hedging relationship:

Forward currency contracts

1,195,495

6,432

15,353

1,597,878

609

18,985

Net derivatives recognized on

consolidated balance sheets:

Forward currency contracts

21,722 $

15,353

19,077 $

18,985

The forward currency contracts designated as net investment hedges outstanding as of May 1, 2022 mature on

different dates between May 2022 and February 2023.

The forward currency contracts not designated in a hedging relationship outstanding as of May 1, 2022 mature on

different dates between May 2022 and February 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:

First Quarter

2022

2021

(In thousands)

Gains (losses) recognized in net investment hedge gains (losses):

Derivatives designated as net investment hedges

6,847 $

(31,986)

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:

First Quarter

2022

2021

(In thousands)

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

Foreign currency exchange gains (losses)

(1,743) $

(33,540)

Derivatives not designated in a hedging relationship

(892)

30,592

Net foreign currency exchange and derivative gains (losses)

(2,635) $

(2,948)

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Credit risk
	The Company is 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's forward currency contracts are entered into with large, reputable financial institutions that are
monitored by the Company for counterparty risk.
	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 revolving credit facility, the
Company may be required to make immediate payment for outstanding liabilities under its derivative contracts.
Note 8. Earnings Per Share
	The details of the computation of basic and diluted earnings per share are as fol ows:
		First Quarter
		2022	2021
				(In thousands, except per share
		amounts)
Net income				$	189,998 $	144,956
Basic weighted-average number of shares outstanding					128,077	130,358
Assumed conversion of dilutive stock options and awards					464		626
Diluted weighted-average number of shares outstanding					128,541	130,984
Basic earnings per share				$	1.48 $	1.11
Diluted earnings per share				$	1.48 $	1.11
	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 the first quarter of 2022 and 2021, 0.1
mil ion and 0.1 mil ion 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. As of May 1, 2022, the remaining authorized value of shares available to be repurchased under this program
was $954.8 mil ion.
	During the first quarter of 2022 and 2021, 0.7 mil ion and 0.3 mil ion shares, respectively, were repurchased under the
program at a total cost of $232.6 mil ion and $83.8 mil ion, respectively.
	Subsequent to May 1, 2022, and up to May 27, 2022, 0.3 mil ion shares were repurchased at a total cost of $87.9
mil ion.
						14

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Note 9. Supplementary Financial Information
	A summary of certain consolidated balance sheet accounts is as fol ows:
		May 1,		January 30,
		2022		2022
			(In thousands)
Inventories:
Inventories, at cost		$ 1,326,659 $ 1,004,526
Provision to reduce inventories to net realizable value			(51,619)	(38,045)
		$ 1,275,040 $		966,481
Prepaid expenses and other current assets:
Prepaid inventories		$	— $	42,691
Other prepaid expenses			117,707	98,254
Forward currency contract assets			21,722	19,077
Other current assets			45,083	32,550
		$	184,512 $	192,572
Property and equipment, net:
Land		$	70,353 $	74,297
Buildings			27,764	30,880
Leasehold improvements			709,800	676,762
Furniture and fixtures			132,111	125,213
Computer hardware			136,399	130,393
Computer software			615,290	532,819
Equipment and vehicles			27,567	23,060
Work in progress			126,151	163,420
Property and equipment, gross			1,845,435		1,756,844
Accumulated depreciation			(870,651)	(829,134)
		$	974,784 $	927,710
Other non-current assets:
Cloud computing arrangement implementation costs		$	94,765 $	89,334
Security deposits			23,968	24,083
Other			18,427	18,685
		$	137,160 $	132,102
Accrued liabilities and other:
Accrued operating expenses		$	116,638 $	116,822
Accrued freight			73,192	71,390
Sales return al owances			47,838	41,690
Accrued duty			28,121	27,182
Forward currency contract liabilities			15,353	18,985
Sales tax col ected			15,131	13,540
Accrued rent			12,446	11,254
Accrued capital expenditures			15,949	9,616
Accrued inventory liabilities			21,965	4,005
Other			16,305	16,316
		$	362,938 $	330,800
					15

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Note 10. 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, temporary locations, MIRROR, sales to wholesale accounts, and license and supply arrangements are included within
Other.
		First Quarter
		2022	2021
		(In thousands)
Net revenue:
Company-operated stores		$	731,604 $	536,584
Direct to consumer			721,253	545,089
Other			160,606	144,792
		$ 1,613,463 $ 1,226,465
Segmented income from operations:
Company-operated stores		$	160,706 $	99,148
Direct to consumer			285,107	236,933
Other			19,527	14,506
			465,340	350,587
General corporate expense			202,798	146,907
Amortization of intangible assets			2,195	2,195
Acquisition-related expenses				—	7,664
Income from operations			260,347	193,821
Other income (expense), net				(22)	227
Income before income tax expense		$	260,325 $	194,048
Capital expenditures:
Company-operated stores		$	24,946 $	18,565
Direct to consumer			20,339	26,581
Corporate and other			66,067	19,079
		$	111,352 $	64,225
Depreciation and amortization:
Company-operated stores		$	31,310 $	26,800
Direct to consumer			8,669	5,748
Corporate and other			24,491	17,937
		$	64,470 $	50,485
						16

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Note 11. Net Revenue by Geography and Category
	The fol owing table disaggregates the Company's net revenue by geographic area.
		First Quarter
		2022	2021
		(In thousands)
United States				$ 1,098,329 $	849,614
Canada					244,944	167,729
Outside of North America					270,190	209,122
				$ 1,613,463 $ 1,226,465
	In addition to the disaggregation of net revenue by reportable segment, the fol owing table disaggregates the
Company's net revenue by category.
		First Quarter
		2022	2021
		(In thousands)
Women's product				$ 1,073,924 $	849,645
Men's product					374,998	274,307
Other categories					164,541	102,513
				$ 1,613,463 $ 1,226,465
Note 12. Legal Proceedings and Other Contingencies
	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 2020, Ali gn Activation Wear, LLC filed a lawsuit in the United States District Court for the Central District of
California al eging federal trademark infringement, false designation of origin and unfair competition. The plaintiff is seeking
injunctive relief, monetary damages and declaratory relief. The Company obtained summary judgment that the Company did
not infringe upon any of the plaintiff's rights and the district court entered judgment in the Company's favor on al claims. The
plaintiff has filed a Notice of Appeal with the United States Court of Appeals for the Ninth Circuit. The Company intends to
defend its win at the appel ate level.
	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. The ITC
investigation is ongoing and the Delaware litigation remains stayed pending resolution to the ITC investigation. The Company
intends to vigorously defend this matter.
Note 13. Subsequent Event
	Subsequent to May 1, 2022, the Company completed the sale of an administrative office building. As of May 1, 2022,
the building's carrying value of $5.4 mil ion was classified as a held for sale and was recognized within other current assets.
The sale resulted in a pre-tax gain of $10.2 mil ion which wil be recognized during the second quarter of 2022.
					17

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Some of the statements contained in this Form 10-Q and any documents incorporated herein by reference constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Al statements, other than statements of
historical facts, included or incorporated in this Form 10-Q are forward-looking statements, particularly statements which
relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions
concerning matters that are not historical facts, such as statements regarding our future financial condition or results of
operations, the impact of the COVID-19 pandemic on our business and results of operations, expectations related to our
acquisition of MIRROR, our prospects and strategies for future growth, the development and introduction of new products,
and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking
statements by terms such as "may," "wil ," "should," "expects," "plans," "anticipates," "believes," "estimates," "intends,"
"predicts," "potential" or the negative of these terms or other comparable terminology.
	The forward-looking statements contained in this Form 10-Q and any documents incorporated herein by reference
reflect our current views about future events and are subject to risks, uncertainties, assumptions, and changes in
circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any
forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future events, results, actions, levels of activity, performance, or achievements. Readers are
cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause
actual results to differ material y from those indicated by the forward-looking statements, including, but not limited to, those
factors described in "Risk Factors" and elsewhere in this report.
	The forward-looking statements contained in this Form 10-Q reflect our views and assumptions only as of the date of
this Form 10-Q and are expressly qualified in their entirety by the cautionary statements included in this Form 10-Q. Except as
required by applicable securities law, we undertake no obligation to update any forward-looking statement to reflect events
or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
	This information should be read in conjunction with the unaudited interim consolidated financial statements and the
notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and
notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in our fiscal
2021 Annual Report on Form 10-K filed with the SEC on March 29, 2022. Fiscal 2022 and fiscal 2021 are referred to as "2022,"
and "2021," respectively. The first quarter of 2022 and 2021 ended on May 1, 2022 and May 2, 2021, respectively.
Components of management's discussion and analysis of financial condition and results of operations include:
•	Overview and COVID-19 Update
•	Financial Highlights
•	Quarter-to-Date Results of Operations
•	Comparable Store Sales and Total Comparable Sales
•	Non-GAAP Financial Measures
•	Seasonality
•	Liquidity and Capital Resources
•	Critical Accounting Policies and Estimates
•	Operating Locations
	We disclose material non-public information through one or more of the fol owing channels: our investor relations
website (http://corporate.lululemon.com/investors), the social media channels identified on our investor relations website,
press releases, SEC filings, public conference cal s, and webcasts.
Overview
	lululemon athletica inc. is principal y a designer, distributor, and retailer of technical athletic apparel, footwear, and
accessories. We have a vision to create transformative products and experiences that build meaningful connections, unlocking
greater possibility and wel being for al . Since our inception, we have fostered a distinctive corporate culture; we promote a
set of core values in our business which include taking personal responsibility, acting with courage, valuing connection and
inclusion, and choosing to have fun. These core values attract passionate and motivated employees who are driven to achieve
personal and professional goals, and share our purpose "to elevate human potential by helping people feel their best."
	Our performance apparel and footwear are marketed under the lululemon brand. We offer a comprehensive line of
apparel and accessories. Our apparel assortment includes items such as pants, shorts, tops, and jackets designed for a healthy
lifestyle including athletic activities such as yoga, running, training, and most other activities. We also offer apparel designed
		18

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for being On the Move and fitness-related accessories. We expect to continue to broaden our merchandise offerings through
expansion across these product areas. We also offer in-home fitness equipment and associated content subscriptions,
including live and on-demand classes, through our MIRROR brand.
COVID-19 Update
	COVID-19 continues to impact the global economy and cause disruption and volatility. While most of our retail locations
were open throughout the first quarter of fiscal 2022 and 2021, certain locations were temporarily closed based on
government and health authority guidance. Certain stores and our third party distribution center in the People's Republic of
China ("PRC") experienced temporary closures during the first quarter of 2022, and there is uncertainty regarding the ongoing
impact of COVID-19 on our operations in the PRC. We believe we wil continue to experience differing levels of disruption and
volatility, market by market. The pandemic has impacted our suppliers and our distribution and logistics providers, including
in the PRC. There has been disruption in transportation and port congestion, an increase in freight costs, and we have
increased our use of air freight. We expect this disruption and these increased costs to continue throughout 2022.
Financial Highlights
	For the first quarter of 2022, compared to the first quarter of 2021:
	•	Net revenue increased 32% to $1.6 bil ion. On a constant dol ar basis, net revenue increased 32%.
	•	Total comparable sales increased 28%, or 29% on a constant dol ar basis.
		–	Comparable store sales increased 24%, or 24% on a constant dol ar basis.
		–	Direct to consumer net revenue increased 32%, or 33% on a constant dol ar basis.
	•	Gross profit increased 24% to $870.4 mil ion.
	•	Gross margin decreased 320 basis points to 53.9%.
	•	Income from operations increased 34% to $260.3 mil ion.
	•	Operating margin increased 30 basis points to 16.1%.
	•	Income tax expense increased 43% to $70.3 mil ion. Our effective tax rate for the first quarter of 2022 was 27.0%
	compared to 25.3% for the first quarter of 2021.
	•	Diluted earnings per share were $1.48 compared to $1.11 in the first quarter of 2021. The first quarter of 2021
	includes $7.3 mil ion of after-tax costs related to the MIRROR acquisition, which reduced diluted earnings per share
	by $0.05. There were no acquisition-related expenses in the first quarter of 2022.
	Refer to the non-GAAP reconciliation tables contained in the "Non-GAAP Financial Measures" section of this Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations" for reconciliations between constant
dol ar changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net revenue and the
most directly comparable measures calculated in accordance with GAAP.
			19

