lululemon athletica (LULU) 10-K risk factor changes: FY2015 vs FY2014

Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide a consistent, high quality [added: product and] guest experience.

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

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 [removed: customers.][added: guests.]

Additionally, if the 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 [removed: business] [added: business, reputation, and brand] could be harmed.

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

We do not manufacture our products or the raw materials for them and rely instead on [removed: third-party] suppliers.

In fiscal [removed: 2013,] [added: 2014,] approximately 63% of our products were produced by our top five manufacturing suppliers, [removed: 45%] [added: 40%] of raw materials were produced by a single manufacturer.

[removed: In addition, if we experience significant increased demand, or if we need to replace an existing supplier or manufacturer, we may be unable to locate additional supplies of fabrics or raw materials or additional] manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner.

Any delays, interruption or increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability to meet [removed: customer] [added: guest] demand for our products and [removed: our results] [added: result] in lower net revenue and income from operations both in the short and long term.

[removed: 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 effect on our financial conditions, operating results and cash flows.

If we are unable to introduce new products or novel technologies in a timely manner or our new products or technologies are not accepted by our [removed: customers,] [added: guests,] our competitors may introduce similar products in a more timely fashion, which could hurt our goal to be viewed as a leader in technical athletic apparel innovation.

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

Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in [removed: customer] [added: guest] demand for our products or for products of our competitors, our failure to accurately forecast [removed: customer] [added: guest] acceptance of new products, product introductions by competitors, unanticipated changes in general market conditions, and weakening of economic conditions or consumer confidence in future economic conditions.

If we fail to accurately forecast [removed: customer] [added: guest] demand we may experience excess inventory levels or a shortage of products available for sale in our stores or for delivery to [removed: customers.][added: guests.]

Inventory levels in excess of [removed: customer] [added: guest] demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margin to suffer and could impair the strength and exclusivity of our brand.

Conversely, if we underestimate [removed: customer] [added: guest] demand for our products, our manufacturers may not be able to deliver products to meet our requirements, and this could result in damage to our reputation and [removed: customer] [added: guest] relationships.

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 "hackers" or other causes, could cause information, including data related to [removed: customer] [added: guest] orders, to be lost or delayed which could-especially if the disruption or slowdown occurred during the holiday season-result in delays in the delivery of products to our stores and [removed: customers] [added: guests] or lost sales, which could reduce demand for our products and cause our sales to decline.

If changes in technology cause our information systems to become obsolete, or if our information systems are inadequate to handle our growth, we could lose [removed: customers.][added: guests.]

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: $1.6] [added: $1.8] billion in fiscal [removed: 2013.][added: 2014.]

Our future growth depends in part on our [removed: international] expansion [removed: efforts.][added: efforts outside of North America.]

Our failure to develop [added: our business in] new international markets or [added: experiencing] disappointing growth outside of existing markets will harm our business and results of operations.

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

We lease the majority of our [removed: corporate-owned] stores under operating leases and our inability to secure appropriate real estate or lease terms could impact our ability to grow.

[added: 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.

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

A significant portion of our products are produced in [removed: China] [added: South] and [added: South East Asia and] increases in the costs of labor and other costs of doing business in [removed: China] [added: the countries in this area] could significantly increase our costs to produce our products and could have a negative impact on our operations, [added: net] revenue and earnings.

Factors that could negatively affect our business include a potential significant revaluation of the [removed: Chinese Yuan,] [added: currencies used in these countries,] which may result in an increase in the cost of producing [removed: products in China,] [added: products,] labor shortage and increases in labor [removed: costs in China,] [added: costs,] and difficulties in moving products manufactured [removed: in China] out of [removed: Asia] [added: the countries in which they are manufactured] and through the ports on the western coast of North America, whether due to port congestion, labor disputes, product regulations and/or inspections or other factors, and natural disasters or health [removed: pandemics impacting China.][added: pandemics.]

Also, the imposition of trade sanctions or other regulations against products imported by us from, or the loss of "normal trade relations" status [removed: with, China,] [added: with any country in which our products are manufactured,] could significantly increase our cost of products imported into North America and/or Australia and harm our business.

[removed: -] [added: | • |] identify suitable store locations, the availability of which is outside of our control; [added: |]

[removed: -] [added: | • |] negotiate acceptable lease terms, including desired tenant improvement allowances; [added: |]

[removed: -] [added: | • |] hire, train and retain store personnel and field management; [added: |]

[removed: -] [added: | • |] immerse new store personnel and field management into our corporate culture; [added: |]

[removed: -] [added: | • |] source sufficient inventory levels; and [added: |]

[removed: -] [added: | • |] successfully integrate new stores into our existing operations and information technology systems. [added: |]

[removed: Accordingly, there can be no assurance that we will be able to successfully] implement our grassroots marketing efforts in a particular market in a timely manner, if at all.

In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in significant compliance costs or discontinuation of product sales and could impair the marketing of our products, resulting in significant loss of net [removed: sales.][added: revenue.]

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 [removed: team, including our new Chief Executive Officer.][added: team.]

We do not maintain a key person life insurance policy on any of the [removed: other] members of our senior management team.

Our annual net [removed: sales are] [added: revenue is] weighted more heavily toward our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season, while our operating expenses are more equally distributed throughout the year.

For example, we generated approximately [removed: 33%, 36%] [added: 42%, 39%] and [removed: 37%] [added: 41%] of our full year [removed: gross] [added: operating] profit during the fourth quarters of fiscal [removed: 2013,] [added: 2014,] fiscal [removed: 2012] [added: 2013] and fiscal [removed: 2011,] [added: 2012,] respectively.

In addition, if we experience significant increased demand, or if we need to replace an existing supplier or manufacturer, we may be unable to locate additional supplies of fabrics or raw materials or additional

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

A labor strike or other transportation disruption affecting these ports could significantly disrupt our business.

Accordingly, there can be no assurance that we will be able to successfully

The functional currency of our foreign subsidiaries is generally the applicable local currency.

Our consolidated financial statements are presented in U.S. dollars.

Therefore, the net revenues, expenses, assets and liabilities of our foreign subsidiaries are translated from their functional currencies into U.S. dollars.

Fluctuations in the value of the U.S. Dollar affect the reported amounts of net revenue, expenses, assets and liabilities.

Foreign exchange differences which arise on translation of our foreign subsidiaries’ balance sheets into U.S. dollars are recorded as a cumulative translation adjustment in accumulated other comprehensive income within stockholders' equity.

We also have exposure to changes in foreign exchange rates associated with transactions which are undertaken by our subsidiaries in currencies other than their functional currency.

Such transactions include intercompany transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity.

As a result, we have been impacted by changes in exchange rates and may be impacted materially for the foreseeable future.

The potential impact of currency fluctuation increases as international expansion increases.

We currently generate a significant portion of our net revenue and incur a significant portion of our expenses in Canada.

The strengthening of the U.S. dollar against the Canadian dollar during fiscal 2014 has resulted in:

| • | a reduction in our net revenue upon translation of the sales made by our Canadian operations into U.S. dollars for the purposes of consolidation; |

| • | a reduction in our selling, general and administrative expenses incurred by our Canadian operations into U.S. dollars for the purposes of consolidation; and |

| • | foreign exchange gains by our Canadian subsidiaries on U.S. dollar cash and receivables denominated in U.S. dollars. |

This assumes a consistent 10% depreciation in the Canadian dollar against the U.S. dollar throughout the fiscal year.

The timing of changes in the relative value of the Canadian dollar combined with the seasonal nature of our business, can affect the magnitude of the impact that fluctuations in foreign exchange rates have on our income from operations.

We have not historically hedged foreign currency fluctuations.

We do not, and do not intend to, engage in the practice of trading derivative securities for profit.

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and sustaining demand for our products.

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positive impact on both our brand value and reputation.

In addition, as each of our leases

In the future, we expect to continue to derive a significant portion of our net revenue and incur a significant portion of our operating costs in Canada, and changes in exchange rates between the Canadian dollar and the U.S. dollar may have a significant, and potentially adverse, effect on our results of operations.

Additionally, a portion of our net revenue is generated in Australia and New Zealand.

Our primary risk of loss regarding foreign currency exchange rate risk is caused by fluctuations in the exchange rates between the U.S. dollar, Canadian dollar, Australian dollar and New Zealand dollar.

As we recognize net revenue from sales in Canada in Canadian dollars, and the U.S. dollar has strengthened during fiscal 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.

However, the loss in net revenue was offset by lower cost of sales and lower selling, general and administrative expenses that are generated in Canadian dollars.

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 $0.3 million in fiscal 2013 and approximately $0.9 million in fiscal 2012.

As we continue to recognize gains and losses in foreign currency transactions, depending upon changes in future currency rates, such gains or losses could have a significant, and potentially adverse, effect on our results of operations.

Our founder controls a significant percentage of our stock and is able to exercise significant influence over our affairs.

Our founder, Dennis Wilson, beneficially owns approximately 28% of our common stock.

As a result, Mr. Wilson is able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions.

This concentration of ownership may have various effects including, but not limited to, delaying, preventing or deterring a change of control of our company.

This discussion summarizes our consolidated operating results, financial condition and liquidity during the three-year period ending February [removed: 2, 2014.][added: 1, 2015.]

Fiscal [added: 2014 and fiscal] 2013 [removed: is a] [added: were] 52 week [removed: year] [added: years] whereas fiscal 2012 was a 53 week year.

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

[added: | | |] Fiscal [removed: 2013, 2012] [added: Year Ended February 1, 2015] and [removed: 2011 ended on] February 2, [removed: 2014, February 3, 2013 and January 29, 2012, respectively.][added: 2014 | | | | | | | | | | |]

This discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions set forth in the "Special Note Regarding Forward-Looking Statements." Our actual results and the timing of events may differ materially from those anticipated in these forward looking statements as a result of various factors, including those set forth in the "Item [removed: 1A—Risk Factors" section and elsewhere in this Annual Report on Form 10-K.][added: 1A.]

Fiscal 2014 [removed: will be an investment year, as we refocus on building] [added: was] a [removed: solid foundation] [added: year in which we continued] to [added: make investments we believe will help us to] drive growth and expand our business.

[added: | • |] Our net revenue increased from [removed: $1.4] [added: $1.6] billion in fiscal [removed: 2012] [added: 2013] to [removed: $1.6] [added: $1.8] billion in fiscal [removed: 2013,] [added: 2014,] representing an annual growth rate of [removed: 16%.][added: 13%. Our increase in net revenue from fiscal 2013 to fiscal 2014 resulted from the addition of 48 net new corporate-owned stores and increased direct to consumer net revenue. |]

[removed: Our total] [added: Total] comparable sales, which includes comparable store sales and direct to consumer, [removed: were 7%] [added: increased 1%] in fiscal [removed: 2013, excluding the impact of the 53rd week in] [added: 2014 compared to] fiscal [removed: 2012.][added: 2013.]

