Item 1/ Business

General
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.”

In this Annual Report on Form 10-K for the fiscal year ended February 2, 2025, lululemon athletica inc.
(together with its subsidiaries) is referred to as "lululemon," "the Company," "we," "us," or "our." We refer
to the fiscal year ended February 2, 2025 as "2024," the fiscal year ended January 28, 2024 as "2023." Our
next fiscal year ends on February 1, 2026 and is referred to as "2025."

Components of this discussion of our business include:

Our Products
Our Markets and Segments
Integrated Marketing
Product Design and Development
Sourcing and Manufacturing
Distribution Facilities
Competition
Seasonality
Human Capital
Intellectual Property
Securities and Exchange Commission Filings

Our Products
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.

Our design and development team continues to source technically advanced fabrics, with new feel and fit,
and craft innovative functional features for our products. 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. In this way, we believe we are
better positioned to address the needs of our guests, helping us advance our product lines and differentiate
us from our competitors.

During 2024, our women’s range represented 63% of net revenue and our men’s range represented 24% of
net revenue. Our comprehensive men’s line is a key pillar of our strategic growth plans. We believe net
revenue from our men’s range is growing as more guests discover the technical rigor and premium quality
of our men’s products, and are attracted by our distinctive brand.

We continue to innovate and introduce new products for our guests. This includes introducing new
product categories and expanding our accessories assortment. We believe this is another way in which we
can attract new guests and enable them to experience our products. Net revenue from our other product
categories represented 13% of net revenue in 2024.

Our Markets and Segments

We operate in over 25 countries around the world and organize our operations into four regional markets:
Americas, China Mainland, Asia Pacific (“APAC”), and Europe and the Middle East (“EMEA”).

We report these segments, Americas, China Mainland, and Rest of World, which is comprised of the
APAC and EMEA regions on a combined basis.

We operate an omni-channel retail model and aim to efficiently and effectively serve our guests in the
ways most convenient to them. We continue to evolve and integrate our digital and physical channels
in order to enrich our interactions with our guests, and to provide a seamless omni-channel
experience. We have invested in technologies which enable our omni-channel retailing model. Our
capabilities differ by market and include:

Buy online pick-up in store – guests can purchase our products via our website or digital app
and then collect that product from a retail location;
Back-room room – our store educators can access inventory located at our other locations and
have product shipped directly to a guest’s address or a store;
Ship from store – we are able to fulfill e-commerce orders by accessing inventory at both our
distribution centers and at our retail locations, expanding the pool of accessible inventory;
Returns processing – e-commerce guests are able to return products either online or in-store;
and
One inventory pool – we are able to view and allocate the product held at our distribution
centers to either our physical retail locations, or make it available to fulfill online demand.

We operate a combination of physical retail locations and e-commerce services via our websites,
other region-specific websites, digital marketplaces, and mobile apps. Our physical retail locations
remain a key part of our growth strategy and we view them as a valuable tool in helping us build our
brand and product line as well as enabling our omni-channel capabilities. We plan to continue to
expand square footage and open new company-operated stores to support our growth objectives.

Americas
We have operated in the Americas for over 25 years. We opened our first ever store in Vancouver,
Canada in 1998. In 2024, the net revenue we generated in the Americas represented 75% of our total
net revenue.

2024 2023

Net revenue $7,928,156 $7,631,647

Net revenue growth 3.9% 11.9%

Our operations in the Americas are core to our business and we aim to continue to grow our net
revenue in this market through ongoing product innovation and by building brand awareness. We also
plan to continue to invest in our omni-channel capabilities, to open new retail locations, and to
relocate, optimize, and renovate our existing locations as needed.

We generate net revenue in the Americas through our lululemon branded retail locations which
include different sizes of company-operated stores, outlets, pop-ups, and other temporary locations.
We also serve our guests via our e-commerce website www.lululemon.com, our mobile app, our “Like
New” re-commerce program, and through certain wholesale arrangements including university
campus retailers and other organizations that we partner with to sell co-branded lululemon products
as well as through wholesale arrangements with yoga and fitness studios and other select partners.

On September 10, 2024, we acquired the lululemon branded retail locations and operations run by a
third party in Mexico. We had previously granted the third party the right to operate retail locations
and to sell lululemon products in Mexico.

China Mainland
We opened our first store in China Mainland in fiscal 2014. In 2024, the net revenue we generated in
China Mainland represented 13% of our total net revenue.

2024 2023

Net revenue $1,361,237 $936,760

Net revenue growth 45.3% 33.2%

Rest of World

In 2024, the net revenue we generated in APAC and EMEA represented 12% of our total net revenue.
 2024 (in thousands) 2023 (in thousands)

Net revenue $1,298,633 $1,023,871

Net revenue growth 26.8% 42.9%

We have experienced significant net revenue growth in APAC and EMEA and intend to continue to
invest in these markets to build brand awareness. Where we identify growth opportunities, we plan to
open new retail locations, including in new markets across the EMEA and APAC regions.

We operate lululemon branded retail locations in these markets in a variety of different formats
including different sizes of company-operated stores, outlets, pop-ups, and stores operated by third-
parties under license and supply arrangements. We also serve our guests via our country specific
websites, our mobile app, and through third-party regional marketplaces, such as Zalando, Lazada,
and SSG.

Our Selling Channels

We conduct our business through a number of different channels in each market:

Company-operated stores:
In addition to serving as a venue to sell our products, our stores give us a direct connection to our
guests, which we view as a valuable tool in helping us build our brand and product lines as well as
enabling our omni-channel capabilities. Our retail stores are located primarily on street locations, in
lifestyle centers, and in malls. Our sales per square foot was $1,574 and $1,609 for 2024 and 2023,
respectively.

Number of Company-operated Stores by Market

 Market February 2, 2025 January 28, 2024

United States 374 367

Canada 71 71

Mexico 17 —

Americas 462 438

China Mainland 151 117

Australia 33 33

South Korea 20 19

Hong Kong SAR 10 10

Japan 10 8

New Zealand 8 8

Taiwan 8 8

Singapore 7 7

Malaysia 5 4

Thailand 4 2

Macau SAR 2 1

APAC 107 98

Number of Company-Operated Stores by Market (EMEA)

 Country February 2, 2025 January 28, 2024

United Kingdom 19 20

Germany 9 9

France 6 6

Ireland 4 4

Spain 3 3

Netherlands 2 2

Sweden 2 2

Norway 1 1

Switzerland 1 1

EMEA Total 47 48

Total company-operated stores:

767 (as of February 2, 2025)

711 (as of January 28, 2024)

E-commerce

Lululemon considers e-commerce a convenient and effective way to reach and serve guests beyond
physical store locations. The company believes it is a key tool for building brand awareness in new
markets. They serve guests via:

Country- and region-specific e-commerce websites

Digital marketplaces
Mobile apps

E-commerce net revenue includes:

Buy online pick-up in store

Back-back room (cross-location shipping)
Ship from store

Other Channels
Lululemon also utilizes several other distribution channels for broader product access and brand
awareness:

Temporary Locations

Seasonal stores and pop-ups

Open for short periods during peak seasons
Serve guests where permanent locations don’t exist

Wholesale

Partners with organizations like:

University campus retailers
Yoga and fitness studios
Provides access to co-branded lululemon products

Outlets

Sell older inventory from prior seasons at discounted prices

As of February 2, 2025, lululemon operated 52 outlet stores, mostly in the Americas

Like New

Re-commerce program for gently used lululemon products

Products are verified, cleaned, and resold at likenew.lululemon.com
Supports circular economy and environmental goals

License and Supply Arrangements

Partnerships with third parties to:

Operate lululemon branded retail locations
Sell products on websites in specific markets
Example: In September 2024, lululemon acquired its Mexico retail operations from a third party,
transitioning from licensed to company-operated stores.

