AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat25
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · Brand differentiation and direct feedback have commercial value, but supplier-controlled technology and competitors' ability to offer similar products leave weak structural protection. No evidenced network effect, switching barrier, cost advantage or efficient-scale protection offsets this.
durability · 1/4 · Fiscal 2024 revenue growth demonstrates prior success, but Americas revenue declined in 2025 and all disclosed regions recorded comparable-sales declines in second-quarter 2026. Durability depends on continually renewing demand for imitable products.
customer dependency · 1/4 · Management reports franchise engagement, but the passages establish no customer lock-in. Lower traffic and conversion and broad comparable-sales declines provide indirect evidence that repeat demand is fragile; they are not customer-level retention measurements.
erosion resilience · 1/4 · Earlier growth and first-quarter China comparable growth provide counterevidence, but subsequent regional demand declines and refund-adjusted margin deterioration show weak current resilience. Potential imitation adds risk without proving realized substitution.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 1/4 · Lower Americas average order value alongside weaker conversion and traffic, plus the disclosure of experienced pricing pressures, supports weak realized pricing outcomes. Average order value also reflects basket size and mix, so this does not establish a specific unit-price reduction or quantify elasticity.
retention · 1/4 · Historical franchise engagement supports some customer affinity, but declining comparable sales and Americas traffic and conversion indicate fragile continuing demand. This is an indirect operating assessment; no retention rate is inferred.
margin resilience · 1/4 · Fiscal 2024 gross margin improved, but second-quarter 2026 gross margin rose 200 basis points with a 560-basis-point refund benefit, implying a 360-basis-point decline excluding that benefit. Operating margin fell 190 basis points despite the same support. First-quarter Americas product margin also deteriorated, primarily from tariffs, showing limited cost absorption rather than proving competition caused every decline.
contractual freedom · — · Retail channels and disclosed pricing pressures do not establish customer contract terms, enforceable pricing restrictions or explicit discretion to reset prices. Tariff-pricing allegations do not resolve those missing terms.
Predictability94
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 9.38
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 5.04
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 100.00
- Current ratio (x)
- 2.26
- cashInterestPaid
- 1.03
- cashInterestCoverage
- 1558.83
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -2.31
- 3-year average SBC / revenue (%)
- 0.79
- cashConversionGrade
- 83.93
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · The business generates substantial operating cash and has no drawn borrowings under the disclosed committed facility. However, fiscal 2025 capital expenditure and repurchases together exceeded operating cash flow, first-half 2026 repurchases exceeded operating cash flow before investment, and historical Studio impairments demonstrate unsuccessful capital deployment. Working-capital timing supported the recent cash-flow improvement; repurchase value creation is unestablished.
incentive alignment · 3/4 · Actual 2024 bonuses were tied equally to revenue and operating income and paid at 80.9% of target. A completed multiyear PSU award paid against disclosed performance, and actual 2026 PSU grants require performance and continued employment. These demonstrate implemented alignment mechanisms, although detailed current executive ownership, all performance thresholds and durable shareholder outcomes are missing.
execution · 2/4 · Fiscal 2024 growth and first-quarter 2026 China comparable growth demonstrate execution achievements. Americas revenue decline in 2025, weaker traffic and conversion, and subsequent comparable-sales declines across regions offset those achievements. Execution is assessed from operating outcomes rather than directly measured management causality.
governance · 2/4 · The 2025 proxy discloses separate chair and CEO roles, supporting oversight. The September 2026 filing documents a classified board, restricted director removal, no shareholder-called special meetings and no written consent, limiting shareholder accountability. The combined evidence supports a mixed assessment; allegations are not treated as proven misconduct.
Evidence
We believe we successfully compete on the basis of our premium brand image, our technical product innovation, and our commitment to creating highest quality product for our guests.
Business / Competition · Filed 17/03/2026
Through our vertical retail strategy and direct connection with our customers, whom we refer to as guests, we are able to collect feedback and incorporate unique performance and fashion needs into our design process.
Business / Product design and customer feedback · Filed 17/03/2026
•Net revenue increased 10% to $10.6 billion.
Year in Review / Fiscal 2024 revenue growth · Filed 29/04/2025
•Continued to see strong guest engagement with key franchises, including Align, Softstreme, and Fast and Free in women's, and Pace Breaker, Zeroed In, and Soft Jersey in men's.
Year in Review / Product franchise engagement · Filed 29/04/2025
The intellectual property rights in the technology, fabrics, and processes used to manufacture our products generally are owned or controlled by our suppliers and are generally not unique to us.
Risk factors / Supplier-controlled intellectual property · Filed 17/03/2026
As a result, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrics and styling similar to our products.
Risk factors / Ability of competitors to produce similar products · Filed 17/03/2026
We experienced lower conversion rates, reduced store traffic, and a decrease in average order value in the Americas.
MD&A / First-quarter 2026 Americas demand · Filed 04/06/2026
•Comparable sales decreased 9%, or 10% on a constant dollar basis.