[added: | • |] Our direct to consumer segment is an increasingly substantial part of our growth strategy, and now represents [removed: 16.5%] [added: 17.9%] of our net revenue compared to [removed: 14.4%] [added: 16.5%] in fiscal [removed: 2012] [added: 2013] and [removed: 10.6%] [added: 14.4%] in fiscal [removed: 2011.][added: 2012. Direct to consumer net revenue increased 24% on a constant dollar basis primarily as the result of increased traffic on our e-commerce websites. |]

[removed: In addition to deriving] [added: Net] revenue [removed: from sales through our] [added: is comprised of] corporate-owned [removed: stores and] [added: store net revenue,] direct to [removed: consumer, we also derive] [added: consumer sales through www.lululemon.com, www.ivivva.com and] other [added: country and region specific websites, and other] net revenue, which includes [removed: outlet, wholesale, and warehouse] [added: outlet sales, showroom sales,] sales [added: to wholesale accounts, warehouse sales,] and [removed: as well as] sales [removed: through a number of company-operated showrooms and] [added: from] temporary locations.

[removed: In] [added: During] fiscal [removed: 2013] [added: 2014] we opened [removed: additional showrooms] [added: corporate-owned stores for the first time] in [removed: Hong Kong and] the United [removed: Kingdom,] [added: Kingdom] and [added: Singapore and] opened showrooms for the first time in [removed: Germany, Singapore, the Netherlands, and] China.

[removed: | • | other] [added: Other] net [removed: revenue, which] [added: revenue] includes [added: outlet sales, showroom sales, sales to] wholesale accounts, [removed: franchise sales,] warehouse sales, [removed: outlets] and sales from [removed: company-operated showrooms. |][added: temporary locations.]

[removed: in each case,] [added: Net revenue is recognized] net of [added: sales taxes, discounts, and] an estimated allowance for sales [removed: returns and discounts.][added: returns.]

[removed: In addition, we] [added: We] separately track comparable store sales, which reflect net revenue at corporate-owned stores that have been open for at least 12 months.

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

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

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

[added: |] Cost of goods sold [removed: includes:][added: | | 49.1 | | 47.2 | | 44.3 |]

[removed: Our] [added: In fiscal 2014, our] effective tax rate [removed: in fiscal 2013] was [removed: 29.6%,] [added: 37.6%] compared to [removed: 28.8% in fiscal 2012 and 36.1%] [added: 29.6%] in fiscal [removed: 2011.][added: 2013.]

| | | February [removed: 2, 2014] [added: 1, 2015] | | | | February [removed: 3, 2013] [added: 2, 2014] | | | | [removed: January 29, 2012] [added: February 3, 2013] | | |

| Net revenue | | $ | [removed: 1,591,188] [added: 1,797,213] | | | $ | [removed: 1,370,358] [added: 1,591,188] | | | $ | [removed: 1,000,839] [added: 1,370,358] | |

| Cost of goods sold | | [removed: 751,112] [added: 883,033] | | | | [removed: 607,532] [added: 751,112] | | | | [removed: 431,488] [added: 607,532] | | |

| Gross profit | | [removed: 840,076] [added: 914,180] | | | | [removed: 762,826] [added: 840,076] | | | | [removed: 569,351] [added: 762,826] | | |

| Selling, general and administrative expenses | | [removed: 448,718] [added: 538,147] | | | | [removed: 386,387] [added: 448,718] | | | | [removed: 282,393] [added: 386,387] | | |

| Income from operations | | [removed: 391,358] [added: 376,033] | | | | [removed: 376,439] [added: 391,358] | | | | [removed: 286,958] [added: 376,439] | | |

| Other income (expense), net | | [removed: 5,768] [added: 7,102] | | | | [removed: 4,957] [added: 5,768] | | | | [removed: 2,500] [added: 4,957] | | |

| Income before provision for income taxes | | [removed: 397,126] [added: 383,135] | | | | [removed: 381,396] [added: 397,126] | | | | [removed: 289,458] [added: 381,396] | | |

| Provision for income taxes | | [removed: 117,579] [added: 144,102] | | | | [removed: 109,965] [added: 117,579] | | | | [removed: 104,494] [added: 109,965] | | |

| Net income | | [removed: 279,547] [added: 239,033] | | | | [removed: 271,431] [added: 279,547] | | | | [removed: 184,964] [added: 271,431] | | |

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

| Net income attributable to lululemon athletica inc. | | $ | [removed: 279,547] [added: 239,033] | | | $ | [removed: 270,556] [added: 279,547] | | | $ | [removed: 184,063] [added: 270,556] | |

| | | February [added: 1, 2015 | | February] 2, 2014 | | February 3, 2013 | [removed: | January 29, 2012 |]

| Gross profit | | [removed: 52.8] [added: 50.9] | | [removed: 55.7] [added: 52.8] | | [removed: 56.9] [added: 55.7] |

| Selling, general and administrative expenses | | [removed: 28.2] [added: 30.0] | | 28.2 | | 28.2 |

| Income from operations | | [removed: 24.6] [added: 20.9] | | [removed: 27.5] [added: 24.6] | | [removed: 28.7] [added: 27.5] |

| Other income (expense), net | | 0.4 | | [removed: 0.3] [added: 0.4] | | [removed: 0.2] [added: 0.3] |

| Income before provision for income taxes | | [removed: 25.0] [added: 21.3] | | [removed: 27.8] [added: 25.0] | | [removed: 28.9] [added: 27.8] |

| Provision for income taxes | | [removed: 7.4] [added: 8.0] | | [removed: 8.0] [added: 7.4] | | [removed: 10.4] [added: 8.0] |

| Net income | | [removed: 17.6] [added: 13.3] | | [removed: 19.8] [added: 17.6] | | [removed: 18.5] [added: 19.8] |

| Net income attributable to non-controlling interest | | — | | [removed: 0.1] [added: —] | | 0.1 |

Risk Factors" section and elsewhere in this Annual Report on Form 10-K.

We have strengthened the foundation of our business through continued investments in product quality and supply chain and these investments will continue through fiscal 2015.

Throughout fiscal 2014 we also focused on our product assortment, guest experience, and our go-to-market process for our products.

Our improved product assortment helped to enhance our guest experience and contributed to the improved total comparative sales performance we saw in the second half of fiscal 2014.

The opening of our new distribution center in Columbus, Ohio in fiscal 2014 has also helped improve guest experience through a reduction in our average transit times for online orders and will also benefit retail distribution to our corporate owned stores in the United States.

We opened 48 net new corporate-owned stores in fiscal 2014, of which 40 were in the United States.

In addition to our plans for further new store openings in the United States, we are focused on accelerating our international expansion.

We will continue to utilize a community-based approach to building brand awareness and guest loyalty in new countries but will look to do so over a shorter period of time than previously, so that we can accelerate our international growth.

We see potential for further expansion for our men’s category and our ivivva athletica brand.

In the men's category we expanded both in-store and online product assortment and we opened our first standalone men’s store in Soho, New York.

For ivivva, we opened 10 new stores during fiscal 2014 and will continue to invest in this brand and open further stores through fiscal 2015.

In fiscal 2015, we expect to substantially complete this foundational work and accelerate our investments in innovation to drive sustainable global growth.

Financial Highlights

| • | Total comparable sales, which includes comparable store sales and direct to consumer, increased 1% in fiscal 2014 and increased by 3% on a constant dollar basis. |

| • | Corporate-owned stores accounted for 75.0% of total net revenue in fiscal 2014, 77.3% of total net revenue in fiscal 2013 and 79.6% of total net revenue in fiscal 2012. Comparable store sales decreased by 1% on a constant dollar basis for fiscal 2014 primarily as the result of lower conversion rates and lower units purchased per transaction. |

| • | Gross profit for fiscal 2014 increased by 9% to $914.2 million, from $840.1 million in fiscal 2013. As a percentage of net revenue, gross profit decreased to 50.9% compared to 52.8% in fiscal 2013. The decrease in the gross margin percentage was primarily due to product mix, increased product costs, and increased air freight usage. |

| • | Income from operations for fiscal 2014 decreased by 4% to $376.0 million, from $391.4 million in fiscal 2013. As a percentage of net revenue, income from operations decreased to 20.9% compared to 24.6% of net revenue in fiscal 2013. The decrease in income from operations was a result of an increase in selling, general and administration expenses, relative to the increase in net revenue, partially offset by an increase in gross margin. |

| • | Tax expense for fiscal 2014 increased by 23% to $144.1 million, from $117.6 million in fiscal 2013. Fiscal 2014 includes a tax expense of $33.7 million related to the repatriation of foreign earnings that will be used to fund the share buyback program. The tax rate excluding the $33.7 million tax expense on the repatriation of foreign earnings would have been 28.8%, compared to 29.6% in fiscal 2013. The tax rate for fiscal 2014, including the tax expense on the repatriation of foreign earnings, was 37.6%. |

| • | Diluted earnings per share for fiscal 2014 were $1.66. compared to $1.91 in fiscal 2013. Excluding the tax expense of $33.7 million on the repatriated foreign earnings, diluted earnings per share were $1.89 for fiscal 2014. |

Refer to the non-GAAP reconciliation tables contained in the "Results of Operations" section of this "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" for reconciliations of constant dollar total comparable sales, constant dollar comparable store sales, constant dollar changes in direct to consumer net revenue, the fiscal 2014 tax rate excluding the tax expense on the repatriation of foreign earnings, and diluted earnings per share excluding the tax expense on the repatriation of foreign earnings to measures calculated in accordance with United States generally accepted accounting principles ("GAAP").

General

Cost of goods sold includes the cost of purchased merchandise, including in-bound freight, duty and nonrefundable taxes incurred in delivering the goods to our distribution centers.

It also includes occupancy costs and depreciation expense for our corporate-owned store locations, all costs incurred in operating our distribution centers and production, design and merchandise departments, hemming, and shrink and valuation reserves.

Comparison of Fiscal 2014 to Fiscal 2013

Net revenue increased $206.0 million, or 13%, to $1.797 billion in fiscal 2014 from $1.591 billion in fiscal 2013.

Excluding the effect of foreign currency fluctuations, total comparable sales would have increased by 3%.

Our net revenue on a segment basis for fiscal 2014 and fiscal 2013 is summarized below.

Net revenue is expressed in dollar amounts.