Number of retail locations operated by third parties by market

 Market February 2, 2025 January 28, 2024

Mexico — 1

United Arab Emirates 10 8

Saudi Arabia 8 6

Israel 7 7

Kuwait 4 3

Qatar 4 3

Bahrain 1 1

Total 34 39

Integrated Marketing

We believe that our brand awareness is relatively low, especially outside of the Americas, and also
with men. This represents an opportunity for us and we have designed a multi-faceted strategy that
leverages what guests know us for: our products, community, and experiences. This strategy is
designed to leverage owned and paid channels, our ambassador network, events, and content — to
drive awareness, consideration, engagement, conversion, and ultimately loyalty and engagement at
the global, regional, and local levels.

Product Design and Development

Our product design and development efforts are led by a team of researchers, scientists, engineers,
and designers. Our team is comprised of athletes and users of our products who embody our design
philosophy and dedication to premium quality. Our design and development team identifies trends
based on market intelligence and research, proactively seeks the input of our guests and our
ambassadors, and broadly seeks inspiration consistent with our goals of function, style, and technical
superiority.

As we strive to continue to provide our guests with technically advanced fabrics, our team works
closely with our suppliers to incorporate the latest in technical innovation, bringing particular
specifications to our products. We partner with independent inspection, verification, and testing
companies, who conduct a variety of tests on our fabrics, testing performance characteristics
including pilling, shrinkage, abrasion resistance, and colorfastness. We develop proprietary fabrics
and collaborate with leading fabric and trims suppliers to manufacture fabrics and trims that we
generally seek to protect through agreements, trademarks, and as trade-secrets.
Sourcing and Manufacturing

We do not own or operate any manufacturing facilities. We rely on a limited number of suppliers to
provide fabrics for, and to produce, our products. The following statistics are based on cost.

We work with a group of approximately 52 vendors that manufacture our products, five of which
produced 49% of our products in 2024, with the largest manufacturer producing 15%. During 2024,
40% of our products were manufactured in Vietnam, 17% in Cambodia, 11% in Sri Lanka, 11% in
Indonesia, and 7% in Bangladesh, and the remainder in other regions.

We work with a group of approximately 67 suppliers to provide the fabrics for our products. In 2024,
52% of our fabrics were produced by our top five fabric suppliers, with the largest manufacturer
producing 18%. During 2024, 35% of our fabrics originated from Taiwan, 28% from China Mainland,
and 11% from South Korea, and the remainder from other regions.

We also source other raw materials which are used in our products, including items such as content
labels, elastics, buttons, zips, and drawcords from suppliers located predominantly in APAC and
China Mainland.

We have developed long-standing relationships with a number of our vendors and take care to
ensure that they share our commitment to quality and ethics. We do not, however, have any long-
term contracts with the majority of our suppliers or for manufacturing sources for the production and
supply of our fabrics and garments, and we compete with other companies for fabrics, raw materials,
and production. Our product quality and sustainability teams closely assess and monitor each
supplier’s compliance with applicable laws and our Vendor Code of Ethics, including by partnering
with leading inspection and verification firms.

Distribution Facilities
We operate and distribute finished products from our distribution facilities in the United States,
Canada, and Australia. We own our distribution center in Groveport, Ohio, and lease our other
distribution facilities. We also utilize third-party logistics providers in a number of countries in which
we operate to warehouse and distribute finished products from their warehouse locations. We
regularly evaluate our distribution infrastructure and consolidate or expand our distribution capacity as
we believe appropriate for our operations and to meet anticipated needs.

Competition
Competition in the athletic apparel industry is based principally on brand image and recognition as
well as product quality, innovation, style, distribution, and price. We believe we successfully compete
on the basis of our premium brand image and our technical product innovation. We also believe our
ability to introduce new product innovations, combine function and fashion, and connect through in-
store, online, and community experiences sets us apart from our competition. In addition, we believe
our vertical retail distribution strategy and community-based marketing differentiates us further,
allowing us to more effectively control our brand image and connect with our guests.

The market for athletic apparel is highly competitive. It includes increasing competition from
established companies that are expanding their production and marketing of performance products,
as well as from frequent new entrants to the market. We are in direct competition with global as well
as regional and country-specific wholesalers and direct sellers of athletic apparel and footwear.
Seasonality
Our business is affected by the general seasonal trends common to the retail apparel industry. Our
annual net revenue is typically weighted more heavily toward our fourth fiscal quarter, reflecting our
historical strength in sales during the holiday season in the Americas, while our operating expenses
are generally more equally distributed throughout the year. As a result, a substantial portion of our
operating profits are typically generated in the fourth quarter of our fiscal year. For example, we
generated approximately 42% of our full year operating profit during the fourth quarter of 2024.

Human Capital
Our Impact Agenda sets out our social and environmental goals and strategy across three pillars - Be
Human, Be Well, and Be Planet. Details can be found in our Impact Report on our website. Included
within our Impact Agenda is a goal to invest a total of $75.0 million to advance equity in well-being by
the end of 2025. As of February 2, 2025, we have invested a total of $71.0 million towards this goal.

The Be Human pillar of our Impact Agenda sets out our focus areas with respect to human capital,
including inclusion for all, employee empowerment, and fair labor practices and the well-being of the
people who make our products.

Inclusion for All

We are committed to fostering an environment where every individual feels valued and included,
recognizing that diverse perspectives drive innovation and enrich our workplace.

We are proud that as of February 2, 2025, approximately 55% of our board of directors, 60% of our
senior executive leadership team, and 45% of our vice presidents and above are women, while
approximately 75% of our overall workforce are women.

During 2024, we implemented an ongoing feedback approach to gain insights into our workforce
composition and gather measurable data on employees' feelings of engagement, inclusion, and
belonging. Our primary objective is to cultivate a workforce inspired and informed by the diversity of
the communities we serve and where we operate.

We strive to maintain equitable pay, by geography, for comparable work across all our global
operations. We have achieved full pay equity across various demographics in regions where we
analyze this data.

We offer all employees education, training, and feedback discussions on topics such as preventing
bias, ensuring equal opportunity, and fostering inclusive leadership behaviors. We see strong
engagement in inclusion-focused education and development programs across the business.

Employee Empowerment

We believe our people are key to the success of our business. As of February 2, 2025, we employed
approximately 39,000 people worldwide. We strive to foster a distinctive culture rooted in our core
values that attracts and retains passionate and motivated employees who are driven to achieve
personal and professional goals. We believe our people succeed because we create an environment
that fosters growth and provides opportunities for all.
We understand that health and wealth programs need to offer choice at all stages of life. Our current
offerings support our goal of becoming the number one place where people come to develop and
grow as inclusive leaders, and we regularly use feedback to inform opportunities to support this goal.
These offerings include, among other things:

Competitive compensation which rewards exceptional performance;

A Fund your Future program for eligible employees which offers partial contribution matches to a
pension plan and employee share purchase plan;
An annual paid VALUES (Volunteer, Awareness, Life, Unity, Empowerment, Support) Day,
competitive paid time off, and sick leave;
An employee discount program, which includes a lifetime discount to celebrate the contribution of
our long-tenured employees to keep them within our collective, even when they have moved on
to pursue goals outside of lululemon;
Reimbursement programs which reward physical activity;
A parenthood program that provides all eligible employees up to six months of paid leave;
An employee assistance program which provides free confidential support to all our employees
and their families in a variety of areas from mental well-being to financial services to advice for
new parents; and
Training and development of all of our employees including, but not limited to, mentorship
programs, global internships, leadership development, vision and goals, and coaching.

