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| Part I |
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| Item 1. | Business | 6 |
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| Item 1A. | Risk Factors | 14 |
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| Item 1B. | Unresolved Staff Comments | 51 |
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| Item 1C. | Cybersecurity | 51 |
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| Item 2. | Properties | 52 |
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| Item 3. | Legal Proceedings | 52 |
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| Item 4. | Mine Safety Disclosures | 52 |
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| PART II | | |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | 53 |
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| Item 6. | Reserved | 55 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 55 |
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| Item 7A. | Quantitative and Qualitative Disclosure About Market Risk | 66 |
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| Item 8. | Financial Statements and Supplementary Data | 67 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 100 |
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| Item 9A. | Controls and Procedures | 100 |
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| Item 9B. | Other Information | 101 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | 101 |
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| PART III | | |
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| Item 10. | Directors, Executive Officers, and Corporate Governance | 102 |
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| Item 11. | Executive Compensation | 102 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 102 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 102 |
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| Item 14. | Principal Accountant Fees and Services | 102 |
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| PART IV | | |
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| Item 15. | Exhibit and Financial Statement Schedules | 103 |
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| Signatures | 108 |
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Annual Report on Form 10-K may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, stock compensation, business strategy, plans, market growth and our objectives for future operations.
The forward-looking statements in this Annual Report on Form 10-K are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed in Part I, “Item 1A. Risk Factors” in this Annual Report on Form 10-K. The forward-looking statements in this Annual Report on Form 10-K are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read this Annual Report on Form 10-K and the documents that we reference in this Annual Report on Form 10-K and have filed as exhibits to this Annual Report on Form 10-K with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Annual Report on Form 10-K. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Annual Report on Form 10-K, whether as a result of any new information, future events or otherwise.
BASIS OF PRESENTATION
On August 28, 2017, we executed a reorganization of our corporate structure. Our original parent company was called Lulu’s Holdings, LLC. This entity was converted to Lulu’s Holdings, L.P. (the “LP”). We formed two new subsidiaries, Lulu’s Fashion Lounge Holdings, Inc. and Lulu’s Fashion Lounge Parent, LLC, to sit between the LP and our operating company. Our operating company, previously known as Lulu’s Fashion Lounge, Inc., was converted from a California corporation to a Delaware limited liability company, Lulu’s Fashion Lounge, LLC, an indirect wholly-owned subsidiary of Lulu’s Fashion Lounge Holdings, Inc. In connection with our initial public offering, the LP was liquidated. Unless otherwise indicated or the context otherwise requires, references in this Annual Report on Form 10-K to the terms “Lulus,” “we,” “us,” “our,” or the “Company” refer to Lulu’s Fashion Lounge Holdings, Inc. and its consolidated subsidiaries.
Our fiscal year is a “52-53 week” year ending on the Sunday closest in proximity to December 31, such that each quarterly period will be 13 weeks in length, except during a 53 week year when the fourth quarter will be 14 weeks. References herein to “fiscal 2025” and/or “2025” relate to the year ended December 28, 2025, “fiscal 2024” and/or “2024” relate to the year ended December 29, 2024 and “fiscal 2023” and/or “2023” relate to the year ended December 31, 2023. The fiscal years ended December 28, 2025, December 29, 2024 and December 31, 2023 consisted of 52 weeks.
Throughout this Annual Report on Form 10-K, we provide a number of key performance indicators used by management and typically used by our competitors in our industry. These and other key performance indicators are discussed in more detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Financial Metrics.” In this Annual Report on Form 10-K, we also reference Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow which are non-GAAP (generally accepted accounting principles in the United States of America) financial measure. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as well as a reconciliation of netlossto Adjusted EBITDA and a reconciliation to non-GAAP Free Cash Flow from net cash provided by operating activities. Net loss is the most directly comparable financial measure to Adjusted EBITDAand net cash provided by operating activities is the most directly comparable financial measure to Free Cash Flow, required by, or presented in accordance with GAAP.
