LULULululemon Athletica

We note your disclosures in Note 15 indicate that you experienced a significant increase in pre-tax foreign income in fiscal 2016 while your domestic income before tax has declined over the past three years. Please explain the cause of the increase in your foreign income and the domestic loss of $30,955 in fiscal 2016 when 74% of your revenue is domestic.

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Please also explain how the effective tax rate was impacted by the mix of foreign and domestic income/(loss), including the impact of any intercompany agreements such as the effect of your Advance Pricing Arrangement on your foreign tax rate differential adjustment. Please expand your disclosure in management’s discussion and analysis to describe any expectations about trends that may impact your current or future tax expense. Please refer to Item 303(a)(3) of Regulation S-K and SEC Release No. 33-8350. Non-GAAP Financial Measures Effective tax rate and diluted earnings per share, excluding tax and related interest adjustments,

Foreign and domestic pre-tax income/(loss)

The Company respectfully advises the Staff that the increase in foreign pre-tax income and the decrease in domestic pre-tax income in fiscal 2016 was primarily the result of the finalization of the Company’s Advanced Pricing Arrangement (“the APA”) between the Internal Revenue Service (“IRS”) and the Canada Revenue Agency (“CRA”) in fiscal 2016.

The APA determines the amount of pre-tax income of the Company’s subsidiary, lululemon usa inc. (“LUI”).

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[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION.] The APA applies retrospectively, and the pre-tax income recognized by LUI for fiscal 2011 through fiscal 2015 was higher than the amount required under the finalized APA. In accordance with the terms of the APA, the adjustments necessary to reflect the reduction in operating income for fiscal 2011 through fiscal 2015 must be recorded by way of a cumulative catchup reduction in the pre-tax income of LUI in fiscal 2016. As a result, the Company’s domestic pre-tax income for fiscal 2016 was reduced by $129.9 million.

In order to reflect the required cumulative catchup adjustment, LUI recorded a reduction in pre-tax income and an intercompany payable to the Company’s Canadian subsidiary, lululemon athletica canada inc. (“LACI”). LACI recorded a corresponding increase in pre-tax income and an intercompany receivable from LUI, resulting in an increase in the Company’s foreign pre-tax income for fiscal 2016.

Set forth below is an illustrative example of the Company’s proposed disclosure in future filings. The proposed disclosure underlined below represents substantially the nature and form of the disclosure the Company would add to Note 15 to the consolidated financial statements included in Item 8, based on the disclosure in the 2016 Form 10-K.

Transfer pricing adjustments, net

…

In accordance with the terms of the APA, the adjustments necessary to reflect the reduction in pre-tax income in the United States for fiscal 2011 to fiscal 2015 were recorded by way of a cumulative catchup reduction in pre-tax income in fiscal 2016. This resulted in a decrease in a domestic pre-tax income/(loss) of $129.9 million and a corresponding increase in foreign pre-tax income in the year ended January 31, 2017.

Mix of foreign and domestic earnings and tax rate differentials

The Company’s transfer pricing arrangements, such as the APA, and the corresponding intercompany agreements, impact the amount of income allocable to each tax jurisdiction. The amount of income in each respective jurisdiction, and the associated income tax rates in the different jurisdictions, impacts the Company’s effective tax rate.

The Company disclosed the impact that foreign tax rate differentials had on the Company’s effective tax rate in the reconciliation table between the effective and statutory tax rates included in Note 15 to the 2016 Form 10-K (page 59). The Company also separately disclosed in this table the impact that the finalization of the APA had on the Company’s effective tax rate in each year. The foreign tax rate differential line on the effective tax rate reconciliation table does not include the impact that the finalization of the APA had on the Company’s effective tax rate.

The Company believes that in accordance with ASC 740-10-50-12 and Rule 4-08(h)(2) of Regulation S-X that it is appropriate to separately disclose the impact that the APA adjustments had on the Company’s effective tax rates because they are separate and distinct, and qualitatively different than, other underlying causes for differences in effective tax rates, such as the foreign tax differentials driven by the mix of the current year’s foreign and domestic pre-tax income/(loss).

