Lululemon Athletica (LULU) FY2026 10-K Risk Factors: 10 New, 11 Dropped

What the changes say

Lululemon faces leadership instability after its CEO stepped down in January 2026 and founder Chip Wilson nominated directors.

What changed since the prior 10-K

New

NewRisks related to our business and industry
these individuals, may be disruptive to, or cause uncertainty in, our business and could have a negative impact on our ability to manage and grow our business effectively. Such disruption could have a material adverse impact on our financial performance, financial condition, and the market price of our stock
The CEO stepped down in January 2026, interim co-CEOs were appointed, and founder Chip Wilson nominated three directors, risking leadership distraction.
NewRisks related to global economic, political, and regulatory conditions
Changes to U.S. tariff and customs policy, including the elimination of the de minimis exemption, have and may further materially increase product costs and negatively affect margins
The elimination of the de minimis duty-free exemption and rising U.S. tariffs have increased inventory and e-commerce fulfillment costs since mid-2025.
NewRisks related to global economic, political, and regulatory conditions
Macroeconomic volatility, inflationary pressures, and shifts in consumer sentiment may reduce demand for our products
Lower store traffic in the Americas during 2025 reflected macroeconomic uncertainty and inflation weighing on consumer discretionary spending.
NewRisks related to global economic, political, and regulatory conditions
Global political and economic instability, including geopolitical conflicts and political polarization, could disrupt our operations and increase costs
Compliance with the Uyghur Forced Labor Prevention Act and potential conflicts involving Taiwan threaten international sourcing and supply chains.
NewRisks related to global economic, political, and regulatory conditions
Trade restrictions, tariffs, and customs changes could disrupt our supply chain and compress margins
Frequent changes in trade policies and tariff rates complicate cost forecasting and global supply chain planning.
NewRisks related to global economic, political, and regulatory conditions
Our financial condition could be adversely affected by public health crises
Public health crises and pandemics could reduce store traffic and cause retail closures.
NewRisks related to our supply chain
expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products, and quality control standards
Training new fabric and manufacturing suppliers takes time and adds production delays and freight costs.
NewRisks related to information security and technology
(2) PRC includes China Mainland, Hong Kong SAR, Taiwan, and Macau SAR
PRC operations including China Mainland, Hong Kong, Taiwan, and Macau expose the company to regulatory enforcement and litigation.
NewRisks related to environmental, social, and governance issues
Climate change and related pressures may adversely impact our business, supply chain, and financial results
Climate change physical risks could affect cotton availability and pricing, while rising disclosure expectations increase compliance costs.
NewRisks related to environmental, social, and governance issues
We face heightened scrutiny and legal risks from competing pressures regarding our ESG practices and disclosures
Activists and litigation groups have criticized ESG strategies, leading to potential legal challenges and reputational risks.

Dropped

DroppedRisks related to our supply chain
We rely on international suppliers and any significant disruption to our supply chain could impair our ability to procure or distribute our products
DroppedRisks related to our supply chain
Increasing labor costs and other factors associated with the production of our products in South Asia and South East Asia could increase the costs to produce our products
DroppedRisks related to environmental, social, and governance issues
Climate change, and related legislative and regulatory responses to climate change, may adversely impact our business
DroppedRisks related to environmental, social, and governance issues
Increased scrutiny from investors and others regarding our environmental, social, governance, or sustainability responsibilities could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of customers and suppliers to do business with us
DroppedRisks related to global economic, political, and regulatory conditions
An economic recession, depression, downturn, periods of inflation, or economic uncertainty in our key markets may adversely affect consumer discretionary spending and demand for our products
DroppedRisks related to global economic, political, and regulatory conditions
Global economic and political conditions could adversely impact our results of operations
DroppedRisks related to global economic, political, and regulatory conditions
We may be unable to source and sell our merchandise profitably or at all if new trade restrictions are imposed or existing restrictions become more burdensome
DroppedRisks related to global economic, political, and regulatory conditions
We are dependent on international trade agreements and regulations. The countries in which we produce and sell our products could impose or increase tariffs, duties, or other similar charges that could negatively affect our results of operations, financial position, or cash flows
DroppedRisks related to global economic, political, and regulatory conditions
In 2025, assuming there are no exchange transactions by our exchangeable shareholders, we will continue to recognize Canadian withholding taxes on the accumulated earnings of our Canadian subsidiaries which are not indefinitely reinvested
DroppedRisks related to global economic, political, and regulatory conditions
Our financial condition could be adversely affected by global or regional health events such as the COVID-19 pandemic and related government, private sector, and individual consumer responsive actions
DroppedRisks related to intellectual property
We have been, and in the future may be, sued by third parties for alleged infringement of their proprietary rights