Table of Contents
Quarter-to-Date Results of Operations: First Quarter Results
	The fol owing table summarizes key components of our results of operations for the periods indicated:
		First Quarter
			2022	2021		2022	2021
			(In thousands)	(Percentage of net revenue)
Net revenue			$ 1,613,463 $ 1,226,465	100.0 %	100.0 %
Cost of goods sold				743,070	526,151		46.1	42.9
Gross profit				870,393	700,314		53.9	57.1
Sel ing, general and administrative expenses				607,851	496,634		37.7	40.5
Amortization of intangible assets				2,195	2,195		0.1	0.2
Acquisition-related expenses						—	7,664					—	0.6
Income from operations				260,347	193,821		16.1	15.8
Other income (expense), net						(22)	227					—	—
Income before income tax expense				260,325	194,048		16.1	15.8
Income tax expense				70,327	49,092		4.4	4.0
Net income			$	189,998 $	144,956		11.8 %	11.8 %
Net Revenue
	Net revenue increased $387.0 mil ion, or 32%, to $1.6 bil ion for the first quarter of 2022 from $1.2 bil ion for the first
quarter of 2021. On a constant dol ar basis, assuming the average foreign currency exchange rates for the first quarter of 2022
remained constant with the average foreign currency exchange rates for the first quarter of 2021, net revenue increased
$394.1 mil ion, or 32%.
	The increase in net revenue was primarily due to increased company-operated store net revenue, including from
increased comparable store sales and new company-operated stores. Direct to consumer net revenue and other net revenue
also increased.
	Total comparable sales, which includes comparable store sales and direct to consumer net revenue, increased 28% for
the first quarter of 2022 compared to the first quarter of 2021. Total comparable sales increased 29% on a constant dol ar
basis.
	Net revenue for the first quarter of 2022 and 2021 is summarized below.
			First Quarter
									2022	2021	2022	2021		Year over year change
									(In thousands)	(Percentages)	(In thousands)	(Percentages)
Company-operated stores									$	731,604 $	536,584	45.3 %	43.8 % $		195,020	36.3 %
Direct to consumer										721,253	545,089	44.7	44.4			176,164	32.3
Other										160,606	144,792	10.0	11.8			15,814	10.9
Net revenue									$ 1,613,463 $ 1,226,465	100.0 %	100.0 % $		386,998	31.6 %
	Company-Operated Stores. The increase in net revenue from our company-operated stores was driven by increased
comparable store sales. Comparable store sales increased 24%, or 24% on a constant dol ar basis. The increase in comparable
store sales was primarily a result of increased store traffic, partial y offset by a decrease in conversion rates and dol ar value
per transaction. Net revenue from company-operated stores that we opened or significantly expanded since the first quarter
of 2021 contributed $93.9 mil ion to the increase in net revenue from our company-operated stores. We opened 56 net new
company-operated stores since the first quarter of 2021, including 38 stores in Asia Pacific, 12 stores in North America, and six
stores in Europe.
	Direct to Consumer. Direct to consumer net revenue increased 32%, or 33% on a constant dol ar basis. The increase in
net revenue from our direct to consumer segment was primarily a result of increased traffic and a higher dol ar value per
transaction, partial y offset by a decrease in conversion rates.
											20

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Other. The increase in net revenue was primarily due to increased outlet sales, license and supply arrangement

revenue, and sales to wholesale accounts. The increase in net revenue was partial y offset by a decrease in net revenue from

MIRROR and our pop up locations, which had fewer locations open compared to the prior year.

Gross Profit

First Quarter

2022

2021

Year over year change

(In thousands)

(Percentage)

Gross profit

870,393

700,314

170,079

24.3 %

Gross margin

53.9 %

57.1 %

(320) basis points

The decrease in gross margin was primarily the result of:

•

a decrease in product margin of 370 basis points, primarily due to higher air freight costs as a result of global supply

chain disruption;

•

an increase in costs related to our distribution centers and product departments as a percentage of net revenue of

20 basis points; and

•

an unfavorable impact of foreign currency exchange rates of 10 basis points.

The decrease in gross margin was partial y offset by a decrease in occupancy and depreciation costs as a percentage of

net revenue of 80 basis points, driven primarily by the increase in net revenue.

Sel ing, General and Administrative Expenses

First Quarter

2022

2021

Year over year change

(In thousands)

(Percentage)

Sel ing, general and administrative expenses

607,851

496,634

111,217

22.4 %

Sel ing, general and administrative expenses as a percentage of net

revenue

37.7 %

40.5 %

(280) basis points

The increase in sel ing, general and administrative expenses was primarily due to:

•

an increase in head office costs of $68.4 mil ion, comprised of:

– an increase in costs of $36.4 mil ion primarily due to an increase in brand and community costs, professional

fees, technology costs, and depreciation; and

– an increase in employee costs of $32.0 mil ion primarily due to an increase in salaries and wages expense

and incentive compensation, primarily as a result of headcount growth as wel as increased salaries;

•

an increase in costs related to our operating channels of $43.1 mil ion, comprised of:

– an increase in employee costs of $24.6 mil ion primarily due to an increase in salaries and wages expense

and incentive compensation in our company-operated stores and direct to consumer channels, primarily

from the growth in our business as wel as increased wage rates;

– an increase in variable costs of $17.3 mil ion primarily due to an increase in distribution costs and credit card

fees, as a result of increased net revenue; and

– an increase in operating costs of $5.5 mil ion primarily due to increased depreciation and an increase in

repairs and maintenance costs in our company-operated stores.

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The increase in costs related to our operating channels was partial y offset by a decrease in brand and community
costs of $4.3 mil ion primarily due to a decrease in marketing expenses related to MIRROR, partial y offset by an
increase in digital marketing expenses related to our direct to consumer channel.
•	a decrease in net foreign currency exchange and derivative revaluation losses of $0.3 mil ion.
	Amortization of intangible assets
		First Quarter
			2022	2021		Year over year change
			(In thousands)	(In thousands)	(Percentage)
	Amortization of intangible assets		$	2,195 $	2,195 $			—	— %
The amortization of intangible assets was primarily the result of the amortization of intangible assets recognized upon
	the acquisition of MIRROR.
	Acquisition-related expenses
		First Quarter
			2022	2021		Year over year change
			(In thousands)	(In thousands)	(Percentage)
	Acquisition-related expenses		$				— $	7,664 $		(7,664)	(100.0) %
In connection with our acquisition of MIRROR, we recognized acquisition-related compensation expenses of $7.2 mil ion
	and integration related costs of $0.5 mil ion in the first quarter of 2021. There were no acquisition-related expenses in the
	first quarter of 2022.
	Income from Operations
On a segment basis, we determine income from operations without taking into account our general corporate
	expenses. Segmented income from operations is summarized below.
							First Quarter
								2022	2021	2022	2021		Year over year change
			(Percentage of net revenue of
								(In thousands)	respective operating segment)	(In thousands)	(Percentage)
	Segmented income from operations:
	Company-operated stores							$ 160,706	$	99,148	22.0 %	18.5 % $		61,558			62.1 %
	Direct to consumer								285,107		236,933	39.5	43.5			48,174		20.3
	Other								19,527		14,506	12.2	10.0			5,021		34.6
								$ 465,340	$ 350,587	$	114,753			32.7 %
	General corporate expense								202,798		146,907		55,891			38.0
	Amortization of intangible assets								2,195		2,195			—	—
	Acquisition-related expenses									—		7,664		(7,664)	(100.0)
	Income from operations							$ 260,347	$ 193,821	$	66,526			34.3 %
	Operating margin							16.1 %	15.8 %	30 basis points
Company-Operated Stores. The increase in income from operations from our company-operated stores was primarily
	the result of increased gross profit of $93.4 mil ion, driven by increased net revenue, as a result of increased comparable store
	sales and sales from new and significantly expanded stores, as wel as higher gross margin. The increase in gross margin was
	primarily due to leverage on fixed costs, partial y offset by lower product margin driven by increased air freight costs relative
	to net revenue. The increase in gross profit was partial y offset by an increase in sel ing, general and administrative expenses,
	primarily due to higher employee and operating costs. Employee costs increased primarily due to higher salaries and wages
	expense and higher incentive compensation as a result of the growth in our business. Store operating costs increased
	primarily due to increases in credit card fees, packaging costs, and distribution costs, as a result of higher net revenue, as wel
											22

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as increased repairs and maintenance. Income from operations as a percentage of company-operated stores net

revenue increased due to leverage on sel ing, general and administrative expenses and higher gross margin.

Direct to Consumer. The increase in income from operations from our direct to consumer segment was primarily the

result of increased gross profit of $79.5 mil ion, driven by increased net revenue as a result of increased traffic and a higher

dol ar value per transaction, partial y offset by lower gross margin. The decrease in gross margin was primarily due to lower

product margin driven by increased air freight and distribution center costs relative to net revenue. The increase in gross

profit was partial y offset by an increase in sel ing, general and administrative expenses, primarily due to higher variable

operating costs including distribution costs and credit card fees, as a result of higher net revenue, as wel as higher digital

marketing expenses, employee costs, and depreciation. Income from operations as a percentage of direct to consumer net

revenue decreased primarily due to decreased gross margin, partial y offset by leverage on sel ing, general and administrative

expenses.

Other. The increase in other income from operations was primarily due to decreased sel ing, general and administrative

expenses, driven by decreased MIRROR marketing expenses, and decreased people costs at our other retail locations

primarily due to fewer pop up locations open compared to the prior year. These decreases were partial y offset by decreased

gross profit of $2.9 mil ion, driven by increased air freight costs. Income from operations as a percentage of other net revenue

increased primarily due to leverage on sel ing, general and administrative expenses, partial y offset by lower gross margin.

General Corporate Expenses. The increase in general corporate expenses was primarily due to increased employee

costs, primarily from the growth in our business, as wel as increased brand and community costs, professional fees,

technology costs, and depreciation. The increase in general corporate expense was partial y offset by a decrease in net foreign

currency exchange and derivative revaluation losses of $0.3 mil ion.

Other Income (Expense), Net

First Quarter

2022

2021

Year over year change

(In thousands)

(Percentage)

Other income (expense), net

(22) $

227 $

(249)

(109.7) %

The decrease in other income, net was primarily due to a decrease in interest income as a result of lower cash balances.

Income Tax Expense

First Quarter

2022

2021

Year over year change

(In thousands)

(Percentage)

Income tax expense

70,327

49,092

21,235

43.3 %

Effective tax rate

27.0 %

25.3 %

170 basis points

The increase in the effective tax rate was primarily due to a net decrease in tax deductions related to stock-based

compensation and accrued withholding taxes on unremitted foreign earnings.

Net Income

First Quarter

2022

2021

Year over year change

(In thousands)

(Percentage)

Net income

189,998 $

144,956 $

45,042

31.1 %

The increase in net income was primarily due to an increase in gross profit of $170.1 mil ion and a decrease in

acquisition-related expenses of $7.7 mil ion, partial y offset by an increase in sel ing, general and administrative expenses of

$111.2 mil ion, an increase in income tax expense of $21.2 mil ion, and a decrease in other income (expense), net of $0.2

mil ion.