The percentages are presented as a percentage of total net revenue.

| | | 2014 | | | | 2013 | | | | 2014 | | 2013 |

| Corporate-owned stores | | $ | 1,348,225 | | | $ | 1,228,999 | | | 75.0 | | 77.3 |

| Direct to consumer | | 321,180 | | | | 263,083 | | | | 17.9 | | 16.5 |

| Other | | 127,808 | | | | 99,106 | | | | 7.1 | | 6.2 |

| Net revenue | | $ | 1,797,213 | | | $ | 1,591,188 | | | 100.0 | | 100.0 |

Net new store openings in fiscal 2014 included 40 stores in the United States, including eight ivivva branded stores, three stores in Canada, including two ivivva branded stores, one store in Australia, one store in New Zealand, two stores in the United Kingdom and one store in Singapore.

The increase in net revenue from our corporate-owned stores segment was partially offset by a comparable store sales decrease of 3% in fiscal 2014 compared to fiscal 2013 which resulted in a $42.8 million decrease to net revenue, including the effect of foreign currency fluctuations.

Comparable store sales have decreased, primarily as the result of lower conversion rates and lower units purchased per transaction.

Net revenue from our direct to consumer segment increased $58.1 million, or 22%, to $321.2 million in fiscal 2014 from $263.1 million in fiscal 2013.

Excluding the effect of foreign exchange fluctuations, direct to consumer net revenue would have increased 24%.

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.

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

As we became aware of this issue, we pulled what we believe to be all of the affected items from our stores, showrooms 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.

As we previously disclosed, the lost revenue, as well as additional costs incurred and the write down of affected product on hand from this issue, negatively impacted our results from operations in fiscal 2013.

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.

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

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.

We have continued to invest in new and legacy information technology systems to develop new capabilities to support our vertical retail strategy.

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.

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

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.

Continuing increases in traffic 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 significant portion of our resources to further developing this channel.

We increased our store base through execution of our real estate strategy, when and where we saw opportunities for success.

For example, we opened 43 net new corporate-owned stores in North America and Australia during fiscal 2013.

Where we find opportunities for growth through opening showrooms, or other community presence efforts, we expect to expand our store base and therefore our business.

Our growth strategy relies on expansion in North America, particularly in the United States.

We also 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 believe our guests are shopping.

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.

We believe our strong cash flow generation, solid balance sheet and healthy liquidity provide us with the financial flexibility to execute the initiatives which will continue to lead our profitable growth.

Operating Segment Overview

lululemon is a designer and retailer of technical athletic apparel operating primarily in North America and Australia.

Our yoga-inspired apparel is marketed under the lululemon athletica and ivivva athletica brand names.

We offer a comprehensive line of apparel and accessories including 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 2, 2014, our branded apparel was principally sold through 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.

We believe our vertical retail strategy allows us to interact more directly with and gain insights from our customers while providing us with greater control of our brand.

In fiscal 2013, 66% of our net revenue was derived from sales of our products in the United States, 29% of our net revenue was derived from 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 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 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 sales of our products in Canada and 4% of our net revenue was derived from sales of our products outside of North America.

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

Our ability to open new stores and grow sales in existing stores has been driven by increasing demand for our technical athletic apparel and a growing recognition of the lululemon athletica brand.

We believe our superior products, strategic store locations, inviting store environment and distinctive corporate culture are responsible for our strong financial performance.

We have three reportable segments: corporate-owned stores, direct to consumer and other.

We report our segments based on the financial information we use in managing our businesses.

While we receive financial information for each corporate-owned store, we have aggregated all of the corporate-owned stores into one reportable segment due to the similarities in the economic and other characteristics of these stores.

We currently generate a significant portion of our net revenue [added: and incur a significant portion of our expenses] in Canada.

A 10% depreciation in the relative value of the Canadian dollar [removed: compared to] [added: against] the U.S. dollar [added: compared to the exchange rates in effect for fiscal 2014] would have resulted in lost income from operations of approximately [removed: $0.8 million in fiscal 2013 and approximately $5.5] [added: $2.2] million in fiscal [removed: 2012.][added: 2014.]

We [removed: do] [added: have] not [removed: currently hedge] [added: historically hedged] foreign currency fluctuations.

[removed: The] [added: Our] revolving credit facilities provide us with available borrowings in amount up to $15.0 million [removed: total.][added: in the aggregate.]

As of February [removed: 2, 2014] [added: 1, 2015, aside from letters of credit and guarantees,] we had no outstanding balances under our revolving facilities.

The functional currency of our foreign subsidiaries is generally the applicable local currency.

Our consolidated financial statements are presented in U.S. dollars.

Therefore, the net revenues, expenses, assets and liabilities of our foreign subsidiaries are translated from their functional currencies into U.S. dollars.

Fluctuations in the value of the U.S. Dollar affect the reported amounts of net revenue, expenses, assets and liabilities.

Foreign exchange differences which arise on translation of our foreign subsidiaries’ balance sheets into U.S. dollars are recorded as a cumulative translation adjustment in accumulated other comprehensive income within stockholders' equity.

We also have exposure to changes in foreign exchange rates associated with transactions which are undertaken by our subsidiaries in currencies other than their functional currency.

Such transactions include intercompany transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity.

The potential impact of currency fluctuation increases as international expansion increases.

The strengthening of the U.S. dollar against the Canadian dollar during fiscal 2014 has resulted in:

| | |

| --- | --- |

| • | a reduction in our net revenue upon translation of the sales made by our Canadian operations into U.S. dollars for the purposes of consolidation; |

| | |

| --- | --- |

| • | a reduction in our selling, general and administrative expenses incurred by our Canadian operations into U.S. dollars for the purposes of consolidation; and |

| | |

| --- | --- |

| • | foreign exchange gains by our Canadian subsidiaries on U.S. dollar cash and receivables denominated in U.S. dollars. |

This assumes a consistent 10% depreciation in the Canadian dollar against the U.S. dollar throughout the fiscal year.

The timing of changes in the relative value of the Canadian dollar combined with the seasonal nature of our business, can affect the magnitude of the impact that fluctuations in foreign exchange rates have on our income from operations.

Historically, our operations were based largely in Canada.

As of February 2, 2014, we operated 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 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.

However, the loss in net revenue was partially offset by lower cost of sales and lower selling, general and administrative expenses that are generated in Canadian dollars.

To the extent the ratio between our net revenue generated in Canadian dollars increases as compared to our expenses generated in Canadian dollars, we expect that our results of operations will be further impacted by changes in exchange rates.

A portion of our net revenue is generated in Australia.

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 $0.3 million in fiscal 2013 and approximately $0.9 million in fiscal 2012.

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

lululemon athletica inc. is a designer and retailer of technical athletic [removed: apparel operating primarily in North America and Australia.][added: apparel.]

Our [removed: yoga-inspired] [added: healthy lifestyle inspired athletic] apparel is marketed under the lululemon athletica and ivivva athletica brand names.

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

[removed: Consistent with this mission, we] [added: We] promote a set of core values in our [removed: business,] [added: business] which [removed: include] [added: include,] developing the highest quality products, operating with integrity, leading a [removed: healthy] balanced [removed: life,] and [removed: training our employees in self responsibility] [added: fun life,] and [removed: goal setting.][added: nurturing entrepreneurial spirit.]

These core values attract passionate and motivated employees who are driven to succeed and share our [removed: vision] [added: purpose] of "elevating the world from mediocrity to greatness." [removed: We believe the energy and passion of our employees allow us to successfully execute on our business strategy, enhance brand loyalty and create a distinctive connection with our guests.]

[removed: In] [added: During] fiscal [removed: 2013,] [added: 2014] our corporate-owned stores [removed: opened] [added: open] at least one year, [added: which average approximately 2,950 square feet,] averaged sales of [removed: $1,894 per square foot, compared to sales] [added: $1,678] per square [removed: foot of $2,058 for fiscal 2012.][added: foot.]

As women have continued to embrace a variety of fitness and athletic activities, including yoga, we believe [removed: other athletic apparel companies are not] [added: we have been able to] effectively [removed: addressing] [added: address] their unique [removed: style,] fit and performance [removed: needs.][added: needs by incorporating style along with comfort and functionality into our products through our vertical retail strategy.]

[removed: In] addition, we believe consumer purchase decisions are driven by both an actual need for functional products and a desire to create a particular lifestyle perception.

As of February [removed: 2, 2014,] [added: 1, 2015,] our retail footprint included [removed: 171] [added: 211] stores in the United States, [removed: 54] [added: 57] stores in Canada, [removed: 25] [added: 26] stores in [removed: Australia and four] [added: Australia, five] in New [removed: Zealand.][added: Zealand, two in the United Kingdom, and one in Singapore.]

While most of our corporate-owned stores are branded lululemon athletica, [removed: 12] [added: 22] of our corporate-owned stores are branded ivivva athletica and specialize in dance-inspired apparel for female youth.

Our retail stores are located primarily on street locations, in lifestyle [removed: centers] [added: centers,] and in malls.

| | [added: |] February [removed: 2, 2014] [added: 1, 2015] | | | February [removed: 3, 2013] [added: 2, 2014] | |

| United States | | [added: 11] | | | [added: 3] | [added: |]

| Canada | | [added: 46] | | | [added: 45] | [added: |]

| [removed: Total] Canada | [removed: 54] | [added: 11] | | [removed: 51] | [added: 9] | [added: |]

| Australia | | [added: 26] | | | [added: 25] | [added: |]

| New Zealand | [removed: 4] | [added: 5] | | [removed: 2] | [added: 4] | [added: |]

| Total | [removed: 254] | [added: 302] | | [removed: 211] | [added: 254] | [added: |]

[removed: Management performs an] [added: We perform] ongoing [removed: evaluation] [added: evaluations] of our portfolio of corporate-owned store locations.

In fiscal [removed: 2013] [added: 2014] we closed [removed: two] [added: one] of our corporate-owned stores.

We opened [removed: 43] [added: 48] net new corporate-owned stores in North [removed: America] [added: America, Australia, Europe] and [removed: Australia] [added: Asia] in fiscal [removed: 2013.][added: 2014.]

Over the next [removed: few years,] [added: fiscal year,] our new store growth will be primarily focused on corporate-owned stores in the United [removed: States, an attractive market with a population of approximately nine times that of Canada.][added: States.]

[removed: Beyond North America,] [added: Over the next few years] we intend to expand our [removed: global] presence [added: outside of North America and Australia,] as part of our long-term business strategy.

We believe that partnering with companies and individuals with significant experience and proven success in [removed: the] [added: certain] target [removed: country] [added: countries] is to our advantage.

Direct to consumer is an increasingly substantial part of our business, representing approximately [removed: 16.5%] [added: 17.9%] of our net revenue in fiscal [removed: 2013,] [added: 2014,] compared to [removed: 14.4%] [added: 16.5%] of our net revenue in fiscal [removed: 2012] [added: 2013] and [removed: 10.6%] [added: 14.4%] of our net revenue in fiscal [removed: 2011.][added: 2012.]