Fair Labor Practices and the Well-Being of the People who Make our Products

We work with suppliers who we believe share our values and collaborate with us to uphold robust
standards, address systemic challenges, and support the well-being of people who make our
products. Our Responsible Supply Chain program is built on three pillars:

Monitoring – Assessing and, in collaboration with suppliers, improving working conditions in

facilities.
Integration – Integrating responsible purchasing practices across key lululemon strategies,
processes, and tools.
 Collaboration – Working with multi-stakeholder organizations, industry, suppliers, and brands to
support systemic change and impact.

Vendor Code of Ethics and Foreign Migrant Worker Standard

Our Vendor Code of Ethics outlines our commitment to respect human and labor rights, and promote
safe and fair working conditions for people in our supply chain. The code, which is based on
international standards, sets the minimum standards for our supplier partners and is a component of
our supplier and manufacturer agreements. Our finished goods and fabric suppliers are assessed
against the Vendor Code of Ethics prior to forming a business relationship, and regularly thereafter;
we work with factories that can uphold our strict requirements.

Our Foreign Migrant Worker Standard sets out our minimum requirements for what we believe are the
appropriate and ethical recruitment, employment, and repatriation of foreign migrant workers.

Intellectual Property

We have trademark rights on many of our products and believe having distinctive marks that are
readily identifiable is an important factor in building our brand image and in distinguishing our
products from the products of others. We consider our lululemon and wave design trademarks to be
among our most valuable assets. In addition, we own many other trademarks for the names of
several of our brands, slogans, fabrics and products. We own registered and pending U.S. and
foreign utility and design patents, industrial designs in Canada, and registered community designs in
Europe that protect our product innovations, distinctive apparel, and accessory designs.

Securities and Exchange Commission Filings

Our website address is www.lululemon.com. We provide free access to various reports that we file
with, or furnish to, the United States Securities and Exchange Commission, or the SEC, through our
website, as soon as reasonably practicable after they have been filed or furnished. These reports
include, but are not limited to, our Annual Reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and any amendments to those reports. Our SEC reports can also be
accessed through the SEC’s website at www.sec.gov. Also available on our website are printable
versions of our Global Code of Business Conduct and ethics and charters of the standing committees
of our board of directors. Information contained on or accessible through our websites is not
incorporated into, and does not form a part of, this annual report or any other report or document we
file with the SEC, and any references to our websites are intended to be inactive textual references
only.

ITEM 1A. RISK FACTORS

In addition to the other information contained in this Form 10-K, the following risk factors
should be considered in evaluating our business. Our business, financial condition, or results
of operations could be materially adversely affected as a result of any of these risks.

Risks related to our business and industry

Our success depends on our ability to maintain the value and reputation of our brand.
The lululemon name is integral to our business as well as to the implementation of our expansion
strategies. Maintaining, promoting, and positioning our brand will depend largely on the success of
our marketing and merchandising efforts and our ability to provide a consistent, high quality product,
and guest experience. As we grow, our brand positioning, products, and marketing efforts may not be
considered distinct, culturally relevant, or desirable to guests, employees, or other stakeholders.

We rely on social media, as one of our marketing strategies, to have a positive impact on both our
brand value and reputation. Our brand and reputation could be adversely affected if we fail to achieve
these objectives or if our brand image was to be tarnished by negative publicity, which could be
amplified by social media, if we fail to deliver innovative and high quality products acceptable to our
guests, or if we face or mishandle a product recall. Our reputation could also be impacted by adverse
publicity, whether or not valid, regarding allegations that we, or others we work with, have acted
inappropriately or unlawfully with us, have violated applicable laws or regulations, including but not
limited to those related to safety, employment, discrimination, harassment, whistle-blowing, privacy,
corporate governance, unethical business practices, or cybersecurity. Certain activities on the part of
stakeholders, including nongovernmental organizations and governmental institutions, could cause
reputational damage, distract senior management, and disrupt our business. Additionally, while we
devote our considerable effort and investment to protecting intellectual property, if these efforts are
not successful the value of our brand may be affected. Any harm to our brand and reputation could
have a material adverse effect on our financial condition.

We operate in a highly competitive market and our competitors may compete more effectively
than we can, resulting in a loss of our market share and a decrease in our net revenue and
profitability.

The market for our products is highly competitive. Competition may result in pricing pressures,
reduced profit margins or lost market share, or our failure to grow or maintain our market share, any
of which could substantially harm our business and results of operations. We compete directly against
global as well as regional and country-specific wholesalers and direct retailers of athletic apparel,
including large, diversified apparel companies with substantial market share, and established
companies expanding their production and marketing of technical athletic apparel, as well as against
smaller retailers and brands those specifically focused on women’s athletic apparel. We also face
competition from wholesalers and direct retailers of traditional commodity athletic apparel, such as
cotton T-shirts and sweatshirts. Many of our competitors are large apparel and sporting goods
companies with strong worldwide brand recognition. Because of the fragmented nature of the
industry, we also compete with other apparel sellers, including those specializing in yoga apparel and
activewear. Our competitors may be able to achieve and maintain brand awareness and market share
more quickly and effectively than we can.

We may fail to acknowledge or react appropriately to the entry or growth of a viable competitor or
disruptive force, and could struggle to continue to innovate, differentiate, and sustain the growth of
our brand. The increasing dominance and presence of our brand may also drive guests towards
alternative emerging competitors.

In addition, because we hold limited patents and exclusive intellectual property rights in the
technology, fabrics or processes underlying our products, our current and future competitors are able
to manufacture and sell products with performance characteristics, fabrication techniques, and styling
similar to our products.
If we are unable to anticipate consumer preferences and successfully develop and introduce
new, innovative, and differentiated products, we may not be able to maintain or increase our
sales and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate
and react to changing consumer demands in a timely manner. All of our products are subject to
changing consumer preferences that cannot be predicted with certainty. If we are unable to introduce
new products or new technologies in a timely manner or our new products or technologies are not
accepted by our guests, our competitors may introduce similar products in a more timely fashion,
which could hurt our goal to be viewed as a leader in technical athletic apparel innovation. Our new
products may not receive consumer acceptance as consumer preferences could shift rapidly to
different types of athletic apparel or away from these types of products altogether, and our future
success depends in part on our ability to anticipate and respond to these changes. Our failure to
anticipate and respond in a timely manner to changing consumer preferences could lead to, among
other things, lower sales and excess inventory levels. We may not have or successfully leverage the
relevant data to effectively understand and react to consumer preferences and expectations. Even if
we are successful in anticipating consumer preferences, our ability to adequately react to and
address those preferences will in part depend upon our continued ability to develop and introduce
innovative, high-quality products. Our failure to effectively introduce new products that are accepted
by consumers could result in a decrease in net revenue and excess inventory levels, which could
have a material adverse effect on our financial condition.

If any of our products have manufacturing or design defects or are otherwise unacceptable to
us or our guests, our business could be harmed.

We have occasionally, and may in the future receive, shipments of products that fail to comply with
our technical specifications or that fail to conform to our quality control standards. We have also
received, and may in the future receive, products that are otherwise unacceptable to us or our guests.
Under these circumstances, unless we are able to obtain replacement products in a timely manner,
we risk the loss of net revenue resulting from the inability to sell those products and related increased
administrative and shipping costs. Additionally, if the unacceptability of our products is not discovered
until after the products are sold, our guests could lose confidence in us or our brand, and we could
face a product recall and our results of operations could suffer and our business, reputation, and
brand could be harmed.

