lululemon athletica inc.
For the period ended Feb 1, 2026. Filed Mar 17, 2026.
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FY2026 · Filed Mar 17, 2026
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Impairment of Assets and Restructuring Costs
Note 10. Impairment of Assets and Restructuring Costs
During the third quarter of 2023, the Company reached the decision to cease selling its lululemon Studio Mirror hardware. It also contracted with Peloton Interactive, Inc. to be the exclusive digital fitness content provider to existing lululemon Studio subscribers, and stopped producing its own digital fitness content. The Company ceased selling the lululemon Studio Mirror and new digital content subscriptions in December 2023.
These strategy shifts resulted in impairment testing and the recognition of inventory provisions, asset impairments, and restructuring costs related to the lululemon Studio reporting unit. The following table summarizes the amounts recognized:
| (In thousands) | |
|---|---|
| Costs recorded in cost of goods sold: | |
| lululemon Studio obsolescence provision | $23,709 |
| Costs recorded in operating expenses: | |
| Impairment of assets: | |
| Impairment of intangible assets | 16,951 |
| Impairment of cloud computing arrangement implementation costs | 16,074 |
| Impairment of property and equipment | 11,161 |
| $44,186 | |
| Restructuring costs | 30,315 |
| Impairment of assets and restructuring costs | $74,501 |
| Total pre-tax charges | $98,210 |
| Income tax effects of charges | $(26,085) |
| Total after-tax charges | $72,125 |
lululemon Studio obsolescence provision
As a result of the decision to cease selling the lululemon Studio Mirror in the third quarter of 2023, the Company recognized an inventory obsolescence provision of $23.7 million during 2023. The net realizable value of the lululemon Studio inventory was based on assumptions regarding liquidation value.
Impairment of assets
During 2023, as a result of the Company's decision to no longer produce digital fitness content and to cease the sale of the lululemon Studio Mirror, the Company performed impairment testing for the lululemon Studio asset group as of October 29, 2023. The undiscounted cash flows of the lululemon Studio asset group were less than their carrying value, and therefore the Company calculated the fair value of the asset group, which was also less than its carrying value.
As a result of the impairment test, the Company recognized asset impairments totaling $44.2 million during 2023. The fair value of long-lived assets was based on a discounted cash flow model, and is a Level 3 non-recurring fair value measurement. The key assumptions used to estimate the fair value were subscriber churn rates and operating costs.
Restructuring costs
During 2023, the Company recognized restructuring costs of $30.3 million for lululemon Studio primarily related to contract termination costs, employee severance costs, and professional fees.
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