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Quantifying Athleta impact on Lululemon1/27/2014

Companies mentioned:

Lululemon Athletica (LULU) - $47.47Gap Inc. (GPS) - $37.21

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Why Read?Over the last year, there has been a growing concern surrounding the effects of increased competition inthe Yoga/Active Wear market. Lululemon (LULU), once alone in the space, has experienced newcompetition from Athleta, a yoga/active wear company purchased by Gap Inc. (GPS) in 2008 for$150mn in cash.

Instead of purely speculating on the impact of increased competition from Athleta, we havequantitatively studied the impact by mapping the distances between Lululemon and Athleta storeswhile also analyzing the market penetration rates of each concept.

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! Store counts increasing: From 4Q12 to Jan. 20th, 2014, Lululemon added an additional 41stores in the United States. Over the same time period, Athleta added 31 new stores. Although,Lululemon added more new stores, new Athleta stores tended to be at the same locations asexisting Lululemon stores while Lululemon new stores tended to be in untouched markets.

! Market overlaps increasing:At the end of 4Q12, 21% of Lululemon stores had an Athletawithin 1 mile of their location. By Jan. 20th, 2014, 26% of Lululemons had an Athleta within 1mile. At the same time, 36% of Lululemon stores had an Athleta within 5 miles at the end of4Q12, increasing to 45% of Lululemons by Jan. 20th, 2014.

! Average distances between stores relatively flat: We calculated the average distancebetween Lululemon stores and Athleta stores within 10 miles of each other and found that thedistance has remained relatively flat over the last year, increasing from 2.41 miles at the end of2012 to 2.66 miles by Jan. 20th, 2014.

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January 20th, 2014

Disclaimer:The information contained herein reflects the views of Consumer Fox as of the date of publication. These views

are subject to change without notice at any time subsequent to the date of issue. All information provided in this presentationis for informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sellthe securities mentioned or to invest in any specific security or investment product. While the information presented herein isbelieved to be reliable, no representation or warranty is made concerning the accuracy of any data presented. In addition,there can be no guarantee that any projection, forecast or opinion in this presentation will be realized. All trade names, trade-marks, service marks, and logos herein are the property of their respective owners who retain all proprietary rights over theiruse. This presentation is confidential and may not be reproduced without prior written permission from Consumer Fox. Itshould be noted that Consumer Fox has no position in any security of the company mentioned in the report/presentation.