[added: | • | Wholesale - Our wholesale accounts include premium yoga studios, health clubs and fitness centers.] We believe these premium wholesale locations offer an alternative distribution channel that is convenient for our core consumer and enhances the image of our brand. [added: We do not intend wholesale to be a significant contributor to overall sales. Instead, we intend to use the channel to build brand awareness, especially in new markets, including those outside of North America. |]

We offer a comprehensive line of [removed: performance] apparel and accessories for women, men and female youth.

Although we benefit from the growing number of people that participate in yoga, we believe the percentage of our products sold for other activities will continue to increase as we broaden our product range to address [added: other activities.]

Our design team continues to [added: source and] develop technically advanced fabrics and innovative functional features that we believe will help advance our product line and differentiate us from the competition.

Since our inception, we have developed a distinctive corporate culture with a mission to [added: produce products which] create [removed: components] [added: transformational experiences] for people to live [removed: long, healthy and] [added: happy, healthy,] fun lives.

We [removed: differentiate our business through an innovative,] [added: utilize a] community-based approach to building brand awareness and customer loyalty.

We partner with independent inspection, verification, and testing companies, [removed: which] [added: who] conduct a [removed: battery] [added: variety] of tests on our fabrics, testing [removed: for a variety of] performance characteristics including pilling, shrinkage, abrasion resistance and colorfastness.

We rely on a limited number of [removed: third-party] suppliers to provide fabrics for and to produce our products.

We work with a group of approximately [removed: 65] [added: 57] suppliers to provide the fabrics for our products.

We obtain substantially all of our Luon fabric, which represents approximately 30% of the fabric we use in our products, from [removed: a single third-party supplier.][added: two suppliers.]

We work with a group of approximately 30 [removed: manufacturers,] [added: suppliers that manufacture our products,] five of which produced approximately 63% of our products in fiscal [removed: 2013.][added: 2014.]

During fiscal [removed: 2013,] [added: 2014,] no single manufacturer produced more than [removed: 25%] [added: 30%] of our product offering.

[removed: During fiscal 2013, approximately 67%] of our products were produced in [removed: South/South] [added: South] East Asia, approximately 23% in [added: South Asia, approximately 11% in] China, approximately [removed: 3%] [added: 1%] in North America and the remainder in other countries.

We [removed: centrally] [added: operate and] distribute finished products from [added: our owned or leased] distribution facilities in Vancouver, British Columbia, Sumner, Washington, [added: Columbus, Ohio,] and Melbourne, Victoria.

[removed: We operate the] [added: The] distribution facilities in Vancouver, Sumner and Melbourne [removed: which] are leased and are approximately 120,000, 167,000 and 54,000 square feet, respectively.

General

In this Annual Report on Form 10-K ("10-K" or "Report") for the fiscal year ended February 1, 2015 ("fiscal 2014"), lululemon athletica inc. (together with its subsidiaries) is referred to as "lululemon, "the Company," "we," "us" or "our."

In

Our Segments

We primarily conduct our business through two channels: corporate-owned stores, and direct to consumer.

We also generate net revenue from our corporate-owned outlets and showrooms, through sales to wholesale accounts, from warehouse sales, and from sales from temporary locations.

The net revenue we generate from these sources is combined in our other segment.

As of February 1, 2015, we operated 302 corporate-owned stores located in the United States, Canada, Australia, New Zealand, the United Kingdom, and Singapore.

Our direct to consumer segment includes the net revenue which we generate from our lululemon and ivivva e-commerce websites, www.lululemon.com and www.ivivva.com and other country and region specific websites.

Our corporate-owned stores by brand and by country as of February 1, 2015 and February 2, 2014, are summarized in the table below:

| | | | | | | |

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

| | | | | | | |

| lululemon athletica | | | | | | |

| United States | | 200 | | | 168 | |

| United Kingdom | | 2 | | | — | |

| Singapore | | 1 | | | — | |

| | | 280 | | | 242 | |

| ivivva athletica | | | | | | |

| | | 22 | | | 12 | |

On January 11, 2015, we entered into a license and supply agreement with a partner in the Middle East which grants it the right to operate lululemon athletica branded retail locations in the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain for an initial term of five years.

We retain the rights to sell lululemon products through our e-commerce websites in these countries.

Under this arrangement we will be supplying the partner with lululemon products, training and other support.

As of February 1, 2015 there were no franchised retail locations in operation.

Other Channels

Other net revenue accounted for 7.1% of total net revenue in fiscal 2014 compared to 6.2% in fiscal 2013 and 6.0% of total net revenue in fiscal 2012.

Other net revenue includes sales made through the following channels:

| • | Outlets and warehouse sales - We utilize outlets as well as warehouse sales, which are typically held one or more times a year, to sell slow moving inventory and inventory from prior seasons to retail customers at discounted prices. |

| • | Showrooms - Our showrooms are typically small locations that we open from time to time when we enter new markets and feature a limited selection of our product offering. |

| • | Temporary locations - Our temporary locations are typically opened for a short period of time in markets in which we may not already have a presence. |

During fiscal 2014, approximately 59%

We also utilize third-party logistic providers to store and distribute finished products from their warehouse locations in Hong Kong and the Netherlands.

In addition to trademarks, we own 32 industrial design registrations in Canada that protect our

Overview

We believe consumers associate our brand with innovative, technical apparel products.

Our products are designed to offer performance, fit and comfort while incorporating both function and style.

Our heritage of combining performance and style distinctly positions us to address the needs of female athletes as well as a growing core of consumers who desire everyday casual wear that is consistent with their active lifestyles.

We also continue to broaden our product range to increasingly appeal to male athletes and athletic female youth.

As of February 2, 2014, our branded apparel was principally sold through 254 stores that are located in Canada, the United States, Australia and New Zealand.

We have developed a distinctive community-based strategy that we believe enhances our brand and reinforces our guest loyalty.

The key elements of our strategy are to:

| | |

| --- | --- |

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

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

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

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

We were founded in 1998 by Dennis "Chip" Wilson in Vancouver, British Columbia.

Noting the increasing number of women participating in sports, and specifically yoga, Mr. Wilson developed lululemon athletica to 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 creating components for people to live long, healthy and fun lives.

We believe our culture and community-based business approach provides us with competitive advantages that are responsible for our strong financial performance.

Our net revenue has increased from $40.7 million in fiscal 2004 to $1.6 billion in fiscal 2013, representing a 50% compound annual growth rate.

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.

During fiscal 2013, our comparable store sales growth was 2% and 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 $391.4 million.

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

We believe this is among the best in the apparel retail sector.

Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52 week year, but occasionally giving rise to an additional week, resulting in a 53 week year.

Fiscal 2012, which ended on February 3, 2013, was a 53 week year.

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

We believe we have been able to help address this void in the marketplace by incorporating style along with comfort and functionality into our products through our vertical retail strategy.

Our Competitive Strengths

We believe the following strengths differentiate us from our competitors and are important to our success:

| • | Premium Active 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 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 women's athletic apparel. While our brand has its roots in yoga, our products are 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. |

| • | Distinctive Retail 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 "educators," to develop a personal connection with each guest. Our educators receive significant in-house training at the start of their employment and are well prepared to explain the technical and innovative design aspects of each product. |

| • | Innovative Design 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: |

| • | 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; |

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

| • | although we typically bring products from design to market in eight to 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. |

| • | Community-Based Marketing 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. |

| • | Deep Rooted Culture Centered on Training and Personal 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. |

| • | Experienced Management Team with Proven Ability to Execute. Our Chief Executive Officer, Mr. Potdevin, who has more than two decades of experience at premium, technical athletic apparel, and life-style centric retail companies, joined us in January 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 companies. We believe our management team is well positioned to execute the long-term growth strategy for our business. |

Growth Strategy

On October 25, 2013, plaintiff Laborers' District Council Industry Pension Fund filed a books-and-records action [added: in the Delaware Court of Chancery] entitled Laborers' District Council Construction Industry Pension Fund v.

lululemon athletica inc., [added: C.A.] No. [removed: 9039] [added: 9039-VCP] (Del.

Ch.) under [removed: 7] [added: 8] Del.

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, [removed: intends] [added: intended] to resign, and certain stock trades executed by the [removed: Chairman] [added: then-Chairman] of our board of directors, Mr. Wilson, prior to our announcement regarding our former CEO, Christine Day.

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

[removed: Day ,] [added: Day,] et al., No. 13-CV-5629 (S.D.N.Y.) and Federman v.

In that amended complaint, plaintiffs challenge certain public disclosures and conduct relating to the March 2013 sheer Luon issue, the June 2013 announcement [removed: of] [added: regarding] 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.

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

On October 1, 2013, the Court appointed Louisiana Sheriffs' Pension & Relief Fund as Lead Plaintiff and on November 1, [added: 2013,] 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").

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

On May 3, 2013, plaintiff Hallandale Beach Police Officers and [removed: Firefighters] [added: Firefighters'] Personnel Retirement Fund filed a books-and-records action [added: in the Delaware Court of Chancery] entitled Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund v.

lululemon athletica inc., [added: C.A.] No. [removed: 8522] [added: 8522-VCP] (Del.

[removed: Ch.).,] [added: Ch.)] under [removed: 7] [added: 8] Del.

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 [removed: recent] revisions to our executive bonus plan.

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

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

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

In addition to the legal matters described below, we are, from time to time, involved in routine legal matters incidental to the conduct of our business, including legal matters such as initiation and defense of proceedings to protect intellectual property rights, slip and fall/personal injury claims, product liability claims, and similar matters.

The Court held a one-day trial on February 19, 2014, which took the form of an oral argument.

On April 2, 2014, the Court rejected the majority of books and records sought by plaintiff and ordered us to produce a narrow category of documents relating to one trade made by the our former Chairman.

On June 11, 2014, the Court consolidated this action with the action captioned Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund v.

Ch.), which is described below.

On June 13, 2014, Plaintiffs filed a Motion to Enforce the Court's April 2, 2014 Telephonic Rulings and Compel in Camera Inspection of Withheld and Redacted Documents.

The Court held a hearing on the Motion to Enforce on December 1, 2014 and the judgment on the Motion remains pending.

We believe there is no merit to the Motion.

On April 9, 2014, the Court dismissed all of plaintiffs' claims due to plaintiffs' failure to make a pre-suit demand.

On May 9, 2014, plaintiff in the Canty action filed a notice of appeal to the United States Court of Appeals for the Second Circuit.

The Court of Appeals has scheduled an oral argument on the appeal on March 27, 2015.

We believe there is no merit to the appeal.

class of purchasers of lululemon stock between September 7, 2012 through January 10, 2014.

On April 18, 2014, the Court dismissed all of Lead Plaintiff's claims for failure to state a claim.