Reworded

90% rewrittenRisks related to global economic, political, and regulatory conditions
Changes in tax laws, transfer pricing, or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability
Expanded tax disclosures to include China Mainland jurisdictions and noted that Canadian subsidiary repatriations are subject to withholding taxes based on paid-up capital.
Was: Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability
79% rewrittenRisks related to our business and industry
Our future success is dependent on the service of our senior management and our ability to maintain our culture and to attract, manage, and retain highly qualified individuals
Removed language detailing specific executive retention risks while maintaining general senior management dependence text.
Was: Our future success is substantially dependent on the service of our senior management and our ability to maintain our culture and to attract, manage, and retain highly qualified individuals
78% rewrittenRisks related to our supply chain
Disruptions of our supply chain, which is dependent on international suppliers, could have a material adverse effect on our operating and financial results
Added explicit mention of Middle East conflicts and tariffs as potential supply chain disruption drivers.
Was: Disruptions of our supply chain could have a material adverse effect on our operating and financial results
69% rewrittenRisks related to legal and governance matters
We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us
Minor phrasing refinements made to ongoing litigation and regulatory claims disclosures without changing core liabilities.
67% rewrittenRisks related to legal and governance matters
Our business could be negatively affected as a result of actions of stockholders, activists, or shifting consumer sentiment
Added specific disclosures about recent stockholder public views, leadership searches, and Chip Wilson's December 2025 director nominations and declassification proposal.
Was: Our business could be negatively affected as a result of actions of stockholders, activists, or others
64% rewrittenRisks related to information security and technology
We may be unable to safeguard against security breaches which could damage our customer relationships and result in significant legal and financial exposure
Updated cybersecurity wording to emphasize the risk of failing to anticipate, detect, or prevent rapidly evolving cyberattacks in retail.
62% rewrittenRisks related to information security and technology
Our technology-based systems that give our customers the ability to shop with us online may not function effectively
Added a specific warning about the risk of failing to implement technological advancements like AI effectively compared to competitors.
61% rewrittenRisks related to our business and industry
Our business is affected by seasonality, which could result in fluctuations in our operating results
Clarified that international revenue seasonality is affected by events like Lunar New Year and Singles Day falling in different fiscal quarters.
56% rewrittenRisks related to information security and technology
Privacy and data protection laws increase our compliance burden
55% rewrittenRisks related to our supply chain
If we encounter problems with our distribution system, our ability to deliver our products to the market and to meet guest expectations could be harmed
53% rewrittenRisks related to our supply chain
The fluctuating cost of raw materials and the cost of producing our products could increase our cost of goods sold
Was: The fluctuating cost of raw materials could increase our cost of goods sold
52% rewrittenRisks related to our business and industry
If any of our products have manufacturing or design defects or are otherwise unacceptable to us or our guests, our business could be harmed
49% rewrittenRisks related to our supply chain
A relatively small number of vendors supply and manufacture a significant portion of our products, and losing one or more of these vendors could adversely affect our business and results of operations
49% rewrittenRisks related to our business and industry
If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative, and differentiated products, we may not be able to maintain or increase our sales and profitability
47% rewrittenRisks related to information security and technology
Disruption of our technology systems or unexpected network interruption could disrupt our business
46% rewrittenRisks related to our business and industry
Our results of operations could be materially harmed if we are unable to accurately forecast guest demand for our products
41% rewrittenRisks related to our business and industry
Our success depends on our ability to maintain our brand value and reputation
Was: Our success depends on our ability to maintain the value and reputation of our brand
38% rewrittenRisks related to our business and industry
Our sales and profitability may decline as a result of increasing costs and decreasing selling prices
36% rewrittenRisks related to global economic, political, and regulatory conditions
Because a significant portion of our net revenue and expenses are generated in countries other than the United States, fluctuations in foreign currency exchange rates have affected our results of operations and may continue to do so in the future
34% rewrittenRisks related to our business and industry
We operate in a highly competitive market and our competitors may compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability
34% rewrittenRisks related to our business and industry
We are subject to risks associated with leasing retail and distribution space subject to long-term and non-cancelable leases
31% rewrittenRisks related to our business and industry
We may not be able to effectively manage our growth and the increased complexity of our business and as a result our brand image and financial performance may suffer
26% rewrittenRisks related to our business and industry
Changes in consumer shopping preferences, and shifts in distribution channels could materially impact our results of operations
24% rewrittenRisks related to our business and industry
Our limited operating experience and limited brand recognition in new international markets and new product categories may limit our expansion and cause our business and growth to suffer
22% rewrittenRisks related to our supply chain
Our business could be harmed if our suppliers and manufacturers do not comply with our Vendor Code of Ethics or applicable laws

All 40 risk factors

Headings as the filing states them, in filing order.

