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 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.

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 two quarters of 2026 and 2025 ended on August 2, 2026 and August 3, 2025, respectively.

Previous 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."

Current wording

lululemon athletica inc. is principally a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. Our mission is to inspire the world to sweat, grow, and connect. 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

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

Current wording

The summary below compares the second quarter of 2026 to the second quarter of 2025 and includes $134.5 million of International Emergency Economic Power Act ("IEEPA") tariff refunds and $4.1 million of associated interest received during the second quarter of 2026. Refer to the Import Tariffs section for more information.

Previous wording

•Net revenue increased 4% to $2.5 billion. On a constant dollar basis, net revenue increased 2%.

Current wording

•Net revenue decreased 4% to $2.4 billion. On a constant dollar basis, net revenue decreased 5%.

Previous wording

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

Current wording

–China Mainland comparable sales decreased 2%, or 8% on a constant dollar basis.

Previous wording

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

Current wording

–Rest of World comparable sales decreased 4%, or 3% on a constant dollar basis.

Previous 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.

Current wording

•Income tax expense decreased 15% to $138.1 million. Our effective tax rate for the second quarter of 2026 was 29.6%, compared to 30.5% for the second quarter of 2025.

Previous wording

Net revenue in the Americas decreased 3%, and comparable sales in the Americas decreased 5%. We experienced lower conversion rates, reduced store traffic, and a decrease in average order value in the Americas. We also experienced a decrease in product margin in the Americas segment of 500 basis points, primarily reflective of the impact of higher tariffs. We have initiated an action plan to drive sustainable net revenue growth in the Americas, structured around three strategic pillars: product creation, product activation, and enterprise enablement. This includes a plan to increase the reliance of full price selling to drive sustainable revenue growth.

Current wording

Net revenue in the Americas decreased 8%, and comparable sales in the Americas decreased 12%. We experienced reduced traffic and lower conversion rates, as well as a decrease in average order value in the Americas. We have initiated an action plan to drive net revenue growth in the Americas, structured around three strategic pillars: product creation, product activation, and enterprise enablement. This includes a plan to increase the reliance of full price selling to drive sustainable revenue growth.

Previous wording

Net revenue in China Mainland and Rest of World increased 30% and 13%, respectively, and comparable sales increased 20% and 5%, respectively. We experienced increased traffic in these markets which led to higher comparable sales. We opened 19 net new stores in China Mainland and 13 net new stores in Rest of World which contributed to the respective increases in net revenue.

Current wording

Net revenue in China Mainland and Rest of World increased 4% and 5%, respectively, or decreased 2% and increased 6% on a constant dollar basis, respectively. China Mainland and Rest of World comparable sales decreased by 2% and 4%, respectively. We experienced lower conversion in these markets which led to a decrease in comparable sales. We opened 15 net new stores in China Mainland and 10 net new stores in Rest of World since the second quarter of 2025.

Previous 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.

Current wording

Across all markets, our business continues to be impacted by shifting consumer demand and brand sentiment and macroeconomic conditions, including trade policies, 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

During 2025, the United States implemented a series of trade-related policies, including removing the de minimis exemption for low-value shipments imported into the United States, and implementing higher tariffs under different statutes, including under the International Emergency Economic Power Act ("IEEPA"). These changes in the tariff landscape, including the de minimis exemption removal, had a significant adverse effect on our business and results of operations in 2025, which continues in 2026.

Current wording

During 2025, the United States implemented a series of trade-related policies, including removing the de minimis exemption for low-value shipments imported into the United States, and implementing higher tariffs under different statutes, including under the IEEPA. These changes in tariffs, including the de minimis exemption removal, have had a significant adverse effect on our business and results of operations in 2025 and 2026.

Previous wording

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the IEEPA. Immediately following this IEEPA decision, the U.S. Administration initiated new tariffs at different rates under alternative legislative powers. The U.S. Administration also confirmed that the IEEPA decision does not impact the removal of the de minimis exemption. We paid $230 million of tariffs under the IEEPA and have commenced submitting refund claims for eligible IEEPA tariffs paid, including associated interest. The ultimate amounts that we may recover remain uncertain and as of May 3, 2026, we have not recognized an asset in relation to IEEPA refund claims.

