lululemon athletica inc.

Previous wording

Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2025 will end on February 1, 2026 and will be a 52-week year. Fiscal 2024 was a 53-week year and ended on February 2, 2025. Fiscal 2025 and fiscal 2024 are referred to as "2025," and "2024," respectively. The first three quarters of 2025 and 2024 ended on November 2, 2025 and October 27, 2024, respectively.

Current wording

Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2026 will end on January 31, 2027 and will be a 52-week year. Fiscal 2025 was a 52-week year and ended on February 1, 2026. Fiscal 2026 and fiscal 2025 are referred to as "2026," and "2025," respectively. The first quarter of 2026 and 2025 ended on May 3, 2026 and May 4, 2025, respectively.

Previous wording

We use comparable sales as a metric to evaluate the performance of our business. Due to the 53rd week in 2024, comparable sales are calculated on a one-week shifted basis such that the 13 or 39 weeks ended November 2, 2025 is compared to the 13 or 39 weeks ended November 3, 2024 rather than October 27, 2024. Refer to the Comparable Sales section of this MD&A for further information.

Current wording

We use comparable sales as a metric to evaluate the performance of our business. Refer to the Comparable Sales section of this MD&A for further information.

Previous wording

lululemon athletica inc. is principally a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. We have a vision to create transformative products and experiences that build meaningful connections, unlocking greater possibility and wellbeing for all. Since our inception, we have fostered a distinctive corporate culture; we promote a set of core values in our business which include taking personal responsibility, acting with courage, valuing connection and inclusion, and choosing to have fun. These core values attract passionate and motivated employees who are driven to achieve personal and professional goals, and share our purpose "to elevate human potential by helping people feel their best."

Current wording

lululemon athletica inc. is principally a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. Our vision is to create transformative products and experiences that build meaningful connections, unlocking greater possibility and wellbeing for all. Since our inception, we have fostered a distinctive corporate culture; we promote a set of core values in our business which include taking personal responsibility, acting with courage, valuing connection and inclusion, and choosing to have fun. These core values attract passionate and motivated employees who are driven to achieve personal and professional goals, and share our purpose "to elevate human potential by helping people feel their best."

Previous wording

We offer a comprehensive line of technical athletic apparel, footwear, and accessories marketed under the lululemon brand. Our apparel assortment includes items such as pants, shorts, tops, and jackets designed for a healthy lifestyle including athletic activities such as yoga, running, training, and most other activities. We also offer apparel designed for being on the move and fitness-inspired accessories. We expect to continue to broaden our merchandise offerings through expansion across these product areas.

Current wording

We offer a comprehensive line of technical athletic apparel, footwear, and accessories marketed under the lululemon brand which includes:

Previous wording

The summary below compares the third quarter of 2025 to the third quarter of 2024:

Current wording

The summary below compares the first quarter of 2026 to the first quarter of 2025:

Previous wording

•Comparable sales increased 1%, or 2% on a constant dollar basis.

Current wording

•Comparable sales increased 1%, or decreased 2% on a constant dollar basis.

Previous wording

–Americas comparable sales decreased 5%.

Current wording

–Americas comparable sales decreased 5%, or 6% on a constant dollar basis.

Previous wording

–China Mainland comparable sales increased 24%, or 25% on a constant dollar basis.

Current wording

–China Mainland comparable sales increased 20%, or 13% on a constant dollar basis.

Previous wording

–Rest of World comparable sales increased 9%.

Current wording

–Rest of World comparable sales increased 5%, or 1% on a constant dollar basis.

Previous wording

•Gross margin decreased 290 basis points to 55.6%.

Current wording

•Gross margin decreased 410 basis points to 54.2%.

Previous wording

•Operating margin decreased 350 basis points to 17.0%.

Current wording

•Operating margin decreased 730 basis points to 11.2%.

Previous wording

•Income tax expense decreased 12% to $134.9 million. Our effective tax rate for the third quarter of 2025 was 30.5% compared to 30.2% for the third quarter of 2024.

Current wording

•Income tax expense decreased 33% to $91.0 million. Our effective tax rate for the first quarter of 2026 was 31.8% compared to 30.2% for the first quarter of 2025.

Previous wording

•Diluted earnings per share were $2.59 compared to $2.87 in the third quarter of 2024.

Current wording

•Diluted earnings per share were $1.69 compared to $2.60 in the first quarter of 2025.