The complex hardware previously sold by our lululemon Studio subsidiary, as well as the services
associated with it, may be affected by design and manufacturing defects. Sophisticated operating
system software and applications, such as those offered by lululemon Studio, often have issues that
can unexpectedly interfere with the intended operations of the hardware or software products and
react to consumer preferences and expectations in real time. These issues can unexpectedly
interfere with the intended operation of hardware or software products, and even result in personal
injury and/or property damage. Any defects could make our products unsafe and create a risk of
environmental or property damage or personal injury and we may become subject to the hazards and
uncertainties of product liability claims and related litigation. The occurrence of real or perceived
defects in any of our products, now or in the future, could result in additional negative publicity,
regulatory investigations, or lawsuits filed against us, particularly if guests or others who use or
purchase our lululemon Studio products are injured.
Our sales and profitability may decline as a result of increasing costs and decreasing selling
prices.

Our business is subject to significant pressure on costs and pricing caused by many factors, including
intense competition, constrained sourcing capacity and related inflationary pressure, the availability of
qualified labor and wage inflation, pressure from consumers to reduce the prices we charge for our
products, and changes in consumer demand. These and other factors have, and may in the future,
cause us to experience increased costs, reduce our prices to consumers 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. Unionization efforts or other
employee organizing activities could lead to higher people costs or reduce our flexibility to manage
our employees which may negatively disrupt our operations.

Our results of operations could be materially harmed if we are unable to accurately forecast
guest demand for our products.

To ensure adequate inventory supply, we must forecast inventory needs and place orders with our
manufacturers based on our estimates of future demand for particular products. Our ability to
accurately forecast demand for our products could be affected by many factors, including an increase
or decrease in guest demand for our products or for products of our competitors, our failure to
accurately forecast guest acceptance of new products, product introductions by competitors,
unanticipated changes in general market conditions (for example, because of global economic
concerns such as inflation, an economic downturn, or delays and disruptions resulting from local and
international shipping delays and labor shortages), and weakening of economic conditions or
consumer confidence in future economic conditions (for example, because of inflationary pressures,
or because of sanctions, restrictions, and other responses related to geopolitical events). If we fail to
accurately forecast guest demand, we may experience excess inventory levels or a shortage of
products available for sale in our stores or for delivery to guests.

Inventory levels in excess of guest demand may result in inventory write-downs or write-offs and the
sale of excess inventory at discounted prices, which would cause our gross margin to suffer and
could impair the strength and exclusivity of our brand. Conversely, if we underestimate guest demand
for our products, our manufacturers may not be able to deliver products to meet our requirements,
and this could result in damage to our reputation and guest relationships.

Our limited operating experience and limited brand recognition in new international markets
and new product categories may limit our expansion and cause our business and growth to
suffer.

Our future growth depends in part on our expansion efforts outside of the Americas. We have limited
experience with regulatory environments and market practices internationally, and we may not be
able to penetrate or successfully operate in any new market. In connection with our expansion efforts
we may encounter obstacles we did not face in the Americas, including cultural and linguistic
differences, differences in regulatory environments, labor practices and market practices, difficulties in
keeping abreast of market, business and technical developments, and international guests’ tastes and
preferences. We may also encounter difficulty expanding into new international markets because of
limited brand recognition leading to delayed acceptance of our technical athletic apparel by guests in
these new international markets. Our failure to develop our business in new international markets or
disappointing growth outside of existing markets could harm our business and results of operations.

In addition, our continued growth depends in part on our ability to expand our product categories and
introduce new product lines. We may not be able to successfully implement the expansion of our
product categories or the development of our existing products. Selling new product categories and
lines will require our management to test and develop new products. Our management, for now, may
be unsuccessful in refining our approach in entering new categories and developing and launching
new product lines, which require management of new suppliers, potential new customers, and new
business models. Our management may not have the experience of selling in these new product
categories and we may not be able to gain our business in these areas. In July 2020, we acquired
MIRROR, which was rebranded as lululemon Studio, and in 2023, we discontinued selling its
hardware and offering its digital app-only subscription. If we are unable to effectively and successfully
operate in or otherwise develop new categories and lines, we may not be able to increase our
revenues, and our sales and our operating margins may be adversely affected. This may also divert
the attention of management and cause additional expenses.

We may, from time to time, evaluate and pursue other strategic investments or acquisitions. These
involve various inherent risks and the benefits sought may not be realized.

We may not be able to effectively manage our growth and the increased complexity of our
business and as a result our brand image and financial performance may suffer.

We may be unable to achieve our growth objectives if we do not have the right level of efficiency and
scalability in our processes and operations. We may experience difficulties in obtaining sufficient raw
materials and manufacturing capacity to produce our products, as well as delays in production and
shipments, as our products are subject to risks associated with overseas sourcing and manufacturing.
We could be required to continue to expand our sales and marketing, product development and
distribution functions, to upgrade our management information systems and other processes and
technology, and to obtain more space for our expanding workforce. This expansion could increase the
strain on our resources, and could experience operating difficulties, including difficulties in hiring,
training, and managing an increasing number of employees. These difficulties could result in the
erosion of our brand image which could have a material adverse effect on our financial condition.

Changes in consumer shopping preferences, and shifts in distribution channels could

materially impact our results of operations.

We operate an omni-channel retail model and aim to efficiently and effectively serve our guests in the
ways most convenient to them. We operate a combination of physical retail locations and e-
commerce services via our websites, other region-specific websites, digital marketplaces, and mobile
apps. Our physical retail locations remain a key part of our growth strategy and we view them as a
valuable tool in helping us build our brand and product line as well as enabling our omni-channel
capabilities. We plan to continue to expand square footage and open new company-operated stores
to support our growth objectives. The diversion of sales from our company-operated stores could
adversely impact our return on investment and could lead to impairment charges and store closures,
including lease exit costs. We could have difficulty in recreating the in-store experience through direct
channels. Our failure to successfully integrate our digital and physical channels and respond to these
risks could adversely impact our business and results of operations, as well as damage our reputation
and brand. In addition, our channels have different operating margins and shifts in our guests’
diversified distribution channels could negatively impact our overall operating margins and results of
operations.

We are subject to risks associated with leasing retail and distribution space subject to long-
term and non-cancelable leases.

We lease the majority of our stores under operating leases and our inability to secure appropriate real
estate or lease terms could impact our ability to grow. Our leases generally have initial terms of
between ten and 15 years, and generally can be extended in increments between two and five years,
if at all. We generally cannot cancel these leases at our option. If an existing or new store is not
profitable, and we decide to close it, as we have done in the past and may in the future, we may
nonetheless be committed to perform our obligations under the applicable leases including, among
other things, paying the base rent for the balance of the lease term. Similarly, we may be committed
to perform our obligations under the applicable leases even if current locations of our stores become
unattractive as demographic patterns change. In addition, as each of our leases expire, we may fail to
negotiate renewals, either on commercially acceptable terms or at all, which could require us to close
stores in desirable locations.

We also lease the majority of our distribution centers and our inability to secure appropriate real
estate or lease terms could impact our ability to deliver our products to the market.

Our future success is substantially dependent on the service of our senior management and
our ability to maintain our culture and to attract, manage, and retain highly qualified
individuals.

The performance of our senior management team and other key employees and contractors may not
meet our needs and expectations. Also, the loss of services of any of these key individuals, or any
negative public perception with respect to these individuals, may be disruptive to, or cause
uncertainty in, our business and could have a negative impact on our ability to manage and grow our
business effectively. Such disruption could have a material adverse impact on our financial
performance, financial condition, and the market price of our stock.