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Comparable Store Sales and Total Comparable Sales
	We use comparable store sales to assess the performance of our existing stores as it al ows us to monitor the
performance of our business without the impact of recently opened or expanded stores. We use total comparable sales to
evaluate the performance of our business from an omni-channel perspective. We believe investors would similarly find these
metrics useful in assessing the performance of our business.
	Comparable store sales reflect net revenue from company-operated stores that have been open, or open after being
significantly expanded, for at least 12 ful fiscal months. Net revenue from a store is included in comparable store sales
beginning with the first fiscal month for which the store has a ful fiscal month of sales in the prior year. Comparable store
sales exclude sales from new stores that have not been open for at least 12 ful fiscal months, from stores which have not
been in their significantly expanded space for at least 12 ful fiscal months, and from stores which have been temporarily
relocated for renovations or temporarily closed. Comparable store sales also exclude sales from direct to consumer and our
other operations, as wel as sales from company-operated stores that have closed.
	Total comparable sales combines comparable store sales and direct to consumer net revenue.
	In fiscal years with 53 weeks, the 53rd week of net revenue is excluded from the calculation of comparable sales. In the
year fol owing a 53 week year, the prior year period is shifted by one week to compare similar calendar weeks.
	Opening new stores and expanding existing stores is an important part of our growth strategy. Accordingly, total
comparable sales is just one way of assessing the success of our growth strategy insofar as comparable sales do not reflect the
performance of stores opened, or significantly expanded, within the last 12 ful fiscal months. The comparable sales measures
we report may not be equivalent to similarly titled measures reported by other companies.
Non-GAAP Financial Measures
	Constant dol ar changes in net revenue, total comparable sales, comparable store sales, and direct to consumer net
revenue are non-GAAP financial measures.
	A constant dol ar basis assumes the average foreign currency exchange rates for the period remained constant with the
average foreign currency exchange rates for the same period of the prior year. We provide constant dol ar changes in our
results to help investors understand the underlying growth rate of net revenue excluding the impact of changes in foreign
currency exchange rates.
	The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or with
greater prominence to, the financial information prepared and presented in accordance with GAAP. A reconciliation of the
non-GAAP financial measures fol ows, which includes more detail on the GAAP financial measure that is most directly
comparable to each non-GAAP financial measure, and the related reconciliations between these financial measures.
Constant dol ar changes in net revenue
	The below changes in net revenue show the change compared to the corresponding period in the prior year.
		First Quarter 2022
		Net Revenue
			(In thousands)	(Percentages)
Change			$	386,998		32 %
Adjustments due to foreign currency exchange rate changes				7,098		—
Change in constant dol ars			$	394,096		32 %
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Constant dol ar changes in total comparable sales, comparable store sales, and direct to consumer net revenue
	The below changes in total comparable sales, comparable store sales, and direct to consumer net revenue show the
change compared to the corresponding period in the prior year.
		First Quarter 2022
			Total	Direct to
			Comparable	Comparable		Consumer Net
			Sales1,2	Store Sales2		Revenue
Change		28 %			24 %	32 %
Adjustments due to foreign currency exchange rate changes		1			—	1
Change in constant dol ars		29 %			24 %	33 %
__________(1)
	Total comparable sales includes comparable store sales and direct to consumer net revenue.
(2)	Comparable store sales reflects net revenue from company-operated stores that have been open for at least 12 ful fiscal months, or open for at least
	12 ful fiscal months after being significantly expanded.
Seasonality
	Our business is affected by the general seasonal trends common to the retail apparel industry. Our annual net revenue
is weighted more heavily toward our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season,
while our operating expenses are more equal y distributed throughout the year. As a result, a substantial portion of our
operating profits are generated in the fourth quarter of our fiscal year. For example, we generated approximately 44% and
56% of our ful year operating profit during the fourth quarters of 2021 and 2020, respectively. Due to a significant number of
our company-operated stores being temporarily closed due to COVID-19 during the first two quarters of 2020, we earned a
higher proportion of our operating profit during the last two quarters of 2020 compared to 2021.
Liquidity and Capital Resources
	Our primary sources of liquidity are our current balances of cash and cash equivalents, cash flows from operations, and
capacity under our committed revolving credit facility. Our primary cash needs are capital expenditures for opening new
stores and remodeling or relocating existing stores, investing in technology and making system enhancements, funding
working capital requirements, and making other strategic capital investments both in North America and international y. We
may also use cash to repurchase shares of our common stock. Cash and cash equivalents in excess of our needs are held in
interest bearing accounts with financial institutions, as wel as in money market funds and term deposits.
	The fol owing table summarizes our net cash flows provided by and used in operating, investing, and financing activities
for the periods indicated:
		First Quarter
				Year over year
			2022		2021	change
		(In thousands)
Total cash provided by (used in):
Operating activities			$	(243,256) $		214,109 $	(457,365)
Investing activities				(101,328)		(85,464)	(15,864)
Financing activities				(259,560)		(122,235)	(137,325)
Effect of foreign currency exchange rate changes on cash				(6,711)		22,812	(29,523)
Increase (decrease) in cash and cash equivalents			$	(610,855) $		29,222 $	(640,077)
Operating Activities
	The increase in cash used in operating activities was primarily as a result of:
•	a decrease in cash flows from the changes in operating assets and liabilities of $487.9 mil ion. This decrease was
	driven by changes in inventories, income taxes, and accrued compensation; and
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Table of Contents
•	changes in adjusting items of $14.5 mil ion, primarily driven by lower cash inflows related to derivatives not
designated in a hedging relationship, partial y offset by increased depreciation and stock-based compensation
expenses.
The increase in cash used in operating activities was partial y offset by increased net income of $45.0 mil ion.
Investing Activities
The increase in cash used in investing activities was primarily due to increased capital expenditures, partial y offset by
the settlement of net investment hedges. The increase in capital expenditures was primarily due to increased corporate
expenditures driven by investment in technology and business systems and increased expenditures on corporate office
renovations. There was also increased company-operated store expenditures driven by opening new stores as wel
remodeling stores to support our footwear launch. This was partial y offset by decreased capital expenditures for our direct to
consumer segment.
Financing Activities
The increase in cash used in financing activities was primarily the result of an increase in stock repurchases. Cash used in
financing activities for the first quarter of 2022 included $232.6 mil ion to repurchase 0.7 mil ion shares of our common stock
compared to $83.8 mil ion to repurchase 0.3 mil ion shares for the first quarter of 2021. The common stock was repurchased
in the open market at prevailing market prices, including under plans complying with the provisions of Rule 10b5-1 and Rule
10b-18 of the Securities Exchange Act of 1934, with the timing and actual number of shares repurchased depending upon
market conditions, eligibility to trade, and other factors.
Liquidity Outlook
We believe that our cash and cash equivalent balances, cash generated from operations, and borrowings available to us
under our committed revolving credit facility wil be adequate to meet our liquidity needs and capital expenditure
requirements for at least the next 12 months. Our cash from operations may be negatively impacted by a decrease in demand
for our products, as wel as the other factors described in "Item 1A. Risk Factors". In addition, we may make discretionary
capital improvements with respect to our stores, distribution facilities, headquarters, or systems, or we may repurchase
shares under an approved stock repurchase program, which we would expect to fund through the use of cash, issuance of
debt or equity securities or other external financing sources to the extent we were unable to fund such expenditures out of
our cash and cash equivalents and cash generated from operations.
The fol owing table includes certain measures of our liquidity:
	May 1, 2022
	(In thousands)
Cash and cash equivalents	$	649,016
Working capital excluding cash and cash equivalents(1)		447,333
Capacity under committed revolving credit facility		396,907
__________(1)
Working capital is calculated as current assets of $2.3 bil ion less current liabilities of $1.2 bil ion.
We enter into standby letters of credit to secure certain of our obligations, including leases, taxes, and duties. As of
May 1, 2022, letters of credit and letters of guarantee totaling $4.3 mil ion had been issued, including $3.1 mil ion under our
committed revolving credit facility.
Our committed North America credit facility 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. As of May 1, 2022, aside from letters of credit of $3.1 mil ion, we had no other borrowings outstanding under
this credit facility. Further information regarding our credit facilities and associated covenants is outlined in Note 4. Revolving
Credit Facilities included in Item 1 of Part I of this report.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. general y accepted accounting principles requires
management to make estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such,
requires the use of judgment. Actual results may vary from our estimates in amounts that may be material to the financial
			26

Table of Contents
statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on
assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that
reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodical y, could
material y impact our consolidated financial statements.
	Our critical accounting policies and estimates are discussed within "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" of our 2021 Annual Report on Form 10-K filed with the SEC on March 29, 2022.
Operating Locations
	Our company-operated stores by country as of May 1, 2022 and January 30, 2022 are summarized in the table below.
		May 1,	January 30,
Number of company-operated stores by country		2022	2022
United States				325	324
People's Republic of China(1)				87	86
Canada				64	63
Australia				31	31
United Kingdom				18	17
South Korea				13	12
Germany			8		9
New Zealand			7		7
Japan			6		6
Singapore			6		6
Ireland			4		3
France			3		3
Malaysia			2		2
Sweden			2		2
Netherlands			1		1
Norway			1		1
Switzerland			1		1
Total company-operated stores				579	574
__________(1)
	Included within PRC as of May 1, 2022, were nine stores in Hong Kong Special Administrative Region, five stores in Taiwan, and two stores in Macao
	Special Administration Region. As of January 30, 2022, there were nine stores in Hong Kong Special Administrative Region, five stores in Taiwan, and
	two stores in Macao Special Administration Region.
	Retail locations operated by third parties under license and supply arrangements are not included in the above table. As
of May 1, 2022, there were 16 licensed locations, including eight in Mexico, six in the United Arab Emirates, one in Kuwait,
and one in Qatar.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	Foreign Currency Exchange Risk. The functional currency of our international subsidiaries is general y the applicable
local currency. Our consolidated financial statements are presented in U.S. dol ars. Therefore, the net revenue, expenses,
assets, and liabilities of our international subsidiaries are translated from their functional currencies into U.S. dol ars.
Fluctuations in the value of the U.S. dol ar affect the reported amounts of net revenue, expenses, assets, and liabilities.
Foreign currency exchange differences which arise on translation of our international subsidiaries' balance sheets into U.S.
dol ars are recorded as other comprehensive income (loss), net of tax in accumulated other comprehensive income or loss
within stockholders' equity.
	We also have exposure to changes in foreign currency exchange rates associated with transactions which are
undertaken by our subsidiaries in currencies other than their functional currency. Such transactions include intercompany
transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity.
As a result, we have been impacted by changes in foreign currency exchange rates and may be impacted for the foreseeable
future. The potential impact of currency fluctuation increases as our international expansion increases.
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As of May 1, 2022, we had certain forward currency contracts outstanding in order to hedge a portion of the foreign
	currency exposure that arises on translation of a Canadian subsidiary into U.S. dol ars. We also had certain forward currency
	contracts outstanding in an effort to reduce our exposure to the foreign currency exchange revaluation gains and losses that
	are recognized by our Canadian and Chinese subsidiaries on U.S. dol ar denominated monetary assets and liabilities. Please
	refer to Note 7. Derivative Financial Instruments included in Item 1 of Part I of this report for further information, including
	details of the notional amounts outstanding.
In the future, in an effort to reduce foreign currency exchange risks, we may enter into further derivative financial
	instruments including hedging additional currency pairs. We do not, and do not intend to, engage in the practice of trading
	derivative securities for profit.
We currently generate a significant portion of our net revenue and incur a significant portion of our expenses in Canada.
	We also hold a significant portion of our net assets in Canada. The reporting currency for our consolidated financial
	statements is the U.S. dol ar. A strengthening of the U.S. dol ar against the Canadian dol ar results in:
•	the fol owing impacts to the consolidated statements of operations:
		– a decrease in our net revenue upon translation of the sales made by our Canadian operations into U.S.
		dol ars for the purposes of consolidation;
		– a decrease in our sel ing, general and administrative expenses incurred by our Canadian operations upon
		translation into U.S. dol ars for the purposes of consolidation;
		– foreign currency exchange revaluation gains by our Canadian subsidiaries on U.S. dol ar denominated
		monetary assets and liabilities; and
		– derivative valuation losses on forward currency contracts not designated in a hedging relationship;
•	the fol owing impacts to the consolidated balance sheets:
		– a decrease in the foreign currency translation adjustment which arises on the translation of our Canadian
		subsidiaries' balance sheets into U.S. dol ars; and
		– net investment hedge losses from derivative valuation losses on forward currency contracts, entered into as
		net investment hedges of a Canadian subsidiary.
During the first quarter of 2022, the change in the relative value of the U.S. dol ar against the Canadian dol ar resulted in
	a $11.4 mil ion increase in accumulated other comprehensive loss within stockholders' equity. During the first quarter of
	2021, the change in the relative value of the U.S. dol ar against the Canadian dol ar resulted in a $67.1 mil ion reduction in
	accumulated other comprehensive loss within stockholders' equity.
A 10% appreciation in the relative value of the U.S. dol ar against the Canadian dol ar compared to the foreign currency
	exchange rates in effect for the first quarter of 2022 would have resulted in lower income from operations of approximately
	$26.6 mil ion. This assumes a consistent 10% appreciation in the U.S. dol ar against the Canadian dol ar over the first quarter
	of 2022. The timing of changes in the relative value of the U.S. dol ar combined with the seasonal nature of our business, can
	affect the magnitude of the impact that fluctuations in foreign currency exchange rates have on our income from operations.
Interest Rate Risk. Our committed revolving credit facility provides us with available borrowings in an amount up to
	$400.0 mil ion. Because our revolving credit facilities bear interest at a variable rate, we wil be exposed to market risks
	relating to changes in interest rates, if we have a meaningful outstanding balance. As of May 1, 2022, aside from letters of
	credit of $3.1 mil ion, there were no borrowings outstanding under these credit facilities. We currently do not engage in any
	interest rate hedging activity and currently have no intention to do so. However, in the future, if we have a meaningful
	outstanding balance under our revolving facility, in an effort to mitigate losses associated with these risks, we may at times
	enter into derivative financial instruments, although we have not historical y done so. These may take the form of forward
	contracts, option contracts, or interest rate swaps. We do not, and do not intend to, engage in the practice of trading
	derivative securities for profit.
Our cash and cash equivalent balances are held in the form of cash on hand, bank balances, and short-term deposits
	with original maturities of three months or less, and in money market funds. We do not believe these balances are subject to
	material interest rate risk.
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Credit Risk. We have cash on deposit with various large, reputable financial institutions and have invested in AAA-rated
	money market funds. The amount of cash and cash equivalents held with certain financial institutions exceeds government-
	insured limits. We are also exposed to credit-related losses in the event of nonperformance by the financial institutions that
	are counterparties to our forward currency contracts. The credit risk amount is our unrealized gains on our derivative
	instruments, based on foreign currency rates at the time of nonperformance. We have not experienced any losses related to
	these items, and we believe credit risk to be minimal. We seek to minimize our credit risk by entering into transactions with
	credit worthy and reputable financial institutions and by monitoring the credit standing of the financial institutions with
	whom we transact. We seek to limit the amount of exposure with any one counterparty.
	Inflation
Inflationary factors such as increases in the cost of our product as wel as overhead costs may adversely affect our
	operating results. During 2021 and the first quarter of 2022, our operating margin was impacted by higher air freight costs
	compared to fiscal 2020 as a result of global supply chain disruption, as wel as increased wage costs. Sustained increases in
	transportation costs, wages, and raw material costs, or other inflationary pressures in the future may have an adverse effect
	on our ability to maintain current levels of gross margin and sel ing, general and administrative expenses as a percentage of
	net revenue if the sel ing prices of our products do not increase with these increased costs, or we cannot identify cost
	efficiencies.
	ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed
	by us in the reports we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and
	reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and
	communicated to our management, including our principal executive officer and principal financial and accounting officer, to
	al ow timely decisions to be made regarding required disclosure. We have established a Disclosure Committee, consisting of
	certain members of management, to assist in this evaluation. The Disclosure Committee meets on a quarterly basis, and as
	needed.
Our management, including our principal executive officer and principal financial and accounting officer, evaluated the
	effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the
	Exchange Act) as of May 1, 2022. Based on that evaluation, our principal executive officer and principal financial and
	accounting officer concluded that, as of May 1, 2022, our disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting during the quarter ended May 1, 2022 that have
	material y affected, or are reasonably likely to material y affect, our internal control over financial reporting.
		29