Previous wording

Across all markets, our business continues to be negatively influenced by macroeconomic conditions, including trade policies, shifting consumer demand, inflation, foreign currency fluctuations, and geopolitical instability. These factors have had varying effects across our markets and are expected to continue to impact our business throughout 2025 and beyond.

Current wording

Across all markets, our business continues to be influenced by macroeconomic conditions, including trade policies, shifting consumer demand and sentiment, foreign currency fluctuations, and geopolitical instability. These factors have had varying effects across our markets and are expected to continue to impact our business throughout the remainder of 2026 and beyond.

Previous wording

Because this is an evolving area, future developments may change our expectations materially. For additional information on related risks, please see “Risk Factors” in this quarterly report.

Current wording

Because this is an evolving area, future developments may change our expectations materially. For additional information on related risks, please see “Risk Factors” in this report.

Previous wording

Foreign currency fluctuations negatively impacted our financial results during the first three quarters of 2025, reducing net revenue growth by $15.4 million compared to the first three quarters of 2024. We expect ongoing exchange rate volatility to continue affecting our financial results.

Current wording

Foreign currency fluctuations positively impacted our financial results during the first quarter of 2026, increasing net revenue growth by $52.2 million compared to the first quarter of 2025. We expect ongoing exchange rate volatility to continue to affect our financial results.

Previous wording

The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue, partially offset by decreased Americas net revenue. Global comparable sales increased 1%, or 2% on a constant dollar basis.

Current wording

The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue, partially offset by decreased Americas net revenue. Global comparable sales increased 1%, or decreased 2% on a constant dollar basis, primarily due to lower conversion rates as well as a decrease in average order value, partially offset by higher traffic.

Previous wording

•a net decrease in product margin of 300 basis points, comprised of:

Current wording

•a net decrease in product margin of 270 basis points, comprised of:

Previous wording

–a net decrease of 290 basis points primarily from higher tariffs as well as markdowns and credit card affiliate programs, partially offset by higher pricing and lower product costs; and

Current wording

–a net decrease of 330 basis points primarily from higher tariffs as well as markdowns including credit card affiliate programs and higher inventory provisions, partially offset by higher pricing and lower product costs; and

Previous wording

•a net decrease in other cost of sales as a percentage of net revenue of 10 basis points, comprised of:

Current wording

•a net increase in other cost of sales as a percentage of net revenue of 140 basis points, comprised of:

Previous wording

–an increase in occupancy and depreciation costs of 30 basis points.

Current wording

–an increase in occupancy and depreciation costs of 130 basis points, primarily driven by new and expanded company-operated stores as well as increased penetration in China Mainland and Rest of World; and

Previous wording

•a net increase in head office costs of $9.7 million, comprised of:

Current wording

•a net increase in head office costs of $63.1 million, comprised of:

Previous wording

–an increase in employee costs of $77.3 million primarily due to increased salaries and wages expense for retail employees, partially offset by decreased incentive compensation;

Current wording

–an increase in employee costs of $29.6 million primarily due to increased salaries and wages expense, primarily as a result of increased wage rates;

Previous wording

–an increase in brand and community expenses of $8.6 million;

Current wording

–an increase in brand and community expenses of $22.5 million;

Previous wording

–an increase in technology costs, including cloud computing amortization, of $6.4 million;

Current wording

–an increase in technology costs, including cloud computing amortization, of $6.5 million;

Previous wording

–an increase in depreciation of $4.2 million;

Current wording

–an increase in depreciation of $4.5 million;

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–a decrease in contractor, advisory, and professional services of $1.5 million; and

Current wording

–a net increase in contractor, advisory, and professional services of $1.1 million, which includes costs associated with proxy contest matters of $11.4 million in 2026, partially offset by lower other advisory and professional fees; and

Previous wording

•an increase in costs related to our operating channels of $66.7 million, comprised of:

Current wording

•an increase in costs related to our operating channels of $56.4 million, comprised of:

Previous wording

–an increase in employee costs of $28.2 million primarily due to increased salaries and wages expense for retail employees;

Current wording

–an increase in employee costs of $31.2 million primarily due to increased salaries and wages expense for retail employees;

Previous wording

–an increase in variable costs of $15.1 million primarily due to increased distribution costs and higher credit card fees as a result of higher net revenue;

Current wording

–an increase in variable costs of $14.3 million primarily due to increased distribution costs;

Previous wording

–an increase in digital marketing expenses of $9.5 million;

Current wording

–an increase in digital marketing expenses of $3.5 million;

Previous wording

–an increase in other operating costs of $8.7 million primarily due to increased depreciation and occupancy costs.