Management’s discussion and analysis

Management’s discussion and analysis in the 2016 Form 10-K refers the reader to Note 15 of the consolidated financial statements. This note includes further disclosure as to the nature of certain specific items which impacted the Company’s income tax expense and its effective tax rate in each of the fiscal years presented, specifically including certain transfer pricing adjustments, repatriation tax charges and associated foreign tax credit calculations.

The Company respectfully advises the Staff that the income tax adjustments arising through the finalization of the APA, including the significant decrease in domestic pre-tax income/(loss) in fiscal 2016, are not a trend which it expects to impact the Company’s tax expense or effective tax rate in future periods. Similarly, the Company has no intention or expectation to repatriate any further earnings to the U.S. parent entity and does not anticipate paying any further repatriation related taxes.

The Company provided disclosure of the Company’s effective tax rate excluding the APA related adjustments, repatriation tax charges, and associated foreign tax credit adjustments since it does not believe these historic adjustments to be indicative of the underlying trend in the Company’s effective tax rate. The adjusted tax rate disclosure enables historic comparability on a consistent basis, and the Company believes this provides a better indication of the trend in the Company’s effective tax rate and income tax expense.

The effective tax rate reconciliation table included in Note 15 to the consolidated financial statements provides disclosure with respect to the underlying factors which contributed to the change in the Company’s effective tax rate for each of the years presented. The Company acknowledges the Staff’s comment and will ensure that its future periodic reports include further discussion and analysis of any significant changes in these underlying factors, including discussion of any trends which it anticipates will impact its income tax expense and effective tax rate in future periods.

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We note you have adjusted the effective tax rate and diluted earnings per share to exclude certain tax and related interest adjustments. From your disclosure on page 59, it appears these adjustments are related to tax on transfer pricing adjustments, repatriation of foreign earnings and foreign tax credits.

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Please explain why you believe these adjustments are not normal, recurring, cash operating expenses necessary to operate your business. Refer to Question 100.01 of the Compliance and Disclosure Interpretations issued on May 17, 2016. Additionally, please clarify your disclosure to explain in greater detail the reasons why you believe these measures provide useful information to investors. Please refer to the guidance in Item 10(e)(1)(i)(C) of Regulation S-K. Notes to the consolidated financial statements 15. Income Taxes, page 57

The Company respectfully submits that the adjustments made to the Company’s effective tax rate and earnings per share measures do not represent normal, recurring, cash operating expenses necessary to operate its business.

The negotiation and finalization of the Company’s APA resulted in a reduction in the Company’s income tax expense in both fiscal 2015 and 2016, and ultimately resulted in a net income tax recovery for overpayment of taxes in prior years.

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The APA is effective until the end of fiscal 2020 and provides the Company with greater certainty with respect to the amount of income tax payable in the United States and Canada. The Company does not expect similar net recoveries to recur in future periods, does not believe the income tax recovery represents a normal operating expense.

The repatriation tax charges and associated foreign tax credit adjustments are unrelated to the operating performance of the Company. As discussed further below, the distributions which were paid in fiscal 2014 and 2016 arose as a result of unforeseen changes in circumstances which the Company does not expect to recur. Further, the Company does not have any intention or expectation to repatriate any further earnings to the U.S. parent entity and does not anticipate paying any further repatriation related taxes.

The Company respectfully advises the Staff that it does not believe that the effective tax rate including these adjustments reflects the underlying trend in the Company’s tax rate nor does it accurately reflect the Company’s expectations for its effective tax rate in future periods. The Company disclosed the effective tax rate excluding these items in order to enable greater historic comparability, to provide a better indication of the underlying trend in the Company’s tax rates, and to provide a clearer indication as to the Company’s expectation with respect to its effective tax rates in future periods.

Similarly, the Company presented a non-GAAP adjusted earnings per share measure which excludes these items in order to enable greater historic comparability and to provide a better indication of the underlying trend in the Company’s earnings. The GAAP earnings per share measures show a 33% increase in earnings per share from fiscal 2014 to fiscal 2016, whereas the non-GAAP adjusted earnings per share measures show a 13% increase over the same period. The Company does not believe the trend in earnings per share on a GAAP basis provides a true indication of the underlying trend in the earnings growth of the Company.