MD&A / Second-quarter 2026 comparable sales · Filed 03/09/2026
–Americas comparable sales decreased 12%.
MD&A / Second-quarter 2026 Americas comparable sales · Filed 03/09/2026
–China Mainland comparable sales decreased 2%, or 8% on a constant dollar basis.
MD&A / Second-quarter 2026 China Mainland comparable sales · Filed 03/09/2026
–Rest of World comparable sales decreased 4%, or 3% on a constant dollar basis.
MD&A / Second-quarter 2026 Rest of World comparable sales · Filed 03/09/2026
20 Table of Contents •Gross margin increased 200 basis points to 60.5%, which includes an increase of 560 basis points related to IEEPA tariff refunds.
MD&A / Gross margin and tariff refund contribution · Filed 03/09/2026
•Operating margin decreased 190 basis points to 18.8%, which includes an increase of 560 basis points related to IEEPA tariff refunds.
MD&A / Operating margin and tariff refund contribution · Filed 03/09/2026
We also experienced a decrease in product margin in the Americas segment of 500 basis points, primarily reflective of the impact of higher tariffs.
MD&A / Americas product margin and tariffs · Filed 04/06/2026
These and other factors have, and may in the future, cause us to experience increased costs, reduce our selling prices 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.
Risk factors / Experienced cost and pricing pressures · Filed 03/09/2026
CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Fiscal Year Ended February 1, 2026 February 2, 2025 January 28, 2024 Cash flows from operating activities Net income $ 1,579,183 $ 1,814,616 $ 1,550,190 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 496,228 446,524 379,384 lululemon Studio obsolescence provision — — 23,709 Impairment of assets and restructuring costs — — 74,501 Stock-based compensation expense 62,203 90,011 93,560 Derecognition of unredeemed gift card liability (37,766) (36,231) (28,547) Settlement of derivatives not designated in a hedging relationship (34,552) (47,763) 32,527 Deferred income taxes (53,379) 57,451 (28,383) Changes in operating assets and liabilities: Accounts receivable (65,755) 1,626 6,580 Inventories (188,710) (156,085) 66,584 Prepaid and receivable income taxes (170,216) (2,031) 1,908 Prepaid expenses and other current assets 47,779 (71,789) 40,587 Other non-current assets (70,351) (73,205) (53,280) Accounts payable 45,856 (57,044) 177,367 Accrued liabilities and other 98,421 193,139 (71,734) Accrued compensation and related expenses (24,737) (112,110) 70,327 Current and non-current income taxes payable (150,496) 157,205 (173,196) Unredeemed gift card liability 41,253 42,410 84,315 Right-of-use lease assets and current and non-current lease liabilities 6,884 23,501 37,535 Other current and non-current liabilities 20,632 2,488 12,230 Net cash provided by operating activities 1,602,477 2,272,713 2,296,164 Cash flows from investing activities Purchase of property and equipment (680,802) (689,232) (651,865) Settlement of net investment hedges 27,205 50,213 (1,609) Acquisition, net of cash acquired — (154,146) — Other investing activities (8,521) (5,009) (658) Net cash used in investing activities (662,118) (798,174) (654,132) Cash flows from financing activities Proceeds from settlement of stock-based compensation 8,377 19,813 42,430 Taxes paid related to net share settlement of stock-based compensation (27,372) (35,410) (32,574) Repurchase of common stock (1,178,349) (1,636,879) (558,652) Other financing activities (11,312) (32) (32) Net cash used in financing activities (1,208,656) (1,652,508) (548,828) Effect of foreign currency exchange rate changes on cash and cash equivalents 91,163 (81,666) (4,100) Increase (decrease) in cash and cash equivalents (177,134) (259,635) 1,089,104 Cash and cash equivalents, beginning of period $ 1,984,336 $ 2,243,971 $ 1,154,867 Cash and cash equivalents, end of period $ 1,807,202 $ 1,984,336 $ 2,243,971 See accompanying notes to the consolidated financial statements 47 Table of Contents lululemon athletica inc.
Consolidated statements of cash flows / Fiscal 2023–2025 · Filed 17/03/2026
The following table summarizes our net cash flows provided by and used in operating, investing, and financing activities for the periods indicated: First Two Quarters 2026 2025 Year over year change (In thousands) Total cash provided by (used in): Operating activities $ 589,278 $ 209,722 $ 379,556 Investing activities (281,802) (319,960) 38,158 Financing activities (712,225) (744,823) 32,598 Effect of foreign currency exchange rate changes on cash and cash equivalents (12,716) 26,519 (39,235) Decrease in cash and cash equivalents $ (417,465) $ (828,542) $ 411,077 Operating Activities Net income decreased $161.2 million.
MD&A / First-half 2026 cash flows · Filed 03/09/2026
During the first two quarters of 2026 and 2025, 4.9 million and 2.5 million shares, respectively, were repurchased under the programs at a total cost including commissions and excise taxes of $695.1 million and $715.7 million, respectively.
