Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the unaudited interim consolidated financial statements and related notes in Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and MD&A in our Annual Report on Form 10-K for fiscal 2025.

This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our financial condition, results of operations, business strategies, growth opportunities, market trends, and future performance. Forward-looking statements can often be identified by words such as "may," "will," "expects," "plans," "anticipates," "believes," "estimates," "intends," and similar expressions.

These forward-looking statements are based on our current expectations and assumptions, are subject to risks and uncertainties, and may differ materially from actual results due to various factors, including those described under "Risk Factors" and elsewhere in this report. We undertake no obligation to update any forward-looking statements, except as required by applicable law.

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 2026 will end on January 31, 2027 and will be a 52-week year. Fiscal 2025 was a 52-week year and ended on February 1, 2026. Fiscal 2026 and fiscal 2025 are referred to as "2026," and "2025," respectively. The first quarter of 2026 and 2025 ended on May 3, 2026 and May 4, 2025, respectively.

Components of this MD&A include:

• Overview

• Financial Highlights and Market Conditions and Trends

• Quarter-to-Date Results of Operations

• Comparable Sales

• Non-GAAP Financial Measures

• Seasonality

• Liquidity and Capital Resources

• Critical Accounting Policies and Estimates

• Operating Locations

We use comparable sales as a metric to evaluate the performance of our business. Refer to the Comparable Sales section of this MD&A for further information.

We provide constant dollar changes, which is a non-GAAP financial measure, as supplemental information to help investors understand the underlying growth rate of net revenue excluding the impact of changes in foreign currency exchange rates. Refer to the Non-GAAP Financial Measures section of this MD&A for reconciliations between the non-GAAP financial measures and the most directly comparable measures calculated in accordance with GAAP.

We disclose material non-public information through one or more of the following channels: our investor relations website (http://corporate.lululemon.com/investors), the social media channels identified on our investor relations website, press releases, SEC filings, public conference calls, and webcasts. Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this quarterly report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Overview

lululemon athletica inc. is principally a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. Our vision is to create transformative products and experiences that build meaningful connections, unlocking greater possibility and wellbeing for all. Since our inception, we have fostered a distinctive corporate culture; we promote a set of core values in our business which include taking personal responsibility, acting with courage, valuing connection and inclusion, and choosing to have fun. These core values attract passionate and motivated employees who are driven to achieve personal and professional goals, and share our purpose "to elevate human potential by helping people feel their best."

We offer a comprehensive line of technical athletic apparel, footwear, and accessories marketed under the lululemon brand which includes:

• Pants, shorts, tops, and jackets designed for a healthy lifestyle including athletic activities such as yoga, running, training, and most other activities;

• Apparel designed for being on the move; and

• Fitness-inspired accessories.

Financial Highlights

The summary below compares the first quarter of 2026 to the first quarter of 2025:

• Net revenue increased 4% to $2.5 billion. On a constant dollar basis, net revenue increased 2%.

• Comparable sales increased 1%, or decreased 2% on a constant dollar basis.

–Americas comparable sales decreased 5%, or 6% on a constant dollar basis.

–China Mainland comparable sales increased 20%, or 13% on a constant dollar basis.

–Rest of World comparable sales increased 5%, or 1% on a constant dollar basis.

• Gross profit decreased 3% to $1.3 billion.

• Gross margin decreased 410 basis points to 54.2%.

• Income from operations decreased 37% to $276.9 million.

• Operating margin decreased 730 basis points to 11.2%.

• Income tax expense decreased 33% to $91.0 million. Our effective tax rate for the first quarter of 2026 was 31.8% compared to 30.2% for the first quarter of 2025.

• Diluted earnings per share were $1.69 compared to $2.60 in the first quarter of 2025.

Market Conditions and Trends

Net revenue in the Americas decreased 3%, and comparable sales in the Americas decreased 5%. We experienced lower conversion rates, reduced store traffic, and a decrease in average order value in the Americas. We also experienced a decrease in product margin in the Americas segment of 500 basis points, primarily reflective of the impact of higher tariffs. We have initiated an action plan to drive sustainable net revenue growth in the Americas, structured around three strategic pillars: product creation, product activation, and enterprise enablement. This includes a plan to increase the reliance of full price selling to drive sustainable revenue growth.