		Table of Contents
PART II
	OTHER INFORMATION
		ITEM 1. LEGAL PROCEEDINGS
			In addition to the legal matters described in Note 12. Legal Proceedings and Other Contingencies included in Item 1 of
		Part I of this report and in our 2021 Annual Report on Form 10-K, we are, from time to time, involved in routine legal matters
		incidental to the conduct of our business, including 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. We
		believe the ultimate resolution of any such current proceeding wil not have a material adverse effect on our financial
		position, results of operations or cash flows.
		ITEM 1A. RISK FACTORS
			In addition to the other information contained in this Form 10-Q and in our 2021 Annual Report on Form 10-K, the
		fol owing risk factors should be considered in evaluating our business. Our business, financial condition, or results of operations
		could be material y adversely affected as a result of any of these risks.
		Risks related to our business and industry
		Our success depends on our ability to maintain the value and reputation of our brand.
			The lululemon name is integral to our business as wel as to the implementation of our expansion strategies.
		Maintaining, promoting, and positioning our brand wil depend largely on the success of our marketing and merchandising
		efforts and our ability to provide a consistent, high quality product, and guest experience. We rely on social media, as one of
		our marketing strategies, to have a positive impact on both our brand value and reputation. Our brand and reputation could
		be adversely affected if we fail to achieve these objectives, if our public image was to be tarnished by negative publicity,
		which could be amplified by social media, if we fail to deliver innovative and high quality products acceptable to our guests, or
		if we face or mishandle a product recal . Our reputation could also be impacted by adverse publicity, whether or not valid,
		regarding al egations that we, or persons associated with us or formerly associated with us, have violated applicable laws or
		regulations, including but not limited to those related to safety, employment, discrimination, harassment, whistle-blowing,
		privacy, corporate citizenship, improper business practices, or cybersecurity. Certain activities on the part of stakeholders,
		including nongovernmental organizations and governmental institutions, could cause reputational damage, distract senior
		management, and disrupt our business. Additional y, while we devote considerable effort and resources to protecting our
		intel ectual property, if these efforts are not successful the value of our brand may be harmed. Any harm to our brand and
		reputation could have a material adverse effect on our financial condition.
		The current COVID-19 coronavirus pandemic and related government, private sector, and individual consumer responsive
		actions have and could continue to affect our business operations, store traffic, employee availability, supply chain,
		financial condition, liquidity, and cash flow.
			The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply
		chains, and created significant volatility and disruption of financial markets. COVID-19 negatively impacted our business and
		operations in 2020. While conditions improved in 2021, the extent and duration of ongoing impacts remain uncertain. Certain
		stores and our third party distribution center in the PRC experienced temporary closures during the first quarter of 2022, and
		there is uncertainty regarding the ongoing impact of COVID-19 on our operations in the PRC.
			The spread of COVID-19 has caused health officials to impose restrictions and recommend precautions to mitigate the
		spread of the virus, especial y when congregating in heavily populated areas, such as mal s and lifestyle centers. Our stores
		have experienced temporary closures, and we have implemented precautionary measures in line with guidance from local
		authorities in the stores that are open. These measures include restrictions such as limitations on the number of guests
		al owed in our stores at any single time, minimum physical distancing requirements, and limited operating hours. We do not
		know how the measures recommended by local authorities or implemented by us may change over time or what the duration
		of these restrictions wil be.
			Further resurgences in COVID-19 cases, including from variants, could cause additional restrictions, including
		temporarily closing al or some of our stores again. An outbreak at one of our locations, even if we fol ow appropriate
		precautionary measures, could negatively impact our employees, guests, and brand. There is uncertainty over the impact of
		COVID-19 on the U.S., Canadian, PRC, and global economies, consumer wil ingness to visit stores, mal s, and lifestyle centers,
		and employee wil ingness to staff our stores as the pandemic continues and if there are future resurgences. There is also
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uncertainty regarding potential long-term changes to consumer shopping behavior and preferences and whether consumer
demand wil recover when restrictions are lifted.
	The COVID-19 pandemic also has the potential to significantly impact our supply chain if the factories that manufacture
our products, the distribution centers where we manage our inventory, or the operations of our logistics and other service
providers are disrupted, temporarily closed, or experience worker shortages. In particular, we have seen disruptions and
delays in shipments, and we may see negative impacts to pricing of certain components of our products as a result of the
COVID-19 pandemic.
	The COVID-19 situation is changing rapidly and the extent to which COVID-19 impacts our results wil depend on future
developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning
the severity of COVID-19 and its variants and the actions taken to contain it or treat its impact, including vaccinations.
Changes in consumer shopping preferences, and shifts in distribution channels could material y impact our results of
operations.
	We sel our products through a variety of channels, with a significant portion through traditional brick-and-mortar retail
channels. The COVID-19 pandemic has shifted guest shopping preferences away from brick-and-mortar and towards digital
platforms. As strong e-commerce channels emerge and develop, we are evolving towards an omni-channel approach to
support the shopping behavior of our guests. This involves country and region-specific websites, social media, product
notification emails, mobile apps, including mobile apps on in-store devices that al ow demand to be fulfil ed via our
distribution centers, and online order fulfil ment through stores. The diversion of sales from our company-operated stores
could adversely impact our return on investment and could lead to impairment charges and store closures, including lease exit
costs. We could have difficulty in recreating the in-store experience through direct channels. Our failure to successful y
integrate our digital and physical channels and respond to these risks might adversely impact our business and results of
operations, as wel as damage our reputation and brands.
If any of our products have manufacturing or design defects or are otherwise unacceptable to us or our guests, our business
could be harmed.
	We have occasional y received, and may in the future receive, shipments of products that fail to comply with our
technical specifications or that fail to conform to our quality control standards. We have also received, and may in the future
receive, products that are otherwise unacceptable to us or our guests. Under these circumstances, unless we are able to
obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sel those
products and related increased administrative and shipping costs. Additional y, if the unacceptability of our products is not
discovered until after such products are sold, our guests could lose confidence in our products or we could face a product
recal and our results of operations could suffer and our business, reputation, and brand could be harmed.
	Our MIRROR subsidiary offers complex hardware and software products and services that can be affected by design and
manufacturing defects. Sophisticated operating system software and applications, such as those offered by MIRROR, often
have issues that can unexpectedly interfere with the intended operation of hardware or software products. Defects may also
exist in components and products that we source from third parties. Any defects could make our products and services unsafe
and create a risk of environmental or property damage or personal injury and we may become subject to the hazards and
uncertainties of product liability claims and related litigation. The occurrence of real or perceived defects in any of our
products, now or in the future, could result in additional negative publicity, regulatory investigations, or lawsuits filed against
us, particularly if guests or others who use or purchase our MIRROR products are injured. Even if injuries are not the result of
any defects, if they are perceived to be, we may incur expenses to defend or settle any claims and our brand and reputation
may be harmed.
We operate in a highly competitive market and the size and resources of some of our competitors may al ow them to
compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and
profitability.
	The market for technical athletic apparel is highly competitive. Competition may result in pricing pressures, reduced
profit margins or lost market share, or a failure to grow or maintain our market share, any of which could substantial y harm
our business and results of operations. We compete directly against wholesalers and direct retailers of athletic apparel,
including large, diversified apparel companies with substantial market share, and established companies expanding their
production and marketing of technical athletic apparel, as wel as against retailers specifical y focused on women's athletic
apparel. We also face competition from wholesalers and direct retailers of traditional commodity athletic apparel, such as
cotton T-shirts and sweatshirts. Many of our competitors are large apparel and sporting goods companies with strong
worldwide brand recognition. Because of the fragmented nature of the industry, we also compete with other apparel sel ers,
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including those specializing in yoga apparel and other activewear. Many of our competitors have significant competitive
advantages, including longer operating histories, larger and broader customer bases, more established relationships with a
broader set of suppliers, greater brand recognition and greater financial, research and development, store development,
marketing, distribution, and other resources than we do.
	Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively
than we can. In contrast to our grassroots community-based marketing approach, many of our competitors promote their
brands through traditional forms of advertising, such as print media and television commercials, and through celebrity
endorsements, and have substantial resources to devote to such efforts. Our competitors may also create and maintain brand
awareness using traditional forms of advertising more quickly than we can. Our competitors may also be able to increase sales
in their new and existing markets faster than we do by emphasizing different distribution channels than we do, such as
catalog sales or an extensive franchise network.
	In addition, because we hold limited patents and exclusive intel ectual property rights in the technology, fabrics or
processes underlying our products, our current and future competitors are able to manufacture and sel products with
performance characteristics, fabrication techniques, and styling similar to our products.
Our sales and profitability may decline as a result of increasing costs and decreasing sel ing prices.
	Our business is subject to significant pressure on costs and pricing caused by many factors, including intense
competition, constrained sourcing capacity and related inflationary pressure, the availability of qualified labor and wage
inflation, pressure from consumers to reduce the prices we charge for our products, and changes in consumer demand. These
factors may cause us to experience increased costs, reduce our prices to consumers or experience reduced sales in response
to increased prices, any of which could cause our operating margin to decline if we are unable to offset these factors with
reductions in operating costs and could have a material adverse effect on our financial condition, operating results, and cash
flows.
If we are unable to anticipate consumer preferences and successful y develop and introduce new, innovative, and
differentiated products, we may not be able to maintain or increase our sales and profitability.
	Our success depends on our ability to identify and originate product trends as wel as to anticipate and react to
changing consumer demands in a timely manner. Al of our products are subject to changing consumer preferences that
cannot be predicted with certainty. If we are unable to introduce new products or novel technologies in a timely manner or
our new products or technologies are not accepted by our guests, our competitors may introduce similar products in a more
timely fashion, which could hurt our goal to be viewed as a leader in technical athletic apparel innovation. Our new products
may not receive consumer acceptance as consumer preferences could shift rapidly to different types of athletic apparel or
away from these types of products altogether, and our future success depends in part on our ability to anticipate and respond
to these changes. Our failure to anticipate and respond in a timely manner to changing consumer preferences could lead to,
among other things, lower sales and excess inventory levels. Even if we are successful in anticipating consumer preferences,
our ability to adequately react to and address those preferences wil in part depend upon our continued ability to develop and
introduce innovative, high-quality products. Our failure to effectively introduce new products that are accepted by consumers
could result in a decrease in net revenue and excess inventory levels, which could have a material adverse effect on our
financial condition.
Our results of operations could be material y harmed if we are unable to accurately forecast guest demand for our
products.
	To ensure adequate inventory supply, we must forecast inventory needs and place orders with our manufacturers
based on our estimates of future demand for particular products. Our ability to accurately forecast demand for our products
could be affected by many factors, including an increase or decrease in guest demand for our products or for products of our
competitors, our failure to accurately forecast guest acceptance of new products, product introductions by competitors,
unanticipated changes in general market conditions (for example, because of unexpected effects on inventory supply and
consumer demand caused by the current COVID-19 coronavirus pandemic), and weakening of economic conditions or
consumer confidence in future economic conditions (for example, because of inflationary pressures, or because of sanctions,
restrictions, and other responses related to geopolitical events). If we fail to accurately forecast guest demand, we may
experience excess inventory levels or a shortage of products available for sale in our stores or for delivery to guests.
	Inventory levels in excess of guest demand may result in inventory write-downs or write-offs and the sale of excess
inventory at discounted prices, which would cause our gross margin to suffer and could impair the strength and exclusivity of
our brand. Conversely, if we underestimate guest demand for our products, our manufacturers may not be able to deliver
products to meet our requirements, and this could result in damage to our reputation and guest relationships.
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Our limited operating experience and limited brand recognition in new international markets and new product categories
may limit our expansion and cause our business and growth to suffer.
	Our future growth depends in part on our expansion efforts outside of North America. We have limited experience with
regulatory environments and market practices international y, and we may not be able to penetrate or successful y operate in
any new market. In connection with our expansion efforts we may encounter obstacles we did not face in North America,
including cultural and linguistic differences, differences in regulatory environments, labor practices and market practices,
difficulties in keeping abreast of market, business and technical developments, and international guests' tastes and
preferences. We may also encounter difficulty expanding into new international markets because of limited brand recognition
leading to delayed acceptance of our technical athletic apparel by guests in these new international markets. Our failure to
develop our business in new international markets or disappointing growth outside of existing markets could harm our
business and results of operations.
	In addition, our continued growth depends in part on our ability to expand our product categories and introduce new
product lines. We may not be able to successful y manage integration of new product categories or the new product lines
with our existing products. Sel ing new product categories and lines wil require our management to learn different strategies
in order to be successful. We may be unsuccessful in entering new product categories and developing or launching new
product lines, which requires management of new suppliers, potential new customers, and new business models. Our
management may not have the experience of sel ing in these new product categories and we may not be able to grow our
business as planned. For example, in July 2020, we acquired MIRROR, an in-home fitness company with an interactive
workout platform that features live and on-demand classes. If we are unable to effectively and successful y further develop
these and future new product categories and lines, we may not be able to increase or maintain our sales and our operating
margins may be adversely affected.
We may not realize the potential benefits and synergies sought with the acquisition of MIRROR.
	During 2020, we acquired MIRROR as part of our growth plan, which includes driving business through omni-guest
experiences. The potential benefits of enhancing our digital and interactive capabilities and deepening our roots in the
sweatlife might not be realized ful y, if at al , or take longer than anticipated to achieve. Further, the expected synergies
between lululemon and MIRROR, such as those related to our connections with our guests and communities as wel as our
store and direct to consumer infrastructure, may not materialize. A significant portion of the purchase price was al ocated to
goodwil and if our acquisition does not yield expected returns, we may be required to record impairment charges, which
would adversely affect our results of operations.
	Our management team has limited experience in addressing the chal enges of integrating management teams,
strategies, cultures, and organizations of two companies. This integration may divert the attention of management and cause
additional expenses. Management also has limited experience outside of the retail industry, including with the specialized
hardware and software sold and licensed by MIRROR. If MIRROR has inadequate or ineffective controls and procedures, our
internal control over financial reporting could be adversely impacted. The acquisition may not be wel received by the
customers or employees of either company, and this could hurt our brand and result in the loss of key employees. If we are
unable to successful y integrate MIRROR, including its people and technologies, or if integration takes longer than planned, we
may not be able to manage operations efficiently, which could adversely affect our results of operations. The acquisition of
MIRROR may also divert management time and other resources away from our existing business.
	In addition, we may, from time to time, evaluate and pursue other strategic investments or acquisitions. These involve
various inherent risks and the benefits sought may not be realized. The acquisition of MIRROR or other strategic investments
or acquisitions may not create value and may harm our brand and adversely affect our business, financial condition, and
results of operations.
We may not be able to grow the MIRROR business and have it achieve profitability.
	We may be unable to attract and retain subscribers to MIRROR. If we do not provide the delivery and instal ation
service that our guests expect, offer engaging and innovative classes, and support and continue to improve the technology
used, we may not be able to maintain and grow the number of subscribers. This could adversely impact our results of
operations.
	We are dependent on technology systems to provide live and recorded classes to our customers with MIRROR
subscriptions, to maintain its software, and to manage subscriptions. If we experience issues such as cybersecurity threats or
actions, or interruptions or delays in our technology systems, the data privacy and overal experience of subscribers could be
negatively impacted and could therefore damage our brand and adversely affect our results of operations.
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Competition, including from other in-home fitness providers as wel as in-person fitness studios, and trends of
	consumer preferences, could also impact the level of subscriptions and therefore our results of operations.
	If we continue to grow at a rapid pace, we may not be able to effectively manage our growth and the increased complexity
