1397187--4/8/2008--lululemon_athletica

related topics

{acquisition, growth, future}

{stock, price, operating}

{customer, product, revenue}

{property, intellectual, protect}

{financial, litigation, operation}

{operation, international, foreign}

{cost, operation, labor}

{stock, price, share}

{control, financial, internal}

{condition, economic, financial}

{provision, law, control}

{investment, property, distribution}

{competitive, industry, competition}

{personnel, key, retain}

{product, liability, claim}

{cost, regulation, environmental}

{system, service, information}

{regulation, government, change}

Our limited operating experience and limited brand recognition in new markets may limit our expansion strategy and cause our business and growth to suffer. We plan to primarily use cash from operations to finance our growth strategy, and if we are unable to maintain sufficient levels of cash flow we may not meet our growth expectations. A downturn in the economy may affect consumer purchases of discretionary items, which could materially harm our sales, profitability and financial condition. 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. 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. We are planning a replacement of our core systems that might disrupt our supply chain operations. Problems with our distribution system could harm our ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies. 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 may need to raise additional capital that may be required to grow our business, and we may not be able to raise capital on terms acceptable to us or at all. 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. The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer. Because a significant portion of our sales are generated in Canada, fluctuations in foreign currency exchange rates could harm our results of operations. 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 restricted from immediate resale, but may be sold on the Nasdaq Global Select Market and the Toronto Stock Exchange in the near future. The large number of shares eligible for public sale or subject to rights requiring us to register them 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.

Full 10-K form ▸

1397187--4/8/2008--lululemon_athletica_inc.