Net revenue in China Mainland and Rest of World increased 30% and 13%, respectively, and comparable sales increased 20% and 5%, respectively. We experienced increased traffic in these markets which led to higher comparable sales. We opened 19 net new stores in China Mainland and 13 net new stores in Rest of World which contributed to the respective increases in net revenue.

Across all markets, our business continues to be influenced by macroeconomic conditions, including trade policies, shifting consumer demand and sentiment, foreign currency fluctuations, and geopolitical instability. These factors have had varying effects across our markets and are expected to continue to impact our business throughout the remainder of 2026 and beyond.

Import Tariffs

During 2025, the United States implemented a series of trade-related policies, including removing the de minimis exemption for low-value shipments imported into the United States, and implementing higher tariffs under different statutes, including under the International Emergency Economic Power Act ("IEEPA"). These changes in the tariff landscape, including the de minimis exemption removal, had a significant adverse effect on our business and results of operations in 2025, which continues in 2026.

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the IEEPA. Immediately following this IEEPA decision, the U.S. Administration initiated new tariffs at different rates under alternative legislative powers. The U.S. Administration also confirmed that the IEEPA decision does not impact the removal of the de minimis exemption. We paid $230 million of tariffs under the IEEPA and have commenced submitting refund claims for eligible IEEPA tariffs paid, including associated interest. The ultimate amounts that we may recover remain uncertain and as of May 3, 2026, we have not recognized an asset in relation to IEEPA refund claims.

There remains significant uncertainty regarding the duration and scope of newly initiated tariffs and whether the United States will pursue additional trade actions or impose further tariffs, or currently enforced tariffs may be invalidated through legal challenges.

Because this is an evolving area, future developments may change our expectations materially. For additional information on related risks, please see “Risk Factors” in this report.

Other Factors Affecting Our Business

Foreign currency fluctuations positively impacted our financial results during the first quarter of 2026, increasing net revenue growth by $52.2 million compared to the first quarter of 2025. We expect ongoing exchange rate volatility to continue to affect our financial results.

Quarter-to-Date Results of Operations: First Quarter Results

The following table summarizes key components of our results of operations for the periods indicated:

						First Quarter
						2026						2025						2026						2025
						(In thousands)												(Percentage of net revenue)
Net revenue						$	2,471,603					$	2,370,660					100.0		%				100.0		%
Cost of goods sold						1,132,785						987,534						45.8						41.7
Gross profit						1,338,818						1,383,126						54.2						58.3
Selling, general and administrative expenses						1,059,988						942,871						42.9						39.8
Amortization of intangible assets						1,884						1,630						0.1						0.1
Income from operations						276,946						438,625						11.2						18.5
Other income (expense), net						9,131						11,786						0.4						0.5
Income before income tax expense						286,077						450,411						11.6						19.0
Income tax expense						91,029						135,839						3.7						5.7
Net income						$	195,048					$	314,572					7.9		%				13.3		%

Net Revenue

						First Quarter
						2026						2025						2026						2025						Year over year change
						(In thousands)												(Percentage of net revenue)												(In thousands)						(Percentage)						(Constant dollar change)
Americas						$	1,621,210					$	1,674,558					65.6		%				70.6		%				$	(53,348)					(3)		%				(4)		%
China Mainland						478,395						368,101						19.4						15.5						110,294						30		%				23		%
Rest of World						371,998						328,001						15.1						13.8						43,997						13		%				9		%
Net revenue						$	2,471,603					$	2,370,660					100.0		%				100.0		%				$	100,943					4		%				2		%

The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue, partially offset by decreased Americas net revenue. Global comparable sales increased 1%, or decreased 2% on a constant dollar basis, primarily due to lower conversion rates as well as a decrease in average order value, partially offset by higher traffic.

Gross Margin

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Gross profit						$	1,338,818					$	1,383,126					$	(44,308)					(3.2)		%
Gross margin						54.2		%				58.3		%				(410) basis points

The decrease in gross margin was primarily due to:

• a net decrease in product margin of 270 basis points, comprised of:

–a net decrease of 330 basis points primarily from higher tariffs as well as markdowns including credit card affiliate programs and higher inventory provisions, partially offset by higher pricing and lower product costs; and

–a favorable impact of foreign currency exchange rates of 60 basis points.