	of our business and as a result our brand image and financial performance may suffer.
We have expanded our operations rapidly since our inception in 1998 and our net revenue has increased from
	$40.7 mil ion in fiscal 2004 to $6.3 bil ion in 2021. If our operations continue to grow at a rapid pace, we may experience
	difficulties in obtaining sufficient raw materials and manufacturing capacity to produce our products, as wel as delays in
	production and shipments, as our products are subject to risks associated with overseas sourcing and manufacturing. We
	could be required to continue to expand our sales and marketing, product development and distribution functions, to upgrade
	our management information systems and other processes and technology, and to obtain more space for our expanding
	workforce. This expansion could increase the strain on our resources, and we could experience operating difficulties, including
	difficulties in hiring, training, and managing an increasing number of employees. These difficulties could result in the erosion
	of our brand image which could have a material adverse effect on our financial condition.
	We are subject to risks associated with leasing retail and distribution space subject to long-term and non-cancelable leases.
We lease the majority of our stores under operating leases and our inability to secure appropriate real estate or lease
	terms could impact our ability to grow. Our leases general y have initial terms of between five and 15 years, and general y can
	be extended in five-year increments if at al . We general y cannot cancel these leases at our option. If an existing or new store
	is not profitable, and we decide to close it, as we have done in the past and may do in the future, we may nonetheless be
	committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the
	balance of the lease term. Similarly, we may be committed to perform our obligations under the applicable leases even if
	current locations of our stores become unattractive as demographic patterns change. In addition, as each of our leases expire,
	we may fail to negotiate renewals, either on commercial y acceptable terms or at al , which could require us to close stores in
	desirable locations.
We also lease the majority of our distribution centers and our inability to secure appropriate real estate or lease terms
	could impact our ability to deliver our products to the market.
	We may not be able to successful y open new store locations in a timely manner, if at al , which could harm our results of
	operations.
Our growth wil largely depend on our ability to successful y open and operate new stores. We may be unsuccessful in
	identifying new locations and markets where our technical athletic apparel and other products and brand image wil be
	accepted. In addition, we may not be able to open or profitably operate new stores in existing, adjacent, or new markets due
	to the impact of COVID-19, political instability, inflationary pressures, or other economic conditions, which could have a
	material adverse effect on us.
	Our future success is substantial y dependent on the service of our senior management and other key employees.
In the last few years, we have had changes to our senior management team including new hires, departures, and role
	and responsibility changes. The performance of our senior management team and other key employees may not meet our
	needs and expectations. Also, the loss of services of any of these key employees, or any negative public perception with
	respect to these individuals, may be disruptive to, or cause uncertainty in, our business and could have a negative impact on
	our ability to manage and grow our business effectively. Such disruption could have a material adverse impact on our financial
	performance, financial condition, and the market price of our stock.
	Our business is affected by seasonality, which could result in fluctuations in our operating results.
Our business is affected by the general seasonal trends common to the retail apparel industry. Our annual net revenue
	is weighted more heavily toward our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season,
	while our operating expenses are more equal y distributed throughout the year. This seasonality, along with other factors that
	are beyond our control, including weather conditions and the effects of climate change, could adversely affect our business
	and cause our results of operations to fluctuate.
	Risks related to our supply chain
	Disruptions of our supply chain could have a material adverse effect on our operating and financial results.
Disruption of our supply chain capabilities due to trade restrictions, political instability, severe weather, natural
	disasters, public health crises such as the ongoing COVID-19 pandemic, war, terrorism, product recal s, labor supply or
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stoppages, the financial or operational instability of key suppliers and carriers, changes in diplomatic or trade relationships
(including any sanctions, restrictions, and other responses such as those related to current geopolitical events), or other
reasons could impair our ability to distribute our products. To the extent we are unable to mitigate the likelihood or potential
impact of such events, there could be a material adverse effect on our operating and financial results.
Our reliance on suppliers to provide fabrics for and to produce our products could cause problems if we experience a supply
chain disruption and we are unable to secure additional suppliers of fabrics or other raw materials, or manufacturers of our
end products.
	The entire apparel industry, including our company, continues to face supply chain chal enges as a result of economic
uncertainty due to the impacts of COVID-19, political instability, inflationary pressures, and other factors, including reduced
freight availability and increased costs, port disruption, manufacturing facility closures, and related labor shortages and other
supply chain disruptions. We do not manufacture our products or the raw materials for them and rely instead on suppliers.
Many of the specialty fabrics used in our products are technical y advanced textile products developed and manufactured by
third parties and may be available, in the short-term, from only one or a limited number of sources. We have no long-term
contracts with any of our suppliers or manufacturers for the production and supply of our raw materials and products, and we
compete with other companies for fabrics, other raw materials, and production. The fol owing statistics are based on cost.
	We work with a group of approximately 41 vendors that manufacture our products, five of which produced 57% of our
products in 2021. During 2021, the largest single manufacturer produced approximately 15% of our products. During 2021,
approximately 40% of our products were manufactured in Vietnam, 17% in Cambodia, 11% in Sri Lanka, 7% in the PRC,
including 2% in Taiwan, and the remainder in other regions.
	We work with a group of approximately 65 suppliers to provide the fabrics for our products. In 2021, 56% of our fabrics
were produced by our top five fabric suppliers, and the largest single manufacturer produced approximately 27% of fabric
used. During 2021, approximately 48% of our fabrics originated from Taiwan, 19% from China Mainland, 11% from Sri Lanka,
and the remainder from other regions.
	We also source other raw materials which are used in our products, including items such as content labels, elastics,
buttons, clasps, and drawcords from suppliers located predominantly in the Asia Pacific region, including the PRC.
	We have experienced, and may in the future experience, a significant disruption in the supply of fabrics or raw materials
and may be unable to locate alternative suppliers of comparable quality at an acceptable price, or at al . In addition, if we
experience significant increased demand, or if we need to replace an existing supplier or manufacturer, we may be unable to
locate additional supplies of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to us,
or at al , or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or fil
our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with
its quality control, responsiveness and service, financial stability, and labor and other ethical practices. Even if we are able to
expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a
result of the time it takes to train our suppliers and manufacturers in our methods, products, and quality control standards.
	Our supply of fabric or manufacture of our products could be disrupted or delayed by economic or political conditions,
and by the impact of health pandemics, including the current COVID-19 pandemic, and the related government and private
sector responsive actions such as border closures, restrictions on product shipments, and travel restrictions. Delays related to
supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from our
markets or from other participants in our supply chain. The receipt of inventory sourced from areas impacted by COVID-19
has been slowed or disrupted and our manufacturers may also face similar chal enges in receiving fabric and fulfil ing our
orders. In addition, ocean freight capacity issues continue to persist worldwide as there is much greater demand for shipping
and reduced capacity and equipment. Any delays, interruption, or increased costs in the supply of fabric or manufacture of
our products could have an adverse effect on our ability to meet guest demand for our products and result in lower net
revenue and income from operations both in the short and long term.
Our business could be harmed if our suppliers and manufacturers do not comply with our Vendor Code of Ethics or
applicable laws.
	While we require our suppliers and manufacturers to comply with our Vendor Code of Ethics, which includes labor,
health and safety, and environment standards, we do not control their operations. If suppliers or contractors do not comply
with these standards or applicable laws or there is negative publicity regarding the production methods of any of our
suppliers or manufacturers, even if unfounded or not specific to our supply chain, our reputation and sales could be adversely
affected, we could be subject to legal liability, or could cause us to contract with alternative suppliers or manufacturing
sources.
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The fluctuating cost of raw materials could increase our cost of goods sold.
	The fabrics used to make our products include synthetic fabrics whose raw materials include petroleum-based products.
Our products also include silver and natural fibers, including cotton. Our costs for raw materials are affected by, among other
things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the
currencies of producer versus consumer countries, and other factors that are general y unpredictable and beyond our control.
Any and al of these factors may be exacerbated by global climate change. In addition, ongoing impacts of the pandemic,
political instability, trade relations, sanctions, inflationary pressure, or other geopolitical or economic conditions could cause
raw material costs to increase and have an adverse effect on our future margins. Increases in the cost of raw materials,
including petroleum or the prices we pay for silver and our cotton yarn and cotton-based textiles, could have a material
adverse effect on our cost of goods sold, results of operations, financial condition, and cash flows.
If we encounter problems with our distribution system, our ability to deliver our products to the market and to meet guest
expectations could be harmed.
	We rely on our distribution facilities for substantial y al of our product distribution. Our distribution facilities include
computer control ed and automated equipment, which means their operations may be subject to a number of risks related to
security or computer viruses, the proper operation of software and hardware, electronic or power interruptions, or other
system failures. In addition, our operations could also be interrupted by labor difficulties, pandemics (such as the COVID-19
pandemic), the impacts of climate change, extreme or severe weather conditions or by floods, fires, or other natural disasters
near our distribution centers. If we encounter problems with our distribution system, our ability to meet guest expectations,
manage inventory, complete sales, and achieve objectives for operating efficiencies could be harmed.
Increasing labor costs and other factors associated with the production of our products in South Asia and South East Asia
could increase the costs to produce our products.
	A significant portion of our products are produced in South Asia and South East Asia and increases in the costs of labor
and other costs of doing business in the countries in this area could significantly increase our costs to produce our products
and could have a negative impact on our operations and earnings. Factors that could negatively affect our business include
labor shortages and increases in labor costs, labor disputes, pandemics, the impacts of climate change, difficulties and
additional costs in transporting products manufactured from these countries to our distribution centers and significant
revaluation of the currencies used in these countries, which may result in an increase in the cost of producing products. Also,
the imposition of trade sanctions or other regulations against products imported by us from, or the loss of "normal trade
relations" status with any country in which our products are manufactured, could significantly increase our cost of products
and harm our business.
Risks related to information security and technology
We may be unable to safeguard against security breaches which could damage our customer relationships and result in
significant legal and financial exposure.
	As part of our normal operations, we receive confidential, proprietary, and personal y identifiable information, including
credit card information, and information about our customers, our employees, job applicants, and other third parties. Our
business employs systems and websites that al ow for the storage and transmission of this information. However, despite our
safeguards and security processes and protections, security breaches could expose us to a risk of theft or misuse of this
information, and could result in litigation and potential liability.
	The retail industry, in particular, has been the target of many recent cyber-attacks. We may not have the resources or
technical sophistication to be able to anticipate or prevent rapidly evolving types of cyber-attacks. Attacks may be targeted at
us, our vendors or customers, or others who have entrusted us with information. In addition, despite taking measures to
safeguard our information security and privacy environment from security breaches, our customers and our business could
stil be exposed to risk. Actual or anticipated attacks may cause us to incur increasing costs including costs to deploy additional
personnel and protection technologies, train employees and engage third party experts and consultants. Advances in
computer capabilities, new technological discoveries or other developments may result in the technology used by us to
protect transaction or other data being breached or compromised. Measures we implement to protect against cyber-attacks
may also have the potential to impact our customers' shopping experience or decrease activity on our websites by making
them more difficult to use.
	Data and security breaches can also occur as a result of non-technical issues including intentional or inadvertent breach
by employees or persons with whom we have commercial relationships that result in the unauthorized release of personal or
confidential information. Any compromise or breach of our security could result in a violation of applicable privacy and other
laws, significant legal and financial exposure, and damage to our brand and reputation or other harm to our business.
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In addition, the increased use of employee-owned devices for communications as wel as work-from-home
	arrangements, such as those implemented in response to the COVID-19 pandemic, present additional operational risks to our
	technology systems, including increased risks of cyber-attacks. Further, like other companies in the retail industry, we have in
	the past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and other attempts to
	breach, or gain unauthorized access to, our systems. To date, these attacks have not had a material impact on our operations,
	but they may have an impact in the future.
	Privacy and data protection laws increase our compliance burden.
We are subject to a variety of privacy and data protection laws and regulations that change frequently and have
	requirements that vary from jurisdiction to jurisdiction. For example, we are subject to significant compliance obligations
	under privacy laws such as the General Data Privacy Regulation ("GDPR") in the European Union, the Personal Information
	Protection and Electronic Documents Act (“PIPEDA”) in Canada, the California Consumer Privacy Act ("CCPA") modified by the
	California Privacy Rights Act (“CPRA”), and the Personal Information Protection Law (“PIPL”) in the PRC. Some privacy laws
	prohibit the transfer of personal information to certain other jurisdictions. We are subject to privacy and data protection
	audits or investigations by various government agencies. Our failure to comply with these laws subjects us to potential
	regulatory enforcement activity, fines, private litigation including class actions, and other costs. Our efforts to comply with
	privacy laws may complicate our operations and add to our compliance costs. A significant privacy breach or failure or
	perceived failure by us or our third-party service providers to comply with privacy or data protection laws, regulations,
	policies or regulatory guidance might have a material y adverse impact on our reputation, business operations and our
	financial condition or results of operations.
	Disruption of our technology systems or unexpected network interruption could disrupt our business.
We are increasingly dependent on technology systems and third-parties to operate our e-commerce websites, process
	transactions, respond to guest inquiries, manage inventory, purchase, sel and ship goods on a timely basis, and maintain cost-
	efficient operations. The failure of our technology systems to operate properly or effectively, problems with transitioning to
	upgraded or replacement systems, or difficulty in integrating new systems, could adversely affect our business. In addition,
	we have e-commerce websites in the United States, Canada, and international y. Our technology systems, websites, and
	operations of third parties on whom we rely, may encounter damage or disruption or slowdown caused by a failure to
	successful y upgrade systems, system failures, viruses, computer "hackers", natural disasters, or other causes. These could
	cause information, including data related to guest orders, to be lost or delayed which could, especial y if the disruption or
	slowdown occurred during the holiday season, result in delays in the delivery of products to our stores and guests or lost
	sales, which could reduce demand for our products and cause our sales to decline. The concentration of our primary offices,
	two of our distribution centers, and a number of our stores along the west coast of North America could amplify the impact of
	a natural disaster occurring in that area to our business, including to our technology systems. In addition, if changes in
	technology cause our information systems to become obsolete, or if our information systems are inadequate to handle our
	growth, we could lose guests. We have limited back-up systems and redundancies, and our technology systems and websites
	have experienced system failures and electrical outages in the past which have disrupted our operations. Any significant
	disruption in our technology systems or websites could harm our reputation and credibility, and could have a material adverse
	effect on our business, financial condition, and results of operations.
	Our technology-based systems that give our customers the ability to shop with us online may not function effectively.
Many of our customers shop with us through our e-commerce websites and mobile apps. Increasingly, customers are
	using tablets and smart phones to shop online with us and with our competitors and to do comparison shopping. We are
	increasingly using social media and proprietary mobile apps to interact with our customers and as a means to enhance their
	shopping experience. Any failure on our part to provide attractive, effective, reliable, user-friendly e-commerce platforms that
	offer a wide assortment of merchandise with rapid delivery options and that continual y meet the changing expectations of
	online shoppers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our
	reputation with customers, have a material adverse impact on the growth of our e-commerce business global y and could
	have a material adverse impact on our business and results of operations.
	Risks related to environmental, social, and governance issues
	Climate change, and related legislative and regulatory responses to climate change, may adversely impact our business.
There is increasing concern that a gradual rise in global average temperatures due to increased concentration of carbon
	dioxide and other greenhouse gases in the atmosphere wil cause significant changes in weather patterns around the globe,
	an increase in the frequency, severity, and duration of extreme weather conditions and natural disasters, and water scarcity
	and poor water quality. These events could adversely impact the cultivation of cotton, which is a key resource in the
		37