Set forth below is an illustrative example of the Company’s proposed disclosure in future filings. In response to the Staff’s comment, the proposed disclosure underlined below represents substantially the nature and form of the disclosure the Company would add under the heading “Non-GAAP Financial Measures” in Item 7, based on the non-GAAP disclosure in the 2016 Form 10-K.

We disclose the effective tax rate and diluted earnings per share excluding certain tax and related interest adjustments because we believe these measures are useful to investors as the adjustments do not directly relate to our ongoing business operations and therefore do not contribute to a meaningful evaluation of the trend in the Company’s operating performance. Furthermore, we do not believe the adjustments are reflective of the Company’s expectations of future operating performance and believe these non-GAAP measures are useful to investors because of their comparability to our historical information, which we believe is useful to investors.

Notes to the consolidated financial statements

15. Income Taxes, page 57

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We note that no deferred income taxes have been recognized on cumulative undistributed earnings of foreign subsidiaries of $866.2 million as these earnings are considered indefinitely reinvested. However, we note that you have repatriated a portion of your foreign earnings in fiscal 2015 and 2014 and also incurred domestic net loss before income taxes in fiscal 2016.

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Please tell us how you were able to conclude that all of your undistributed earnings of foreign subsidiaries should be considered to be indefinitely reinvested pursuant to ASC 740-30-25-17. Please address your specific plans for reinvestment for these undistributed earnings that demonstrate remittance of the earnings would be postponed indefinitely.

The Company respectfully submits that there is sufficient evidence to show that the Company has the ability and intent to indefinitely reinvest the accumulated undistributed foreign earnings, such that the presumption in ASC 740-30-25-3 that the undistributed earnings will be transferred to the parent is overcome and, in accordance with ASC 740-30-25-17 and 25-18(a), no deferred tax liability should be recognized.

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Set forth below is background information regarding the accumulated undistributed earnings of foreign subsidiaries and the factors the Company has considered in concluding that undistributed earnings will be indefinitely reinvested.

Background

The Company respectfully advises the Staff that $852.3 million of the $866.2 million of accumulated undistributed earnings of foreign subsidiaries as of January 29, 2017 relates to LACI, the Company’s principal Canadian operating entity (also referred to as the “intermediate parent company”).

Within the group consisting of the Company and its subsidiaries, LACI is the intermediate parent company of all of the subsidiaries outside of Australia, New Zealand, and the United States. The Company expects that LACI’s subsidiaries will be a significant driver for the future growth of the Company’s operations as it invests and expands into markets where it does not have significant or mature operations. LACI is also the primary Canadian operating entity that operates the Company’s head office, employing approximately 1,500 head office employees, as well as approximately 1,800 retail employees as of January 29, 2017.

Factors Considered in Concluding Undistributed Earnings Indefinitely Reinvested

In reaching the conclusion that LACI’s undistributed earnings will be indefinitely reinvested, the Company considers, on an ongoing basis, its short term and long term capital needs; specifically, the Company evaluates its international expansion plans, Canadian expansion plans, projected working capital needs, projected head office capital investments, forecasted cash flow requirements within the United States, and other factors the Company believes are relevant, such as past history of dividend payments and other possible reasons why excess foreign earnings may be needed by the U.S. parent (for example share repurchase activity).

Past history of distributions, and future intentions

The Company considers its past history of distributions when considering whether LACI’s undistributed earnings will be indefinitely reinvested. The Company has made two distributions from LACI to the U.S. parent, the first in fiscal 2014 to fund a share repurchase program and the second in fiscal 2016 to fund the repayment of LUI’s intercompany debt to LACI which arose upon finalization of the APA.

The Company evaluated whether the decision to finance the fiscal 2014 share repurchase program with funds repatriated from LACI to the U.S. parent would impact its indefinite reinvestment assertion with respect to the remaining undistributed earnings of LACI. The Company applied the guidance in ASC 740-30-25-19. The Company’s decision to repurchase shares in fiscal 2014 was made at a time when the Company’s stock price had reached its lowest point in a number of years. The decline in stock price and share repurchase program (funded with LACI earnings) was not anticipated by the Company but rather was considered to be a change in circumstances that made it apparent that a portion of the undistributed earnings within LACI would be “remitted in the foreseeable future.”

