lululemon athletica (LULU) 10-K risk factor changes: FY2014 vs FY2013

[removed: _In] [added: In] addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our business.

Please note that additional risks not presently known to us or that we currently deem immaterial could also impair our business and [removed: operations._][added: operations.]

[removed: _Our] [added: Our] success depends on our ability to maintain the value and reputation of our [removed: brand._][added: brand.]

We rely on social media, as one of our marketing strategies, to have a [removed: positive impact on both our brand value and reputation.]

[removed: _An] [added: An] economic downturn or economic uncertainty in our key markets may adversely affect consumer discretionary spending and demand for our [removed: products._][added: products.]

[removed: These unfavorable] [added: Unfavorable] economic conditions may lead consumers to delay or reduce purchase of our products.

[removed: _Our] [added: Our] sales and profitability may decline as a result of increasing product costs and decreasing selling [removed: prices._][added: prices.]

These factors may cause us to experience increased costs, reduce our sales 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 [removed: affect] [added: effect] on our financial conditions, operating results and cash flows.

[removed: _If] [added: If] we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and [removed: profitability._][added: profitability.]

[removed: _Our] [added: Our] results of operations could be materially harmed if we are unable to accurately forecast customer demand for our [removed: products._][added: products.]

[removed: _Any] [added: Any] material disruption of our information systems could disrupt our business and reduce our [removed: sales._][added: sales.]

Any material disruption or slowdown of our systems, including a disruption or slowdown caused by our failure to successfully upgrade our systems, system failures, viruses, computer [removed: “hackers”] [added: "hackers"] or other causes, could cause information, including data related to customer orders, to be lost or delayed which [removed: could—especially] [added: could-especially] if the disruption or slowdown occurred during the holiday [removed: season—result] [added: season-result] in delays in the delivery of products to our stores and customers or lost sales, which could reduce demand for our products and cause our sales to decline.

[removed: _If] [added: If] we continue to grow at a rapid pace, 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 [removed: suffer._][added: suffer.]

We have expanded our operations rapidly since our inception in 1998 and our net revenue has increased from $40.7 million in fiscal 2004 to [removed: $1,370.4 million] [added: $1.6 billion] in fiscal [removed: 2012.][added: 2013.]

[added: If our operations continue to grow at a rapid] pace, 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.

This expansion could increase the strain on our resources, and we could experience [removed: serious] operating difficulties, including difficulties in hiring, training and managing an increasing number of employees.

[removed: _The] [added: The] fluctuating cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to [removed: suffer._][added: suffer.]

Our products also include [added: silver and] natural fibers, including cotton.

Increases in the cost of raw materials, including petroleum or the prices we pay for [added: silver and] our 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.

For example, Luon fabric, which is included in many of our products, is supplied to the [removed: mills] [added: garment factories] we use by a [removed: single manufacturer in Taiwan,] [added: limited number of manufacturers,] and the [removed: fibers] [added: components] used in manufacturing Luon fabric [removed: are] [added: may each be] supplied to our [removed: Taiwanese manufacturer] [added: manufacturers] by [removed: a] single [removed: company.][added: companies.]

In fiscal [removed: 2012,] [added: 2013,] approximately [removed: 60%] [added: 63%] of our products were produced by our top five manufacturing [removed: suppliers.][added: suppliers, 45% of raw materials were produced by a single manufacturer.]

We have no [removed: long term] [added: long-term] contracts with [added: any of] our suppliers or manufacturing [removed: sources,] [added: sources for the production] and [added: supply of our fabrics and garments, and] we compete with other companies for fabrics, raw materials, production and import quota capacity.

We [added: have experienced, and] may [removed: experience] [added: in the future continue to experience,] a significant disruption in the supply of fabrics or raw materials from current sources [removed: or, in the event of a disruption,] [added: and] we may be unable to locate alternative materials 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 [added: 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 to fill our orders in a timely manner.

Identifying a suitable supplier is an involved process that requires us to become satisfied with [removed: their] [added: its] quality control, responsiveness and service, financial stability and labor and other ethical practices.

[removed: In that event,] [added: 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 [removed: defects in] the [removed: manufacture] [added: unacceptability] of our products are not discovered until after such products are purchased by our guests, our guests could lose confidence in the technical attributes of our products and our results of operations could suffer and our business could be harmed.

[removed: _Our] [added: Our] limited operating experience and limited brand recognition in new international markets may limit our expansion strategy and cause our business and growth to [removed: suffer._][added: suffer.]

Our future growth [removed: depends, to an extent,] [added: depends in part] on our international expansion efforts.

[removed: _We] [added: We] operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and [removed: profitability._][added: profitability.]

Many of our competitors are large apparel and sporting goods companies with strong worldwide brand recognition, such as Nike, Inc., adidas AG, [removed: which includes the adidas and Reebok brands, and] The Gap, [removed: Inc, which includes] [added: Inc. and Under Armour, Inc. Because of] the [removed: Athleta brand.][added: fragmented nature of the industry, we also compete with other apparel sellers, including those specializing in yoga apparel.]

[removed: _If] [added: If] we encounter problems with our distribution system, our ability to deliver our products to the market and to meet guest expectations could be [removed: harmed._][added: harmed.]

Our distribution facilities include computer controlled and automated equipment, which means their operations are complicated [added: and 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.]

[removed: Another significant risk resulting from our] [added: Our] international operations [removed: is] [added: are also subject to] compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-bribery laws applicable to our operations.

[removed: _Our] [added: Our] fabrics and manufacturing technology are not patented and can be imitated by our [removed: competitors._][added: competitors.]

[removed: _Our] [added: Our] failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive [removed: position._][added: position.]

[removed: _We] [added: We] are subject to risks associated with leasing retail space subject to long-term and non-cancelable [removed: leases._][added: leases.]

[removed: 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.

[removed: _Increasing] [added: Increasing] labor costs and other factors associated with the production of our products in China could increase the costs to produce our [removed: products._][added: products.]

[removed: During fiscal 2012, approximately 34%] [added: A significant portion] of our products [removed: were] [added: are] produced in China and increases in the costs of labor and other costs of doing business in China could significantly increase our costs to produce our products and could have a negative impact on our operations, revenue and earnings.

positive impact on both our brand value and reputation.

If any of our products are unacceptable to us or our guests, our business could be harmed.

We have also received, and may in the future continue to receive, products that either meet our technical specifications but that are nonetheless unacceptable to us, or products that are otherwise unacceptable to us or our customers.

Our reliance on third-party suppliers to provide fabrics for and to produce our products could cause problems in our supply chain.

Our inability to safeguard against security breaches with respect to our information technology systems could disrupt our operations.

Our business employs systems and websites that allow for the storage and transmission of proprietary or confidential information regarding our business, customers and employees including credit card information.

Security breaches could expose us to a risk of loss or misuse of this information and potential liability.

We may not have the resources or technical sophistication to be able to anticipate or prevent rapidly evolving types of cyber-attacks.

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 computer capabilities, new technological discoveries or other developments may result in the technology used by us to protect transaction or other data being breached or compromised.

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 litigation and potential liability and damage to our brand and reputation or other harm to our business.

In addition, as each of our leases

In the last several years, several members of our senior management team have left us and we have focused time and resources on recruiting the new members of our current management team, including our new Chief Executive Officer.

The continued turnover of senior management and the loss of key members of our executive team could have a negative impact on our ability to manage and grow our business effectively.

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The current volatility in the United States economy in particular has resulted in an overall slowing in growth in the retail sector because of decreased consumer spending, which may remain depressed for the foreseeable future.

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If our operations continue to grow at a rapid

_We rely on third-party suppliers to provide fabrics for and to produce our products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity._

Because of the fragmented nature of the industry, we also compete with other apparel sellers, including those specializing in yoga apparel.

and 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.

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The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and achieve our business goals.

We also may be unable to retain existing management, technical, sales and client support personnel that are critical to our success, which could result in harm to our customer and employee relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs.

For example, under the provisions of the World Trade Organization, or the WTO, Agreement on Textiles and Clothing, effective as of January 1, 2005, the United States and other WTO member countries eliminated quotas on textiles and apparel-related products from WTO member countries.

In 2005, China’s exports into the United States surged as a result of the eliminated quotas.

In response to the perceived disruption of the market, the United States imposed new quotas, which remained in place through the end of 2008, on certain categories of natural-fiber products that we import from China.

as appropriate.

This discussion summarizes our consolidated operating results, financial condition and liquidity during the three-year period ending February [removed: 3, 2013.][added: 2, 2014.]

Fiscal [removed: 2012] [added: 2013] is a [added: 52 week year whereas fiscal 2012 was a] 53 week year.

Net sales numbers [added: for fiscal 2012] include results from the 53rd week; however, comparable stores sales calculations exclude the 53rd week.

Fiscal [removed: 2012, 2011] [added: 2013, 2012] and [removed: 2010] [added: 2011] ended on February [added: 2, 2014, February] 3, [removed: 2013, January 29, 2012] [added: 2013] and January [removed: 30, 2011,] [added: 29, 2012,] respectively.

[removed: Overview][added: Overview]

For example, we opened [removed: 37] [added: 43 net] new corporate-owned stores in North [removed: America, Australia,] [added: America] and [removed: New Zealand since] [added: Australia during] fiscal [removed: 2011.][added: 2013.]

Our growth strategy relies on [removed: positive comparable store sales and] expansion in North America, particularly in the United States.