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production of our products, disrupt the operation of our supply chain and the productivity of our contract manufacturers,
increase our production costs, impose capacity restraints and impact the types of apparel products that consumers purchase.
These events could also compound adverse economic conditions and impact consumer confidence and discretionary
spending. As a result, the effects of climate change could have a long-term adverse impact on our business and results of
operations. In many countries, governmental bodies are enacting new or additional legislation and regulations to reduce or
mitigate the potential impacts of climate change. If we, our suppliers, or our contract manufacturers are required to comply
with these laws and regulations, or if we choose to take voluntary steps to reduce or mitigate our impact on climate change,
we may experience increased costs for energy, production, transportation, and raw materials, increased capital expenditures,
or increased insurance premiums and deductibles, which could adversely impact our operations. Inconsistency of legislation
and regulations among jurisdictions may also affect the costs of compliance with such laws and regulations. Any assessment
of the potential impact of future climate change legislation, regulations or industry standards, as wel as any international
treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate.
Increased scrutiny from investors and others regarding our environmental, social, governance, or sustainability,
responsibilities could result in additional costs or risks and adversely impact our reputation, employee retention, and
wil ingness of customers and suppliers to do business with us.
	Investor advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, and
customers have focused increasingly on the environmental, social and governance ("ESG") or “sustainability” practices of
companies, including those associated with climate change. These parties have placed increased importance on the
implications of the social cost of their investments. If our ESG practices do not meet investor or other industry stakeholder
expectations and standards, which continue to evolve, our brand, reputation and employee retention may be negatively
impacted based on an assessment of our ESG practices. Any sustainability report that we publish or other sustainability
disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate
governance, environmental compliance, employee health and safety practices, human capital management, product quality,
supply chain management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our
ESG practices or the speed of their adoption. We could also incur additional costs and require additional resources to monitor,
report, and comply with various ESG practices. Also, our failure, or perceived failure, to meet the standards included in any
sustainability disclosure could negatively impact our reputation, employee retention, and the wil ingness of our customers
and suppliers to do business with us.
Risks related to global economic, political, and regulatory conditions
An economic recession, depression, downturn, periods of inflation, or economic uncertainty in our key markets may
adversely affect consumer discretionary spending and demand for our products.
	Many of our products may be considered discretionary items for consumers. Some of the factors that may influence
consumer spending on discretionary items include general economic conditions, high levels of unemployment, health
pandemics (such as the impact of the current COVID-19 coronavirus pandemic, including reduced store traffic and widespread
temporary closures of retail locations), higher consumer debt levels, reductions in net worth based on market declines and
uncertainty, home foreclosures and reductions in home values, fluctuating interest and foreign currency exchange rates and
credit availability, government austerity measures, fluctuating fuel and other energy costs, fluctuating commodity prices,
inflationary pressure, tax rates and general uncertainty regarding the overal future economic environment. Global economic
conditions are uncertain and volatile, due in part to the impacts of COVID-19 and related restrictions and mitigation measures,
the potential impacts of increasing inflation, the potential impacts of geopolitical uncertainties, and any potential sanctions,
restrictions or responses to those conditions. As global economic conditions continue to be volatile or economic uncertainty
remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions due to credit
constraints and uncertainties about the future. Unfavorable economic conditions may lead consumers to delay or reduce
purchases of our products. Consumer demand for our products may not reach our targets, or may decline, when there is an
economic downturn or economic uncertainty in our key markets. Our sensitivity to economic cycles and any related
fluctuation in consumer demand may have a material adverse effect on our financial condition.
Global economic and political conditions and global events such as health pandemics could adversely impact our results of
operations.
	Uncertain or chal enging global economic and political conditions could impact our performance, including our ability to
successful y expand international y. Global economic conditions could impact levels of consumer spending in the markets in
which we operate, which could impact our sales and profitability. Political unrest, such as the turmoil related to current
geopolitical events and the related sanctions, restrictions, or other responses, could negatively impact our guests and
employees, reduce consumer spending, and adversely impact our business and results of operations. Health pandemics, such
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as the current COVID-19 coronavirus pandemic, and the related governmental, private sector and individual consumer
responses could contribute to a recession, depression, or global economic downturn, reduce store traffic and consumer
spending, result in temporary or permanent closures of retail locations, offices, and factories, and could negatively impact the
flow of goods.
We may be unable to source and sel our merchandise profitably or at al if new trade restrictions are imposed or existing
restrictions become more burdensome.
	The United States and the countries in which our products are produced or sold have imposed and may impose
additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty, or tariff
levels. The results of any audits or related disputes regarding these restrictions or regulations could have an adverse effect on
our financial statements for the period or periods for which the applicable final determinations are made. Countries impose,
modify, and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national
economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other
trade restrictions. Trade restrictions, including tariffs, quotas, embargoes, safeguards, and customs restrictions, could increase
the cost or reduce the supply of products available to us, could increase shipping times, or may require us to modify our
supply chain organization or other current business practices, any of which could harm our business, financial condition, and
results of operations.
	We are dependent on international trade agreements and regulations. The countries in which we produce and sel our
products could impose or increase tariffs, duties, or other similar charges that could negatively affect our results of
operations, financial position, or cash flows.
	Adverse changes in, or withdrawal from, trade agreements or political relationships between the United States and the
PRC, Canada, or other countries where we sel or source our products, could negatively impact our results of operations or
cash flows. Any tariffs imposed between the United States and the PRC could increase the costs of our products. General
geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions, and changes in tariffs,
including recent sanctions against the PRC, tariffs imposed by the United States and the PRC, and the possibility of additional
tariffs or other trade restrictions between the United States and Mexico, could adversely impact our business. It is possible
that further tariffs may be introduced, or increased. Such changes could adversely impact our business and could increase the
costs of sourcing our products from the PRC, or could require us to source more of our products from other countries.
	There could be changes in economic conditions in the United Kingdom ("UK") or European Union ("EU"), including due
to the UK's withdrawal from the EU, foreign currency exchange rates, and consumer markets. Our business could be adversely
affected by these changes, including by additional duties on the importation of our products into the UK from the EU and as a
result of shipping delays or congestion.
Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.
	We are subject to the income tax laws of the United States, Canada, and several other international jurisdictions. Our
effective income tax rates could be unfavorably impacted by a number of factors, including changes in the mix of earnings
amongst countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in
tax laws, new tax interpretations and guidance, the outcome of income tax audits in various jurisdictions around the world,
and any repatriation of unremitted earnings for which we have not previously accrued applicable U.S. income taxes and
international withholding taxes.
	Repatriations from our Canadian subsidiaries are not subject to Canadian withholding taxes if such distributions are
made as a return of capital. Historical y, we have not accrued for any Canadian withholding taxes that would be payable on
repatriations from our Canadian subsidiaries because the net investment in our Canadian subsidiaries is indefinitely
reinvested, or could be repatriated free of withholding tax. The extent to which increases in the net assets of our Canadian
subsidiaries can be repatriated free of withholding tax is dependent on, among other things, the amount of paid-up-capital in
our Canadian subsidiaries and transactions undertaken by our exchangeable shareholders. As of May 1, 2022, we had 5.2
mil ion exchangeable shares outstanding. If there are insufficient transactions by our exchangeable shareholders between
now and the end of 2022, and our Canadian subsidiary continues to generate profits at historic rates, then we wil be unable
to repatriate al of our 2022 Canadian earnings free of withholding tax. We have therefore accrued for Canadian withholding
taxes on the portion of our 2022 earnings which we expect to be unable to repatriate free of withholding tax. This has
increased our effective tax rate, and absent further transactions by our exchangeable shareholders, we expect our tax rate to
increase further in fiscal 2023.
	We and our subsidiaries engage in a number of intercompany transactions across multiple tax jurisdictions. Although we
believe that these transactions reflect the accurate economic al ocation of profit and that proper transfer pricing
		39