Current wording

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the IEEPA. The U.S. Administration has initiated new tariffs at different rates under alternative legislative powers. The U.S. Administration also confirmed that the IEEPA decision does not impact the removal of the de minimis exemption, and this was upheld by the U.S. Court of International Trade on August 13, 2026. We paid $230 million of tariffs under the IEEPA and have submitted refund claims for eligible IEEPA tariffs paid, including associated interest. During the second quarter of 2026, we received $134.5 million of IEEPA tariff refunds, which has been recognized in cost of goods sold, and $4.1 million of associated interest, which has been recognized in other income (expense), net. However, the ultimate additional amounts that we may be refunded, if any, remain uncertain, and as of August 2, 2026, we have not recognized an asset in relation to further IEEPA tariff refund claims.

Previous wording

There remains significant uncertainty regarding the duration and scope of newly initiated tariffs and whether the United States will pursue additional trade actions or impose further tariffs, or currently enforced tariffs may be invalidated through legal challenges.

Current wording

There remains significant uncertainty regarding the duration and scope of newly initiated tariffs and whether the United States will pursue additional trade actions or impose further tariffs, or currently enforced tariffs may be invalidated through legal challenges. Additionally, our U.S. operating entity was named as a defendant in purported consumer class actions relating to alleged tariff-related pricing actions and potential governmental tariff reimbursements.

Previous 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.

Current wording

Foreign currency fluctuations positively impacted our financial results during the first two quarters of 2026, increasing net revenue by $69.6 million compared to the first two quarters 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 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.

Current wording

The decrease in net revenue was primarily due to decreased Americas net revenue, partially offset by increased Rest of World and China Mainland net revenue. Global comparable sales decreased 9%, or 10% on a constant dollar basis, primarily as a result of lower conversion rates, as well as reduced store traffic and a decrease in average order value, partially offset by higher e-commerce traffic.

Previous 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

Current wording

•a net decrease of 150 basis points primarily from higher tariffs, as well as markdowns including credit card affiliate programs, partially offset by higher pricing and lower product costs; and

Previous wording

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

Current wording

The increase in gross margin was partially offset by a net increase in other cost of sales as a percentage of net revenue of 230 basis points, comprised of:

Previous 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

Current wording

•an increase in occupancy and depreciation costs of 180 basis points, driven by new and expanded company-operated stores, as well as increased penetration in China Mainland and Rest of World; and

Previous wording

–an increase in costs related to our distribution centers and product departments of 10 basis points.

Current wording

•an increase in costs related to our distribution centers and product departments of 50 basis points.

Previous wording

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

Current wording

–an increase in brand and community expenses of $14.1 million;

Previous wording

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

Current wording

–an increase in technology costs, including cloud computing amortization, of $6.9 million;

Previous wording

–an increase in depreciation of $4.5 million;

Current wording

–an increase in depreciation of $6.4 million; and

Previous wording

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

Current wording

–an increase in digital marketing expenses of $0.9 million;

Previous wording

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

Current wording

–an increase in other operating costs of $4.2 million; and

Previous wording

Selling, general and administrative expenses as a percentage of net revenue increased 310 basis points, primarily due to an increase in head office costs of 180 basis points and an increase in costs related to our operating channels of 140 basis points.

Current wording

Selling, general and administrative expenses as a percentage of net revenue increased 400 basis points primarily due to an increase in head office costs of 260 basis points and an increase in costs related to our operating channels of 130 basis points.

Previous wording

The decrease in gross margin was primarily due to higher occupancy costs as a percentage of net revenue, partially offset by higher product margin driven by a favorable impact of foreign currency exchange rates.

Current wording

The increase in gross margin was primarily due to higher product margin driven by a favorable impact of foreign currency exchange rates, partially offset by higher depreciation and occupancy costs as a percentage of net revenue.

Previous wording

The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $117.1 million, a decrease in gross profit of $44.3 million, and a decrease in other income (expense), net of $2.7 million, partially offset by a decrease in income tax expense of $44.8 million.

Current wording

The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $54.7 million and a decrease in gross profit of $15.3 million, which included $134.5 million of IEEPA tariff refunds. The decrease in net income was partially offset by a decrease in income tax expense of $24.5 million and an increase in other income (expense), net of $4.0 million.