We [removed: have] also [removed: determined] [added: believe] that international growth is an opportunity and are expanding our foothold in markets by establishing local community connections, distributing to strategic sales partners and opening showrooms where we [removed: feel] [added: believe] our [removed: key] guests are shopping.

Throughout fiscal [removed: 2012,] [added: 2013,] we were able to grow our e-commerce business which [added: we believe] has further increased our brand awareness and has made our product available in new markets, including those outside of North America.

Continuing increases in traffic [removed: and conversion rates] on our e-commerce website lead us to believe that there is potential for our direct to consumer segment to become an increasingly substantial part of our business and we plan to continue to commit a [added: significant] portion of our resources to further developing this channel.

In mid-March 2013, we determined that certain shipments of [removed: women’s] [added: women's] black Luon bottoms received from our factories and available in our stores from March 1, 2013, did not meet our [removed: technical] specifications.

As we became aware of this issue, we pulled what we believe to be all of the affected items from our stores, showrooms [added: and e-commerce sites and began working with our supplier to replace the fabric and with our other manufacturers to replace these items as quickly as possible.]

[removed: The] [added: As we previously disclosed, the] lost revenue, [added: as well as] additional costs [removed: expected to be] incurred and the write down of affected product on hand from this [removed: issue will] [added: issue,] negatively [removed: impact] [added: impacted] our results from operations in [removed: Fiscal] [added: fiscal] 2013.

We believe [removed: that] our brand is recognized as premium in our offerings of [added: women and men's] run and yoga assortment, as well as a leader in technical fabrics and functionality.

[removed: In fiscal 2013, we plan on investing] [added: We have continued to invest] in new and legacy information technology systems to develop new capabilities [removed: in] [added: to support] our vertical retail strategy.

We believe our strong cash flow generation, solid balance sheet and healthy liquidity provide us with the financial flexibility to [removed: continue executing] [added: execute] the initiatives which [removed: we believe] will [removed: lead] [added: continue] to [removed: quality] [added: lead our profitable] growth.

[removed: Operating] [added: Operating] Segment [removed: Overview][added: Overview]

We offer a comprehensive line of apparel and accessories including [removed: fitness] pants, shorts, tops and jackets designed for athletic pursuits such as yoga, running and general fitness, and dance-inspired apparel for female youth.

As of February [removed: 3, 2013,] [added: 2, 2014,] our branded apparel was principally sold through [removed: 211] [added: 254] corporate-owned stores that are located in the United States, Canada, Australia and New Zealand and via our e-commerce websites through our direct to consumer sales channel.

In fiscal 2012, 61% of our net revenue was derived from sales of our products in the United States, 34% of our net revenue was derived from [removed: the] sales of our products in Canada and 5% of our net revenue was derived from sales of our products outside of North America.

In fiscal 2011, 53% of our net revenue was derived from sales of our products in the United States, 43% of our net revenue was derived from [removed: the] sales of our products in Canada and 4% of our net revenue was derived from sales of our products outside of North America.

In fiscal [removed: 2010, 46%] [added: 2013, 66%] of our net revenue was derived from sales of our products in the United States, [removed: 52%] [added: 29%] of our net revenue was derived from [removed: the] sales of our products in Canada and [removed: 2%] [added: 5%] of our net revenue was derived from sales of our products outside of North America.

[removed: Our net] [added: Net] revenue [removed: increased] from [removed: $1,000.8] [added: our other segment increased $5.3 million, or 7%, to $82.9] million in fiscal [removed: 2011 to $1,370.4] [added: 2012 from $77.6] million in fiscal [removed: 2012, representing a 37% increase.][added: 2011.]

Our increase in net revenue from fiscal [removed: 2011] [added: 2012] to fiscal [removed: 2012] [added: 2013] resulted from the addition of [removed: 37] [added: 43 net new] retail locations, and comparable store sales growth of [removed: 16%] [added: 2%] in fiscal [removed: 2012,] [added: 2013,] excluding the impact of the 53rd [removed: week.][added: week in fiscal 2012.]

We believe our superior products, strategic store locations, inviting store [removed: environment, grassroots marketing approach] [added: environment] and distinctive corporate culture are responsible for our strong financial performance.

[removed: Our corporate-owned] [added: Corporate-owned] stores [removed: segment] accounted for [removed: 80%] [added: 77.3%] of [removed: our] [added: total] net revenue in fiscal [removed: 2012, 82%] [added: 2013, 79.6% of total net revenue] in fiscal [removed: 2011] [added: 2012] and [removed: 83%] [added: 81.6% of total net revenue] in fiscal [removed: 2010.][added: 2011.]

[removed: Our] [added: | • |] other [removed: segment, consisting of franchise sales,] [added: net revenue, which includes] wholesale accounts, [added: franchise sales, warehouse sales, outlets and] sales from company-operated [removed: showrooms, warehouse sales and outlets, each accounted for less than 10% of our net revenue in each of fiscal 2012, fiscal 2011 and fiscal 2010.][added: showrooms. |]

As of February [removed: 3, 2013,] [added: 2, 2014,] we sold our products through [removed: 211] [added: 254] corporate-owned stores located [removed: in,] [added: in] the United States, Canada, Australia, and New Zealand.

As of February [removed: 3, 2013,] [added: 2, 2014,] our direct to consumer segment included our lululemon and ivivva e-commerce websites.

Our direct to consumer segment is an increasingly substantial part of our growth strategy, and now represents [removed: 14%] [added: 16.5%] of our net [removed: revenue.][added: revenue compared to 14.4% in fiscal 2012 and 10.6% in fiscal 2011.]

In addition to deriving revenue from sales through our corporate-owned stores and direct to consumer, we also derive other net revenue, which includes [removed: wholesale customers, as well as] [added: outlet, wholesale, and] warehouse sales and [added: as well as] sales through a number of company-operated showrooms and temporary locations.

[removed: Warehouse sales] [added: Outlets as well as warehouse sales, which] are typically held one or more times a [removed: year] [added: year, are both] to sell slow moving inventory or inventory from prior seasons to retail customers at discounted prices.

Other net revenue accounted for [removed: 6%] [added: 6.2%] of total revenue in fiscal [removed: 2012, 7% of total net revenue] [added: 2013 compared to 6.0%] in fiscal [removed: 2011] [added: 2012] and [removed: 9%] [added: 7.8%] of total net revenue in fiscal [removed: 2010.][added: 2011.]

[removed: In fiscal 2008, we] opened our first company-operated showroom in Hong Kong and in fiscal 2012 we opened our first company-operated showroom in the United Kingdom.

[removed: Basis] [added: Basis] of [removed: Presentation][added: Presentation]

[removed: _Net revenue_] [added: Net revenue] is comprised of:

| [removed: |] • | [removed: |] corporate-owned store net revenue, which includes sales to customers through corporate-owned stores in [removed: North America] [added: the United States, Canada, Australia] and [removed: Australia;] [added: New Zealand;] |

| [removed: |] • | [removed: |] direct to consumer revenue, which includes sales from our e-commerce websites; and |

Also included in non-comparable stores sales are sales from direct to consumer sales, [added: outlets,] wholesale, [removed: franchises,] warehouse [removed: sales] [added: sales, showrooms, temporary locations, franchises,] and [added: sales from corporate-owned stores which we have closed.]

By measuring the change in year-over-year net revenue in stores that have been open for 12 months or [removed: more,] [added: more as well as direct to consumer sales, total] comparable [removed: store] sales [removed: allows] [added: allow] us to evaluate [removed: how] our [removed: core store base is performing.][added: performance eliminating the impact of newly opened stores.]

Fiscal 2013 was a year of challenges for lululemon.

While we were able to grow year over year revenue across all of our selling channels, we also faced challenges with product quality and brand perception.

We remain committed to our brand and core values, and have continued to invest in our product engine and supply chain throughout fiscal 2013.

In addition, we recently hired a new Chief Executive Officer and a new Chief Product Officer, who we believe will lead our continued profitable growth.

However, we are proud of our organization’s ability to get Luon delivered back into our stores within 90 days of having pulled it from our line.

Delivering quality to our customers is a critical factor in our market place differentiation.

We believe removing items that do not meet our standards is key to maintaining our brand reputation and that the pull-back of black Luon pants reiterates our commitment to quality.

In addition, we have continued to strengthen our senior management team in the areas of sourcing, quality and commercialization with key hires during the year.

While the pull-back of black Luon pants from our e-commerce sites negatively affected sales, net revenue from our direct to consumer channel increased 33% and represented 16.5% of total revenue in fiscal 2013 compared to 14.4% of total revenue in fiscal 2012 and 10.6% of total revenue in fiscal 2011.

Fiscal 2014 will be an investment year, as we refocus on building a solid foundation to drive growth and expand our business.

In addition to our plans for domestic and international expansion, we are also focused on initiatives related to rebuilding our brand experience, connecting with our guests and communities, and creating innovative, technical and beautiful product.

We continue to invest in our product quality and supply chain, as we believe this is the foundation of our guest loyalty.

Our focus on building foundation will also extend to our other categories, including our men’s and ivivva business, where we see potential for future expansion.

Our net revenue increased from $1.4 billion in fiscal 2012 to $1.6 billion in fiscal 2013, representing an annual growth rate of 16%.

Our total comparable sales, which includes comparable store sales and direct to consumer, were 7% in fiscal 2013, excluding the impact of the 53rd week in fiscal 2012.

