LULU 10-Q

lululemon athletica inc. (LULU)

10-Q 2026-09-03 For: 2026-08-02

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Added on September 04, 2026

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Delaware			20-3842867
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Income	4
	Consolidated Statements of Stockholders' Equity	5
	Consolidated Statements of Cash Flows	7
	Index for Notes to the Unaudited Interim Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 5.	Other Information	50
Item 6.	Exhibits	51

Signatures		52


	August 2, 2026		February 1, 2026
ASSETS
Current assets
Cash and cash equivalents	$	1,389,737	$	1,807,202
Accounts receivable, net	171,164		190,657
Inventories	1,711,450		1,700,753
Prepaid and receivable income taxes	479,948		352,469
Prepaid expenses and other current assets	193,288		211,620
	3,945,587		4,262,701
Property and equipment, net	2,046,363		2,033,720
Right-of-use lease assets	1,947,077		1,630,181
Goodwill	185,840		184,911
Intangible assets, net	2,530		6,283
Deferred income tax assets	24,537		24,037
Other non-current assets	332,644		314,910
	$	8,484,578	$	8,456,743
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	346,717	$	331,421
Accrued liabilities and other	584,912		662,982
Accrued compensation and related expenses	122,747		187,887
Current lease liabilities	366,649		298,724
Current income taxes payable	67,375		43,948
Unredeemed gift card liability	277,318		316,632
Other current liabilities	35,933		45,954
	1,801,651		1,887,548
Non-current lease liabilities	1,774,478		1,499,717
Deferred income tax liabilities	56,987		52,278
Other non-current liabilities	60,288		55,360
	3,693,404		3,494,903
Commitments and contingencies
Stockholders' equity
Undesignated preferred stock, $0.01 par value: 5,000 shares authorized; none issued and outstanding	—		—
Exchangeable stock, no par value: 60,000 shares authorized; 5,116 and 5,116 issued and outstanding	—		—
Special voting stock, $0.000005 par value: 60,000 shares authorized; 5,116 and 5,116 issued and outstanding	—		—
Common stock, $0.005 par value: 400,000 shares authorized; 106,566 and 111,380 issued and outstanding	533		557
Additional paid-in capital	695,052		669,392
Retained earnings	4,364,017		4,522,581
Accumulated other comprehensive loss	(268,428)		(230,690)
	4,791,174		4,961,840
	$	8,484,578	$	8,456,743


	Quarter Ended				Two Quarters Ended
	August 2, 2026		August 3, 2025		August 2, 2026		August 3, 2025
Net revenue	$	2,415,631	$	2,525,219	$	4,887,234	$	4,895,879
Cost of goods sold	953,753		1,048,017		2,086,538		2,035,551
Gross profit	1,461,878		1,477,202		2,800,696		2,860,328
Selling, general and administrative expenses	1,006,332		951,658		2,066,320		1,894,529

Amortization of intangible assets	1,893		1,730		3,777		3,360

Income from operations	453,653		523,814		730,599		962,439
Other income (expense), net	13,698		9,737		22,829		21,523
Income before income tax expense	467,351		533,551		753,428		983,962
Income tax expense	138,128		162,646		229,157		298,485
Net income	$	329,223	$	370,905	$	524,271	$	685,477

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	$	(76,329)	$	4,707	$	(64,342)	$	174,479
Net investment hedge gains (losses)	25,289		790		26,604		(81,263)
Other comprehensive income (loss), net of tax	$	(51,040)	$	5,497	$	(37,738)	$	93,216
Comprehensive income	$	278,183	$	376,402	$	486,533	$	778,693

Basic earnings per share	$	2.92	$	3.10	$	4.59	$	5.71
Diluted earnings per share	$	2.92	$	3.10	$	4.59	$	5.70
Basic weighted-average number of shares outstanding	112,898		119,600		114,156		120,116
Diluted weighted-average number of shares outstanding	112,919		119,680		114,201		120,262


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Quarter Ended August 2, 2026
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Shares	Par Value		Shares	Par Value
Balance as of May 3, 2026	5,116	5,116	$	—	109,308	$	547	$	681,152	$	4,361,290	$	(217,388)	$	4,825,601
Net income										329,223				329,223
Other comprehensive income (loss), net of tax												(51,040)		(51,040)

