Lululemon Athletica is a technical athletic apparel company founded in 1998 that designs and retails yoga-inspired clothing. It has expanded from its roots in Vancouver to over 350 stores globally. While the company faced a quality control issue in 2013 from a fabric issue that was recalled, it has since strengthened quality assurance processes. The investment thesis is based on the growing yoga and wellness industry trend, Lululemon's focus on high quality products, and loyal consumer base that supports premium pricing. Future opportunities lie in continuing global expansion, with plans to open more stores in major cities across Europe and Asia by 2017.

1. LULULEMON ATHLETICA
Melissa Sulciner

2. OUTLINE
#THESWEATLIFE
COMPANY OVERVIEW
HISTORY, TIMELINE, BUSINESS MODEL
INVESTMENT THESIS
TREND, QUALITY, LOYALTY
KEY RISKS
WHAT COULD GO WRONG?
GOING GLOBAL
PROGRESS, OUTLOOK & OPPORTUNITIES
THE LATEST
THE LONG AWAITED DEAL
VALUATION
DEFENDABLE BRAND
FINANCIALS
HISTORICAL & PROJECTIONS
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3. COMPANY OVERVIEW
BEAUTY MEETS TECHNICAL
YOGA-INSPIRED
• Founded: 1998, Chip Wilson
• Technical athletic fabrics
PHYSICAL & MENTAL
• Teaching hub
• Healthy and balanced lifestyle
RETAIL FOOTPRINT
• Design & retail of performance apparel
• Aesthetically creative, innovatively functional
• North America, Australia, New Zealand
manifesto: sweat every day, breath deeply, drink water, get outdoors
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4. COMPANY OVERVIEW
2014 NORTH AMERICA COVERAGE
10 10 1
2
20 6
1
17
2
38
5
3
1
4
1
3
1
1
17
2
5
3
1
1
42
13 61
3
1
1
11
1 5
6
1
7
5
17
1
1
1
8
7
9
4 1
1
NORTH
AMERICA
263
4
NORTH
AMERICA
2018
350

5. COMPANY TIMELINE
JOURNEY TO A MOVEMENT
2000
First store
opens;
Vancouver BC
2003
First U.S. store
opens; Santa
Monica, CA
2005
Private Equity
Investment Advent
International 48%
minority interest
New CEO, Bob Meers
2007
July 2007, IPO
2008
New CEO,
Christine Day
2009
April 2009
Ecommerce
launched
2011
‘Who is John Galt?’
controversy
Revenues reach $1
billion
2014
New CEO,
Laurent Potdevin
Chip makes a deal
1998
Company
founded; Chip
Wilson
2013
March 2013, Luon recall
September 2013, Day announces
departure
December 2013, Wilson announces
resignation as chairman
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6. INVESTMENT THESIS
DYNAMIC INNOVATION
STOCK
PRICE: $38.77
52-WEEK RANGE: $36.26 – 77.75
MARKET CAP: $5.64B
FAIR VALUE: $38.00 – 63.00
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7. INVESTMENT THESIS
THE SUMMARY
7
THE BIG PICTURE
INDUSTRY TREND
ADDRESSING A MISSTEP
PRODUCT QUALITY
PROACTIVE APPEAL
CONSUMER BASE

8. INVESTMENT THESIS
INDUSTRY TREND
Fees for yoga
instruction were the
largest category of
total revenue.
Yoga equipment and
apparel had the
biggest growth.
$862
$1,040
$1,730
$2,345
$2,230
$2,552
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
EQUIPMENT CLOTHING INSTRUCTION
DOLLARSSPENT($M)
THE YOGA ECONOMY
2008 2012
114%
47%
172%
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9. INVESTMENT THESIS
PRODUCT QUALITY
THE LUON RECALL
• March 18, 2013
• 17% black luon yoga pants
THE REMEDY
• Testing & processes
• Factory oversight
• Leadership and structure
FUTURE ASSURANCE
• Heightened development
• Every step quality checks
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10. INVESTMENT THESIS
CONSUMER BASE
MEN’S
RUN
TENNIS
&GO
SWIM
CYCLE
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11. KEY RISKS
WHAT COULD GO WRONG?
COMPETITION
• Longer operating histories
• Worldwide brand recognition
• Traditional advertising techniques
• No patents or exclusive IP rights
• Price premium
MANAGEMENT
• Biggest risk: no change
• Infrastructure gap
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12. GOING GLOBAL
CATALYST MOMENTUM
THE PLAN
• Hong Kong, Q1 2015
• Europe, 20, by 2017
• Asia, 20, by 2017
BUILDING DEMAND ABROAD
• Ecommerce
• Showrooms
• Grassroots Marketing
LONDON CALLING
• First store on track, $7M in sales
• Second store in London by year-end
12

13. GOING GLOBAL
UNITED KINGDOM: OPPORTUNITIES
2
1
1
1
41
8
LONDON
18
LONDON
1
UNITED
KINGDOM
36
13

14. GOING GLOBAL
AUSTRALIA: OPPORTUNITIES
414
1 0
50 2
10 141 7
22 9
131 1
AUSTRALIA
142
AUSTRALIA
23
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15. THE LATEST
A TRUCE CALLED
5.64%
AUGUST 7, 2014
LULU reaches a deal with
Chip, ending a months long
standoff.
THE DEAL
Chip will sell ½ of his stock,
roughly 27% of LULU, to private
equity firm Advent International
for $845M. In addition, Advent
will obtain two director seats.
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16. VALUATION
DEFENDABLE BRAND
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17. VALUATION
FUTURE POTENTIAL
2.7x
2.2x
2.0x
1.6x 1.6x
1.4x 1.3x 1.2x 1.2x
1.0x 0.9x
0.8x 0.8x
0.7x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
PE/GROWTH
6.3x
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18. FINANCIALS
FAVORABLE FUTURE
18

19. QUESTIONS?