Current wording

–an increase in other operating costs of $4.5 million.

Previous wording

•an increase in net foreign currency exchange and derivative revaluation losses of $2.0 million.

Current wording

The increase in selling, general and administrative expenses was partially offset by a decrease in net foreign currency exchange and derivative revaluation losses of $2.4 million.

Previous wording

On a segment basis, we determine income from operations without taking into account corporate expenses and certain other expenses. Corporate expenses include the cost of centrally managed support functions including product design, raw material development, product innovation, sourcing, supply chain, and global merchandising which are included in other cost of sales. Administrative corporate expenses include technology, brand and marketing, finance, human resources, legal, and other head office costs.

Current wording

On a segment basis, we determine income from operations without taking into account corporate expenses. Corporate expenses include the cost of centrally managed support functions including product design, raw material development, product innovation, sourcing, supply chain, and global merchandising which are included in other cost of sales. Administrative corporate expenses include technology, brand and marketing, finance, human resources, legal, and other head office costs.

Previous wording

The decrease in Americas net revenue was primarily due to a decrease in comparable sales, which decreased 5%. The decrease in comparable sales was primarily a result of a decrease in average order value, lower conversion rates, and reduced store traffic, partially offset by higher e-commerce traffic, which was partially driven by the impact of credit card affiliate programs. The decrease in comparable sales was partially offset by a $50.3 million increase from new or expanded company-operated stores and our other channels. We opened 11 net new company-operated stores in the Americas since the third quarter of 2024.

Current wording

The decrease in net revenue was primarily due to a decrease in comparable sales, which decreased 5%, or 6% on a constant dollar basis. The decrease in comparable sales was primarily a result of lower conversion rates, reduced store traffic, and a decrease in average order value, partially offset by higher e-commerce traffic. The decrease in comparable sales was partially offset by a $15.8 million increase from new or expanded company-operated stores and our other channels. We have opened 14 net new company-operated stores in the Americas since the first quarter of 2025.

Previous wording

The decrease in gross margin was primarily due to lower product margin and higher distribution center costs as a percentage of net revenue, partially offset by lower occupancy costs as a percentage of net revenue.

Current wording

The decrease in gross margin was primarily due to lower product margin driven mainly by higher tariffs, as well as higher depreciation, occupancy costs, and distribution center costs as a percentage of net revenue.

Previous wording

The increase in selling, general and administrative expenses was primarily due to increased marketing expenses, employee costs, variable costs, and technology costs.

Current wording

The increase in selling, general and administrative expenses was primarily due to higher marketing expenses, employee costs, and variable costs.

Previous wording

The increase in China Mainland net revenue was primarily due to an increase in comparable sales, which increased 16%, or 17% on a constant dollar basis. The increase in comparable sales was primarily a result of increased e-commerce traffic, partially offset by a decrease in average order value. The increase in China Mainland net revenue was also driven by a $122.3 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 27 new company-operated stores in China Mainland since the third quarter of 2024.

Current wording

The increase in net revenue was primarily due to an increase in comparable sales, which increased 20%, or 13% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic partially offset by lower conversion rates. The increase in China Mainland net revenue was also driven by a $45.2 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 19 net new company-operated stores in China Mainland since the first quarter of 2025.

Previous wording

The decrease in gross margin was primarily due to higher distribution center costs as a percentage of net revenue and lower product margin, partially offset by lower occupancy costs as a percentage of net revenue.

Current wording

The increase in gross margin was primarily due to a higher product margin driven mainly by a favorable impact of foreign currency exchange rates, as well as lower distribution center costs as a percentage of net revenue.

Previous wording

The increase in Rest of World net revenue was primarily due to a $91.7 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened nine net new company-operated stores in Rest of World since the third quarter of 2024. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 9%, or 8% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in average order value.

Current wording

The increase in net revenue was primarily due to a $29.4 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 13 net new company-operated stores in Rest of World since the first quarter of 2025. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 5%, or 1% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by lower conversion rates.