Lead Plaintiff filed a notice of appeal of this decision and filed its appeal brief on August 1, 2014.

We filed a reply on October 23, 2014, Lead Plaintiff filed a further reply on November 6, 2014, and a hearing has been scheduled for May 8, 2015.

We believe there is no merit to the appeal.

lululemon athletica inc., C.A. No. 8522-VCP (Del.

We moved to dismiss the second amended complaint on December 4, 2013 and the Court held argument on the motion on February 5, 2014.

On April 2, 2014, the Court rejected the majority of books and records sought by plaintiff and ordered us to produce a narrow category of documents relating to one trade made by our former Chairman.

On June 11, 2014 the Court consolidated this action with the action captioned Laborers' District Council Construction Industry Pension Fund v.

lululemon athletica inc., C.A. No. 9039-VCP (Del.

Ch.) which is described above.

On June 13, 2014 Plaintiffs filed a Motion to Enforce the Court's April 2, 2014 Telephonic Rulings and Compel in Camera Inspection of Withheld and Redacted Documents.

The Court held a hearing on the Motion to Enforce on December 1, 2014 and the judgment on the Motion remains pending.

We believe there is no merit to the Motion.

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.

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

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

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.

In addition to the legal matters described above, we are, from time to time, involved in routine legal matters incidental to our business.

For the fiscal year ended February [removed: 2, 2014][added: 1, 2015]

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 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. [removed: o]

The aggregate market value of the voting stock held by non-affiliates of the registrant on August [removed: 2, 2013] [added: 1, 2014] was approximately [removed: $7,600,977,364.][added: $3,986,474,344.]

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 August [removed: 2, 2013.][added: 1, 2014.]

For purposes of determining this amount only, the registrant has defined affiliates as including the executive officers and directors of the registrant on August [removed: 2, 2013.][added: 1, 2014.]

At March [removed: 24, 2014] [added: 23, 2015] there were [removed: 115,411,223] [added: 132,131,605] shares of the registrant's common stock, par value $0.005 per share, outstanding.

At March [removed: 24, 2014,] [added: 23, 2015,] there were outstanding [removed: 29,937,820] [added: 9,832,541] exchangeable shares of Lulu Canadian Holding, Inc., a wholly-owned subsidiary of the registrant.

In addition, at March [removed: 24, 2014,] [added: 23, 2015,] the registrant had outstanding [removed: 29,937,820] [added: 9,832,541] 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.

| Portions of Proxy Statement for the [removed: 2014] [added: 2015] Annual Meeting of Stockholders | | Part III |

| Item 1. | [removed: [BUSINESS](#s76201C92503666D8C5888206D7E3B11C)] [added: [BUSINESS](#s718BC30091A0F037898C742F77E8C6F4)] | [removed: [1](#s76201C92503666D8C5888206D7E3B11C)] [added: [1](#s718BC30091A0F037898C742F77E8C6F4)] |

| Item 1A. | [RISK [removed: FACTORS](#sE77F36F936E4C7A3EBAB8206D8137208)] [added: FACTORS](#s579927FD3642C328ECDC742F784617EA)] | [removed: [7](#sE77F36F936E4C7A3EBAB8206D8137208)] [added: [5](#s579927FD3642C328ECDC742F784617EA)] |

| Item 2. | [removed: [PROPERTIES](#sE4B1B8F45F82E04D13E78206D8380740)] [added: [PROPERTIES](#s7FE4B5C73240807F9F96742F78645D10)] | [removed: [15](#sE4B1B8F45F82E04D13E78206D8380740)] [added: [12](#s7FE4B5C73240807F9F96742F78645D10)] |

| Item 3. | [LEGAL [removed: PROCEEDINGS](#s887B633A020B7055E5D98206D8646130)] [added: PROCEEDINGS](#s9CAAF7176A0221FD7159742F7877CFCE)] | [removed: [15](#s887B633A020B7055E5D98206D8646130)] [added: [13](#s9CAAF7176A0221FD7159742F7877CFCE)] |

| Item 5. | [MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#s58915C709478CA6F635F8206D8BB801E)] [added: SECURITIES](#sEE990665F8830CE26782742F6FF197E6)] | [removed: [17](#s58915C709478CA6F635F8206D8BB801E)] [added: [15](#sEE990665F8830CE26782742F6FF197E6)] |

| Item 6. | [SELECTED CONSOLIDATED FINANCIAL [removed: DATA](#s8A767CF5C1C48D9EDABA8206D9319B00)] [added: DATA](#s989FDE549B9305D101B9742F6ED02F37)] | [removed: [19](#s8A767CF5C1C48D9EDABA8206D9319B00)] [added: [18](#s989FDE549B9305D101B9742F6ED02F37)] |

| Item 7. | [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#s87D9082B9109D51A3EBE8206D95D21CE)] [added: OPERATIONS](#sBCFE9A49160F46D3E669742F798A867D)] | [removed: [20](#s87D9082B9109D51A3EBE8206D95D21CE)] [added: [19](#sBCFE9A49160F46D3E669742F798A867D)] |

| Item 7A. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#s85AE21A52367794FF10F8206DB04EA03)] [added: RISK](#sE526FA1AEBA68F537DF2742F7BD0C557)] | [removed: [35](#s85AE21A52367794FF10F8206DB04EA03)] [added: [34](#sE526FA1AEBA68F537DF2742F7BD0C557)] |

| Item 8. | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#sFBAB109DEB9CB2AED7F48206DB24345E)] [added: DATA](#s549CA8E56C7E4ABECFCB742F7BF1C105)] | [removed: [37](#sFBAB109DEB9CB2AED7F48206DB24345E)] [added: [35](#s549CA8E56C7E4ABECFCB742F7BF1C105)] |

| Item 9A. | [CONTROLS AND [removed: PROCEDURES](#sC63B4268F9F01DBA10E88206DFB4834C)] [added: PROCEDURES](#s9792FB1BF236C04C9CB4742F80D1268E)] | [removed: [59](#sC63B4268F9F01DBA10E88206DFB4834C)] [added: [58](#s9792FB1BF236C04C9CB4742F80D1268E)] |

| [PART [removed: III](#s24D7B9F33C2B25E933098206DFE54D6F)] [added: III](#s0826A348D47881B791DF742F80F1E0C5)] | | |

| Item 10. | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s9FF6AD418590E23A7E888206E007743C)] [added: GOVERNANCE](#sA1067121FECA5EBA5573742F81068B2E)] | [removed: [61](#s9FF6AD418590E23A7E888206E007743C)] [added: [59](#sA1067121FECA5EBA5573742F81068B2E)] |

| Item 11. | [EXECUTIVE [removed: COMPENSATION](#sCFDDC769EA249EA7B4118206E038EDC3)] [added: COMPENSATION](#sB1A4577908677007CFDB742F812774B1)] | [removed: [61](#sCFDDC769EA249EA7B4118206E038EDC3)] [added: [59](#sB1A4577908677007CFDB742F812774B1)] |

| Item 12. | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#s271B026F5964DACF5CA38206E05939A8)] [added: MATTERS](#s0BBDA145D20DB18EDBF5742F703EC06E)] | [removed: [61](#s271B026F5964DACF5CA38206E05939A8)] [added: [59](#s0BBDA145D20DB18EDBF5742F703EC06E)] |

| Item 13. | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#sB1FCA6AED9182E213AE68206E08A6CF5)] [added: INDEPENDENCE](#sBA5F13A69E749ED34F61742F817A84C4)] | [removed: [61](#sB1FCA6AED9182E213AE68206E08A6CF5)] [added: [60](#sBA5F13A69E749ED34F61742F817A84C4)] |

| Item 14. | [PRINCIPAL ACCOUNTANT FEES AND [removed: SERVICES](#s55D342870FB6AEE16DED8206E0AD7039)] [added: SERVICES](#sCD7B8C86B65A290D1E45742F81ACFFB0)] | [removed: [61](#s55D342870FB6AEE16DED8206E0AD7039)] [added: [60](#sCD7B8C86B65A290D1E45742F81ACFFB0)] |

| Item 15. | [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULE](#s46F83B3FC58621876BF48206E10172AB)] [added: SCHEDULE](#sC38545BF1B016A6F4C0E742F8201F4F1)] | [removed: [62](#s46F83B3FC58621876BF48206E10172AB)] [added: [61](#sC38545BF1B016A6F4C0E742F8201F4F1)] |

They may be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including the risks, uncertainties and assumptions described in the section entitled [removed: Item 1A and elsewhere in this report.][added: "Item 1A.]

10-K 1 lulu-20150201x10k.htm 10-K

| [PART I](#s9AABB487903C7FA958B2742F7795A5BF) | | |

| [PART II](#s34CADB024789DA43BDF4742F788FA29C) | | |

| [PART IV](#s0A1A1B0363D3CB9D4BF8742F81CD13D0) | | |

Risk Factors" and elsewhere in this report.

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

| [PART I](#s278BFD73F3E23D8235BC8206D78F1695) | | |

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

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

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

We currently operate [removed: three] [added: four] distribution centers located in Vancouver, British Columbia, Sumner, Washington, [added: Columbus, Ohio] and Melbourne, Victoria.

[removed: In November 2013 we] [added: We] purchased [removed: a] [added: the Columbus, Ohio] distribution center in [removed: Columbus, Ohio] [added: fiscal 2013] and [removed: will commence] [added: it commenced] operations [removed: in mid-2014.][added: during fiscal 2014.]

The general location, use, approximate size and lease renewal date of our [added: leased] properties at February [removed: 2, 2014,] [added: 1, 2015,] are set forth below:

| Columbus, OH | | Distribution Center [removed: (Intended)] | | 307,000 | | [removed: | n/a |]

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

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

As of February [removed: 2, 2014,] [added: 1, 2015,] we leased approximately [removed: 734,000] [added: 888,000] gross square feet relating to [removed: 252] [added: 300] of our [removed: 254 corporate-owned] [added: 302] stores.

The general location, use and approximate size of our owned properties at February 1, 2015, are set forth below:

| | | | | | |

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

| | | | | | |

| Location | | Use | | Approximate Square Feet | |

In addition to the locations listed above, we hold inventory at warehouses managed by third-parties in Hong Kong and the Netherlands.

In March 2011, we purchased the building that currently houses our administrative offices and in October 2012 we purchased additional space in Vancouver, BC for our administrative offices.