SUMMARY RISK FACTORS
Our business is subject to numerous risks and uncertainties, including those described in Part I, “Item 1A. Risk Factors” in this Annual Report on Form 10-K. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:
| ● | Our business depends on our ability to maintain a strong community around the Lulus brand with engaged customers and influencers; |
| ● | Our success depends on our ability to anticipate, identify, measure, and respond quickly to new and rapidly changing fashion trends, customer preferences and demands, and other factors; |
| ● | We rely on third parties to drive traffic to our platform; |
| ● | Certain of our key operating metrics are subject to inherent challenges; |
| ● | Use of social media, influencers, affiliate marketing, email, SMS, podcast advertisements, promotional partnerships and direct mail may adversely impact our brand and reputation or subject us to fines or other penalties; |
| ● | If we are unable to continue connecting with our target customer base through effective marketing channels, it could have a material adverse effect on our business; |
| ● | We may not accurately forecast income and appropriately plan our expenses; |
| ● | If we fail to provide high-quality customer support or have significant changes to policies and/or services, third party or otherwise, it could have a material adverse effect on our business; |
| ● | Changes in international trade regulation, including increases in tariff rates and the imposition of additional tariffs, could increase our costs and adversely impact our business; |
| ● | A growing portion of our revenue is derived from wholesale partners, and changes in our relationships with, or the loss of, wholesale partners could adversely impact our financial condition and results of operations; |
| ● | Our business is affected by seasonality, which could result in fluctuations in our results of operations; |
| ● | We have outstanding borrowings, and we may incur additional indebtedness in the future; |
| ● | We have a history of net losses and we may not be able to achieve or maintain profitability in the future; |
| ● | We may not be able to successfully implement our growth strategy; |
| ● | Our international growth strategy will largely depend on our ability to manage the unique challenges presented by international markets; |
| ● | We operate in the highly competitive retail apparel industry; |
| ● | We rely on consumer discretionary spending and may be adversely affected by economic downturns and other macroeconomic conditions or trends; |
| ● | If we are not able to successfully maintain our desired merchandise assortment or manage our inventory effectively, we may be unable to attract a sufficient number of customers or sell sufficient quantities of our merchandise; |
| ● | Our ability to obtain merchandise on a timely basis at competitive prices could suffer as a result of any deterioration or change in our supplier relationships or events and regulations that adversely affect our suppliers or their ability to obtain financing for their operations; |
| ● | Merchandise returns and damages could harm our business; |
| ● | System security risk issues, including any real or perceived failure to protect confidential or personal information against security breaches and disruption of our internal operations or information technology systems, could have a material adverse effect on our business, financial condition, and results of operations; |
| ● | We rely significantly on technology and systems to support our supply chain, payments, financial reporting and other key aspects of our business; |
| ● | Our business relies heavily on email, SMS and other messaging services, and any restrictions on the sending of emails or messages or an inability to timely or successfully deliver such communications could materially adversely affect our business, financial condition and results of operations; |
| ● | The use of technology based on artificial intelligence presents risks; |
| ● | Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, and warehousing; |
| ● | We have two distribution facilities and disruptions to the operations at these locations could have a material adverse effect on our business, financial condition, cash flows, and results of operations; |
| ● | We rely on third-party suppliers, manufacturers, distributors, and other suppliers, and they may not continue to produce products or provide services that are consistent with our standards or applicable regulatory requirements; |
| ● | Many of our third-party suppliers and manufacturers are based in China, which exposes us to risks inherent in doing business there; |
| ● | We plan to continue increasing the number of direct sourcing relationships with manufacturers overseas, but because our experience with direct sourcing is still relatively limited, we may be exposed to unforeseen risks that could have a material adverse effect on our business, financial condition, and results of operations; |
| ● | We rely upon independent third-party transportation providers for substantially all of our merchandise; |
| ● | A failure to comply with current laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties may adversely affect our business, financial performance, results of operations or business growth; |
| ● | We may be unable to protect our trademarks or other intellectual property rights; |
| ● | If our suppliers fail to comply with applicable laws, including a failure to use acceptable labor practices, or if our suppliers suffer disruptions in their businesses, we could suffer adverse business consequences; |
| ● | Changes in laws, including employment laws and laws related to our merchandise, could make conducting our business more expensive or otherwise cause us to change the way we do business; |
| ● | We may require additional capital to support business growth and this capital might not be available or may be available only by diluting existing stockholders; |
| ● | We are required to meet the Nasdaq Capital Market’s continued listing requirements and other Nasdaq rules, or we may risk delisting; |
| ● | We expect that our stock price will fluctuate significantly; |
| ● | There could be a material disruption to our business as a result of activist stockholders or others; |
| ● | Short sellers of our stock may be manipulative and may drive down the market price of our common stock; |
| ● | Our common stock market price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business; |
| ● | We cannot guarantee that our 2024 Stock Repurchase Program will enhance long-term stockholder value and stock repurchases could increase the volatility of the trading price of our stock and could diminish our cash reserves; |
| ● | Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition; |
| ● | We have incurred goodwill impairment charges in the past, and may incur goodwill or intangible asset impairment charges again in the future; |
| ● | There are claims made against us from time to time that can result in litigation that could distract management from our business activities and result in significant liability or damage to our brand; and |
| ● | We depend on our senior management personnel. |