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documentation is in place, the profit al ocation and transfer pricing terms and conditions may be scrutinized by local tax
authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax
rates. At the end of 2020, our Advance Pricing Arrangement ("APA") with the Internal Revenue Service and the Canada
Revenue Agency expired. This APA stipulated the al ocation of certain profits between the U.S. and Canada. We are currently
in the process of negotiating the renewal of this arrangement and the final agreed upon terms and conditions thereof could
impact our effective tax rate.
	Current economic and political conditions make tax rules in any jurisdiction, including the United States and Canada,
subject to significant change. Changes in applicable U.S., Canadian, or other international tax laws and regulations, or their
interpretation and application, including the possibility of retroactive effect, could affect our income tax expense and
profitability, as they did in fiscal 2017 and fiscal 2018 upon passage of the U.S. Tax Cuts and Jobs Act and in 2020 with the
passage of the Coronavirus Aid, Relief, and Economic Security Act.
Our failure to comply with trade and other regulations could lead to investigations or actions by government regulators
and negative publicity.
	The labeling, distribution, importation, marketing, and sale of our products are subject to extensive regulation by
various federal agencies, including the Federal Trade Commission, Consumer Product Safety Commission and state attorneys
general in the United States, the Competition Bureau and Health Canada in Canada, the State Administration for Market
Regulation of the PRC, General Administration of Customs of the PRC, as wel as by various other federal, state, provincial,
local, and international regulatory authorities in the countries in which our products are distributed or sold. If we fail to
comply with any of these regulations, we could become subject to enforcement actions or the imposition of significant
penalties or claims, which could harm our results of operations or our ability to conduct our business. In addition, any audits
and inspections by governmental agencies related to these matters could result in significant settlement amounts, damages,
fines, or other penalties, divert financial and management resources, and result in significant legal fees. An unfavorable
outcome of any particular proceeding could have an adverse impact on our business, financial condition, and results of
operations. In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in
significant compliance costs or discontinuation of product sales and could impair the marketing of our products, resulting in
significant loss of net revenue.
	Our international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, and
other anti-bribery laws applicable to our operations. In many countries, particularly in those with developing economies, it
may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the
FCPA or other U.S. and international laws and regulations applicable to us. Although we have implemented procedures
designed to ensure compliance with the FCPA and similar laws, some of our employees, agents, or other partners, as wel as
those companies to which we outsource certain of our business operations, could take actions in violation of our policies. Any
such violation could have a material and adverse effect on our business.
Because a significant portion of our net revenue and expenses are generated in countries other than the United States,
fluctuations in foreign currency exchange rates have affected our results of operations and may continue to do so in the
future.
	The functional currency of our international subsidiaries is general y the applicable local currency. Our consolidated
financial statements are presented in U.S. dol ars. Therefore, the net revenue, expenses, assets, and liabilities of our
international subsidiaries are translated from their functional currencies into U.S. dol ars. Fluctuations in the value of the U.S.
dol ar affect the reported amounts of net revenue, expenses, assets, and liabilities. Foreign currency exchange differences
which arise on translation of our international subsidiaries' balance sheets into U.S. dol ars are recorded as other
comprehensive income (loss), net of tax in accumulated other comprehensive income or loss within stockholders' equity.
	We also have exposure to changes in foreign currency exchange rates associated with transactions which are
undertaken by our subsidiaries in currencies other than their functional currency. Such transactions include intercompany
transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity.
As a result, we have been impacted by changes in foreign currency exchange rates and may be impacted for the foreseeable
future. The potential impact of currency fluctuation increases as our international expansion increases.
	Although we use financial instruments to hedge certain foreign currency risks, these measures may not succeed in ful y
offsetting the negative impact of foreign currency rate movements.
	We are exposed to credit-related losses in the event of nonperformance by the counterparties to forward currency
contracts used in our hedging strategies.
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Risks related to intel ectual property
Our fabrics and manufacturing technology general y are not patented and can be imitated by our competitors. If our
competitors sel products similar to ours at lower prices, our net revenue and profitability could suffer.
	The intel ectual property rights in the technology, fabrics, and processes used to manufacture our products general y
are owned or control ed by our suppliers and are general y not unique to us. Our ability to obtain intel ectual property
protection for our products is therefore limited. We hold limited patents and exclusive intel ectual property rights in the
technology, fabrics or processes underlying our products. As a result, our current and future competitors are able to
manufacture and sel products with performance characteristics, fabrics and styling similar to our products. Because many of
our competitors have significantly greater financial, distribution, marketing, and other resources than we do, they may be
able to manufacture and sel products based on our fabrics and manufacturing technology at lower prices than we can. If our
competitors sel products similar to ours at lower prices, our net revenue and profitability could suffer.
Our failure or inability to protect our intel ectual property rights could diminish the value of our brand and weaken our
competitive position.
	We currently rely on a combination of patent, copyright, trademark, trade dress, trade secret, and unfair competition
laws, as wel as confidentiality procedures and licensing arrangements, to establish and protect our intel ectual property
rights. The steps we take to protect our intel ectual property rights may not be adequate to prevent infringement of these
rights by others, including imitation of our products and misappropriation of our brand. In addition, any of our intel ectual
property rights may be chal enged, which could result in them being narrowed in scope or declared invalid or unenforceable,
or our intel ectual property protection may be unavailable or limited in some international countries where laws or law
enforcement practices may not protect our intel ectual property rights as ful y as in the United States or Canada, and it may
be more difficult for us to successful y chal enge the use of our intel ectual property rights by other parties in these countries.
If we fail to protect and maintain our intel ectual property rights, the value of our brand could be diminished, and our
competitive position may suffer.
Our trademarks, patents, and other proprietary rights could potential y conflict with the rights of others and we may be
prevented from sel ing some of our products.
	Our success depends in large part on our brand image. We believe that our trademarks, patents, and other proprietary
rights have significant value and are important to identifying and differentiating our products from those of our competitors
and creating and sustaining demand for our products. We have applied for and obtained some United States, Canada, and
international trademark registrations and patents, and wil continue to evaluate additional trademarks and patents as
appropriate. However, some or al of these pending trademark or patent applications may not be approved by the applicable
governmental authorities. Moreover, even if the applications are approved, third parties may seek to oppose or otherwise
chal enge these applications or registrations. Additional y, we may face obstacles as we expand our product line and the
geographic scope of our sales and marketing. Third parties may assert intel ectual property claims against us, particularly as
we expand our business and the number of products we offer. Our defense of any claim, regardless of its merit, could be
expensive and time consuming and could divert management resources. Successful infringement claims against us could
result in significant monetary liability or prevent us from sel ing some of our products. In addition, resolution of claims may
require us to redesign our products, license rights from third parties, or cease using those rights altogether. Any of these
events could harm our business and cause our results of operations, liquidity, and financial condition to suffer.
We have been, and in the future may be, sued by third parties for al eged infringement of their proprietary rights.
	There is considerable patent and other intel ectual property development activity in our market, and litigation, based on
al egations of infringement or other violations of intel ectual property, is frequent in the fitness and technology industries.
Furthermore, it is common for individuals and groups to purchase patents and other intel ectual property assets for the
purpose of making claims of infringement to extract settlements from companies like ours. Our use of third-party content,
including music content, software, and other intel ectual property rights may be subject to claims of infringement or
misappropriation. We cannot guarantee that our internal y developed or acquired technologies and content do not or wil not
infringe the intel ectual property rights of others. From time to time, our competitors or other third parties may claim that we
are infringing upon or misappropriating their intel ectual property rights, and we may be found to be infringing upon such
rights. Any claims or litigation could cause us to incur significant expenses and, if successful y asserted against us, could
require that we pay substantial damages or ongoing royalty payments, prevent us from offering our platform or services or
using certain technologies, force us to implement expensive work-arounds, or impose other unfavorable terms. We expect
that the occurrence of infringement claims is likely to grow as the market for fitness products and services grows and as we
introduce new and updated products and offerings. Accordingly, our exposure to damages resulting from infringement claims
could increase and this could further exhaust our financial and management resources. Any of the foregoing could prevent us
from competing effectively and could have an adverse effect on our business, financial condition, and operating results.
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Risks related to legal and governance matters
We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved
against us.
	From time to time, we are involved in litigation and other proceedings, including matters related to product liability
claims, stockholder class action and derivative claims, commercial disputes and intel ectual property, as wel as trade,
regulatory, employment, and other claims related to our business. Any of these proceedings could result in significant
settlement amounts, damages, fines, or other penalties, divert financial and management resources, and result in significant
legal fees. An unfavorable outcome of any particular proceeding could exceed the limits of our insurance policies or the
carriers may decline to fund such final settlements and/or judgments and could have an adverse impact on our business,
financial condition, and results of operations. In addition, any proceeding could negatively impact our reputation among our
guests and our brand image.
Our business could be negatively affected as a result of actions of activist stockholders or others.
	We may be subject to actions or proposals from stockholders or others that may not align with our business strategies
or the interests of our other stockholders. Responding to such actions can be costly and time-consuming, disrupt our business
and operations, and divert the attention of our board of directors, management, and employees from the pursuit of our
business strategies. Such activities could interfere with our ability to execute our strategic plan. Activist stockholders or others
may create perceived uncertainties as to the future direction of our business or strategy which may be exploited by our
competitors and may make it more difficult to attract and retain qualified personnel and potential guests, and may affect our
relationships with current guests, vendors, investors, and other third parties. In addition, a proxy contest for the election of
directors at our annual meeting would require us to incur significant legal fees and proxy solicitation expenses and require
significant time and attention by management and our board of directors. The perceived uncertainties as to our future
direction also could affect the market price and volatility of our securities.Anti-takeover provisions of Delaware law and our certificate of incorporation and bylaws could delay and discourage
takeover attempts that stockholders may consider to be favorable.
	Certain provisions of our certificate of incorporation and bylaws and applicable provisions of the Delaware General
Corporation Law may make it more difficult or impossible for a third-party to acquire control of us or effect a change in our
board of directors and management. These provisions include:
	•	the classification of our board of directors into three classes, with one class elected each year;
	•	prohibiting cumulative voting in the election of directors;
	•	the ability of our board of directors to issue preferred stock without stockholder approval;
	•	the ability to remove a director only for cause and only with the vote of the holders of at least 66 2/3% of our voting
	stock;
	•	a special meeting of stockholders may only be cal ed by our chairman or Chief Executive Officer, or upon a
	resolution adopted by an affirmative vote of a majority of the board of directors, and not by our stockholders;
	•	prohibiting stockholder action by written consent; and
	•	our stockholders must comply with advance notice procedures in order to nominate candidates for election to our
	board of directors or to place stockholder proposals on the agenda for consideration at any meeting of our
	stockholders.
	In addition, we are governed by Section 203 of the Delaware General Corporation Law which, subject to some specified
exceptions, prohibits "business combinations" between a Delaware corporation and an "interested stockholder," which is
general y defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation's voting stock,
for a three-year period fol owing the date that the stockholder became an interested stockholder. Section 203 could have the
effect of delaying, deferring, or preventing a change in control that our stockholders might consider to be in their best
interests.
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Table of Contents
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	The fol owing table provides information regarding our purchases of shares of our common stock during the first
quarter of 2022 related to our stock repurchase program:
					Maximum Dollar
				Total Number of	Value of Shares
				Shares Purchased	that May Yet Be
		Total Number of	Average	as Part of Publicly	Purchased Under
		Shares	Price Paid per	Announced Plans	the Plans or
Period(1)		Purchased(2)	Share	or Programs(2)	Programs(2)
January 31, 2022 - February 27, 2022						364,581 $	323.27	364,581 $	69,585,052
February 28, 2022 - April 3, 2022						223,501	311.34	223,501	1,000,000,000
April 4, 2022 - May 1, 2022						120,288	375.67	120,288	954,811,791
Total						708,370					708,370
__________(1)
	Monthly information is presented by reference to our fiscal periods during our first quarter of 2022.
(2)	On January 31, 2019, our board of directors approved a stock repurchase program of up to $500.0 mil ion of our common shares on the open market
	or in privately negotiated transactions. On December 1, 2020, our board of directors approved an increase in the remaining authorization of our
	existing stock repurchase program from $264 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, we completed the remaining stock repurchases under this program. On
	March 23, 2022, our board of directors approved a stock repurchase program of up to $1.0 bil ion of our 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.
	The fol owing table provides information regarding our purchases of shares of our common stock during the first
quarter of 2022 related to our Employee Share Purchase Plan:
					Maximum
				Total Number of	Number of Shares
				Shares Purchased	that May Yet Be
		Total Number of	Average	as Part of Publicly	Purchased Under
		Shares	Price Paid per	Announced Plans	the Plans or
Period(1)		Purchased(2)	Share	or Programs(2)	Programs(2)
January 31, 2022 - February 27, 2022						6,040 $	320.86	6,040	4,585,612
February 28, 2022 - April 3, 2022						9,584	332.37	9,584	4,576,028
April 4, 2022 - May 1, 2022						6,001	377.05	6,001	4,570,027
Total						21,625					21,625
__________(1)
	Monthly information is presented by reference to our fiscal periods during our first quarter of 2022.
(2)	The ESPP was approved by our board of directors and stockholders in September 2007. Al shares purchased under the ESPP are purchased on the
	Nasdaq Global Select Market (or such other stock exchange as we may designate). Unless our board terminates the ESPP earlier, it wil continue until
	al shares authorized for purchase have been purchased. The maximum number of shares authorized to be purchased under the ESPP was 6,000,000.
	Excluded from this disclosure are shares withheld to settle statutory employee tax withholding related to the vesting of
stock-based compensation awards.
						43