In fiscal 2008, we

In fiscal 2013 we opened additional showrooms in Hong Kong and the United Kingdom, and opened showrooms for the first time in Germany, Singapore, the Netherlands, and China.

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We began to report total comparable sales in fiscal 2013, which combines comparable store sales and direct to consumer sales, excluding the 53rd week of sales from fiscal 2012.

Our direct to consumer segment represents a growing portion of our net revenue as the shopping behavior of our guests evolves.

Our approach to our guests supports this as it involves country and region specific websites, mobile/tablet devices in stores, social networks, and product notification emails.

We therefore believe that reporting total comparable sales with comparable store sales and direct to consumer sales combined provides a more relevant metric, and we intend to continue reporting this in fiscal 2014.

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Our results for fiscal 2012 demonstrate the ongoing success of our efforts to execute the goals we set at the end of last year.

We committed to continued investment in our stores and our people, making infrastructure enhancements and funding working capital requirements, while remaining conscious of our discretionary spending.

These goals included driving store productivity along with North American store build out and ecommerce, seeding international markets via a community, showroom and ecommerce model, and reinvesting in product innovation to create value and differentiation in our product lines and to enhance our leadership position for the long term.

We continually assess the economic environment and market conditions when making decisions regarding timing of our investments.

Our investments in our stores and people were reflected in our comparable stores net revenue growth, which leveraged our fixed operating costs.

This sales channel offers a higher operating margin than our other segments and accounted for 16.1% of total revenue in the fourth quarter of fiscal 2012 compared to 13.5% of total revenue in the same period of the prior year.

In fiscal 2012 we launched country and region specific websites in Australia, Europe and Asia to provide our online guests with local content, assortment and pricing.

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and e-commerce sites and began working with our supplier to replace the fabric and with our other manufacturers to replace these items as quickly as possible.

This has made our product desirable to our consumers and has driven demand, which we are able to meet given our increased product depth compared to last year.

Delivering quality to our customers is a critical factor in our market place differentiation and removing items that do not meet our standards is key to maintaining our brand reputation.

We have recently added strong leadership in Quality Control, our Liason Office and our commercialization and development teams, and expect these people and other investments to solidify our quality consistency and our delivery capabilities.

Our direct to consumer segment accounted for 14% of our net revenue in fiscal 2012, 11% in fiscal 2011 and 8% in fiscal 2010.

We previously reported our franchise channel as an operating segment; however, we reacquired our remaining four franchised stores in fiscal 2011 and opening new franchise stores is not part of our growth strategy.

Corporate-owned stores accounted for 80% of total net revenue in fiscal 2012, 82% of total net revenue in fiscal 2011 and 83% of total net revenue in fiscal 2010.

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| | • | | other net revenue, which includes wholesale accounts, franchises net revenue, which consists of royalties as well as sales of our products to franchises, warehouse sales, outlets and sales from company-operated showrooms. |

showrooms, and sales from corporate-owned stores which we have closed.

Our selling, general and administrative expenses include marketing costs, accounting costs, information technology costs, human resource costs, professional fees, corporate facility costs, corporate and

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We have not recorded deferred taxes on undistributed earnings and other temporary differences of our Canadian subsidiary which are considered to be indefinitely reinvested.

If management’s intentions with respect to these undistributed earnings and other temporary differences were to change in the future, deferred taxes may need to be provided that could materially impact our financial results.

Comparison of Fiscal 2011 to Fiscal 2010

Net revenue increased $289.1 million, or 41%, to $1,000.8 million in fiscal 2011 from $711.7 million in fiscal 2010.

| | | 2011 | | | | 2010 | | | | 2011 | | | | 2010 | | |

| Corporate-owned stores | | $ | 816,925 | | | $ | 590,389 | | | | 81.6 | | | | 83.0 | |

| Direct to consumer | | | 106,313 | | | | 57,348 | | | | 10.6 | | | | 8.1 | |

| Other | | | 77,601 | | | | 63,967 | | | | 7.8 | | | | 8.9 | |

| Net revenue | | $ | 1,000,839 | | | $ | 711,704 | | | | 100.0 | | | | 100.0 | |

| | • | | The reacquisition of four U.S. franchise stores in fiscal 2011 contributed $6.5 million of the increase. |

_Direct to Consumer._ Net revenue from our direct to consumer segment increased $49.0 million, or 85%, to $106.3 million in fiscal 2011 from $57.3 million in fiscal 2010.

_Other._ Net revenue from our other segment increased $13.6 million, or 21%, to $77.6 million in fiscal 2011 from $64.0 million in fiscal 2010.

Net revenue from our franchise channel decreased due to the reacquisition of our remaining four remaining franchise stores in the United States, now included in our corporate-owned stores segment.

Gross profit increased $174.4 million, or 44%, to $569.4 million in fiscal 2011 from $394.9 million in fiscal 2010.

| | • | | strengthening of the Canadian and Australian dollars, relative to the U.S. dollar, decreased foreign exchange impacts on product costs and contributed 70 basis points; and |

| | • | | a decrease in expenses related to our product and supply chain departments, relative to the increase in net revenue, which had a leveraging effect on gross margin of 10 basis points. |

The increase in gross margin was partially offset by a decrease in product margins, which contributed 20 basis points.

This was primarily a result of product cost pressures from raw materials and labour costs which were partially offset by strong sell through of merchandise with fewer markdowns and discounts than in fiscal 2010.

[removed: _Foreign Currency Exchange Risk._] We currently generate a significant portion of our net revenue in Canada.

As of February [removed: 3, 2013,] [added: 2, 2014,] we operated [removed: 51] [added: 54] stores in Canada.

As we recognize net revenue from sales in Canada in Canadian dollars, and the U.S. dollar has strengthened during fiscal [removed: 2012,] [added: 2013,] it has had a negative impact on our Canadian operating results upon translation of those results into U.S. dollars for the purposes of consolidation.

A 10% depreciation in the relative value of the Canadian dollar compared to the U.S. dollar would have resulted in lost income from operations of approximately [removed: $28.0] [added: $0.8] million in fiscal [removed: 2012] [added: 2013] and approximately [removed: $15.4] [added: $5.5] million in fiscal [removed: 2011.][added: 2012.]

A 10% depreciation in the relative value of the Australian dollar compared to the U.S. dollar would have resulted in lost income from operations of approximately [removed: $0.9] [added: $0.3] million in fiscal [removed: 2012] [added: 2013] and [removed: $0.4] [added: approximately $0.9] million in fiscal [removed: 2011.][added: 2012.]

The revolving credit [removed: facility provides] [added: facilities provide] us with available borrowings in [removed: an] amount up to [removed: CDN$20.0 million.][added: $15.0 million total.]

Because our revolving credit [removed: facility bears] [added: facilities bear] interest at a variable rate, we will be exposed to market risks relating to changes in interest rates, if we have a meaningful outstanding balance.

As of February [removed: 3, 2013,] [added: 2, 2014] we had no outstanding [removed: borrowings] [added: balances] under our revolving [removed: facility.][added: facilities.]

These may take the form of forward [removed: sales] contracts, option contracts, [removed: and] [added: or] interest rate swaps.

[removed: Inflation][added: Inflation]

Foreign Currency Exchange Risk.

Interest Rate Risk.

In November 2013, we entered into unsecured demand revolving credit facilities with HSBC Bank Canada and Bank of America, N.A., Canada Branch.

| --- | --- |

_Interest Rate Risk._ In April 2007, we entered into an uncommitted senior secured demand revolving credit facility with Royal Bank of Canada.

We had small outstanding balances under our revolving facility during fiscal 2012 as we built inventory and working capital for the holiday selling season, but we do not believe we are significantly exposed to changes in interest rate risk.

##### [Table of Contents](#toc)

[removed: Overview][added: Overview]

As of February [removed: 3, 2013,] [added: 2, 2014,] our branded apparel was principally sold through [removed: 211] [added: 254] stores that are located in Canada, the United States, Australia and New Zealand.

| [removed: |] • | [removed: |] design and develop innovative athletic apparel that combines performance with style and incorporates real-time guest feedback; |

| [removed: |] • | [removed: |] locate our stores in street locations, lifestyle centers and malls that position each lululemon athletica store as an integral part of its community; |

| [removed: |] • | [removed: |] create an inviting and educational store environment that encourages product trial and repeat visits; and |

| [removed: |] • | [removed: |] market on a grassroots level in each community, including through social media and influential fitness practitioners who embrace and create excitement around our brand. |

Noting the increasing number of women participating in sports, and specifically yoga, Mr. Wilson developed lululemon athletica to [added: address a void in the women's athletic apparel market.]

The founding principles established by Mr. Wilson drive our distinctive corporate culture with a mission of [removed: providing people with the] [added: creating] components [added: for people] to live [removed: a longer, healthier] [added: long, healthy] and [removed: more] fun [removed: life.][added: lives.]

Our net revenue has increased from $40.7 million in fiscal 2004 to [removed: $1,370.4 million] [added: $1.6 billion] in fiscal [removed: 2012,] [added: 2013,] representing a [removed: 55%] [added: 50%] compound annual growth rate.

During fiscal 2012, our comparable store sales growth was 16%, excluding the [removed: impact of the] 53rd week of sales, and we reported income from operations of $376.4 million.