• a net increase in other cost of sales as a percentage of net revenue of 140 basis points, comprised of:

–an increase in occupancy and depreciation costs of 130 basis points, primarily driven by new and expanded company-operated stores as well as increased penetration in China Mainland and Rest of World; and

–an increase in costs related to our distribution centers and product departments of 10 basis points.

Selling, General and Administrative Expenses

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Selling, general and administrative expenses						$	1,059,988					$	942,871					$	117,117					12.4		%
Selling, general and administrative expenses as a % of net revenue						42.9		%				39.8		%				310 basis points

The increase in selling, general and administrative expenses was primarily due to:

• a net increase in head office costs of $63.1 million, comprised of:

–an increase in employee costs of $29.6 million primarily due to increased salaries and wages expense, primarily as a result of increased wage rates;

*–*an increase in brand and community expenses of $22.5 million;

–an increase in technology costs, including cloud computing amortization, of $6.5 million;

–an increase in depreciation of $4.5 million;

–a net increase in contractor, advisory, and professional services of $1.1 million, which includes costs associated with proxy contest matters of $11.4 million in 2026, partially offset by lower other advisory and professional fees; and

–a decrease in other head office costs of $1.1 million.

• an increase in costs related to our operating channels of $56.4 million, comprised of:

–an increase in employee costs of $31.2 million primarily due to increased salaries and wages expense for retail employees;

–an increase in variable costs of $14.3 million primarily due to increased distribution costs;

–an increase in digital marketing expenses of $3.5 million;

–an increase in technology costs of $2.9 million; and

–an increase in other operating costs of $4.5 million.

The increase in selling, general and administrative expenses was partially offset by a decrease in net foreign currency exchange and derivative revaluation losses of $2.4 million.

Selling, general and administrative expenses as a percentage of net revenue increased 310 basis points, primarily due to an increase in head office costs of 180 basis points and an increase in costs related to our operating channels of 140 basis points.

Segment Results

On a segment basis, we determine income from operations without taking into account corporate expenses. Corporate expenses include the cost of centrally managed support functions including product design, raw material development, product innovation, sourcing, supply chain, and global merchandising which are included in other cost of sales. Administrative corporate expenses include technology, brand and marketing, finance, human resources, legal, and other head office costs.

Americas

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Net revenue						$	1,621,210					$	1,674,558					$	(53,348)					(3.2)		%
Product costs						545,559						480,820						64,739						13.5
Other cost of sales						183,972						156,647						27,325						17.4
Gross profit						891,679						1,037,091						(145,412)						(14.0)
Selling, general and administrative expenses						483,199						447,760						35,439						7.9
Segmented income from operations						$	408,480					$	589,331					$	(180,851)					(30.7)		%
Product margin						66.3		%				71.3		%				(500) basis points
Gross margin						55.0		%				61.9		%				(690) basis points
Selling, general and administrative expenses as a % of net revenue						29.8		%				26.7		%				310 basis points
Segmented income from operations as a % of net revenue						25.2		%				35.2		%				(1000) basis points

The decrease in net revenue was primarily due to a decrease in comparable sales, which decreased 5%, or 6% on a constant dollar basis. The decrease in comparable sales was primarily a result of lower conversion rates, reduced store traffic, and a decrease in average order value, partially offset by higher e-commerce traffic. The decrease in comparable sales was partially offset by a $15.8 million increase from new or expanded company-operated stores and our other channels. We have opened 14 net new company-operated stores in the Americas since the first quarter of 2025.

The decrease in gross margin was primarily due to lower product margin driven mainly by higher tariffs, as well as higher depreciation, occupancy costs, and distribution center costs as a percentage of net revenue.

The increase in selling, general and administrative expenses was primarily due to higher marketing expenses, employee costs, and variable costs.