[added: Our common stock is quoted on the Nasdaq Global Select Market under the symbol "LULU."] The following table sets forth, for the periods indicated, the high and low closing sale prices of our common stock reported by the Nasdaq Global Select Market for the last two fiscal years:

| Fiscal Year [removed: Ending] [added: Ended] February 2, 2014 | | | | | | | | |

| Third Quarter | | [removed: $ |] 76.57 | | | [removed: $] | 65.29 | | [added: |]

| Second Quarter | | [removed: $ |] 82.28 | | | [removed: $] | 61.33 | | [added: |]

| First Quarter | | [removed: $ |] 76.88 | | | [removed: $] | 62.32 | | [added: |]

| Fiscal Year [removed: Ending] [added: Ended] February [removed: 3, 2013] [added: 1, 2015] | | | | | | | | |

As of February [removed: 2, 2014,] [added: 1, 2015,] there were approximately [removed: 526] [added: 700] holders of record of our common stock.

We have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock [removed: in the foreseeable future.][added: at this time.]

The graph set forth below compares the cumulative total stockholder return on our common stock between [removed: February 1, 2009] [added: January 31, 2010] (the date of our fiscal year end five years ago) and February [removed: 2, 2014,] [added: 1, 2015,] 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 [removed: February 1, 2009] [added: January 31, 2010] 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.

[removed: ][added: ]

| | | [removed: 01-Feb-09 | | | |] 31-Jan-10 | | | | 30-Jan-11 | | | | 29-Jan-12 | | | | 03-Feb-13 | | | | 02-Feb-14 | | | [added: | 01-Feb-15 | | |]

| S&P 500 Apparel, Accessories & Luxury Goods Index | | $ | 100.00 | | | $ | [removed: 185.55] [added: 135.25] | | | $ | [removed: 250.95] [added: 190.32] | | | $ | [removed: 353.12] [added: 174.21] | | | $ | [removed: 323.23] [added: 199.36] | | | $ | [removed: 369.91] [added: 204.52] | |

The following table provides information regarding our [removed: Employee Share Purchase Plan (ESPP) repurchases] [added: purchases] of [added: shares of] our common [removed: stock,] [added: stock] during the thirteen [removed: week period] [added: weeks] ended February [removed: 2, 2014:][added: 1, 2015 related to our Employee Share Purchase Plan:]

| (1) | Monthly information is presented by reference to our fiscal [removed: months] [added: periods] during our fourth quarter of fiscal [removed: 2013.] [added: 2014.] |

| (3) | Our [removed: ESPP] [added: Employee Share Purchase Plan (ESPP)] was approved by our [removed: Board] [added: board] of [removed: Directors] [added: directors] and stockholders in September 2007. All shares purchased under the ESPP [removed: will be] [added: are] purchased on the Nasdaq Global Select Market (or such other stock exchange as we may designate from time to time). Unless our [removed: Board] [added: board] of [removed: Directors] [added: 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 [removed: available for issuance] [added: authorized to be purchased] under the ESPP is 6,000,000. |

| Fourth Quarter | | $ | 67.48 | | | $ | 41.29 | |

| Third Quarter | | 45.19 | | | | 38.37 | | |

| Second Quarter | | 45.67 | | | | 37.25 | | |

| First Quarter | | 54.56 | | | | 44.53 | | |

| lululemon athletica inc. | | $ | 100.00 | | | $ | 242.99 | | | $ | 454.11 | | | $ | 480.59 | | | $ | 323.58 | | | $ | 469.12 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 118.85 | | | $ | 122.58 | | | $ | 140.91 | | | $ | 166.00 | | | $ | 185.78 | |

The following table provides information regarding our repurchases of shares of our common stock during the thirteen weeks ended February 1, 2015 related to our stock repurchase program:

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

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

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

| 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) | | |

| November 3, 2014 - November 30, 2014 | | 326,312 | | | $ | 42.96 | | | 326,312 | | | $ | 305,716,285 | |

| December 1, 2014 - January 4, 2015 | | 70,157 | | | 44.86 | | | | 70,157 | | | 302,569,190 | | |

| January 5, 2015 - February 1, 2015 | | — | | | — | | | | — | | | 302,569,190 | | |

| Total | | 396,469 | | | | | | | 396,469 | | | | | |

__________

| (2) | Our stock repurchase program was approved by our board of directors in June 2014. Common shares are repurchased in the open market at prevailing market prices, with the timing and actual number of common shares to be repurchased depending upon market conditions, eligibility to trade, and other factors. The repurchases will be made up until June 2016, and the maximum dollar value of shares to be repurchased is $450 million. |

| November 3, 2014 - November 30, 2014 | | 10,952 | | | $ | 44.82 | | | 10,952 | | | 5,300,350 | |

| December 1, 2014 - January 4, 2015 | | 14,104 | | | 51.35 | | | | 14,104 | | | 5,286,246 | |

| January 5, 2015 - February 1, 2015 | | 7,391 | | | 64.49 | | | | 7,391 | | | 5,278,855 | |

| Total | | 32,447 | | | | | | | 32,447 | | | | |

| (1) | Monthly information is presented by reference to our fiscal periods during our fourth quarter of fiscal 2014. |

| | |

| --- | --- |

| | |

| --- | --- |

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 | | $ | 77.19 | | | $ | 65.87 | |

| Third Quarter | | $ | 77.99 | | | $ | 53.35 | |

| Second Quarter | | $ | 80.30 | | | $ | 54.40 | |

| First Quarter | | $ | 77.06 | | | $ | 63.13 | |

| 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 | | | | |

The selected consolidated financial data set forth below [removed: are] [added: is] derived from our consolidated financial statements and should be read in conjunction with our consolidated financial statements for the years ended February [added: 1, 2015, February] 2, 2014, February 3, 2013, January 29, [removed: 2012, January 30, 2011] [added: 2012] and January [removed: 31, 2010.][added: 30, 2011.]

The consolidated statement of operations and comprehensive income data for each of the years ended February [added: 1, 2015, February] 2, [removed: 2014,] [added: 2014 and] February 3, 2013 and [removed: January 29, 2012 and] the consolidated balance sheet data as of February [removed: 2, 2014] [added: 1, 2015] and February [removed: 3, 2013 are] [added: 2, 2014 is] derived from, and qualified by reference to, our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report.

| | | February [added: 1, 2015 | | | | February] 2, 2014 | | | | February 3, 2013 | | | | January 29, 2012 | | | | January 30, 2011 | | | [removed: | January 31, 2010 | | |]

| Net revenue | | $ | [removed: 1,591,188] [added: 1,797,213] | | | $ | [removed: 1,370,358] [added: 1,591,188] | | | [removed: 1,000,839] [added: $] | [added: 1,370,358] | | | $ | [removed: 711,704] [added: 1,000,839] | | | $ | [removed: 452,898] [added: 711,704] | |

| Cost of goods sold | | [removed: 751,112] [added: 883,033] | | | | [removed: 607,532] [added: 751,112] | | | | [removed: 431,488] [added: 607,532] | | | | [removed: 316,757] [added: 431,488] | | | | [removed: 229,812] [added: 316,757] | | |

| Gross profit | | [removed: 840,076] [added: 914,180] | | | | [removed: 762,826] [added: 840,076] | | | | [removed: 569,351] [added: 762,826] | | | | [removed: 394,947] [added: 569,351] | | | | [removed: 223,086] [added: 394,947] | | |

| Selling, general and administrative expenses | | [removed: 448,718] [added: 538,147] | | | | [removed: 386,387] [added: 448,718] | | | | [removed: 282,393] [added: 386,387] | | | | [removed: 212,784] [added: 282,393] | | | | [removed: 136,161] [added: 212,784] | | |

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

| Income from operations | | [removed: 391,358] [added: 376,033] | | | | [removed: 376,439] [added: 391,358] | | | | [removed: 286,958] [added: 376,439] | | | | [removed: 180,391] [added: 286,958] | | | | [removed: 86,546] [added: 180,391] | | |

| Other income (expense), net | | [removed: 5,768] [added: 7,102] | | | | [removed: 4,957] [added: 5,768] | | | | [removed: 2,500] [added: 4,957] | | | | [removed: 2,886] [added: 2,500] | | | | [removed: 164] [added: 2,886] | | |

| Income before provision for income taxes | | [removed: 397,126] [added: 383,135] | | | | [removed: 381,396] [added: 397,126] | | | | [removed: 289,458] [added: 381,396] | | | | [removed: 183,277] [added: 289,458] | | | | [removed: 86,710] [added: 183,277] | | |

| Provision for income taxes | | [removed: 117,579] [added: 144,102] | | | | [removed: 109,965] [added: 117,579] | | | | [removed: 104,494] [added: 109,965] | | | | [removed: 61,080] [added: 104,494] | | | | [removed: 28,429] [added: 61,080] | | |

| Net income | | [removed: 279,547] [added: 239,033] | | | | [removed: 271,431] [added: 279,547] | | | | [removed: 184,964] [added: 271,431] | | | | [removed: 122,197] [added: 184,964] | | | | [removed: 58,281] [added: 122,197] | | |

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

| Net income attributable to lululemon athletica inc. | | $ | [removed: 279,547] [added: 239,033] | | | $ | [removed: 270,556] [added: 279,547] | | | $ | [removed: 184,063] [added: 270,556] | | | $ | [removed: 121,847] [added: 184,063] | | | $ | [removed: 58,281] [added: 121,847] | |

| Basic earnings per share | | $ | [removed: 1.93] [added: 1.66] | | | $ | [removed: 1.88] [added: 1.93] | | | $ | [removed: 1.29] [added: 1.88] | | | $ | [removed: 0.86] [added: 1.29] | | | $ | [removed: 0.41] [added: 0.86] | |

| Diluted earnings per share | | $ | [removed: 1.91] [added: 1.66] | | | $ | [removed: 1.85] [added: 1.91] | | | $ | [removed: 1.27] [added: 1.85] | | | $ | [removed: 0.85] [added: 1.27] | | | $ | [removed: 0.41] [added: 0.85] | |

| Basic weighted-average number of shares outstanding | | [removed: 144,913] [added: 143,935] | | | | [removed: 144,000] [added: 144,913] | | | | [removed: 143,196] [added: 144,000] | | | | [removed: 141,720] [added: 143,196] | | | | [removed: 140,502] [added: 141,720] | | |

| Diluted weighted-average number of shares outstanding | | [removed: 146,043] [added: 144,298] | | | | [removed: 145,806] [added: 146,043] | | | | [removed: 145,278] [added: 145,806] | | | | [removed: 143,858] [added: 145,278] | | | | [removed: 141,898] [added: 143,858] | | |

| Foreign currency translation adjustment | | [removed: (89,158] [added: (105,339] | | ) | | [removed: (459] [added: (89,158] | | ) | | [removed: 1,220] [added: (459] | | [added: )] | | [removed: 14,462] [added: 1,220] | | | | [removed: 17,018] [added: 14,462] | | |

| Comprehensive income | | $ | [removed: 190,389] [added: 133,694] | | | $ | [removed: 270,097] [added: 190,389] | | | $ | [removed: 185,283] [added: 270,097] | | | $ | [removed: 136,309] [added: 185,283] | | | $ | [removed: 75,299] [added: 136,309] | |

| Cash and cash equivalents | | $ | [removed: 698,649] [added: 664,479] | | | $ | [removed: 590,179] [added: 698,649] | | | $ | [removed: 409,437] [added: 590,179] | | | $ | [removed: 316,286] [added: 409,437] | | | $ | [removed: 159,573] [added: 316,286] | |

| Total stockholders' equity | | [removed: 1,096,682] [added: 1,089,568] | | | | [removed: 887,299] [added: 1,096,682] | | | | [removed: 606,181] [added: 887,299] | | | | [removed: 394,293] [added: 606,181] | | | | [removed: 233,108] [added: 394,293] | | |