During fiscal [removed: 2011,] [added: 2013,] our comparable store sales growth was [removed: 22%] [added: 2%] and [added: our total comparable sales, which includes comparable store sales and direct to consumer, was 7%, both excluding the impact of the 53rd week of sales in fiscal 2012, and] we reported income from operations of [removed: $287.0] [added: $391.4] million.

In fiscal [removed: 2012,] [added: 2013,] our corporate-owned stores opened at least one year, averaged sales of [removed: $2,058] [added: $1,894] per square foot, [removed: excluding the impact of the 53rd week of sales,] compared to sales per square foot of [removed: $2,004] [added: $2,058] for fiscal [removed: 2011.][added: 2012.]

Fiscal 2012, which [removed: ends] [added: ended] on February 3, 2013, [removed: is] [added: was] a 53 week year.

[removed: Our Market][added: Our Market]

[removed: Our] [added: Our] Competitive [removed: Strengths][added: Strengths]

| [removed: |] • | [removed: | _Premium] [added: Premium] Active [removed: Brand._] [added: Brand.] lululemon athletica stands for leading a healthy, balanced and fun life. We believe customers associate the lululemon athletica brand with high quality premium athletic apparel that incorporates technically advanced [removed: materials,] [added: fabrics,] innovative functional features and style. We believe our focus on women differentiates us and positions lululemon athletica to address a void in the growing market for [removed: women’s] [added: women's] athletic apparel. While our brand has its roots in yoga, our products are [added: increasingly being designed and used for other athletic and casual lifestyle pursuits, such as running and general fitness. We work with local athletes and fitness practitioners to enhance our brand awareness and broaden our product appeal.] |

| [removed: |] • | [removed: | _Distinctive] [added: Distinctive] Retail [removed: Experience._] [added: Experience.] We locate our stores in street locations, lifestyle centers and malls that position lululemon athletica stores to be an integral part of their communities. We coach our store sales associates, whom we refer to as [removed: “educators,”] [added: "educators,"] to develop a personal connection with each guest. Our educators receive [removed: approximately 30 hours of] [added: significant] in-house training [removed: within the first three months of] [added: at] the start of their employment and are well prepared to explain the technical and innovative design aspects of each product. |

| [removed: |] • | [removed: | _Innovative] [added: Innovative] Design [removed: Process._] [added: Process.] We offer high-quality premium apparel that is designed for performance, comfort, functionality and style. We attribute our ability to develop superior products to a number of factors, including: |

| [removed: |] • | [removed: |] our feedback-based design process through which our design and product development team proactively and frequently seeks input from our guests and local fitness practitioners; |

| [removed: |] • | [removed: |] close collaboration with our third-party suppliers to formulate innovative and [removed: technically-advanced] [added: technically advanced] fabrics and [added: innovative functional] features for our products; and |

| [removed: |] • | [removed: |] although we typically bring products from design to market in eight to [removed: 10] [added: ten] months, our vertical retail strategy enables us to bring select products to market in as little as two months, thereby allowing us to respond quickly to customer feedback, changing market conditions and apparel trends. |

| [removed: |] • | [removed: | _Community-Based] [added: Community-Based] Marketing [removed: Approach._] [added: Approach.] We differentiate lululemon athletica through an innovative, community-based approach to building brand awareness and customer loyalty. We use a multi-faceted grassroots marketing strategy that includes social media, local ambassadors, hosting community events and creating in-store community boards. We believe this grassroots approach allows us to successfully increase brand awareness and broaden our appeal while reinforcing our premium brand image. |

| [removed: |] • | [removed: | _Deep] [added: Deep] Rooted Culture Centered on Training and Personal [removed: Growth._] [added: Growth.] We believe our core values and distinctive corporate culture allow us to attract passionate and motivated employees who are driven to succeed and share our vision. We provide our employees with a supportive, goal-oriented environment and encourage them to reach their full professional, health and personal potential. We offer programs such as personal development workshops and goal coaching to assist our employees in realizing their long-term objectives. We believe our relationship with our employees is exceptional and a key contributor to our success. |

| [removed: |] • | [removed: | _Experienced] [added: Experienced] Management Team with Proven Ability to [removed: Execute._] [added: Execute.] Our Chief Executive Officer, [removed: Ms. Day, whose] [added: Mr. Potdevin, who has more than two decades of] experience [removed: includes 20 years] at [removed: Starbucks Corporation, most recently serving as President of Asia Pacific Group of Starbucks International from 2004 to 2007,] [added: premium, technical athletic apparel, and life-style centric retail companies,] joined us in January [removed: 2008. Ms. Day has assembled] [added: 2014. Mr. Potdevin works closely with] a management team with a complementary mix of retail, design, operations, product sourcing, marketing and information technology experience from leading apparel and retail [removed: companies such as Abercrombie & Fitch Co., The Gap, Inc., Nike, Inc. and Speedo International Limited.] [added: companies.] We believe our management team is well positioned to execute the long-term growth strategy for our business. |

[removed: Growth Strategy][added: Growth Strategy]

| [removed: |] • | [removed: | _Grow] [added: Grow] our Store Base in North [removed: America._] [added: America.] As of February [removed: 3, 2013,] [added: 2, 2014,] our products were sold through [removed: 186] [added: 225] corporate-owned stores in North America, including [removed: 135] [added: 171] in the United States and [removed: 51] [added: 54] in Canada. We expect that most of our near-term store growth will occur in the United States. We [added: opened 36 net stores in the United States, including three ivivva branded stores, and three net stores in Canada in fiscal 2013, including one ivivva branded store, and we] plan to [removed: add] [added: open up to 39] new [added: stores, including ten ivivva athletica branded stores in North America in fiscal 2014.] |

| [removed: |] • | [removed: | _Expand] [added: Expand] Beyond North [removed: America._] [added: America.] As of February [removed: 3, 2013,] [added: 2, 2014,] we operated [removed: 23] [added: 25] corporate-owned stores [removed: and one showroom] in Australia, [removed: two] [added: four] corporate-owned stores [removed: and one showroom in] New Zealand, [removed: two showrooms in Hong Kong,] and [removed: one showroom in the United Kingdom.] [added: 17 showrooms outside of North America.] We plan to open [removed: approximately five] [added: two new] lululemon stores in fiscal [removed: 2013] [added: 2014] in Australia and [removed: New Zealand.] [added: two other new stores internationally in fiscal 2014.] Over the next two years we intend to open additional showrooms as pre-seeding activities in the Asian and European markets. |

| [removed: |] • | [removed: | _Develop] [added: Develop] our Direct to Consumer Sales [removed: Channel._] [added: Channel.] We launched our retail website in the first quarter of fiscal 2009. The addition of e-commerce to our direct to consumer sales channel expanded our customer base and supplemented our growing store base over the past four years. [removed: During fiscal 2012 we added new] [added: We operate] country and region specific websites in Australia, Europe and Asia, and [removed: new] brand specific websites in North America. We plan to continue developing our e-commerce website to provide a distinctive online shopping experience and extend our reach. |

| [removed: |] • | [removed: | _Increase] [added: Increase] our Brand [removed: Awareness._] [added: Awareness.] We [removed: will continue] [added: plan] to [removed: increase] [added: continue focusing on increasing] brand awareness and customer loyalty through [added: amplification of] our [added: brand stories and our] grassroots marketing efforts, social media activities and planned store expansion. We believe that increased brand awareness will result in increased comparable store sales and store productivity over time. |

| [removed: |] • | [removed: | _Introduce] [added: Introduce] New Product [removed: Technologies._] [added: Technologies.] We remain focused on developing and offering products that incorporate [removed: technology-enhanced] [added: technically advanced] fabrics and [removed: performance] [added: innovative functional] features that [added: we believe] differentiate us in the market. Collaborating with leading fabric manufacturers, we have jointly developed and trademarked names for innovative fabrics such as Luon and [removed: Silverescent, and natural stretch fabrics using organic elements such as cotton and seaweed.] [added: Silverescent.] Among our ongoing efforts, we are developing fabrics to provide advanced [added: performance] features such as UV protection and inherent reflectivity. In addition, we [removed: will] [added: plan to] continue to develop differentiated manufacturing techniques that provide greater support, protection, and comfort. |

| [removed: |] • | [removed: | _Broaden] [added: Broaden] the Appeal of our [removed: Products._] [added: Products.] We will selectively seek opportunities to expand the appeal of our brand to improve store productivity and expand our market. To enhance our product appeal, we intend to: |

| [removed: |] • | [removed: | _Expand] [added: Expand] our Product [removed: Categories._] [added: Categories.] We continue to expand our product offerings in complementary existing and new categories such as [removed: bags, underwear] [added: swim, tennis] and [removed: outerwear;] [added: golf;] |

| [removed: |] • | [removed: | _Increase] [added: Increase] the Range of Athletic Activities our Products [removed: Target._ Our] [added: Target. We believe our] guests purchase our products mainly for activities such as yoga, running and general fitness. We will continue to expand our product categories and educate our guests on the versatility of our products; |

| [removed: |] • | [removed: | _Grow] [added: Grow] our [removed: Men’s Business._] [added: Men's Business.] We believe the premium quality and technical rigor of our products will continue to appeal to men and that there is an opportunity to expand our [removed: men’s] [added: men's] business as a proportion of our total sales; and |

| [removed: |] • | [removed: | _Develop] [added: Develop] our Youth [removed: Brand._] [added: Brand.] We launched our youth focused brand, ivivva athletica, in fiscal 2009. We believe the premium quality and technical rigor of our dance-inspired products designed for female youth serve an open market and provide us with an opportunity for future growth. |

[removed: Our Stores][added: Our Stores]

As of February [removed: 3, 2013,] [added: 2, 2014,] our retail footprint included [removed: 135] [added: 171] stores in the United States, [removed: 51] [added: 54] stores in Canada, [removed: 23] [added: 25] stores in Australia and [removed: two] [added: four] in New Zealand.