China Mainland

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Net revenue						$	478,395					$	368,101					$	110,294					30.0		%
Product costs						100,558						81,815						18,743						22.9
Other cost of sales						63,556						50,273						13,283						26.4
Gross profit						314,281						236,013						78,268						33.2
Selling, general and administrative expenses						111,212						82,378						28,834						35.0
Segmented income from operations						$	203,069					$	153,635					$	49,434					32.2		%
Product margin						79.0		%				77.8		%				120 basis points
Gross margin						65.7		%				64.1		%				160 basis points
Selling, general and administrative expenses as a % of net revenue						23.2		%				22.4		%				80 basis points
Segmented income from operations as a % of net revenue						42.4		%				41.7		%				70 basis points

The increase in net revenue was primarily due to an increase in comparable sales, which increased 20%, or 13% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic partially offset by lower conversion rates. The increase in China Mainland net revenue was also driven by a $45.2 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 19 net new company-operated stores in China Mainland since the first quarter of 2025.

The increase in gross margin was primarily due to a higher product margin driven mainly by a favorable impact of foreign currency exchange rates, as well as lower distribution center costs as a percentage of net revenue.

The increase in selling, general and administrative expenses was primarily due to higher employee costs as well as higher technology costs.

Rest of World

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Net revenue						$	371,998					$	328,001					$	43,997					13.4		%
Product costs						100,328						90,264						10,064						11.1
Other cost of sales						72,009						58,471						13,538						23.2
Gross profit						199,661						179,266						20,395						11.4
Selling, general and administrative expenses						130,238						106,410						23,828						22.4
Segmented income from operations						$	69,423					$	72,856					$	(3,433)					(4.7)		%
Product margin						73.0		%				72.5		%				50 basis points
Gross margin						53.7		%				54.7		%				(100) basis points
Selling, general and administrative expenses as a % of net revenue						35.0		%				32.4		%				260 basis points
Segmented income from operations as a % of net revenue						18.7		%				22.2		%				(350) basis points

The increase in net revenue was primarily due to a $29.4 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 13 net new company-operated stores in Rest of World since the first quarter of 2025. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 5%, or 1% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by lower conversion rates.

The decrease in gross margin was primarily due to higher occupancy costs as a percentage of net revenue, partially offset by higher product margin driven by a favorable impact of foreign currency exchange rates.

The increase in selling, general and administrative expenses was primarily due to higher employee costs as well as higher marketing expenses.

Corporate

Corporate expenses increased $26.8 million to $404.0 million in the first quarter of 2026 compared to the first quarter of 2025. The net increase was primarily due to higher employee costs, as well as higher technology costs and depreciation. The increase in corporate expenses was partially offset by lower professional fees and a decrease in net foreign currency exchange and derivative losses of $2.4 million.

Other Income (Expense), Net

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Other income (expense), net						$	9,131					$	11,786					$	(2,655)					(22.5)		%

The decrease in other income, net was primarily due to a decrease in interest income as a result of lower average cash balances and lower interest rates.

Income Tax Expense

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Income tax expense						$	91,029					$	135,839					$	(44,810)					(33.0)		%
Effective tax rate						31.8		%				30.2		%				160 basis points

The increase in the effective tax rate was primarily due to a decrease in tax benefits related to stock-based compensation.

Net Income

						First Quarter
						2026						2025						Year over year change
						(In thousands)												(In thousands)						(Percentage)
Net income						$	195,048					$	314,572					$	(119,524)					(38.0)		%

The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $117.1 million, a decrease in gross profit of $44.3 million, and a decrease in other income (expense), net of $2.7 million, partially offset by a decrease in income tax expense of $44.8 million.

Comparable Sales

We use comparable sales to evaluate the performance of our company-operated store and e-commerce businesses from an omni-channel perspective. It allows us to monitor the performance of our business without the impact of recently opened or expanded stores. We believe investors would similarly find these metrics useful in assessing the performance of our business. The comparable sales measures we report may not be equivalent to similarly titled measures reported by other companies.

Comparable sales includes comparable company-operated store and all e-commerce net revenue. E-commerce net revenue includes buy online pick up in store, back-back room, and ship from store net revenue in addition to our websites, other region-specific websites, third-party online marketplaces, and mobile apps. Our back-back room capability allows our store educators to access inventory located at our other locations and have product shipped directly to a guest's address or a store. Comparable company-operated stores have been open, or open after being significantly expanded, for at least 12 full fiscal months. Net revenue from a company-operated store is included in comparable sales beginning with the month for which the store has a full fiscal month of sales in the prior year. Comparable sales excludes sales from new stores that have not been open for at least 12 full fiscal months, from stores which have not been in their significantly expanded space for at least 12 full fiscal months, from stores which have been temporarily relocated for renovations or temporarily closed, and sales from company-operated stores that have closed. Comparable sales also excludes sales from our selling channels other than company-operated stores and e-commerce.