If we are unable to successfully maintain and evolve our unique culture, offer competitive
compensation and benefits, and a desirable work model, we may be unable to retain highly qualified
individuals to support our business and continued growth. Our work model may not meet the needs
and expectations of our employees and may not be perceived as favorable compared to other
companies. We also face risks related to employee engagement and productivity which could result in
increased headcount and lead to increased labor costs.

Our business is affected by seasonality, which could result in fluctuations in our operating
results.

Our business is affected by the general seasonal trends common to the retail apparel industry. Our
annual net revenue is typically weighted more heavily toward our fourth fiscal quarter, reflecting our
historical strength in sales during the holiday season, while our operating expenses are more equally
distributed throughout the year. This seasonality, along with other factors that are beyond our control,
including weather conditions and the effects of climate change, could adversely affect our business
and cause our results of operations to fluctuate.
Risks related to information security and technology

We may be unable to safeguard against security breaches which could damage our customer
relationships and result in significant legal and financial exposure.

As part of our normal operations, we receive confidential, proprietary, and personally identifiable
information, including credit card information, and information about our customers, our employees,
job applicants, and other third parties. Our business employs systems and websites that allow for the
storage and transmission of this information. However, despite our safeguards and security
processes and protections, security breaches could expose us to a risk of theft or misuse of this
information, and could result in litigation and potential liability.

The retail industry, in particular, has been the target of many recent cyber-attacks. We may not have
the resources or technical sophistication to be able to anticipate or prevent rapidly evolving types of
cyber-attacks. Attacks may be targeted at us, our vendors or customers, or others who have
entrusted us with information. In addition, despite taking measures to safeguard our information
security and privacy environment from security breaches, our customers and our business could still
be exposed to risk. Actual or anticipated attacks may cause us to incur increasing costs including
costs to deploy additional personnel and protection technologies, train employees and engage third
party experts and consultants. Advances in artificial intelligence and other computer capabilities, new
technological discoveries or other developments may result in the technology used by us to protect
transactions or other data being breached or compromised. Measures we implement to protect
against cyber-attacks may also have the potential to impact our customers’ shopping experience or
decrease activity on our websites by making them more difficult to use or requiring website downtime.

Data and security breaches can also occur as a result of non-technical issues including intentional or
inadvertent breach by employees or persons with whom we have commercial relationships that result
in the unauthorized release of personal or confidential information. Any compromise or breach of our
security could result in a violation of applicable privacy and other laws, significant legal and financial
exposure, and damage to our brand and reputation or other harm to our business.

In addition, the increased use of employee-owned devices for communications as well as work-from-
home arrangements present additional operational risks to our technology systems, including
increased risks of cyber-attacks. Further, like other companies in the retail industry, we have in the
past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and
other attempts to breach, or gain unauthorized access to, our systems. To date, these attacks have
not had a material impact on our operations, but they may have a material impact in the future.

Privacy and data protection laws increase our compliance burden.

We are subject to a variety of privacy and data protection laws and regulations that change frequently
and have requirements that vary from jurisdiction to jurisdiction. For example, we are subject to
significant compliance obligations under privacy laws such as the General Data Privacy Regulation
(“GDPR”) in the European Union, the Personal Information Protection and Electronic Documents Act
(“PIPEDA”) in Canada, the California Consumer Privacy Act (“CCPA”) modified by the California
Privacy Rights Act (“CPRA”), and the Personal Information Protection Law (“PIPL”) in the People’s
Republic of China (“PRC”). Some privacy laws prohibit the transfer of personal information to certain
other jurisdictions. We are subject to privacy and data protection audits or investigations by various
government agencies. Our failure to comply with these laws subjects us to potential regulatory
enforcement activity, fines, private litigation including class actions, and other costs. Our efforts to
comply with privacy laws may complicate our operations and add to our compliance costs. A
significant privacy breach or failure or perceived failure by us or our third-party service providers to
comply with privacy or data protection laws, regulations, policies or regulatory guidance might have a
materially adverse impact on our reputation, business operations and our financial condition or results
of operations.

Disruption of our technology systems or unexpected network interruption could disrupt our
business.

We are increasingly dependent on networks, technology systems, and third-parties to operate our e-
commerce websites, process transactions, respond to guest inquiries, manage inventory, purchase,
sell and ship goods on a timely basis, and maintain cost-efficient operations. The failure of our
technology systems to operate properly or effectively, problems with transitioning to upgraded or
replacement systems, or difficulty in integrating new systems, could adversely affect our business.
Our technology systems, websites, and operations of third parties on which we rely, may well
encounter damage, slowdown, or disruption including complete outages caused by a failure to
successfully upgrade systems, system failures, viruses, computer “hackers”, natural disasters, or
other real or perceived causes. These could cause information, including data related to guest orders,
to be lost or delayed which could, especially if the disruption or slowdown occurred during the holiday
season, result in delays in the delivery of products to our stores and guests or lost sales, which could
reduce demand for our products and cause our sales to decline. The concentration of our data
processing services, several of our distribution centers, and a number of our stores along the west
coast of North America could amplify the impact of a natural disaster occurring in that area to our
business, including to our technology systems. In addition, if changes in technology cause our
information systems to become obsolete, we do not effectively leverage artificial intelligence, or if our
information systems are inadequate to handle our growth, we could lose guests. We have limited
back-up systems and redundancies, and our technology systems and websites have experienced
system failures and electrical outages in the past which have disrupted our operations. Any significant
disruption in our technology systems or websites could harm our reputation and credibility, and could
have a material adverse effect on our business, financial condition, and results of operations.

Our technology-based systems that give our customers the ability to shop with us online may
not function effectively.

Many of our customers shop with us through our e-commerce websites and mobile apps.
Increasingly, customers are using tablets and smart phones to shop online with us and with our
competitors and to do comparison shopping. We are increasingly using social media and proprietary
mobile apps to interact with our customers and as a means to enhance their shopping experience.
Any failure on our part to provide attractive, effective, reliable, user-friendly e-commerce platforms
that offer a wide assortment of merchandise with rapid delivery options and that continually meet the
changing expectations of online shoppers could place us at a competitive disadvantage, result in the
loss of e-commerce and other sales, harm our reputation with customers, have a material adverse
impact on the growth of our e-commerce business globally and could have a material adverse impact
on our business and results of operations.

Risks related to our supply chain

Disruptions of our supply chain could have a material adverse effect on our operating and
financial results.

Disruption of our supply chain capabilities due to trade restrictions, political instability, severe weather,
natural disasters, public health crises, war, terrorism, product recalls, labor supply shortages or
stoppages, the financial or operational instability of key suppliers and carriers, changes in diplomatic
or trade relationships (including any sanctions, restrictions, and other responses such as those
related to current geopolitical events), or other reasons could impair our ability to distribute our
products. To the extent we are unable to mitigate the likelihood or potential impact of such events,
there could be a material adverse effect on our operating and financial results.

We rely on international suppliers and any significant disruption to our supply chain could
impair our ability to procure or distribute our products.

We do not manufacture our products or raw materials and rely on suppliers and manufacturers
located predominantly in APAC and China Mainland. We also source other materials used in our
products, including items such as content labels, elastics, buttons, clasps, and drawcords, from
suppliers located primarily in this region. Based on cost, during 2024:

Approximately 40% of our products were manufactured in Vietnam, 17% in Cambodia, 11% in Sri
Lanka, 11% in Indonesia, and 7% in Bangladesh, and the remainder in other regions.
Approximately 35% of the fabric used in our products originated from Taiwan, 28% from China
Mainland, 11% from South Korea, and the remainder from other regions.