While most of our corporate-owned stores are branded lululemon athletica, [removed: eight] [added: 12] of our corporate-owned stores are branded ivivva athletica and specialize in dance-inspired apparel for female youth.

| | [removed: | February 3, 2013 | |] [added: February 2, 2014] | | [removed: January 29, 2012] | [added: February 3, 2013] | |

| [removed: United States | | |] [added: United States] | | | | | |

| | |

| | |

| | |

| | |

| --- | --- |

Our net revenue increased from $1.4 billion in fiscal

2012 to $1.6 billion in fiscal 2013, representing a 16% increase, including the impact of the 53rd week of sales in fiscal 2012.

Fiscal 2013, which ended on February 2, 2014, is a 52 week year.

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##### [Table of Contents](#toc)

address a void in the women’s athletic apparel market.

Our net revenue increased from $1,000.8 million in fiscal 2011 to $1,370.4 million in fiscal 2012, representing a 37% increase, including the impact of the 53rd week of sales.

| | increasingly being designed and used for other athletic and casual lifestyle pursuits, such as running and general fitness. We work with local athletes and fitness practitioners to enhance our brand awareness and broaden our product appeal. |

| | stores to strengthen existing markets and selectively enter new markets in the United States and Canada. We opened 27 stores in the United States and four stores in Canada in fiscal 2012, including three ivivva branded stores, and we plan to open up to 38 stores, including three ivivva athletica branded stores in North America in fiscal 2013. |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

In fiscal 2012 we did not close any of our corporate-owned stores.

We promote a set of core values in our business, which

The fabric used in our products is sourced by our manufacturers from a limited number of pre-approved suppliers.

We do not, however, have any long-term agreements requiring us to use any manufacturer, and no manufacturer is required to produce our products in the long-term.

We believe that the services of additional, or other, producers of our fabrics could be obtained with little or no additional expense to us and/or delay in the timeliness of our production process.

We believe these modern facilities enhance the efficiency of our operations.

We believe our distribution

Merchandise is typically shipped to our stores through third-party delivery services multiple times per week, providing them with a steady flow of new inventory.

Of the 3,387 employees in the United States, 3,196 were employed in our retail locations, 114 were employed in distribution and the remaining 77 performed selling, general and administrative and other functions.

Of the 2,545 Canadian employees, 1,574 were employed in our retail locations, 75 were employed in distribution, 162 were employed in design, merchandise and production, and the remaining 734 performed selling, general and administration functions.

Of the 451 international employees, 347 were employed in our international retail locations, 27 were employed in distribution, and 77 performed merchandise, production, and administrative functions.

In addition to the registrations in Canada, the United States, and Australia, lululemon’s design and word mark are registered in over 68 other jurisdictions which cover over 112 countries.

the Audit, Compensation, and Nominating and Governance Committees of our Board of Directors.

On October 25, 2013, plaintiff Laborers' District Council Industry Pension Fund filed a books-and-records action entitled Laborers' District Council Construction Industry Pension Fund v.

lululemon athletica inc., No. 9039 (Del.

Ch.) under 7 Del.

C.

Sec.

220 based on a demand letter it sent to us on or around August 8, 2013 to request certain lululemon records relating to the March 2013 sheer Luon issue, our announcement that our then CEO, Christine Day, intends to resign, and certain stock trades executed by the Chairman of our board of directors, Mr. Wilson, prior to our announcement regarding our former CEO, Christine Day.

We moved to dismiss the complaint on November 11, 2013, and the motion remains pending.

We believe there is no merit to plaintiff's claims and we intend to continue to defend vigorously.

On August 12, 2103 and August 23, 2013, plaintiffs Thomas Canty and Tammy Federman filed shareholder derivative actions entitled Canty v.

Day , et al., No. 13-CV-5629 (S.D.N.Y.) and Federman v.

Day, et al., No. 13-CV-5977 (S.D.N.Y.).

Plaintiffs allege that they are acting on behalf of us and name as defendants our current and former directors and certain officers.

On January 17, 2014, plaintiffs filed an amended complaint, operative in both actions.

In that amended complaint, plaintiffs challenge certain public disclosures and conduct relating to the March 2013 sheer Luon issue, the June 2013 announcement of the resignation of our former CEO, Christine Day, and certain stock trades executed by Mr. Wilson and Ms. Day in the months leading up to that announcement.

Plaintiffs allege violations of Section 14(a) of the Securities Exchange Act and breach of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement.

Defendants believe there is no merit to plaintiffs' claims and have moved to dismiss both lawsuits.

On July 2, 2013, plaintiff Houssam Alkhoury filed a putative shareholder class action entitled Alkhoury v.

lululemon athletica inc., et al., No. 13-CV-4596 (S.D.N.Y.) against lululemon, a certain director and a certain officer of the Company (collectively, "Defendants").

On October 1, 2013, the Court appointed Louisiana Sheriffs' Pension & Relief Fund as Lead Plaintiff and on November 1, Lead Plaintiff filed a consolidated class action complaint on behalf of a proposed class of purchasers of lululemon stock between September 7, 2012 through June 11, 2013 (the "Complaint").

In its Complaint, Lead Plaintiff asserted causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Defendants based on certain public disclosures made by us relating to lululemon's product quality and the March 2013 sheer Luon issue.

On January 15, 2014, Lead Plaintiff filed a consolidated amended class action compliant (the "Amended Complaint") on behalf of a proposed class of purchasers of lululemon stock between September 7, 2012 through January 10, 2014.

In its Amended Complaint, Lead Plaintiff added new claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on certain of lululemon's public disclosures related to our ongoing quality control improvements and the impact of those improvements on our financial results.

Defendants believe there is no merit to Lead Plaintiff's claims and have moved to dismiss this lawsuit.

On May 3, 2013, plaintiff Hallandale Beach Police Officers and Firefighters Personnel Retirement Fund filed a books-and-records action entitled Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund v.

lululemon athletica inc., No. 8522 (Del.

Ch.)., under 7 Del.

C.

Sec.

220 based on a demand letter it sent to us on April 17, 2013 to request certain lululemon records relating to the March 2013 sheer Luon issue and recent revisions to our executive bonus plan.

We moved to dismiss the complaint on May 28, 2013.

On June 14, 2013, plaintiff sent a supplemental demand letter that requested additional records from us relating to our announcement that Christine Day intends to resign as our Chief Executive Officer, and certain stock trades executed by our Chairman, Mr. Wilson, prior to our announcement regarding Ms. Day.

On July 1, 2013, plaintiff filed an amended complaint to incorporate allegations relating to the June 14, 2013 supplemental demand letter.

We moved to dismiss the amended complaint on August 15, 2013, and, in response to this filing, plaintiffs served us with a new demand letter and then filed a second amended complaint on November 4, 2013, which we moved to dismiss on December 4, 2013.

Our dismissal motion has been fully briefed and remains pending.

The lawsuit is still in its early stages and we believe there is no merit to this action and we intend to continue to defend vigorously.

We have indemnification agreements with certain of our current and former officers and directors that may require us, among other things, to indemnify such current or former officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.

We are unable at this time to predict the amount of our legal expenses associated with these proceedings and any settlement or damages payments associated with these matters.

In the event that we are unsuccessful in our defense, or if we pursue settlement with regard to any of these actions, we could be required to pay significant final settlement amounts and/or judgments that exceed the limits of our insurance policies or the carriers may decline to fund such final settlements and/or judgments, which could have a material adverse effect on our financial condition and liquidity.

Regardless of whether any of the claims asserted against us in these actions are valid, or whether we are ultimately held liable, such litigation may be expensive to defend and may divert resources away from our operations and negatively impact earnings.

Further, we may not be able to obtain adequate insurance to protect us from these types of litigation matters or extraordinary business losses.

[removed: ##### [Table of Contents](#toc)][added: TABLE OF CONTENTS]

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

| [removed: x] [added: þ] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year ended February [removed: 3, 2013][added: 2, 2014]

| [removed: ¨] [added: o] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] file number [removed: 001-33608][added: 001-33608]

[removed: lululemon] [added: lululemon] athletica [removed: inc.][added: inc.]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: Delaware] [added: Delaware] | | [removed: 20-3842867] [added: 20-3842867] |

| [removed: (State] [added: (State] or other jurisdiction [removed: of incorporation] [added: of incorporation] or [removed: organization)] [added: organization)] | | [removed: (I.R.S. Employer Identification Number)] [added: (I.R.S. Employer Identification Number)] |

| [removed: 1818] [added: 1818] Cornwall [removed: Avenue Vancouver,] [added: Avenue Vancouver,] British [removed: Columbia] [added: Columbia] | | [removed: V6J 1C7] [added: V6J 1C7] |

| [removed: (Address] [added: (Address] of principal executive [removed: offices)] [added: offices)] | | [removed: (Zip Code)] [added: (Zip Code)] |

[removed: Registrant’s] [added: Registrant's] telephone number, including area code: (604) [removed: 732-6124][added: 732-6124]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name] [added: Name] of Each Exchange on Which [removed: Registered] [added: Registered] |

| [removed: Common] [added: Common] Stock, par value $0.005 per [removed: share] [added: share] | | [removed: Nasdaq] [added: Nasdaq] Global Select [removed: Market] [added: Market] |

Yes [removed: x] [added: þ] No [removed: ¨][added: o]

Yes [removed: ¨] [added: o] No [removed: x][added: þ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of [removed: registrant’s] [added: registrant's] knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [added: o]

| Large accelerated filer | | [removed: x] [added: þ] | | Accelerated filer | | [removed: ¨] [added: o] |

| Non-accelerated filer | | [removed: ¨] [added: o] (Do not check if a smaller reporting company) | | Smaller reporting company | | [removed: ¨] [added: o] |

The aggregate market value of the voting stock held by non-affiliates of the registrant on [removed: July 27, 2012] [added: August 2, 2013] was approximately [removed: $6,234,540,799.][added: $7,600,977,364.]