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ITEM 6. EXHIBITS

Incorporated by Reference

ExhibitFiledExhibitFiling

No.

Exhibit Title

Herewith

Form

No.

File No.

Date

31.1

Certification of principal executive officer Pursuant to

Exchange Act Rule 13a-14(a)

31.2

Certification of principal financial and accounting officer

Pursuant to Exchange Act Rule 13a-14(a)

32.1*

Certification of principal executive officer and principal

financial and accounting officer Pursuant to 18 U.S.C.

Section 1350 as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

101

The fol owing unaudited interim consolidated financial

statements from the Company's Quarterly Report on Form 10-

Q for the fiscal quarter ended May 1, 2022, formatted in iXBRL:

(i) Consolidated Balance Sheets, (i ) Consolidated Statements of

Operations and Comprehensive Income, (i i) Consolidated

Statements of Stockholders' Equity, (iv) Consolidated

Statements of Cash Flows (v) Notes to the Unaudited Interim

Consolidated Financial Statements

Furnished herewith.

		Table of Contents
SIGNATURES
	Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
		signed on its behalf by the undersigned, thereunto duly authorized.

			lululemon athletica inc.
			By: /s/ MEGHAN FRANK
			Meghan FrankChief Financial Officer(principal financial and accounting officer)
		Dated: June 2, 2022
				45

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Exhibit Index

Incorporated by Reference

Exhibit

Filed

Exhibit

Filing

No.

Exhibit Title

Herewith

Form

No.

File No.

Date

31.1

Certification of principal executive officer Pursuant to

Exchange Act Rule 13a-14(a)

31.2

Certification of principal financial and accounting officer

Pursuant to Exchange Act Rule 13a-14(a)

32.1*

Certification of principal executive officer and principal

financial and accounting officer Pursuant to 18 U.S.C.

Section 1350 as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

101

The fol owing unaudited interim consolidated financial

statements from the Company's Quarterly Report on Form 10-

Q for the fiscal quarter ended May 1, 2022, formatted in iXBRL:

(i) Consolidated Balance Sheets, (i ) Consolidated Statements of

Operations and Comprehensive Income, (i i) Consolidated

Statements of Stockholders' Equity, (iv) Consolidated

Statements of Cash Flows (v) Notes to the Unaudited Interim

Consolidated Financial Statements

Furnished herewith.

Exhibit 31.1
	I, Calvin McDonald, certify that:
		1. I have reviewed this quarterly report on Form 10-Q of lululemon athletica inc.;
		2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
	material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
	not misleading with respect to the period covered by this report;
		3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
	present in al material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
	periods presented in this report;
		4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
	procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
	defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
			(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
	designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
	subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
	prepared;
			(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
	to be designed under our supervision, 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;
			(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
	our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
	report based on such evaluation; and
			(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
	during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
	material y affected, or is reasonably likely to material y affect, the registrant’s internal control over financial reporting; and
		5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
	over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
	performing the equivalent functions):
			(a) Al significant deficiencies and material weaknesses in the design or operation of internal control over financial
	reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
	financial information; and
			(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
	in the registrant’s internal control over financial reporting.

				By: /s/ CALVIN MCDONALD
					Calvin McDonaldChief Executive Officer and Director(principal executive officer)
	Date: June 2, 2022

Exhibit 31.2
	I, Meghan Frank, certify that:
		1. I have reviewed this quarterly report on Form 10-Q of lululemon athletica inc.;
		2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
	material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
	not misleading with respect to the period covered by this report;
		3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
	present in al material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
	periods presented in this report;
		4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
	procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
	defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
			(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
	designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
	subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
	prepared;
			(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
	to be designed under our supervision, 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;
			(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
	our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
	report based on such evaluation; and
			(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
	during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
	material y affected, or is reasonably likely to material y affect, the registrant’s internal control over financial reporting; and
		5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
	over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
	performing the equivalent functions):
			(a) Al significant deficiencies and material weaknesses in the design or operation of internal control over financial
	reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
	financial information; and
			(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
	in the registrant’s internal control over financial reporting.

				By: /s/ MEGHAN FRANK
					Meghan FrankChief Financial Officer(principal financial and accounting officer)
	Date: June 2, 2022

Exhibit 32.1
	CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
		AS ADOPTED PURSUANT TO SECTION 906 OF
		THE SARBANES-OXLEY ACT OF 2002
			In connection with the Quarterly Report of lululemon athletica inc. (the “Company”) on Form 10-Q for the first quarter
				of fiscal 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the
				undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
				Oxley Act of 2002, that, to such officer’s knowledge:
					(1) The Report ful y complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
				1934; and
					(2) The information contained in the Report fairly presents, in al material respects, the financial condition and
				results of operations of the Company.

						By: /s/ CALVIN MCDONALD
							Calvin McDonaldChief Executive Officer and Director(principal executive officer)
				Date: June 2, 2022

						By: /s/ MEGHAN FRANK
							Meghan FrankChief Financial Officer(principal financial and accounting officer)
				Date: June 2, 2022
			The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the
				Report or as a separate disclosure document.