The entire apparel industry, including our company, could face supply chain challenges as a result of
the impacts of global public health crises, political instability, inflationary pressures, macroeconomic
conditions, and other factors, including reduced freight availability and increased costs, port
disruption, manufacturing facility closures, and related labor shortages and other supply chain
disruptions.

Our supply chain capabilities may be disrupted due to these or other factors, such as severe weather,
natural disasters, war or other military conflicts, terrorism, labor supply shortages or stoppages, the
financial or operational instability of key suppliers or the countries in which they operate, or changes
in diplomatic or trade relationships (including any sanctions, restrictions, and other responses to
geopolitical events). Any significant disruption in our supply chain capabilities could impair our ability
to procure or distribute our products, which would adversely affect our business and results of
operations.

A relatively small number of vendors supply and manufacture a significant portion of our
products, and losing one or more of these vendors could adversely affect our business and
results of operations.

Many of the specialty fabrics used in our products are technically advanced textile products
developed and manufactured by third parties and may be available, in the short-term, from only one
or a limited number of sources. We have no long-term contracts with any of our suppliers or
manufacturers for the production and supply of our fabrics or finished products, and we compete with
other companies for fabrics, other raw materials, and production. During 2024, we worked with
approximately 52 vendors to manufacture our products and 67 suppliers to produce the fabric for our
products. Based on cost, during 2024:
 Approximately 49% of our products were manufactured by our top five vendors, the largest of
which produced approximately 15% of our products; and
Approximately 52% of our fabrics were produced by our top five fabric suppliers, the largest of
which produced approximately 18% of fabric used.

We have experienced, and may in the future experience, a significant disruption in the supply of
fabrics or raw materials and may be unable to locate alternative suppliers of comparable quality at an
acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to
replace an existing supplier or manufacturer, we may be unable to locate additional supplies of fabrics
or raw materials or additional manufacturing capacity on terms that are acceptable to us, or at all, or
we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our
requirements or fill our orders in a timely manner. Identifying a suitable supplier is an involved
process that requires us to become satisfied with its quality control, responsiveness and service,
financial stability, and labor and other ethical practices. Even if we are able to expand existing or find
new manufacturing or fabric sources, we may encounter delays in production and added costs as a
result of the time it takes to train our suppliers and manufacturers in our methods, products, and
quality control standards.

Our supply of fabric or manufacture of our products could be disrupted or delayed by economic or
political or global health conditions, and the related government and private sector responsive actions
such as closures, restrictions on product shipments, and travel restrictions. Delays related to supplier
changes could also arise due to an increase in shipping times if new suppliers are located farther
away from our markets or from other participants in our supply chain. In addition, freight capacity
issues continue to persist worldwide as there is much greater demand for shipping and reduced
capacity and equipment. Any delays, interruption, or increased costs in the supply of fabric or
manufacture of our products could have an adverse effect on our ability to meet guest demand for our
products and result in lower net revenue and income from operations both in the short and long term.

Our business could be harmed if our suppliers and manufacturers do not comply with our
Vendor Code of Ethics or applicable laws.

While we require our suppliers and manufacturers to comply with our Vendor Code of Ethics, which
includes labor, health and safety, and environment standards, we do not control their operations. If
suppliers or contractors do not comply with these standards or applicable laws or there is negative
publicity regarding the production practices of any of our suppliers or manufacturers, even if
unfounded or not specific to our supply chain, our reputation and sales could be adversely affected,
we could be subject to legal liability, or could cause us to contract with alternative suppliers or
manufacturing sources.

The fluctuating cost of raw materials could increase our cost of goods sold.

The fabrics used to make our products include synthetic fabrics whose raw materials include
petroleum-based products. Our products also include silver and natural fibers, including cotton. Our
costs for raw materials are affected by, among other things, weather, supply conditions, speculation
on the commodities market, the relative valuation and fluctuations of the currencies of producer
versus consumer countries, and other factors that are generally unpredictable and beyond our
control. Any and all of these factors may be exacerbated by global climate change. In addition,
political instability, trade relations, sanctions, inflationary pressure, or other geopolitical or economic
conditions could cause raw material costs to increase and have an adverse effect on our future
margins. Increases in the cost of raw materials, including petroleum, or the prices we pay

Our silver and cotton yarn and cotton-based textiles could have a material adverse effect on our cost
of goods sold, results of operations, financial condition, and cash flows.

If we encounter problems with our distribution system, our ability to deliver our products to
the market and to meet guest expectations could be harmed.

We rely on our distribution facilities for substantially all of our product distribution. Our distribution
facilities include computer controlled and automated equipment, which means their operations may
be subject to a number of risks related to security or computer viruses, the proper operation of
software and hardware, electronic or power interruptions, or other system failures. In addition, our
operations could also be interrupted by labor difficulties, pandemics, the impacts of climate change,
extreme or severe weather conditions or by floods, fires, or other natural disasters near our
distribution centers. If we encounter problems with our distribution system, our ability to meet guest
expectations, manage inventory, complete sales, and achieve objectives for operating efficiencies
could be harmed.

Increasing labor costs and other factors associated with the production of our products in
South Asia and South East Asia could increase the costs to produce our products.

A significant portion of our products are produced in South Asia and South East Asia and increases in
the costs of labor and other costs of doing business in the countries in this area could significantly
increase our costs to produce our products and could have a negative impact on our operations and
earnings. Factors that could negatively affect our business include labor shortages and increases in
labor costs, labor disputes, pandemics, the impacts of climate change, difficulties and additional costs
in transporting products manufactured from these countries to our distribution centers and significant
revaluation of the currencies used in these countries, which may result in an increase in the cost of
producing products. Also, the imposition of trade sanctions or other regulations against products
imported by or from, or the loss of “normal trade relations” status with any country in which our
products are manufactured, could significantly increase our cost of products and harm our business.

Risks related to environmental, social, and governance issues

Climate change, and related legislative and regulatory responses to climate change, may
adversely impact our business.

There is increasing concern that a gradual rise in global average temperatures due to increased
concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant
changes in weather patterns around the globe, an increase in the frequency, severity, and duration of
extreme weather conditions and natural disasters, and water scarcity and poor water quality. These
events could adversely impact the cultivation of cotton, which is a key resource in the production of
our products, disrupt the operation of our supply chain and the productivity of our contract
manufacturers, increase our production costs, impose capacity restraints and impact the types of
apparel products that consumers purchase. These events could also compound adverse economic
conditions and impact consumer confidence and discretionary spending. As a result, the effects of
climate change could have a long-term adverse impact on our business and results of operations. In
many countries, governmental bodies are enacting new or additional legislation and regulations to
reduce or mitigate the potential impacts of climate change. If we, our suppliers, or our contract
manufacturers are required to comply with these laws and regulations, or if we choose to take
voluntary steps to reduce or mitigate our impact on climate change, we may experience increased
costs for energy, production, transportation, and raw materials, increased capital expenditures, or
increased insurance premiums and deductibles, which could adversely impact our operations.
Inconsistency of legislation and regulations among jurisdictions may also affect the costs of
compliance with such laws and regulations. Any assessment of the potential impact of future climate
change legislation, regulations or industry standards, as well as any international treaties and
accords, is uncertain given the wide scope of potential regulatory change in the countries in which we
operate.

Increased scrutiny from investors and others regarding our environmental, social,
governance, or sustainability responsibilities could result in additional costs or risks and
adversely impact our reputation, employee retention, and willingness of customers and
suppliers to do business with us.