Previous wording

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

Current wording

The decrease in gross margin was partially offset by a net increase in product margin of 80 basis points, comprised of:

Previous 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

Current wording

–an increase in contractor, advisory, and professional services of $15.7 million, which includes costs associated with proxy contest matters of $24.8 million in the first two quarters of 2026, partially offset by lower other advisory and professional fees;

Previous wording

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

Current wording

–an increase in employee costs of $36.2 million primarily due to increased salaries and wages expense for retail employees;

Previous wording

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

Current wording

–an increase in variable costs of $10.1 million primarily due to increased distribution costs, partially offset by lower packaging costs;

Previous 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.

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 $1.3 million.

Previous 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.

Current wording

The decrease in net revenue was primarily due to a decrease in comparable sales, which decreased 8%, or 9% on a constant dollar basis. The decrease in comparable sales was primarily a result of lower conversion rates as well as reduced store traffic and a decrease in average order value, partially offset by higher e-commerce traffic. The decrease in net revenue was partially offset by a $45.3 million increase from new or expanded company-operated stores and our other channels, including from outlets and sales to wholesale accounts. We opened 16 net new company-operated stores in the Americas since the second quarter of 2025.

Previous 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.

Current wording

The increase in net revenue was primarily due to a $68.2 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 15 new company-operated stores in China Mainland since the second quarter of 2025. The increase in net revenue was also driven by an increase in comparable sales, which increased 8%, or 2% on a constant dollar basis. The increase in comparable sales was primarily a result of higher traffic, partially offset by lower conversion rates.

Previous 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.

Current wording

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

Previous wording

Corporate expenses increased $26.8 million to $404.0 million in the first quarter of 2026 compared to the first quarter of 2025. The net increase was primarily due to higher employee costs, as well as higher technology costs and depreciation. The increase in corporate expenses was partially offset by lower professional fees and a decrease in net foreign currency exchange and derivative losses of $2.4 million.

Current wording

Corporate expenses increased $64.5 million to $771.0 million in the first two quarters of 2026 compared to the first two quarters of 2025. The net increase was primarily due to higher employee costs, as well as higher technology costs and depreciation. The increase in corporate expenses was partially offset by a decrease in net foreign currency exchange and derivative losses of $1.3 million.

Previous wording

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

Current wording

A net increase in interest income contributed to the increase in other income (expense), net. The net increase in interest income was primarily due to $4.1 million in interest associated with IEEPA tariff refunds, partially offset by lower average cash balances and lower interest rates.

Previous wording

The increase in the effective tax rate was primarily due to a decrease in tax benefits related to stock-based compensation.

Current wording

The increase in the effective tax rate was primarily due to a decrease in tax benefits related to stock-based compensation, partially offset by a decrease in non-deductible expenses in international jurisdictions.

Previous wording

Net income decreased $119.5 million. The increase in cash provided by operating activities was primarily due to an increase in cash flows from changes in operating assets and liabilities of $375.4 million, primarily driven by changes in inventories and the timing of income tax payments, as well as changes in accrued compensation and accounts receivable, partially offset by the timing of accounts payable and changes in accrued liabilities. The increase in cash provided by operating activities was also a result of higher cash inflows related to derivatives.

Current wording

Net income decreased $161.2 million. The increase in cash provided by operating activities was primarily due to an increase in cash flows from changes in operating assets and liabilities of $464.7 million, driven by changes in inventories and the timing of income tax payments, as well as changes in accrued liabilities and accounts receivable, partially offset by the timing of accounts payable and changes in other current assets. The increase in cash provided by operating activities was also a result of increased depreciation and stock-based compensation expense.

Previous wording

The increase in cash used in investing activities was primarily due to the settlement of net investment hedges, partially offset by decreased capital expenditures. The decrease in capital expenditures was primarily due to decreased investment in supply chain infrastructure and e-commerce related technology system capital expenditures, partially offset by an increase in capital expenditures for opening, remodeling, and relocating company-operated stores, primarily in the Americas.

Current wording

The decrease in cash used in investing activities was primarily due to decreased capital expenditures, partially offset by the settlement of net investment hedges. The decrease in capital expenditures was primarily due to decreased investment in supply chain infrastructure and e-commerce related technology system capital expenditures, partially offset by an increase in capital expenditures for opening, remodeling, and relocating company-operated stores, primarily in the Americas and EMEA.