Such aggregate market value was computed by reference to the closing price of the common stock as reported on the Nasdaq Global Select Market on [removed: July 27, 2012.][added: August 2, 2013.]

For purposes of determining this amount only, the registrant has defined affiliates as including the executive officers and directors of the registrant on [removed: July 27, 2012.][added: August 2, 2013.]

[removed: _Common Stock:_][added: Common Stock:]

At March [removed: 18, 2013] [added: 24, 2014] there were [removed: 112,401,614] [added: 115,411,223] shares of the [removed: registrant’s] [added: registrant's] common stock, par value $0.005 per share, outstanding.

[removed: _Exchangeable] [added: Exchangeable] and Special Voting [removed: Shares:_][added: Shares:]

At March [removed: 18, 2013,] [added: 24, 2014,] there were outstanding [removed: 32,033,458] [added: 29,937,820] exchangeable shares of Lulu Canadian Holding, Inc., a wholly-owned subsidiary of the registrant.

In addition, at March [removed: 18, 2013,] [added: 24, 2014,] the registrant had outstanding [removed: 32,033,458] [added: 29,937,820] shares of special voting stock, through which the holders of exchangeable shares of Lulu Canadian Holding, Inc. may exercise their voting rights with respect to the registrant.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

| [removed: DOCUMENT] [added: DOCUMENT] | | [removed: PARTS] [added: PARTS] INTO WHICH [removed: INCORPORATED] [added: INCORPORATED] |

| Portions of Proxy Statement for the [removed: 2013] [added: 2014] Annual Meeting of Stockholders | | Part III |

| | | [removed: | | Page | |] [added: Page] |

[removed: | [PART I](#toc475380_1) | | | | | | |][added: PART I]

| [removed: Item 1. | | [BUSINESS](#toc475380_2) | |] [added: Item 1.] | [removed: 1] [added: [BUSINESS](#s76201C92503666D8C5888206D7E3B11C)] | [added: [1](#s76201C92503666D8C5888206D7E3B11C)] |

| [removed: Item 1A. | | [RISK FACTORS](#toc475380_3) | |] [added: Item 1A.] | [removed: 9] [added: [RISK FACTORS](#sE77F36F936E4C7A3EBAB8206D8137208)] | [added: [7](#sE77F36F936E4C7A3EBAB8206D8137208)] |

10-K 1 lulu-20140202x10k.htm 10-K

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OR

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Yes þ No o

Yes þ No o

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| [PART II](#s2B7D53D192BA53C186908206D8937795) | | |

| Item 9B. | [OTHER INFORMATION](#s0d024724ec9048279cb367e41a6086ea) | [60](#s0d024724ec9048279cb367e41a6086ea) |

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| [PART IV](#sAA0F163EE866075C6A258206E0DDC813) | | |

10-K 1 d475380d10k.htm 10-K

OR

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TABLE OF CONTENTS

| [PART II](#toc475380_6) | | | | | | |

| [PART IV](#toc475380_18a) | | | | | | |

We expect that our current administrative offices [added: and distribution centers] are sufficient for our expansion plans for the foreseeable future.

We currently operate three distribution centers located in Vancouver, British Columbia, Sumner, Washington, and Melbourne, [removed: Victoria which together are capable of accommodating our expansion plans through the foreseeable future.][added: Victoria.]

The general location, use, approximate size and lease renewal date of our properties at February [removed: 3, 2013,] [added: 2, 2014,] are set forth below:

| [removed: Location] [added: Location] | | [removed: Use] [added: Use] | | [removed: Approximate] [added: Approximate] Square [removed: Feet |] [added: Feet] | | | [removed: Lease] [added: Lease] Renewal [removed: Date] [added: Date] |

| Sumner, WA | | Distribution Center | | [removed: |] 167,000 | | | April 2020 |

| Vancouver, BC | | Distribution Center | | [removed: |] 120,000 | | | November 2017 |

| Vancouver, BC | | Executive and Administrative Offices | | [removed: |] 78,000 | | | n/a |

| Vancouver, BC | | Executive and Administrative Offices | | [removed: |] 15,000 | | | n/a |

| Melbourne, VIC | | Distribution Center | | [removed: |] 54,000 | | | September 2016 |

| Melbourne, VIC | | Executive and Administrative Offices | | [removed: | 19,000] [added: 28,000] | | | September [removed: 2013] [added: 2019] |

As of February [removed: 3, 2013,] [added: 2, 2014,] we leased approximately [removed: 596,000] [added: 734,000] gross square feet relating to [removed: 209] [added: 252] of our [removed: 211] [added: 254] corporate-owned stores.

In November 2013 we purchased a distribution center in Columbus, Ohio and will commence operations in mid-2014.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| Columbus, OH | | Distribution Center (Intended) | | 307,000 | | | n/a |

| --- | --- |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| ITEM | 3. _LEGAL PROCEEDINGS_ |

On October 12, 2012, former hourly employees of lululemon filed a class action lawsuit in the Superior Court of the State of California entitled _Rebekah Geare et al v.

lululemon athletica inc._ The lawsuit alleges that we violated various U.S. labor codes by failing to provide meal and rest breaks, failing to pay minimum wage, failing to pay overtime, failing to pay certain wages , failing to provide reasonable seating and failing to provide unpaid vacation times as wages at time of termination.

The plaintiffs are seeking an unspecified amount of damages.

We intend to vigorously defend the matter.

On August 10, 2012, customers of lululemon filed a class action lawsuit in San Diego Superior Court entitled _Laura Chaikin et al v.

lululemon athletica inc._ The lawsuit alleges that we violated California Civil Code sections by requesting and capturing personal information from guests in our stores.

We are, from time to time, involved in routine legal matters incidental to our business.

Management believes that the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.

##### [Table of Contents](#toc)

PART II

[removed: Market] [added: Market] Information and [removed: Dividends][added: Dividends]

[removed: Our common stock is quoted on the Nasdaq Global Select Market under the symbol “LULU” and on the Toronto Stock Exchange under the symbol “LLL.”] The following table sets forth, for the periods indicated, the high and low closing sale prices [removed: (adjusted to account for our two-for-one stock split that became legally effective July 1, 2011)] of our common stock reported by the Nasdaq Global Select Market for the last two fiscal years:

| | | [removed: Common] [added: Common] Stock [removed: Price (Nasdaq Global Select Market)] [added: Price (Nasdaq Global Select Market)] | | | | | | |

| | | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | |

| [removed: Fiscal] [added: Fiscal] Year Ending February 3, [removed: 2013] [added: 2013] | | | | | | | | |

| [removed: Fiscal] [added: Fiscal] Year Ending [removed: January 29, 2012] [added: February 2, 2014] | | | | | | | | |

As of February [removed: 3, 2013,] [added: 2, 2014,] there were approximately [removed: 398] [added: 526] holders of record of our common stock.

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

The graph set forth below compares the cumulative total stockholder return on our common stock between February [removed: 3, 2008] [added: 1, 2009] (the date of our fiscal year end five years ago) and February [removed: 3, 2013,] [added: 2, 2014,] with the cumulative total return of (i) the S&P 500 Index and (ii) S&P 500 Apparel, Accessories & Luxury Goods Index(1), over the same period.