Investors and political advocacy groups, certain institutional investors, investment funds, other market
participants, stockholders, and customers have focused increasing attention on environmental, social
and governance (“ESG”) practices of companies, including those associated with climate change and
social responsibility. These parties have placed increased importance on the implications of the social
cost of their investments and disclosure of their ESG practices. If our ESG practices do not meet
investor, customer, employee, or other stakeholder expectations or do not align with their opinions or
values, our brand reputation, employee retention, and business may be negatively impacted. Any
sustainability or impact report that we publish or other ESG disclosures we make may include our
policies, procedures, goals, and targets on a variety of social and ethical matters, including corporate
governance, environmental compliance, employee health and safety practices.

Risks related to global economic, political, and regulatory conditions

An economic recession, depression, downturn, periods of inflation, or economic uncertainty

in our key markets may adversely affect consumer discretionary spending and demand for our
products.

Many of our products may be considered discretionary items for consumers. Some of the factors that
may influence consumer spending on discretionary items include general economic conditions, high
levels of unemployment, pandemics, higher consumer debt levels, reductions in net worth based on
market declines and uncertainty, home foreclosures and reductions in home values, fluctuating
interest and foreign currency exchange rates and credit availability, government austerity measures,
fluctuating fuel and other energy costs, fluctuating commodity prices, inflationary pressure, tax rates
and general uncertainty regarding the overall future economic environment. Global economic
conditions are uncertain and volatile, due in part to the potential impacts of increasing inflation, the
potential impacts of geopolitical uncertainties, and any potential sanctions, restrictions or responses
to those conditions. For example, the PRC market presents a number of risks, including changes in
laws and regulations, currency fluctuations, increased competition, and changes in economic
conditions, including the risk of an economic downturn or recession, trade embargoes, restrictions or
other barriers, as well as other conditions that may adversely impact consumer spending, any of
which could cause us to fail to achieve anticipated growth.
As global economic conditions continue to be volatile or economic uncertainty remains, trends in
consumer discretionary spending also remain unpredictable and subject to reductions due to credit
constraints and uncertainty about the future. Unfavorable economic conditions may lead consumers
to delay or reduce purchases of our products. Consumer demand for our products may not reach our
targets, or may decline, when there is an economic downturn or economic uncertainty in our key
markets. Our sensitivity to economic cycles and any related fluctuation in consumer demand may
have a material adverse effect on our financial condition.

Global economic and political conditions could adversely impact our results of operations.

Uncertain or challenging global economic and political conditions could impact our performance,
including our ability to successfully expand internationally. Global economic conditions could impact
levels of consumer spending in the markets in which we operate, which could impact our sales and
profitability. Political unrest, such as the turmoil related to current geopolitical events and the related
sanctions, restrictions, or other responses, could negatively impact our guests and employees,
reduce consumer spending, and adversely impact our business and results of operations.

We may be unable to source and sell our merchandise profitably or at all if new trade
restrictions are imposed or existing restrictions become more burdensome.

The United States and the countries in which our products are produced or sold have imposed and
may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely
adjust prevailing quota, duty, or tariff levels. The results of any audits or related disputes regarding
these restrictions or regulations could have an adverse effect on our financial statements for the
period or periods for which the applicable final determinations are made. Countries impose, modify,
and remove tariffs and other trade restrictions in response to a diverse array of factors, including local
and national political conditions, which make it impossible to predict future developments regarding
tariffs and other trade restrictions. Trade restrictions, including tariffs, changes to de minimis
thresholds, quotas, embargoes, safeguards, and customs restrictions, could increase the cost or
reduce the supply of products available to us, could increase shipping times, or may require us to
modify our supply chain organization or other current business practices, any of which could harm our
business, financial condition, and results of operations.

We are dependent on international trade agreements and relations. The countries in which we
produce and sell our products could impose or increase tariffs, duties, or other similar charges that
could negatively affect our results of operations, financial condition, and results of operations.

Adverse changes in, or withdrawal from, trade agreements or political relationships between
the United States and the PRC, Canada, or other countries where we sell or source our
products, could negatively impact our results of operations and cash flows. General
geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions,
and...

Changes in tariffs, including sanctions against the PRC, tariffs imposed by the United States
and the PRC, and the possibility of additional tariffs or other trade restrictions, could
adversely impact our business. It is possible that further tariffs may be introduced or increased.
Such changes could adversely impact our business and could increase the costs of sourcing our
products from the PRC as well as other countries, or could require us to source our products from
different countries. The Uyghur Forced Labor Prevention Act and other similar legislation may lead to
greater supply chain compliance costs and delays to us and to our vendors.

Changes in tax laws or unanticipated tax liabilities could adversely affect our
effective income tax rate and profitability.

We are subject to the income tax laws of the United States, Canada, and several other international
jurisdictions. Our effective income tax rates could be unfavorably impacted by a number of factors,
including changes in the mix of earnings amongst countries with differing statutory tax rates, changes
in the valuation of deferred tax assets and liabilities, changes in tax laws, new tax interpretations and
guidance, the outcome of income tax audits in various jurisdictions around the world, and any
repatriation of unremitted earnings for which we have not previously accrued applicable U.S. income
taxes and international withholding taxes.

Repatriations from our Canadian subsidiaries are not subject to Canadian withholding taxes if such
distributions are made as a return of capital. The extent to which the accumulated earnings of our
Canadian subsidiaries can be repatriated as a return of capital is dependent on, among other things,
the amount of paid-up capital in our Canadian subsidiaries and transactions undertaken by our
exchangeable shareholders.

Prior to 2022, we had not accrued for Canadian withholding taxes because the accumulated earnings
of, or “net investment in,” our Canadian subsidiaries was either indefinitely reinvested or could be
repatriated as a return of capital without the payment of withholding taxes.

Since 2022, the net investment in our Canadian subsidiaries, which was not indefinitely reinvested,
exceeded the paid-up capital and therefore we recognized Canadian withholding taxes on the portion
of our net investment which we are unable to repatriate free of withholding tax.

In 2025, assuming there are no exchange transactions by our exchangeable shareholders, we will
continue to recognize Canadian withholding taxes on the accumulated earnings of our Canadian
subsidiaries which are not indefinitely reinvested.

We engage in a number of intercompany transactions across multiple tax jurisdictions. Although we

believe that these transactions reflect the accurate economic allocation of profit and that proper
transfer pricing documentation is in place, the profit allocation and transfer pricing terms and
conditions may be scrutinized by local tax authorities during an audit and any resulting changes may
impact our mix of earnings in countries with differing statutory tax rates. At the end of 2020, our
Advance Pricing Arrangement (“APA”) with the Internal Revenue Service and the Canada Revenue
Agency expired. This APA stipulated the allocation of certain profits between the U.S. and Canada.
We are currently in the process of negotiating the renewal of this arrangement and the final agreed
upon terms and conditions thereof could impact our effective tax rate. Current economic and political
conditions make tax rules in any jurisdiction, including the United States and Canada, subject to
significant change. Changes in applicable U.S., Canadian, or other international tax laws and
regulations, or their interpretation and application, including the possibility of retroactive effect, could
affect our income tax expense and profitability, as they did in fiscal 2017 and fiscal 2018 upon
passage of the U.S. Tax Cuts and Jobs Act, and in 2020 with the passage of the Coronavirus Aid,
Relief, and Economic Security Act. Certain provisions of the Inflation Reduction Act passed in 2022,
including a 15% corporate alternative minimum tax, as well as the similar 15% global minimum tax
under the Organization for Economic Cooperation and Development’s Pillar Two Global Anti-Base
Erosion Rules, may impact our income tax expense, profitability, and capital allocation decisions in
the future.

