Lululemon 2013 Annual Report Download - page 11

Table of Contents
other activities. Our fitness-related accessories include an array of items such as bags, socks, underwear, yoga mats and water bottles.
Our design team continues to develop technically advanced fabrics and innovative functional features that we believe will help advance
our product line and differentiate us from the competition.
Our Culture and Values
Since our inception, we have developed a distinctive corporate culture with a mission to create components for people to live long, healthy
and fun lives. We promote a set of core values in our business, which include developing the highest quality products, operating with integrity,
leading a healthy balanced life and instilling in our employees a sense of self responsibility and the value of goal setting. These core values allow
us to attract passionate and motivated employees who are driven to succeed and share our vision of "elevating the world from mediocrity to
greatness."
Community-Based Marketing
We differentiate our business through an innovative, community-based approach to building brand awareness and customer loyalty. We
pursue a multi-faceted strategy which leverages our local ambassadors, social media, in-store community boards and a variety of grassroots
initiatives.
Product Design and Development
Our product design efforts are led by a team of designers based in Vancouver, British Columbia partnering with international designers.
Our team is comprised of dedicated athletes and users of our products who embody our design philosophy and dedication to premium quality.
Our design team identifies trends based on market intelligence and research, proactively seeks the input of our guests and our ambassadors and
broadly seeks inspiration consistent with our goals of style, function and technical superiority.
As we strive to continue to provide our guests with technically advanced fabrics, our design team works closely with our suppliers to
incorporate innovative fabrics that bring particular specifications to our products. We partner with independent inspection, verification, and
testing companies, which conduct a battery of tests on our fabrics, testing for a variety of performance characteristics including pilling,
shrinkage, abrasion resistance and colorfastness. We collaborate with leading fabric suppliers to develop fabrics that we ultimately trademark for
brand recognition whenever possible.
Sourcing and Manufacturing
We do not own or operate any manufacturing facilities. We rely on a limited number of third-party suppliers to provide fabrics for and to
produce our products. We work with a group of approximately 65 suppliers to provide the fabrics for our products. We use a wide variety of
fabrics in our products, including our Luon fabric. We obtain substantially all of our Luon fabric, which represents approximately 30% of the
fabric we use in our products, from a single third-party supplier. We work with a group of approximately 30 manufacturers, five of which
produced approximately 63% of our products in fiscal 2013 . During fiscal 2013 , no single manufacturer produced more than 25% of our
product offering. During fiscal 2013 , approximately 67% of our products were produced in South/South East Asia, approximately 23% in
China, approximately 3% in North America and the remainder in other countries. We believe our North American manufacturers provide us with
the speed to market necessary to respond quickly to changing trends and increased demand. While we plan to support future growth through
manufacturers outside of North America, our intent is also to maintain production in Canada and the United States whenever practicable.
We have developed long-
standing relationships with a number of our vendors and take great care to ensure that they share our commitment
to quality and ethics. We do not, however, have any long-term term contracts with any of our suppliers or manufacturing sources for the
production and supply of our fabrics and garments, and we compete with other companies for fabrics, raw materials, production and import
quota capacity. We require that all of our manufacturers adhere to a vendor code of ethics regarding social and environmental sustainability
practices. We partner with leading inspection and verification firms to closely monitor each supplier's compliance with applicable laws and our
vendor code of ethics.
Distribution Facilities
We centrally distribute finished products from distribution facilities in Vancouver, British Columbia, Sumner, Washington, and
Melbourne, Victoria. We operate the distribution facilities in Vancouver, Sumner and Melbourne which are leased and are approximately
120,000, 167,000 and 54,000 square feet, respectively. During fiscal 2013 we purchased a distribution center in Columbus, Ohio that we expect
to open in fiscal 2014. We believe our distribution infrastructure will be sufficient to accommodate our expected store growth and expanded
product offerings over the next several years.
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