Stock-based compensation expense								21,089						21,089
Common stock issued upon settlement of stock-based compensation					8	—		—						—
Shares withheld related to net share settlement of stock-based compensation					(3)	—		(350)						(350)
Repurchase of common stock, including excise tax					(2,747)	(14)		(6,839)		(326,496)				(333,349)
Balance as of August 2, 2026	5,116	5,116	$	—	106,566	$	533	$	695,052	$	4,364,017	$	(268,428)	$	4,791,174


	Quarter Ended August 3, 2025
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Shares	Par Value		Shares	Par Value
Balance as of May 4, 2025	5,116	5,116	$	—	114,909	$	574	$	632,564	$	3,993,154	$	(336,722)	$	4,289,570
Net income										370,905				370,905
Other comprehensive income (loss), net of tax												5,497		5,497

Stock-based compensation expense								(1,844)						(1,844)
Common stock issued upon settlement of stock-based compensation					50	—		5,257						5,257
Shares withheld related to net share settlement of stock-based compensation					(3)	—		(873)						(873)
Repurchase of common stock, including excise tax					(1,128)	(4)		(2,729)		(278,500)				(281,233)
Balance as of August 3, 2025	5,116	5,116	$	—	113,828	$	570	$	632,375	$	4,085,559	$	(331,225)	$	4,387,279


	Two Quarters Ended August 2, 2026
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Shares	Par Value		Shares	Par Value
Balance as of February 1, 2026	5,116	5,116	$	—	111,380	$	557	$	669,392	$	4,522,581	$	(230,690)	$	4,961,840
Net income										524,271				524,271
Other comprehensive income (loss), net of tax												(37,738)		(37,738)

Stock-based compensation expense								50,275						50,275
Common stock issued upon settlement of stock-based compensation					187	1		(1)						—
Shares withheld related to net share settlement of stock-based compensation					(83)	—		(12,369)						(12,369)
Repurchase of common stock, including excise tax					(4,918)	(25)		(12,245)		(682,835)				(695,105)
Balance as of August 2, 2026	5,116	5,116	$	—	106,566	$	533	$	695,052	$	4,364,017	$	(268,428)	$	4,791,174


	Two Quarters Ended August 3, 2025
	Exchangeable Stock	Special Voting Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Shares	Par Value		Shares	Par Value
Balance as of February 2, 2025	5,116	5,116	$	—	116,166	$	581	$	638,190	$	4,109,717	$	(424,441)	$	4,324,047
Net income										685,477				685,477
Other comprehensive income (loss), net of tax												93,216		93,216

Stock-based compensation expense								21,247						21,247
Common stock issued upon settlement of stock-based compensation					245	—		5,478						5,478
Shares withheld related to net share settlement of stock-based compensation					(92)	—		(26,514)						(26,514)
Repurchase of common stock, including excise tax					(2,491)	(11)		(6,026)		(709,635)				(715,672)
Balance as of August 3, 2025	5,116	5,116	$	—	113,828	$	570	$	632,375	$	4,085,559	$	(331,225)	$	4,387,279


Note 1	Nature of Operations and Basis of Presentation	9
Note 2	Recent Accounting Pronouncements	9
Note 3	Net Revenue	10
Note 4	Revolving Credit Facilities	11
Note 5	Supply Chain Financing Program	11
Note 6	Stock-Based Compensation and Benefit Plans	11
Note 7	Fair Value Measurement	13
Note 8	Derivative Financial Instruments	13
Note 9	Earnings Per Share	15
Note 10	Supplementary Financial Information	15
Note 11	Segmented Information	16
Note 12	Legal Proceedings and Other Contingencies	18


	Second Quarter				First Two Quarters
	2026		2025		2026		2025
	(In thousands)
United States	$	1,302,069	$	1,415,002	$	2,615,275	$	2,777,526
Canada	285,815		321,293		569,156		614,113
Mexico	28,888		21,922		53,551		41,136
Americas	1,616,772		1,758,217		3,237,982		3,432,775

China Mainland	407,095		392,898		885,490		760,999
Hong Kong SAR, Taiwan, and Macau SAR	51,419		47,634		102,827		91,738
People's Republic of China	458,514		440,532		988,317		852,737

Other geographic areas	340,345		326,470		660,935		610,367
	$	2,415,631	$	2,525,219	$	4,887,234	$	4,895,879


	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


	Stock Options		Performance-Based Restricted Stock Units
Expected term	4.25 years		2.85 years
Expected volatility	43.69	%	42.40	%
Risk-free interest rate	3.79	%	3.79	%
Dividend yield	—	%	—	%