Our failure to comply with trade and other regulations could lead to
investigations or actions by government regulators and negative publicity.

The labeling, distribution, importation, marketing, and sale of our products, as well as components of
our products, including chemicals, are subject to extensive regulation by various regulatory bodies.
These include federal agencies such as the Federal Trade Commission, Consumer Product Safety
Commission and state attorneys general in the United States, the Competition Bureau and Health
Canada in Canada, the State Administration for Market Regulation of the PRC, General
Administration of Customs of the PRC, as well as other federal, state, provincial, local, and
international regulatory authorities in the countries in which our products are distributed or sold.
Governmental regulations and policies could impose restrictions or require changes in labeling or
content of some of our products or result in the need to recall or discontinue some products. Due to
the increased number and complexity of regulations we are subject to globally, if we fail to comply
with any of these regulations, we could become subject to enforcement actions or the imposition of
significant penalties or claims, which could harm our results of operations or our ability to conduct our
business. In addition, any audits and inspections by governmental agencies related to these matters
could result in significant settlement amounts, damages, fines, or other penalties.

A global or regional health event such as the COVID-19 pandemic could significantly and adversely
impact our supply chain if the factories that manufacture our products, the distribution centers where
we manage our inventory, or the operations of our logistics and other service providers are disrupted,
temporarily closed, or experience worker shortages.

Risks related to intellectual property

Our fabrics and manufacturing technology generally are not patented and can be imitated by our
competitors. If our competitors sell products similar to ours at lower prices, our net revenue and
profitability could suffer.

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. Our
ability to obtain intellectual property protection for our products is therefore limited. We hold limited
patents and exclusive intellectual property rights in the technology, fabrics or processes underlying
our products. 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. Because many
of our competitors have significantly greater financial, distribution, marketing, and other resources
than we do, they may be able to manufacture and sell products based on our fabrics and
manufacturing technology at lower prices than we can. If our competitors sell products similar to ours
at lower prices, our net revenue and profitability could suffer.

Our failure or inability to protect our intellectual property rights could diminish the value of
our brand and weaken our competitive position.
We currently rely on a combination of patent, copyright, trademark, trade dress, trade secret, and
unfair competition laws, as well as confidentiality procedures and licensing arrangements, to establish
and protect our intellectual property rights. We often seek to enter into contractual arrangements with
third parties to protect our intellectual property rights by, among other things, including limitations on
use and nondisclosure of, and restrictions on access to, our designs and other proprietary
information. Our intellectual property rights may be challenged, which could result in them being
narrowed in scope or declared invalid or unenforceable, or our intellectual property protection may be
unavailable or limited in some international countries where laws or law enforcement practices may
not protect our intellectual property rights as fully as in the United States or Canada, and it may be
more difficult for us to successfully challenge the use of our intellectual property rights by other
parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of
our brand could be diminished, and our competitive position may suffer.

Our trademarks, patents, and other proprietary rights could potentially conflict with the rights
of others and we may be prevented from selling some of our products.

Our success depends in large part on our brand image. We believe that our trademarks, patents, and
other proprietary rights have significant value and are important to identifying and differentiating our
products from those of our competitors and creating and sustaining demand for our products. We
have filed for and obtained some United States, Canada, and international trademark registrations
and patents, and we continue to evaluate additional trademarks and patents as appropriate. However,
some or all of these pending trademark applications may not be approved by the applicable
governmental authorities. Moreover, even if the applications are approved, third parties may seek to
oppose or otherwise challenge these applications or registrations. Additionally, we may face obstacles
as we expand our product line and the geographic scope of our sales and marketing. Third parties
may assert intellectual property claims against us, particularly as we expand our business and the
number of products we offer. Our expansion, regardless of its merit, could be expensive and time
consuming and could divert management resources. Successful infringement claims against us could
result in significant monetary liability or prevent us from selling some of our products. In addition,
resolution of claims may require us to redesign our products, license rights from third parties, or stop
offering those rights altogether. Any of these events could harm our results of operations, liquidity, and
financial condition to a significant degree.

We have been, and in the future may be, sued by third parties for alleged infringement of their
proprietary rights.

There is considerable patent and other intellectual property development activity in our market, and
litigation based on allegations of infringement or other violations of intellectual property rights is
frequent in the fitness and technology industries. Furthermore, it is common for individuals and
groups to purchase patents and other intellectual property assets for the purpose of making claims of
infringement to extract settlements from companies like ours. Our use of third-party content, including
music, software, and other intellectual property from others may be subject to claims of infringement
or misappropriation. We cannot guarantee that our internally developed or acquired technologies and
content do not or will not infringe the intellectual property rights of others. The time or cost of
defending against claims by other companies or others that we are infringing upon or
misappropriating their intellectual property rights, and we may be found to be infringing upon such
rights. Any claims or litigation could cause us to incur significant expenses and, if successfully
asserted against us, could require that we pay substantial damages or ongoing royalty payments,
prevent us from offering our platform or services or using certain technologies, force us to implement
expensive work-arounds, or impose other unfavorable terms. We expect that the occurrence of
infringement claims is likely to grow as the market for fitness products and services grows and as we
introduce new and updated products and offerings. Also, any exposure to damages resulting from
infringement claims could increase and this could further exhaust our financial and management
resources. Any of the foregoing could prevent us from competing effectively and could have an
adverse effect on our business, financial condition, and operating results.

Risks related to legal and governance matters

Our business could be negatively affected as a result of actions of stockholders, activists, or

others.

We may be subject to actions or proposals from stockholders, political or consumer activists, or

others that may not align with our business strategies or the interests of our other stockholders.
Activism could include geopolitical conflict between the PRC and other countries. Responding to such
actions can be costly and time-consuming, disrupt our business and operations, and divert the
attention of our board of directors, management, and employees from the pursuit of our business
activities or others may create perceived uncertainties in the future direction of our business or
strategy which may be exploited by our competitors and may make it more difficult to attract and
retain qualified personnel and potential guests, and may affect our relationships with current guests,
vendors, investors, and other third parties. In addition, a proxy contest for the election of directors at
our annual meeting would require us to incur significant legal fees and proxy solicitation expenses
and require significant time and attention by management and our board of directors. The perceived
uncertainties as to our future direction also could affect the market price and volatility of our
securities.

We are subject to periodic claims and litigation that could result in unexpected expenses and
could ultimately be resolved against us.

From time to time, we are involved in litigation and other proceedings, including matters related to
product liability claims, stockholder class action and derivative claims, commercial disputes and
intellectual property, as well as trade, regulatory, employment, and other claims related to our
business. Any of these proceedings could result in significant settlement amounts, damages, fines, or
other penalties, direct financial and management resources, and result in significant legal fees. An
unfavorable outcome of any particular proceeding could exceed the limits of our insurance policies or
the carriers may decline to fund such final settlements and/or judgments and could have an adverse
impact on our business, financial condition, and results of operations. In addition, any proceeding
could negatively impact our reputation among our guests and our brand image.

Anti-takeover provisions of Delaware law and our certificate of incorporation and bylaws
could delay and discourage takeover attempts that stockholders may consider to be
favorable.

Certain provisions of our certificate of incorporation and bylaws and applicable provisions of the
Delaware General Corporation Law may make it more difficult or undesirable for a third-party to
acquire control of us or effect a change in our board of directors and management. 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 our 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.

In addition, we are governed by Section 203 of the Delaware General Corporation Law which, subject
to some exceptions, prohibits “business combinations” between a Delaware corporation and an
"interested stockholder."