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

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

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

| | | February 1, 2015 | | | | February 2, 2014 | | | | February 3, 2013 | | | | January 29, 2012 | | | | January 30, 2011 | | |

| Total assets | | 1,296,213 | | | | 1,252,388 | | | | 1,052,678 | | | | 736,034 | | | | 499,302 | | |

| Total assets | | 1,249,688 | | | | 1,051,078 | | | | 734,634 | | | | 499,302 | | | | 307,258 | | |

lululemon athletica inc. [removed: and Subsidiaries]

| [Report of Independent Registered Public Accounting [removed: Firm](#s957E8B9C53103320CC2F8206DB5680C3)] [added: Firm](#s8CAA97C71EBA9C37EC4B742F7C24A9CD)] | [removed: [38](#s957E8B9C53103320CC2F8206DB5680C3)] [added: [36](#s8CAA97C71EBA9C37EC4B742F7C24A9CD)] |

| [Notes to the Consolidated Financial [removed: Statements](#s85DE7824CD47F7B20D0E8206DC510882)] [added: Statements](#s4257993F024EC4787EFA742F7D4735A9)] | [removed: [43](#s85DE7824CD47F7B20D0E8206DC510882)] [added: [42](#s4257993F024EC4787EFA742F7D4735A9)] |

To the [removed: Board of Directors and] Stockholders [added: and Directors] of [removed: lululemon athletica inc.]

We have audited the accompanying consolidated balance sheets of lululemon athletica inc. and its subsidiaries as of February [removed: 2, 2014] [added: 1, 2015] and February [removed: 3, 2013] [added: 2, 2014] and the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for the 52, [removed: 53,] [added: 52,] and [removed: 52] [added: 53] week periods ended February [added: 1, 2015, February] 2, 2014, [added: and] February 3, 2013, [removed: and January 29, 2012,] respectively.

We also have audited lululemon athletica inc.'s and its subsidiaries' internal control over financial reporting as of February [removed: 2, 2014,] [added: 1, 2015,] based on criteria established in Internal Control - Integrated Framework [removed: (1992)] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of lululemon athletica inc. and its subsidiaries as of February [removed: 2, 2014] [added: 1, 2015] and February [removed: 3, 2013] [added: 2, 2014] and the results of their operations and their cash flows for the 52, [removed: 53,] [added: 52,] and [removed: 52] [added: 53] week periods ended February [added: 1, 2015, February] 2, 2014, [added: and] February 3, 2013, [removed: and January 29, 2012,] respectively, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, lululemon athletica inc. and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of February [removed: 2, 2014,] [added: 1, 2015,] based on criteria established in Internal Control - Integrated Framework [removed: (1992)] [added: (2013)] issued by COSO.

| | | February [added: 1, 2015 | | | | February] 2, 2014 | | | | February 3, 2013 | | |

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

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | $ | 698,649 | | | $ | 590,179 | | [added: | $ | 409,437 | |]

| Accounts receivable | | [removed: 11,903] [added: 13,746] | | | | [removed: 6,351] [added: 11,903] | | |

| Prepaid expenses and other current assets | | [removed: 46,197] [added: 64,671] | | | | [removed: 35,301] [added: 46,197] | | |

| Property and equipment, net | | [removed: 255,603] [added: 296,008] | | | | [removed: 214,639] [added: 255,603] | | |

| Goodwill and intangible assets, net | | [removed: 28,201] [added: 26,163] | | | | [removed: 30,201] [added: 28,201] | | |

| Deferred income tax asset | | [removed: 18,300] [added: 16,018] | | | | [removed: 15,033] [added: 18,300] | | |

| Other non-current assets | | [removed: 4,745] [added: 7,012] | | | | [removed: 4,152] [added: 4,745] | | |

| Accounts payable | | $ | [removed: 12,647] [added: 9,339] | | | $ | [removed: 1,045] [added: 12,647] | |

[removed: | Accrued liabilities | | 42,310 | | | | 30,032 | | |][added: 6 OTHER ACCRUED LIABILITIES]

| Accrued compensation and related expenses | | [removed: 19,445] [added: 29,932] | | | | [removed: 27,530] [added: 19,445] | | |

| Income taxes payable | | [removed: 769] [added: 20,073] | | | | [removed: 39,637] [added: 769] | | |

| Unredeemed gift card liability | | [removed: 38,343] [added: 46,252] | | | | [removed: 35,113] [added: 38,343] | | |

[removed: | Non-current liabilities | | 39,492 | | | | 30,422 | | |][added: 7 OTHER NON-CURRENT LIABILITIES]

| Exchangeable stock, no par value, 60,000 shares authorized, issued and outstanding [removed: 29,955] [added: 9,833] and [removed: 32,065] [added: 29,955] | | — | | | | — | | |

| Special voting stock, $0.000005 par value, 60,000 shares authorized, issued and outstanding [removed: 29,955] [added: 9,833] and [removed: 32,065] [added: 29,955] | | — | | | | — | | |

| Common stock, $0.005 par value, 400,000 shares authorized, issued and outstanding [removed: 115,342] [added: 132,112] and [removed: 112,371] [added: 115,342] | | [removed: 577] [added: 661] | | | | [removed: 562] [added: 577] | | |

| Additional paid-in capital | | [removed: 240,351] [added: 241,695] | | | | [removed: 221,372] [added: 240,351] | | |

| Retained earnings | | [removed: 923,822] [added: 1,020,619] | | | | [removed: 644,275] [added: 923,822] | | |

| Accumulated other comprehensive [removed: (loss) income] [added: loss] | | [removed: (68,068] [added: (173,407] | | ) | | [removed: 21,090] [added: (68,068] | | [added: )] |

| | | February [removed: 2, 2014] [added: 1, 2015] | | | | February [removed: 3, 2013] [added: 2, 2014] | | | | [removed: January 29, 2012] [added: February 3, 2013] | | |

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

| Net revenue | | $ | [removed: 1,591,188] [added: 1,797,213] | | | $ | [removed: 1,370,358] [added: 1,591,188] | | | $ | [removed: 1,000,839] [added: 1,370,358] | |

| Cost of goods sold | | [removed: 751,112] [added: 883,033] | | | | [removed: 607,532] [added: 751,112] | | | | [removed: 431,488] [added: 607,532] | | |

| Gross profit | | [removed: 840,076] [added: 914,180] | | | | [removed: 762,826] [added: 840,076] | | | | [removed: 569,351] [added: 762,826] | | |

| Selling, general and administrative expenses | | [removed: 448,718] [added: 538,147] | | | | [removed: 386,387] [added: 448,718] | | | | [removed: 282,393] [added: 386,387] | | |

| Income from operations | | [removed: 391,358] [added: 376,033] | | | | [removed: 376,439] [added: 391,358] | | | | [removed: 286,958] [added: 376,439] | | |

| Other income (expense), net | | [removed: 5,768] [added: 7,102] | | | | [removed: 4,957] [added: 5,768] | | | | [removed: 2,500] [added: 4,957] | | |

| Income before provision for income taxes | | [removed: 397,126] [added: 383,135] | | | | [removed: 381,396] [added: 397,126] | | | | [removed: 289,458] [added: 381,396] | | |

| Provision for income taxes | | [removed: 117,579] [added: 144,102] | | | | [removed: 109,965] [added: 117,579] | | | | [removed: 104,494] [added: 109,965] | | |

| Net income | | [removed: 279,547] [added: 239,033] | | | | [removed: 271,431] [added: 279,547] | | | | [removed: 184,964] [added: 271,431] | | |

| [Consolidated Balance Sheets](#s3DB50EB841DE5B300E8B742F67E7B4E6) | [37](#s3DB50EB841DE5B300E8B742F67E7B4E6) |

| [Consolidated Statements of Operations and Comprehensive Income](#s062A719D3C0C46772472742F6829296D) | [38](#s062A719D3C0C46772472742F6829296D) |

| [Consolidated Statements of Stockholders' Equity](#sDCE1F724C010000E6A55742F68546239) | [39](#sDCE1F724C010000E6A55742F68546239) |

| [Consolidated Statements of Cash Flows](#s6F7BD737C3AD1D6D02B2742F68FC789B) | [41](#s6F7BD737C3AD1D6D02B2742F68FC789B) |

| Vancouver, British Columbia |

| March 25, 2015 |

lululemon athletica inc.

| | | February 1, 2015 | | | | February 2, 2014 | | |

| Cash and cash equivalents | | $ | 664,479 | | | $ | 698,649 | |

| Inventories | | 208,116 | | | | 188,790 | | |

| | | 951,012 | | | | 945,539 | | |

| | | $ | 1,296,213 | | | $ | 1,252,388 | |

| Other accrued liabilities | | 31,989 | | | | 29,595 | | |

| | | 159,881 | | | | 116,214 | | |

| | | 206,645 | | | | 155,706 | | |

| | | 1,089,568 | | | | 1,096,682 | | |

| | | $ | 1,296,213 | | | $ | 1,252,388 | |

lululemon athletica inc.

lululemon athletica inc.

| | | Shares | | | Par Value | | | | Shares | | | Par Value | | | | Shares | | | Par Value | | | | | | | | | | | | | | | | | | | | | | | | | | |

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

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

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

| | | Exchangeable Stock | | | | | | | Special Voting Stock | | | | | | | Common Stock | | | | | | | Additional Paid-in Capital | | | | Retained Earnings | | | | Accumulated Other Comprehensive Income (Loss) | | | | Total | | | | Non-Controlling Interest | | | | Total | | |

| | | Shares | | | Par Value | | | | Shares | | | Par Value | | | | Shares | | | Par Value | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Stock options exercised | | | | | | | | | | | | | | | | 158 | | | 1 | | | | 2,912 | | | | | | | | | | | | 2,913 | | | | | | | | 2,913 | | |

| Common stock issued upon settlement of performance-based restricted stock units | | | | | | | | | | | | | | | | 217 | | | 1 | | | | (1 | | ) | | | | | | | | | | — | | | | | | | | — | | |

| Shares withheld related to net share settlement of stock-based compensation | | | | | | | | | | | | | | | | (104 | ) | | (1 | | ) | | (4,971 | | ) | | | | | | | | | | (4,972 | | ) | | | | | | (4,972 | | ) |

| Repurchase of common stock | | | | | | | | | | | | | | | | (3,657 | ) | | (18 | | ) | | (5,177 | | ) | | (142,236 | | ) | | | | | | (147,431 | | ) | | | | | | (147,431 | | ) |

| Balance at February 1, 2015 | | 9,833 | | | $ | — | | | 9,833 | | | $ | — | | | 132,112 | | | $ | 661 | | | $ | 241,695 | | | $ | 1,020,619 | | | $ | (173,407 | ) | | $ | 1,089,568 | | | $ | — | | | $ | 1,089,568 | |

lululemon athletica inc.

| Inventories | | (26,806 | | ) | | (38,507 | | ) | | (51,222 | | ) |

| Accrued inventory liabilities | | 8,276 | | | | 6,985 | | | | (1,785 | | ) |

| Other accrued liabilities | | 3,271 | | | | 7,837 | | | | 1,777 | | |

| Repurchase of common stock | | (147,431 | | ) | | — | | | | — | | |

lululemon athletica inc.