	Second Quarter				First Two Quarters
	2026		2025		2026		2025
	(In thousands)
Women's apparel	$	1,488,241	$	1,547,321	$	3,091,226	$	3,082,493
Men's apparel	621,380		624,598		1,203,258		1,169,386
Accessories and other categories	306,010		353,300		592,750		644,000
	$	2,415,631	$	2,525,219	$	4,887,234	$	4,895,879


	Second Quarter				First Two Quarters
	2026		2025		2026		2025
	(In thousands)
Company-operated stores	$	1,173,747	$	1,254,952	$	2,366,587	$	2,408,059
E-commerce	934,630		993,093		1,932,072		1,953,983
Other channels	307,254		277,174		588,575		533,837
	$	2,415,631	$	2,525,219	$	4,887,234	$	4,895,879


	August 2, 2026						February 1, 2026
	Gross Notional		Assets		Liabilities		Gross Notional		Assets		Liabilities
	(In thousands)
Derivatives designated as net investment hedges:
Forward currency contracts	$	1,060,000	$	6,218	$	—	$	1,548,000	$	—	$	32,510
Derivatives not designated in a hedging relationship:
Forward currency contracts	1,386,219		57		8,431		1,832,471		30,996		3,966
Net derivatives recognized on consolidated balance sheets:
Forward currency contracts			$	6,275	$	8,431			$	30,996	$	36,476


	Second Quarter				First Two Quarters
	2026		2025		2026		2025
	(In thousands)
Gains (losses) recognized in selling, general and administrative expenses:
Foreign currency exchange gains (losses)	$	36,569	$	5,280	$	36,170	$	(67,998)
Derivatives not designated in a hedging relationship	(36,322)		(3,837)		(43,683)		59,231
Net foreign currency exchange and derivative gains (losses)	$	247	$	1,443	$	(7,513)	$	(8,767)


	August 2, 2026		Level 1		Level 2		Level 3		Balance Sheet Classification
	(In thousands)
Money market funds	$	37,349	$	37,349	$	—	$	—	Cash and cash equivalents

Term deposits	83,328		—		83,328		—		Cash and cash equivalents
Forward currency contract assets	6,275		—		6,275		—		Prepaid expenses and other current assets
Forward currency contract liabilities	8,431		—		8,431		—		Other current liabilities


	Second Quarter 2026
	Americas		China Mainland		Rest of World		Total Segments		Corporate(1)		Total
	(In thousands)
Net revenue	$	1,616,772	$	407,095	$	391,764	$	2,415,631	$	—	$	2,415,631
Product costs(2)	376,770		89,073		115,136		580,979		—		580,979
Other cost of sales(2)	190,694		56,326		72,554		319,574		53,200		372,774
Selling, general and administrative expenses	454,895		110,426		129,101		694,422		311,910		1,006,332
Amortization of intangible assets	—		—		—		—		1,893		1,893
Income from operations	$	594,413	$	151,270	$	74,973	$	820,656	$	(367,003)	$	453,653
Other income (expense), net											13,698
Income before income tax expense											$	467,351

Supplemental information:
Depreciation and amortization(3)	$	65,757	$	11,144	$	11,092	$	87,993	$	54,339	$	142,332


	Second Quarter 2025
	Americas		China Mainland		Rest of World		Total Segments		Corporate(1)		Total
	(In thousands)
Net revenue	$	1,758,217	$	392,898	$	374,104	$	2,525,219	$	—	$	2,525,219
Product costs(2)	515,473		92,219		108,449		716,141		—		716,141
Other cost of sales(2)	158,390		51,139		63,200		272,729		59,147		331,876
Selling, general and administrative expenses	464,960		97,050		121,212		683,222		268,436		951,658
Amortization of intangible assets	—		—		—		—		1,730		1,730
Income from operations	$	619,394	$	152,490	$	81,243	$	853,127	$	(329,313)	$	523,814
Other income (expense), net											9,737
Income before income tax expense											$	533,551

Supplemental information:
Depreciation and amortization(3)	$	54,499	$	8,871	$	8,574	$	71,944	$	47,771	$	119,715