In fiscal years with 53 weeks, the 53rd week of net revenue is excluded from the calculation of comparable sales. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks.

Non-GAAP Financial Measures

We report certain financial metrics on a constant dollar basis, which is a non-GAAP financial measure.

A constant dollar basis assumes the average foreign currency exchange rates for the period remained constant with the average foreign currency exchange rates for the same period of the prior year. We use constant dollar metrics to facilitate comparison of underlying performance excluding the impact of changes in foreign currency exchange rates. Management uses these constant currency metrics internally when reviewing and assessing financial performance.

These non-GAAP financial measures are provided in addition to, and not a substitute for, the corresponding financial measures calculated in accordance with GAAP. A reconciliation of the non-GAAP financial measures follows, which includes more detail on the GAAP financial measure that is most directly comparable to each non-GAAP financial measure, and the related reconciliations between these financial measures. Our non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures reported by other companies.

Constant Dollar Changes

The below changes show the change compared to the corresponding period in the prior year.

						First Quarter 2026
						Change						Foreign exchange changes						Change in constant dollars
Net Revenue
Americas						(3)		%				(1)		%				(4)		%
China Mainland						30						(7)						23
Rest of World						13						(4)						9
Total net revenue						4		%				(2)		%				2		%
Comparable sales(1)
Americas						(5)		%				(1)		%				(6)		%
China Mainland						20						(7)						13
Rest of World						5						(4)						1
Total comparable sales						1		%				(3)		%				(2)		%

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(1)Comparable sales includes comparable company-operated store and e-commerce net revenue.

Seasonality

Our business is affected by the general seasonal trends common to the retail apparel industry. Net revenue is typically higher during our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season in the Americas, while our operating expenses are generally more equally distributed throughout the year. As a result, a substantial portion of our operating profits are typically generated in the fourth quarter of our fiscal year. For example, we generated approximately 37% of our full year operating profit during the fourth quarter of 2025. Events predominantly impacting our international net revenue, such as those related to Lunar New Year and Singles Day, can fall in different fiscal quarters from year to year.

Liquidity and Capital Resources

Our primary sources of liquidity are our current balances of cash and cash equivalents, cash flows from operations, and capacity under our committed revolving credit facility, including to fund short-term working capital requirements. Our primary cash needs are capital expenditures for opening new stores and remodeling or relocating existing stores, investing in our distribution centers, investing in technology and making system enhancements, funding working capital requirements, and making other strategic capital investments. We may also use cash to repurchase shares of our common stock. Cash and cash equivalents in excess of our needs are held in interest-bearing accounts with financial institutions, as well as in money market funds and term deposits.

The following table summarizes our net cash flows provided by and used in operating, investing, and financing activities for the periods indicated:

						First Quarter
						2026						2025						Year over year change
						(In thousands)
Total cash provided by (used in):
Operating activities						$	214,440					$	(118,954)					$	333,394
Investing activities						(138,850)						(106,842)						(32,008)
Financing activities						(378,525)						(467,974)						89,449
Effect of foreign currency exchange rate changes on cash and cash equivalents						10,462						34,706						(24,244)
Decrease in cash and cash equivalents						$	(292,473)					$	(659,064)					$	366,591

Operating Activities

Net income decreased $119.5 million. The increase in cash provided by operating activities was primarily due to an increase in cash flows from changes in operating assets and liabilities of $375.4 million, primarily driven by changes in inventories and the timing of income tax payments, as well as changes in accrued compensation and accounts receivable, partially offset by the timing of accounts payable and changes in accrued liabilities. The increase in cash provided by operating activities was also a result of higher cash inflows related to derivatives.

Investing Activities

The increase in cash used in investing activities was primarily due to the settlement of net investment hedges, partially offset by decreased capital expenditures. The decrease in capital expenditures was primarily due to decreased investment in supply chain infrastructure and e-commerce related technology system capital expenditures, partially offset by an increase in capital expenditures for opening, remodeling, and relocating company-operated stores, primarily in the Americas.