This graph assumes the investment of $100 on February [removed: 3, 2008] [added: 1, 2009] in the closing sale price our common stock, the S&P 500 Index and the S&P Apparel, Accessories & Luxury Goods Index and assumes the reinvestment of dividends, if any.

| (1) | The previously [removed: compared,] [added: compared] S&P Retail Index is no longer [removed: published at February 3, 2013.] [added: published.] |

[removed: ][added: ]

| | | [removed: 3-Feb-08] [added: 01-Feb-09] | | | | [removed: 1-Feb-09] [added: 31-Jan-10] | | | | [removed: 31-Jan-10] [added: 30-Jan-11] | | | | [removed: 30-Jan-11] [added: 29-Jan-12] | | | | [removed: 29-Jan-12] [added: 03-Feb-13] | | | | [removed: 03-Feb-13] [added: 02-Feb-14] | | |

| S&P 500 Apparel, Accessories & Luxury Goods Index | | $ | 100.00 | | | $ | [removed: 50.63] [added: 185.55] | | | $ | [removed: 93.94] [added: 250.95] | | | $ | [removed: 127.05] [added: 353.12] | | | $ | [removed: 178.78] [added: 323.23] | | | $ | [removed: 163.65] [added: 369.91] | |

[removed: Issuer] [added: Issuer] Purchase of Equity [removed: Securities][added: Securities]

The following table provides information regarding our Employee Share Purchase Plan (ESPP) repurchases of our common stock, [removed: on a post-split basis,] during the [removed: fourteen] [added: thirteen] week period ended February [removed: 3, 2013:][added: 2, 2014:]

| [removed: Period(1)] [added: Period(1)] | | [removed: Total] [added: Total] Number of Shares [removed: Purchased |] [added: Purchased(2)] | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs(2) |] [added: Programs(3)] | | | [removed: Maximum] [added: Maximum] Number of Shares that May Yet Be Purchased Under the Plans or [removed: Programs(2) |] [added: Programs(2,3)] | |

| (1) | Monthly information is presented by reference to our fiscal months during our fourth quarter of fiscal [removed: 2012.] [added: 2013.] |

| [removed: (2)] [added: (3)] | Our ESPP was approved by our Board of Directors and stockholders in September 2007. All shares purchased under the ESPP will be purchased on the [removed: Toronto Stock Exchange or the] Nasdaq Global Select Market (or such other stock exchange as we may designate from time to time). Unless our Board of Directors terminates the ESPP earlier, the ESPP will continue until all shares authorized for purchase under the ESPP have been purchased. The maximum number of shares available for issuance under the ESPP is 6,000,000. |

Our common stock is quoted on the Nasdaq Global Select Market under the symbol "LULU." Our common stock was also previously listed on the Toronto Stock Exchange ("TSX") under the symbol "LLL." During fiscal 2013 we voluntarily delisted from the TSX because we believe the minimal trading volume of our shares on the TSX no longer justified the expense and administrative efforts associated with maintaining a dual listing.

| | | | | | | | | |

| Fourth Quarter | | $ | 71.56 | | | $ | 45.68 | |

| Third Quarter | | $ | 76.57 | | | $ | 65.29 | |

| Second Quarter | | $ | 82.28 | | | $ | 61.33 | |

| First Quarter | | $ | 76.88 | | | $ | 62.32 | |

__________

| | |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| lululemon athletica inc. | | $ | 100.00 | | | $ | 415.29 | | | $ | 1,009.12 | | | $ | 1,885.88 | | | $ | 1,995.88 | | | $ | 1,343.82 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 130.03 | | | $ | 154.54 | | | $ | 159.39 | | | $ | 183.22 | | | $ | 215.84 | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| November 4, 2013 - December 1, 2013 | | 7,453 | | | $ | 69.00 | | | 7,453 | | | 5,447,323 | |

| December 2, 2013 - January 5, 2014 | | 12,456 | | | $ | 62.00 | | | 12,456 | | | 5,434,867 | |

| January 6, 2014 - February 2, 2014 | | 10,897 | | | $ | 46.44 | | | 10,897 | | | 5,423,971 | |

| Total | | 30,806 | | | | | | | 30,806 | | | | |

___________

| | |

| | |

| (2) | Excluded from this disclosure are shares repurchased to settle statutory employee tax withholding related to the vesting of performance-based restricted stock unit awards. |

| | |

| Fourth Quarter | | $ | 64.12 | | | $ | 43.61 | |

| Third Quarter | | $ | 62.15 | | | $ | 44.80 | |

| Second Quarter | | $ | 63.76 | | | $ | 41.54 | |

| First Quarter | | $ | 51.08 | | | $ | 34.34 | |

##### [Table of Contents](#toc)

| lululemon athletica inc | | $ | 100.00 | | | $ | 19.48 | | | $ | 80.92 | | | $ | 196.62 | | | $ | 367.45 | | | $ | 388.88 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 59.19 | | | $ | 76.96 | | | $ | 91.47 | | | $ | 94.33 | | | $ | 108.44 | |

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 29, 2012 – November 25, 2012 | | | 6,349 | | | $ | 69.70 | | | | 6,349 | | | | 5,538,071 | |

| November 26, 2012 – December 30, 2012 | | | 6,141 | | | | 73.93 | | | | 6,141 | | | | 5,531,930 | |

| December 31, 2012 – February 3, 2013 | | | 10,007 | | | | 68.38 | | | | 10,007 | | | | 5,521,923 | |

| Total | | | 22,497 | | | | | | | | 22,497 | | | | | |

The selected consolidated financial data set forth below are derived from our consolidated financial statements and should be read in conjunction with our consolidated financial statements [added: for] the years [added: ended] February [added: 2, 2014, February] 3, 2013, January 29, 2012, January 30, [removed: 2011,] [added: 2011 and] January 31, [removed: 2010 and February 1, 2009.][added: 2010.]

The consolidated statement of operations and comprehensive income data for each of the years ended February [added: 2, 2014, February] 3, [removed: 2013,] [added: 2013 and] January 29, 2012 and [removed: January 30, 2011and] the consolidated balance sheet data as of February [added: 2, 2014 and February] 3, 2013 [removed: and January 29, 2012] are derived from, and qualified by reference to, our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report.

| | | [removed: Fiscal] [added: Fiscal] Year [removed: Ended] [added: Ended] | | | | | | | | | | | | | | | | | | |

| | | [removed: February 3, 2013] [added: February 2, 2014] | | | | [removed: January 29, 2012] [added: February 3, 2013] | | | | [removed: January 30, 2011] [added: January 29, 2012] | | | | [removed: January 31, 2010] [added: January 30, 2011] | | | | [removed: February 1, 2009] [added: January 31, 2010] | | |

| | | [removed: (In] [added: (In] thousands, except per share [removed: data)] [added: data)] | | | | | | | | | | | | | | | | | | |

| [removed: Consolidated] [added: Consolidated] statement of operations and comprehensive income [removed: data:] [added: data:] | | | | | | | | | | | | | | | | | | | | |

| Net revenue | | $ | [removed: 1,370,358] [added: 1,591,188] | | | $ | [removed: 1,000,839] [added: 1,370,358] | | | [removed: $] [added: 1,000,839] | [removed: 711,704] | | | $ | [removed: 452,898] [added: 711,704] | | | $ | [removed: 353,488] [added: 452,898] | |

| Cost of goods sold | | [added: 751,112] | [added: | | |] 607,532 | | | | 431,488 | | | | 316,757 | | | | 229,812 | | | [removed: | 174,421 | |]

| Gross profit | | [added: 840,076] | [added: | | |] 762,826 | | | | 569,351 | | | | 394,947 | | | | 223,086 | | | [removed: | 179,067 | |]

| Selling, general and administrative expenses | | [added: 448,718] | [added: | | |] 386,387 | | | | 282,393 | | | | 212,784 | | | | 136,161 | | | [removed: | 118,098 | |]

| Provision for impairment and lease exit costs | | [removed: |] — | | | | — | | | | [removed: 1,722] [added: —] | | | | [removed: 379] [added: 1,772] | | | | [removed: 4,405] [added: 379] | | [added: |]

| Income from operations | | [added: 391,358] | [added: | | |] 376,439 | | | | 286,958 | | | | 180,391 | | | | 86,546 | | | [removed: | 56,564 | |]

| Other income (expense), net | | [added: 5,768] | [added: | | |] 4,957 | | | | 2,500 | | | | 2,886 | | | | 164 | | | [removed: | 821 | |]

| Income before provision for income taxes | | [added: 397,126] | [added: | | |] 381,396 | | | | 289,458 | | | | 183,277 | | | | 86,710 | | | [removed: | 57,385 | |]

| Provision for income taxes | | [added: 117,579] | [added: | | |] 109,965 | | | | 104,494 | | | | 61,080 | | | | 28,429 | | | [removed: | 16,884 | |]

| Net income | | [added: 279,547] | [added: | | |] 271,431 | | | | 184,964 | | | | 122,197 | | | | 58,281 | | | [removed: | 40,501 | |]

| Net income attributable to non-controlling interest | | [added: —] | [added: | | |] 875 | | | | 901 | | | | 350 | | | | — | | | [removed: | — | |]

| Net income attributable to lululemon athletica inc. | | $ | [removed: 270,556] [added: 279,547] | | | $ | [removed: 184,063] [added: 270,556] | | | $ | [removed: 121,847] [added: 184,063] | | | $ | [removed: 58,281] [added: 121,847] | | | $ | [removed: 39,363] [added: 58,281] | |

| Basic earnings [removed: (loss)] per share | | [added: $] | [added: 1.93] | | | [added: $] | [added: 1.88] | | | [added: $] | [added: 1.29] | | | [added: $] | [added: 0.86] | | | [added: $] | [added: 0.41] | |

| Diluted earnings [removed: (loss)] per share | | [added: $] | [added: 1.91] | | | [added: $] | [added: 1.85] | | | [added: $] | [added: 1.27] | | | [added: $] | [added: 0.85] | | | [added: $] | [added: 0.41] | |

| Basic weighted-average number of shares outstanding | | [added: 144,913] | [added: | | |] 144,000 | | | | 143,196 | | | | 141,720 | | | | 140,502 | | | [removed: | 137,422 | |]

| Diluted weighted-average number of shares outstanding | | [added: 146,043] | [added: | | |] 145,806 | | | | 145,278 | | | | 143,858 | | | | 141,898 | | | [removed: | 141,884 | |]

| Other comprehensive [added: (loss)] income: | | | | | | | | | | | | | | | | | | | | |

