1397187--3/25/2010--lululemon_athletica

related topics

{customer, product, revenue}

{stock, price, operating}

{acquisition, growth, future}

{property, intellectual, protect}

{financial, litigation, operation}

{operation, international, foreign}

{cost, operation, labor}

{stock, price, share}

{control, financial, internal}

{product, liability, claim}

{provision, law, control}

{investment, property, distribution}

{competitive, industry, competition}

{personnel, key, retain}

{cost, regulation, environmental}

{regulation, government, change}

Problems with our distribution system could harm our ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies. The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer. We may not be able to successfully open new store locations in a timely manner, if at all, which could harm our results of operations. If we fail to maintain the value and reputation of our brand, our sales are likely to decline. Our limited operating experience and limited brand recognition in new markets may limit our expansion strategy and cause our business and growth to suffer. Our ability to attract customers to our stores depends heavily on successfully locating our stores in suitable locations and any impairment of a store location, including any decrease in customer traffic, could cause our sales to be less than expected. We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability. Our inability to maintain recent levels of comparable store sales or average sales per square foot could cause our stock price to decline. Our net sales are affected by direct to consumer sales. Failure to comply with trade and other regulations could lead to investigations or actions by government regulators and negative publicity. Our plans to improve and expand our product offerings may not be successful, and implementation of these plans may divert our operational, managerial and administrative resources, which could harm our competitive position and reduce our net revenue and profitability. We rely on third-party suppliers to provide fabrics for and to produce our products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity. We do not have long-term contracts with our suppliers and accordingly could face significant disruptions in supply from our current sources. We do not have patents or exclusive intellectual property rights in our fabrics and manufacturing technology. If our competitors sell similar products to ours, our net revenue and profitability could suffer. Our future success is substantially dependent on the continued service of our senior management. Our operating results are subject to seasonal and quarterly variations in our net revenue and income from operations, which could cause the price of our common stock to decline. If we are unable to accurately forecast customer demand for our products our manufacturers may not be able to deliver products to meet our requirements, and this could result in delays in the shipment of products to our stores and may harm our results of operations and customer relationships. Our current and future joint ventures may not be successful. We are subject to risks associated with leasing retail space subject to long-term non-cancelable leases and are required to make substantial lease payments under our operating leases, and any failure to make these lease payments when due would likely harm our business, profitability and results of operations. If our independent manufacturers fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity. Because a significant portion of our sales are generated in Canada, fluctuations in foreign currency exchange rates have negatively affected our results of operations and may continue to do so in the future. The operations of many of our suppliers are subject to additional risks that are beyond our control and that could harm our business, financial condition and results of operations. Our ability to source our merchandise profitably or at all could be hurt if new trade restrictions are imposed or existing trade restrictions become more burdensome. We may be subject to potential challenges relating to overtime pay and other regulations that impact our employees, which could cause our business, financial condition, results of operations or cash flows to suffer. Our franchisees may take actions that could harm our business or brand, and franchise regulations and contracts limit our ability to terminate or replace under-performing franchises. Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position. Our trademarks and other proprietary rights could potentially conflict with the rights of others and we may be prevented from selling some of our products. We will continue to incur significant expenses as a result of being a public company, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer. Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in our stock price. Risks Related to Our Common Stock Our stock price has been volatile and your investment in our common stock could suffer a decline in value. A significant number of our outstanding shares are eligible for resale and may be sold on the Nasdaq Global Select Market and the Toronto Stock Exchange. The large number of shares eligible for public sale could depress the market price of our common stock. Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over our affairs. Anti-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.

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1397187--3/25/2010--lululemon_athletica_inc.