	First Two Quarters 2026
	Americas		China Mainland		Rest of World		Total Segments		Corporate(1)		Total
	(In thousands)
Net revenue	$	3,237,982	$	885,490	$	763,762	$	4,887,234	$	—	$	4,887,234
Product costs(2)	922,329		189,631		215,464		1,327,424		—		1,327,424
Other cost of sales(2)	374,666		119,882		144,563		639,111		120,003		759,114
Selling, general and administrative expenses	938,094		221,638		259,339		1,419,071		647,249		2,066,320
Amortization of intangible assets	—		—		—		—		3,777		3,777
Income from operations	$	1,002,893	$	354,339	$	144,396	$	1,501,628	$	(771,029)	$	730,599
Other income (expense), net											22,829
Income before income tax expense											$	753,428

Supplemental information:
Depreciation and amortization(3)	$	128,011	$	23,134	$	21,630	$	172,775	$	104,892	$	277,667


	First Two Quarters 2025
	Americas		China Mainland		Rest of World		Total Segments		Corporate(1)		Total
	(In thousands)
Net revenue	$	3,432,775	$	760,999	$	702,105	$	4,895,879	$	—	$	4,895,879
Product costs(2)	996,293		174,034		198,713		1,369,040		—		1,369,040
Other cost of sales(2)	315,037		101,412		121,671		538,120		128,391		666,511
Selling, general and administrative expenses	912,720		179,428		227,622		1,319,770		574,759		1,894,529
Amortization of intangible assets	—		—		—		—		3,360		3,360
Income from operations	$	1,208,725	$	306,125	$	154,099	$	1,668,949	$	(706,510)	$	962,439
Other income (expense), net											21,523
Income before income tax expense											$	983,962

Supplemental information:
Depreciation and amortization(3)	$	105,940	$	17,447	$	17,286	$	140,673	$	93,571	$	234,244


	Second Quarter 2026						First Two Quarters 2026
	Change		Foreign exchange changes		Change in constant dollars		Change		Foreign exchange changes		Change in constant dollars
Net Revenue
Americas	(8)	%	—	%	(8)	%	(6)	%	—	%	(6)	%
China Mainland	4		(6)		(2)		16		(6)		10
Rest of World	5		1		6		9		(2)		7
Total net revenue	(4)	%	(1)	%	(5)	%	—	%	(2)	%	(2)	%

Comparable sales(1)
Americas	(12)	%	—	%	(12)	%	(8)	%	(1)	%	(9)	%
China Mainland	(2)		(6)		(8)		8		(6)		2
Rest of World	(4)		1		(3)		—		(1)		(1)
Total comparable sales	(9)	%	(1)	%	(10)	%	(4)	%	(2)	%	(6)	%


Number of company-operated stores by market	August 2, 2026	February 1, 2026
United States	380	379
Canada	74	71
Mexico	29	26
Americas	483	476

China Mainland	174	172

Australia	33	34
South Korea	23	22
Hong Kong SAR	11	11
Japan	10	10
Singapore	9	9
New Zealand	8	8
Taiwan	8	7
Thailand	7	5
Malaysia	5	5
Macau SAR	3	3
APAC	117	114
United Kingdom	22	20
Germany	9	9
France	6	6
Ireland	4	4
Spain	3	3
Netherlands	2	2
Sweden	2	2
Italy	1	1
Norway	1	1
Switzerland	1	1
EMEA	51	49
Rest of World	168	163

Total company-operated stores	825	811


Number of retail locations operated by third parties by market	August 2, 2026	February 1, 2026
United Arab Emirates	13	13
Israel	8	8
Saudi Arabia	8	9
Turkey	7	3
Kuwait	4	4
Qatar	4	4
Belgium	2	2
Greece	2	—
Bahrain	1	1
Denmark	1	1
Hungary	1	—
Poland	1	—
Romania	1	—
Total locations operated by third parties under license and supply arrangements	53	45


Period(1)	Total Number of Shares Purchased(2)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
May 4, 2026 - May 31, 2026	870,327	$	126.21	870,327	$	932,698,894
June 1, 2026 - July 5, 2026	1,209,010	117.50		1,209,010	790,637,075
July 6, 2026 - August 2, 2026	667,165	117.06		667,165	712,539,339
Total	2,746,502			2,746,502


*			Denotes a compensatory plan, contract, or arrangement in which our directors or executive officers may participate.
**			Furnished herewith.


						lululemon athletica inc.

By:						/s/ MEGHAN FRANK
						Meghan Frank
						Interim Co-Chief Executive Officer and Chief Financial Officer
						(principal executive officer and principal financial and accounting officer)