Notes / Actual first-half share repurchases · Filed 03/09/2026
2023 Gross Profit Gross Margin Operating Income GAAP results $ 5,609,405,000 58.3 % $ 2,132,676,000 lululemon Studio charges: lululemon Studio obsolescence provision 23,709,000 0.3 23,709,000 Impairment of assets 44,186,000 Restructuring costs 30,315,000 Adjusted results (non-GAAP) $ 5,633,114,000 58.6 % $ 2,230,886,000 2022 Operating Income GAAP results $ 1,328,408,000 lululemon Studio charges: lululemon Studio obsolescence provision 62,928,000 Impairment of goodwill and other assets 407,913,000 Gain on disposal of assets (10,180,000) Adjusted results (non-GAAP) $ 1,789,069,000 93 2021 Operating Income GAAP results $ 1,333,355,000 Transaction and integration costs 2,989,000 Acquisition-related compensation 38,405,000 Adjusted results (non-GAAP) $ 1,374,749,000
Appendix A / Historical Studio impairment and restructuring charges · Filed 29/04/2025
Named Executive Officer Role 2024 Target Bonus (as a % of Base Salary) Calvin McDonald Chief Executive Officer 200% Meghan Frank Chief Financial Officer 90% Celeste Burgoyne President, Americas and Global Guest Innovation 100% Nicole Neuburger Chief Brand & Product Activation Officer 90% André Maestrini Executive Vice President, International 90% Michelle Choe Former Chief Product Officer 100% Financial Performance Measures & Relative Weighting The annual cash bonus awards for 2024 were determined based on operating income and net revenue, with each metric weighted equally at 50%.
Executive Compensation / Fiscal 2024 bonus metrics · Filed 29/04/2025
As a result, the actual bonuses paid to the named executive officers for 2024 performance represented 80.9% of their target bonus levels, and are reported in the Non-Equity Incentive Plan Compensation column of the summary compensation table.
Executive Compensation / Actual fiscal 2024 bonus payments · Filed 29/04/2025
The final PSU payout of 200% reflects a 22.2% CAGR which is above our maximum goal of a 15% CAGR.
Executive Compensation / Realized 2022 PSU award outcome · Filed 29/04/2025
11 Table of Contents A summary of the balances of the Company's stock-based compensation plans as of August 2, 2026, and changes during the first two quarters of 2026, is presented below: Stock Options Performance-Based Restricted Stock Units Restricted Shares Restricted Stock Units Number Weighted-Average Exercise Price Number Weighted-Average Grant Date Fair Value Number Weighted-Average Grant Date Fair Value Number Weighted-Average Grant Date Fair Value (In thousands, except per share amounts) Balance as of February 1, 2026 1,269 $ 287.41 220 $ 319.19 6 $ 252.28 561 $ 257.92 Granted 421 163.24 178 184.07 — — 363 159.06 Exercised/released — — 71 358.82 6 252.28 116 328.01 Forfeited/expired 165 235.25 39 262.43 — — 49 218.06 Balance as of August 2, 2026 1,525 $ 258.81 288 $ 233.81 — $ — 759 $ 202.50 Exercisable as of August 2, 2026 552 $ 321.95 The Company's performance-based restricted stock units ("PSUs") awarded to eligible employees during 2026 entitle the grantee to receive a maximum of 2.5 shares of common stock per PSU if the Company achieves specified performance goals and the grantee remains employed during the vesting period.
Notes / Actual equity awards and 2026 PSU conditions · Filed 03/09/2026
Currently, the roles of board chair and chief executive officer are held by separate individuals.
Corporate Governance / Separation of chair and CEO roles · Filed 29/04/2025
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 called 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.
Risk factors / Existing board and shareholder-rights provisions · Filed 03/09/2026
As of August 2, 2026, the Company had no borrowings outstanding under this credit facility other than $6.3 million in outstanding letters of credit and guarantee.
Notes / Credit facility borrowings at August 2, 2026 · Filed 03/09/2026
•Gross margin increased 90 basis points to 59.2%.
Year in Review / Fiscal 2024 gross margin improvement · Filed 29/04/2025
If "dupe" or imitation products proliferate, whether through traditional retail channels or social media-driven trends, and lead consumers to perceive less differentiation between our products and lower-priced alternatives, our ability to maintain our brand premium, drive net revenue growth, and sustain our profitability could be adversely affected.
Risk factors / Potential imitation-driven brand premium erosion · Filed 03/09/2026
2025 2024 (In thousands) Net revenue $ 7,847,044 $ 7,928,156 Net revenue change (1.0) % 3.9 % Our operations in the Americas are core to our business and we aim to maintain and grow our net revenue in this market through ongoing product innovation by increasing new style penetration, as well as improving our localized assortment by store and by market.
Business / Fiscal 2025 Americas revenue · Filed 17/03/2026
–China Mainland comparable sales increased 20%, or 13% on a constant dollar basis.
MD&A / First-quarter 2026 China Mainland comparable growth · Filed 04/06/2026
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.
MD&A / Working-capital drivers of operating cash flow · Filed 03/09/2026