| Foreign currency translation adjustment | | [added: (89,158] | [removed: (459] | ) | | [added: (459] | [removed: 1,220] | [added: )] | | [added: 1,220] | [removed: 14,462] | | | [added: 14,462] | [removed: 17,018] | | | [added: 17,018] | [removed: (16,548] | [removed: )] |

| Comprehensive income | | $ | [removed: 270,097] [added: 190,389] | | | $ | [removed: 185,283] [added: 270,097] | | | $ | [removed: 136,309] [added: 185,283] | | | $ | [removed: 75,299] [added: 136,309] | | | $ | [removed: 22,815] [added: 75,299] | |

| | | [removed: (In thousands)] [added: (In thousands)] | | | | | | | | | | | | | | | | | | |

| [removed: Consolidated] [added: Consolidated] balance sheet [removed: data:] [added: data:] | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | [added: $] | [removed: $590,179] [added: 698,649] | | | $ | [removed: 409,437] [added: 590,179] | | | $ | [removed: 316,286] [added: 409,437] | | | $ | [removed: 159,573] [added: 316,286] | | | $ | [removed: 56,797] [added: 159,573] | |

| Total assets | | [added: 1,249,688] | [added: | | |] 1,051,078 | | | | 734,634 | | | | 499,302 | | | | 307,258 | | | [removed: | 211,636 | |]

| Total [removed: stockholders’] [added: stockholders'] equity | | [added: 1,096,682] | [added: | | |] 887,299 | | | | 606,181 | | | | 394,293 | | | | 233,108 | | | [removed: | 154,843 | |]

| Non-controlling interest | | [removed: |] — | | | | [removed: 4,805] [added: —] | | | | [removed: 3,904] [added: 4,805] | | | | [removed: —] [added: 3,904] | | | | — | | [added: |]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | As of | | | | | | | | | | | | | | | | | | |

| | | February 2, 2014 | | | | February 3, 2013 | | | | January 29, 2012 | | | | January 30, 2011 | | | | January 31, 2010 | | |

| --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| Net loss from discontinued operations | | | — | | | | — | | | | — | | | | — | | | | (1,138 | ) |

| Continuing operations | | $ | 1.88 | | | $ | 1.29 | | | $ | 0.86 | | | $ | 0.41 | | | $ | 0.30 | |

| Discontinued operations | | | — | | | | — | | | | — | | | | — | | | | (0.01 | ) |

| Net basic earnings per share | | $ | 1.88 | | | $ | 1.29 | | | $ | 0.86 | | | $ | 0.41 | | | $ | 0.29 | |

| Continuing operations | | $ | 1.85 | | | $ | 1.27 | | | $ | 0.85 | | | $ | 0.41 | | | $ | 0.29 | |

| Net diluted earnings per share | | $ | 1.85 | | | $ | 1.27 | | | $ | 0.85 | | | $ | 0.41 | | | $ | 0.28 | |

| | | As of | | | | | | | | | | | | | | | | | | |

##### [Table of Contents](#toc)

[removed: lululemon] [added: lululemon] athletica inc. and [removed: Subsidiaries][added: Subsidiaries]

[removed: INDEX] [added: INDEX] TO CONSOLIDATED FINANCIAL [removed: STATEMENTS][added: STATEMENTS]

| Consolidated Financial Statements: | | [removed: | | |]

[removed: | [Report of Independent Registered Public Accounting Firm](#tx475380_21) | | | 43 | |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

| [Consolidated Balance Sheets as at February [removed: 3, 2013] [added: 2, 2014] and [removed: January 29, 2012](#tx475380_22) | | | 44] [added: February 3, 2013](#sA19A15EC8C90CC972F8C8206CF30E71C)] | [added: [39](#sA19A15EC8C90CC972F8C8206CF30E71C)] |

| [Consolidated Statements of Operations and Comprehensive Income for the years ended February [added: 2, 2014, February] 3, 2013, [removed: January 29, 2012,] and January [removed: 30, 2011](#tx475380_23) | | | 45] [added: 29, 2012](#s96EAFB79050BC6AF1BAF8206CF64FE7D)] | [added: [40](#s96EAFB79050BC6AF1BAF8206CF64FE7D)] |

| [Consolidated Statements of [removed: Stockholders’] [added: Stockholders'] Equity for the years ended February [added: 2, 2014, February] 3, 2013, [removed: January 29, 2012,] and January [removed: 30, 2011](#tx475380_24) | | | 46] [added: 29, 2012](#s5E4742E83F338BDF76E68206CEC165AD)] | [added: [41](#s5E4742E83F338BDF76E68206CEC165AD)] |

| [Consolidated Statements of Cash Flows for the years ended February [added: 2, 2014, February] 3, 2013, [removed: January 29, 2012,] and January [removed: 30, 2011](#tx475380_25) | | | 47] [added: 29, 2012](#sE9C0EBE22D9C579F08468206CF461CA7)] | [added: [42](#sE9C0EBE22D9C579F08468206CF461CA7)] |

[removed: | [Notes to the Consolidated Financial Statements](#tx475380_26) | | | 48 | |][added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS]

[removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM][added: | [Report of Independent Registered Public Accounting Firm](#s957E8B9C53103320CC2F8206DB5680C3) | [38](#s957E8B9C53103320CC2F8206DB5680C3) |]

In our opinion, the [removed: accompanying] consolidated [removed: balance sheets and the related consolidated] [added: financial] statements [removed: of operations and comprehensive income, stockholders’ equity and cash flows] [added: referred to above] present fairly, in all material respects, the financial position of lululemon athletica inc. and its subsidiaries as [removed: at] [added: of] February [added: 2, 2014 and February] 3, 2013 and [removed: January 29, 2012, and] the results of their operations and their cash flows for the [removed: three years] [added: 52, 53, and 52 week periods] ended February [added: 2, 2014, February] 3, 2013, [removed: January 29, 2012] and January [removed: 30, 2011] [added: 29, 2012, respectively,] in conformity with accounting principles generally accepted in the United States of America.

In addition, in our opinion, the financial statement schedule listed in the index appearing under Item [removed: 15(a)] [added: 15(a)(2)] presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

[removed: Also] [added: Also,] in our opinion, [removed: the Company] [added: lululemon athletica inc. and its subsidiaries] maintained, in all material respects, effective internal control over financial reporting as of February [removed: 3, 2013,] [added: 2, 2014,] based on criteria established in [removed: _Internal Control—Integrated Framework_] [added: Internal Control - Integrated Framework (1992)] issued by [removed: the Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

[removed: The Company’s management] [added: Management] is responsible for these [added: consolidated] financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in [removed: Management’s] [added: Management's] Annual Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express [removed: opinions] [added: an opinion] on these [added: consolidated] financial statements, [removed: on] the financial statement [removed: schedule,] [added: schedule] and [removed: on] the [removed: Company’s] [added: company's] internal control over financial reporting based on our integrated audits.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements [added: and the financial statement schedule] are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the [added: consolidated] financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the [added: consolidated] financial statements, assessing the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: consolidated] financial statement presentation.

A [removed: company’s] [added: company's] internal control over financial reporting includes those policies and procedures [removed: that] [added: that:] (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the [removed: company’s] [added: company's] assets that could have a material effect on the financial statements.

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

| | | [removed: February] [added: February 2, 2014 | | | | February] 3, [removed: 2013] [added: 2013] | | | | [removed: January] [added: January] 29, [removed: 2012] [added: 2012] | | |

| | | [removed: (Amounts] [added: (Amounts] in thousands, except per share [removed: amounts)] [added: amounts)] | | | | | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | $ | 590,179 | | | $ | 409,437 | | [added: | $ | 316,286 | |]

| Accounts receivable | | [added: 11,903] | [removed: 6,351] | | | [added: 6,351] | [removed: 5,202] | |

| Inventories | | [added: 186,090] | [removed: 155,222] | | | [added: 155,222] | [removed: 104,097] | |

| Prepaid expenses and other current assets | | [added: 46,197] | [removed: 35,301] | | | [added: 35,301] | [removed: 8,357] | |

| Property and equipment, net | | [added: 255,603] | [removed: 214,639] | | | [added: 214,639] | [removed: 162,941] | |

| Goodwill and intangible assets, net | | [added: 28,201] | [removed: 30,201] | | | [added: 30,201] | [removed: 31,872] | |

[removed: | Deferred income] [added: Income] taxes [removed: | | | 15,033 | | | | 8,587 | |]

| Other non-current assets | | [added: 4,745] | [removed: 4,152] | | | [added: 4,152] | [removed: 4,141] | |

| [removed: LIABILITIES] [added: LIABILITIES] AND [removed: STOCKHOLDERS’ EQUITY] [added: STOCKHOLDERS' EQUITY] | | | | | | | | |

| Accounts payable | | $ | [removed: 1,045] [added: 12,647] | | | $ | [removed: 14,536] [added: 1,045] | |

| Accrued liabilities | | [added: 42,310] | [removed: 30,032] | | | [added: 30,032] | [removed: 34,535] | |

| Accrued compensation and related expenses | | [added: 19,445] | [removed: 27,530] | | | [added: 27,530] | [removed: 22,875] | |

| Income taxes payable | | [added: 769] | [removed: 39,637] | | | [added: 39,637] | [removed: 8,720] | |

| Unredeemed gift card liability | | [added: 38,343] | [removed: 35,113] | | | [added: 35,113] | [removed: 22,773] | |

| Non-current liabilities | | [added: 39,492] | [removed: 30,422] | | | [added: 30,422] | [removed: 25,014] | |