The Company's business is affected by the pattern of seasonality common to most retail apparel businesses.

Historically, the Company has recognized a significant portion of its operating profit in the fourth fiscal quarter of each year as a result of increased sales during the holiday season.

For the years ended February 1, 2015, February 2, 2014 and February 3, 2013, net revenue recognized on unredeemed gift card balances was $1,468, $4,654, and $1,351, respectively.

Cost of goods sold includes:

| [Consolidated Balance Sheets as at February 2, 2014 and February 3, 2013](#sA19A15EC8C90CC972F8C8206CF30E71C) | [39](#sA19A15EC8C90CC972F8C8206CF30E71C) |

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

| [Consolidated Statements of Stockholders' Equity for the years ended February 2, 2014, February 3, 2013, and January 29, 2012](#s5E4742E83F338BDF76E68206CEC165AD) | [41](#s5E4742E83F338BDF76E68206CEC165AD) |

| [Consolidated Statements of Cash Flows for the years ended February 2, 2014, February 3, 2013, and January 29, 2012](#sE9C0EBE22D9C579F08468206CF461CA7) | [42](#sE9C0EBE22D9C579F08468206CF461CA7) |

| Vancouver, BC |

| March 26, 2014 |

| Inventories | | 186,090 | | | | 155,222 | | |

| | | 942,839 | | | | 787,053 | | |

| | | $ | 1,249,688 | | | $ | 1,051,078 | |

| | | 113,514 | | | | 133,357 | | |

| | | 153,006 | | | | 163,779 | | |

| | | 1,096,682 | | | | 887,299 | | |

| | | Exchangeable Stock | | | | | | | Special Voting Stock | | | | | | | Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at January 30, 2011 | | 35,636 | | | $ | — | | | 35,636 | | | $ | — | | | 106,756 | | | $ | 534 | | | $ | 179,870 | | | $ | 189,656 | | | $ | 20,329 | | | $ | 390,389 | | | $ | 3,904 | | | $ | 394,293 | |

| Stock option exercises | | | | | | | | | | | | | | | | 1,151 | | | 6 | | | | 9,608 | | | | | | | | | | | | 9,614 | | | | | | | | 9,614 | | |

| Net income attributable to non-controlling interests | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 901 | | | | 901 | | |

| Inventories | | (37,407 | | ) | | (51,022 | | ) | | (46,072 | | ) |

| Accrued liabilities | | 13,722 | | | | (208 | | ) | | 1,027 | | |

| Acquisition of franchises | | — | | | | — | | | | (5,654 | | ) |

| Purchase of non-controlling interest | | — | | | | (26,013 | | ) | | — | | |

| Cash and cash equivalents, beginning of period | | $ | 590,179 | | | $ | 409,437 | | | $ | 316,286 | |

otherwise indicated)

The Company has experienced, and expects to continue to experience, significant seasonal variations in net revenue and income from operations.

Seasonal variations in revenue are primarily related to increased sales of products during the fourth fiscal quarter, reflecting historical strength in sales during the holiday season.

Historically, seasonal variations in income from operations have been driven principally by increased net revenue in the fourth fiscal quarter.

Net sales numbers for fiscal 2012 include this additional week; however, comparable stores sales calculations exclude the 53rd week.

| | | |

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

Long-lived assets, including intangible assets with finite lives, held for sale are reported at the lower of the carrying value of the asset and fair value less cost to sell.

Any write-down to reflect fair value less selling cost is recognized in income when the asset is classified as held for sale.

Gains or losses on assets held for sale and asset dispositions are included in provision for impairment and lease exit costs.

Lease exit costs are included in provision for impairment and lease exit costs.

It also includes all occupancy costs such as minimum

Production, design, merchandise and distribution center costs include salaries and benefits as well as operating expenses, which include occupancy costs and depreciation expense for the Company's distribution centers.

The recognition of a deferred income tax asset is based primarily on management's forecasts, including current and proposed tax legislation, current and anticipated taxable income, utilization of previously unrealized non-operating loss carryforwards and regulatory reviews of tax filings.

Given the judgments and estimates required and the sensitivity of the results to the significant assumptions used, the accounting estimates used in relation to the recognition of deferred income tax assets are subject to measurement uncertainty and are susceptible to a material change if the underlying assumptions change.

Because present intentions are to reinvest the unremitted earnings into foreign operations, the Company does not provide U.S. income taxes on unremitted earnings of foreign subsidiaries.

The Company files income tax returns in the United States, Canada and various foreign and state jurisdictions.

Intercompany transfer pricing policies are currently subject to audits by various foreign tax jurisdictions.

Although management believes that the Company's intercompany transfer pricing policies and tax positions are reasonable, the final determination of tax audits or potential tax disputes may be materially different from that which is reflected in the Company's income tax provisions and accruals.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework [removed: (1992)] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

Based on this evaluation, management concluded that we maintained effective internal control over financial reporting as of February [removed: 2, 2014.][added: 1, 2015.]

The effectiveness of our internal control over financial reporting as of February [removed: 2, 2014] [added: 1, 2015] has been audited by PricewaterhouseCoopers LLP our independent registered public accounting firm, as stated in their report [removed: on page 39] [added: in Item 8] of [added: Part II of] this Form 10-K.

There were no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended February [removed: 2, 2014,] [added: 1, 2015,] which were identified in connection with management’s evaluation required by Rules 13a-15(d) and 15d-15(d) under the Securities Exchange Act of 1934, as amended, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART III

The information required by this item concerning our directors, director nominees and Section 16 beneficial ownership reporting compliance is incorporated by reference to our definitive Proxy Statement for our [removed: 2013] [added: 2015] Annual Meeting of Stockholders under the captions "Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," "Executive Officers" and "Corporate Governance."

Our Code of Business Conduct and Ethics is available on our website, www.lululemon.com, and can be obtained by writing to Investor Relations, lululemon athletica inc., 1818 Cornwall Avenue, Vancouver, British Columbia, Canada V6J 1C7 or by sending an email to [removed: investor@lululemon.com.][added: investors@lululemon.com.]

The information required by this item is incorporated by reference to our [removed: 2014] [added: 2015] Proxy Statement under the captions "Executive Compensation" and [removed: "Other Forms of Compensation."][added: "Executive Compensation Tables."]

The information required by this item is incorporated by reference to our [removed: 2014] [added: 2015] Proxy Statement under the caption [removed: "Security Ownership of Certain Beneficial Owners and Directors] [added: "Principal Stockholders] and [removed: Officers."][added: Stock Ownership by Management."]

Equity Compensation Plan Information (as of February [removed: 2, 2014)][added: 1, 2015)]

| Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding [removed: Options] [added: Options, Warrants and Rights(1) (A)] | | | Weighted-Average Exercise Price of Outstanding [removed: Options] [added: Options, Warrants and Rights(2) (B)] | | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation [removed: Plans(1)] [added: Plans (Excluding Securities Reflected in Column (A))(3) (C)] | |

| Equity compensation plans approved by stockholders | | 1,516,818 | | | $ | 39.25 | | | 20,458,987 | |

| Total | | 1,516,818 | | | $ | 39.25 | | | 20,458,987 | |

| (1) | This amount represents the following: (a) 879,282 shares subject to outstanding options, (b) 451,503 shares subject to outstanding performance-based restricted stock units, and (c) 186,033 shares subject to outstanding restricted stock units. The options, performance-based restricted stock units and restricted stock units are all under our 2014 Equity Incentive Plan. Restricted shares outstanding under our 2014 Equity Incentive Plan have already been reflected in our total outstanding common stock balance. |

| | |

| --- | --- |

| (2) | The weighted-average exercise price is calculated solely on the exercise prices of the outstanding options and does not reflect the shares that will be issued upon the vesting of outstanding awards of performance-based restricted stock units and restricted stock units, which have no exercise price. |

| | |

| --- | --- |

| (3) | This includes (a) 15,180,132 shares of our common stock available for future issuance pursuant to our 2014 Equity Incentive Plan and (b) 5,278,855 shares of our common stock available for future issuance pursuant to our Employee Share Purchase Plan. The number of shares remaining available for future issuance under our 2014 Equity Incentive Plan is reduced by 1.7 shares for each award other than stock options granted and by one share for each stock option award granted. Outstanding awards that expire or are canceled without having been exercised or settled in full are available for issuance again under our 2014 Equity Incentive Plan and shares that are withheld in satisfaction of tax withholding obligations for full value awards are also again available for issuance. No further awards may be issued under the predecessor plan, our 2007 Equity Incentive Plan. |

| Equity compensation plans approved by stockholders | | 669,091 | | | $ | 30.76 | | | 14,755,822 | |

| Total | | 669,091 | | | $ | 30.76 | | | 14,755,822 | |

| (1) | This amount represents 9,331,851 shares of our common stock available for future issuance pursuant to stock options available for grant under our 2007 Equity Incentive Plan and 5,423,971 shares of our common stock available for future issuance pursuant to our Employee Share Purchase Plan. |

The information required by this item is incorporated by reference to our [removed: 2014] [added: 2015] Proxy Statement under the captions "Certain Relationships and Related [added: Party] Transactions" and "Corporate Governance."

The information required by this item is incorporated by reference to our [removed: 2014] [added: 2015] Proxy Statement under the caption "Fees for Professional Services."

| For the year ended February 3, 2013 | | [removed: (1,126] [added: $] | [added: (1,126] | ) | | [removed: (2,823] [added: $] | [added: (2,823] | ) | | [added: $ |] 2,949 | | | [added: $] | (1,000 | [removed: |] ) |