Financing Activities

The decrease in cash used in financing activities was primarily the result of a decrease in cash paid for our stock repurchases. During the first quarter of 2026, we repurchased 2.2 million shares at a total cost including commissions and excise taxes of $361.8 million. During the first quarter of 2025, we repurchased 1.4 million shares at a total cost including commissions and excise taxes of $434.4 million. The common stock was repurchased in the open market at prevailing market prices, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, with the timing and actual number of shares repurchased depending upon market conditions, eligibility to trade, and other factors.

Liquidity Outlook

We believe our cash and cash equivalent balances, cash generated from operations, and borrowings available to us under our committed revolving credit facility will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next 12 months. Our ability to access borrowings under the credit facility depends on our ongoing compliance with the covenants in the credit agreement, and a failure to maintain such compliance could adversely affect our liquidity. Our cash from operations may be negatively impacted by a decrease in demand for our products as well as the other factors described in "Item 1A. Risk Factors". In addition, we may make discretionary capital improvements with respect to our stores, distribution facilities, headquarters, or systems, or we may repurchase shares under an approved stock repurchase program, which we would expect to fund through the use of cash, issuance of debt or equity securities or other external financing sources to the extent we were unable to fund such expenditures out of our cash and cash equivalents and cash generated from operations.

The following table includes certain measures of our liquidity:

						May 3, 2026
						(In thousands)
Cash and cash equivalents						$	1,514,729
Working capital excluding cash and cash equivalents(1)						685,530
Capacity under committed revolving credit facility						593,623

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(1)Working capital excluding cash and cash equivalents is calculated as current assets of $4.0 billion less cash and cash equivalents of $1.5 billion and current liabilities of $1.8 billion.

We enter into standby letters of credit and guarantee to secure certain of our obligations, including leases, taxes, and duties. As of May 3, 2026, letters of credit and guarantee totaling $20.2 million had been issued, including $6.4 million under our committed revolving credit facility.

Our existing Americas credit facility provides for $600.0 million in commitments under an unsecured five-year revolving credit facility. The credit facility has a maturity date of October 15, 2030. As of May 3, 2026, no borrowings were outstanding under this facility other than letters of credit and guarantee of $6.4 million. Further information regarding our credit facilities and associated covenants is outlined in Note 4. Revolving Credit Facilities included in Item 1 of Part I of this report.

The timing and cost of our inventory purchases will vary depending on a variety of factors such as revenue growth, assortment and purchasing decisions, product costs including freight and duty, and the availability of production capacity and speed. Our inventory balance as of May 3, 2026 was $1.7 billion, an increase of 2% from May 4, 2025.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of significant judgment. Actual results may vary from our estimates in amounts that may be material to the financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. Management has reviewed these critical accounting policies and estimates and discussed them with the audit committee.

Our critical accounting policies, estimates, and judgments are discussed within "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2025 Annual Report on Form 10-K filed with the SEC on March 17, 2026.

Operating Locations

Our company-operated stores by market as of May 3, 2026 and February 1, 2026 are summarized in the table below.

Number of company-operated stores by market						May 3, 2026						February 1, 2026
United States						377						379
Canada						72						71
Mexico						27						26
Americas						476						476
China Mainland						173						172
Australia						33						34
South Korea						23						22
Hong Kong SAR						11						11
Japan						10						10
Singapore						9						9
New Zealand						8						8
Taiwan						8						7
Thailand						7						5
Malaysia						5						5
Macau SAR						3						3
APAC						117						114
United Kingdom						21						20
Germany						9						9
France						6						6
Ireland						4						4
Spain						3						3
Netherlands						2						2
Sweden						2						2
Italy						1						1
Norway						1						1
Switzerland						1						1
EMEA						50						49
Rest of World						167						163
Total company-operated stores						816						811

Retail locations operated by third parties by market as of May 3, 2026 and February 1, 2026 are summarized in the table below.

Number of retail locations operated by third parties by market						May 3, 2026						February 1, 2026
United Arab Emirates						13						13
Israel						8						8
Saudi Arabia						8						9
Kuwait						4						4
Qatar						4						4
Turkey						3						3
Belgium						2						2
Bahrain						1						1
Denmark						1						1
Hungary						1						—
Poland						1						—
Total locations operated by third parties under license and supply arrangements						46						45