Risks related to our business and industry

01Our success depends on our ability to maintain our brand value and reputation41% rewritten
02We operate in a highly competitive market and our competitors may compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability34% rewritten
03If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative, and differentiated products, we may not be able to maintain or increase our sales and profitability49% rewritten
04If any of our products have manufacturing or design defects or are otherwise unacceptable to us or our guests, our business could be harmed52% rewritten
05Our sales and profitability may decline as a result of increasing costs and decreasing selling prices38% rewritten
06Our results of operations could be materially harmed if we are unable to accurately forecast guest demand for our products46% rewritten
07Our limited operating experience and limited brand recognition in new international markets and new product categories may limit our expansion and cause our business and growth to suffer24% rewritten
08Our future success is dependent on the service of our senior management and our ability to maintain our culture and to attract, manage, and retain highly qualified individuals79% rewritten
09these individuals, may be disruptive to, or cause uncertainty in, our business and could have a negative impact on our ability to manage and grow our business effectively. Such disruption could have a material adverse impact on our financial performance, financial condition, and the market price of our stockNew
10We may not be able to effectively manage our growth and the increased complexity of our business and as a result our brand image and financial performance may suffer31% rewritten
11Changes in consumer shopping preferences, and shifts in distribution channels could materially impact our results of operations26% rewritten
12We are subject to risks associated with leasing retail and distribution space subject to long-term and non-cancelable leases34% rewritten
13Our business is affected by seasonality, which could result in fluctuations in our operating results61% rewritten

Risks related to global economic, political, and regulatory conditions

14Changes to U.S. tariff and customs policy, including the elimination of the de minimis exemption, have and may further materially increase product costs and negatively affect marginsNew
15Macroeconomic volatility, inflationary pressures, and shifts in consumer sentiment may reduce demand for our productsNew
16Global political and economic instability, including geopolitical conflicts and political polarization, could disrupt our operations and increase costsNew
17Trade restrictions, tariffs, and customs changes could disrupt our supply chain and compress marginsNew
18Changes in tax laws, transfer pricing, or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability90% rewritten
19Our failure to comply with trade and other regulations could lead to investigations or actions by government regulators and negative publicity
20Because a significant portion of our net revenue and expenses are generated in countries other than the United States, fluctuations in foreign currency exchange rates have affected our results of operations and may continue to do so in the future36% rewritten
21Our financial condition could be adversely affected by public health crisesNew

Risks related to our supply chain

22Disruptions of our supply chain, which is dependent on international suppliers, could have a material adverse effect on our operating and financial results78% rewritten
23A relatively small number of vendors supply and manufacture a significant portion of our products, and losing one or more of these vendors could adversely affect our business and results of operations49% rewritten
24expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products, and quality control standardsNew
25Our business could be harmed if our suppliers and manufacturers do not comply with our Vendor Code of Ethics or applicable laws22% rewritten
26The fluctuating cost of raw materials and the cost of producing our products could increase our cost of goods sold53% rewritten
27If we encounter problems with our distribution system, our ability to deliver our products to the market and to meet guest expectations could be harmed55% rewritten

Risks related to information security and technology

28We may be unable to safeguard against security breaches which could damage our customer relationships and result in significant legal and financial exposure64% rewritten
29Privacy and data protection laws increase our compliance burden56% rewritten
30(2) PRC includes China Mainland, Hong Kong SAR, Taiwan, and Macau SARNew
31Disruption of our technology systems or unexpected network interruption could disrupt our business47% rewritten
32Our technology-based systems that give our customers the ability to shop with us online may not function effectively62% rewritten

Risks related to intellectual property

33Our fabrics and manufacturing technology generally are not patented and can be imitated by our competitors. If our competitors sell products similar to ours at lower prices, our net revenue and profitability could suffer
34Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position
35Our trademarks, patents, and other proprietary rights could potentially conflict with the rights of others and we may be prevented from selling some of our products

Risks related to legal and governance matters

36Our business could be negatively affected as a result of actions of stockholders, activists, or shifting consumer sentiment67% rewritten
37We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us69% rewritten
38Anti-takeover provisions of Delaware law and our certificate of incorporation and bylaws could delay and discourage takeover attempts that stockholders may consider to be favorable

Risks related to environmental, social, and governance issues

39Climate change and related pressures may adversely impact our business, supply chain, and financial resultsNew
40We face heightened scrutiny and legal risks from competing pressures regarding our ESG practices and disclosuresNew

Other Lululemon Athletica 10-Ks

FY2025 10-K risk factors
41 risks
Heavy reliance on suppliers in APAC and China Mainland creates continuous supply chain vulnerability. International expansion and digital omni-channel retail introduce complex regulatory and operational risks. Lack of patented fabrics exposes products to low-cost imitation by competitors.
Filed Mar 27, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.