As discussed above, the APA resulted in a reduction in LUI’s pre-tax income and an intercompany payable to LACI. The Company received communications from the IRS and CRA during fiscal 2015 which led it to believe that the ultimate outcome of the APA would result in a reduction in the pre-tax profits of LUI and would result in a significant intercompany payment from LUI to LACI, which was required to be settled shortly after the finalization of the APA. The Company considered the available sources of liquidity in the United States and it was concluded that there would be insufficient liquidity within the United States in order for LUI to be able to settle this intercompany balance by its anticipated due date and to also meet its short term working capital requirements. As a result, the Company concluded that it would be necessary for LACI to repatriate sufficient funds to the U.S. parent in order to enable it to finance the repayment of LUI’s intercompany debt to LACI. The Company applied the guidance in ASC 740-30-25-19. The change in the expected outcome of the APA was not anticipated by the Company and was considered to be a change in circumstances that made it apparent that a portion of the undistributed earnings within LACI would be “remitted in the foreseeable future.” The Company recognized a deferred tax liability for the U.S. income and applicable foreign withholding taxes on this distribution in fiscal 2015 (at the time that the communications were received from the IRS and CRA). The distribution was made in fiscal 2016 following the finalization of the APA.

The Company has no intention of making any further distributions from LACI to the U.S. parent. As outlined below the Company anticipates that it will continue to be able to finance its operations and cash flow requirements in the United States without any further distributions from LACI. The remaining $852.3 million of LACI earnings are expected to be needed to fund LACI’s growth and expansion plans as specifically outlined below.

International expansion plans

With the exception of entities in Australia, New Zealand, and the United States, LACI is the intermediate parent company of all of the subsidiaries. The Company plans that LACI will make significant equity investments in these subsidiaries, and other subsidiaries that are yet to be incorporated, to fund the Company’s expansion plans into markets outside of North America, Australia, and New Zealand.

As of January 29, 2017, LACI had subsidiaries incorporated in Denmark, France, Germany, Hong Kong, Ireland, Japan, Luxembourg, Malaysia, the Netherlands, Norway, the People’s Republic of China, Singapore, South Korea, Sweden, Switzerland, Taiwan, and the United Kingdom. The operations in these countries are in their startup phase and are expected to require significant ongoing funding as the operations are established and stores are opened. The Company is evaluating expansion into a number of other countries. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION.]

As of January 29, 2017, the Company operated eleven stores in Europe and eleven stores in Asia. These stores were opened during the past three years. Over the next few years the Company intends to expand its presence outside of North America and Australia, as part of its long term business strategy, which will require capital investment. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION.]

Canadian expansion plans

The Company has plans to open further stores in Canada, to relocate and renovate existing stores, and to implement new store designs and layouts. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION.]

Projected working capital needs

To support the expansion of international and Canadian operations as outlined above, the Company will require additional working capital outside of the United States in order to operate its business in these markets. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION.]

Projected head office capital investments

The Company’s head office is located in Vancouver, British Columbia. The vast majority of the capital and head office costs of operating the Company’s business are incurred by LACI, and this is forecasted to continue indefinitely. In addition, there are expected to be additional regional head office costs incurred by LACI’s subsidiaries as operations in Asia and Europe grow. LACI expects to fund these costs through equity investments in its subsidiaries. Over the next five years the Company expects to make significant investments in information technology as it implements new systems, and upgrades or replaces existing systems. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION.]

Cash flow requirements within the United States

As discussed above, the domestic pre-tax loss in fiscal 2016 resulted from the cumulative catchup reduction in the pre-tax income of LUI which was recognized in fiscal 2016 as a result of the finalization of the APA.

This domestic pre-tax loss is not a trend which the Company expects to continue and it expects that the Company will report significant domestic pre-tax profits in fiscal 2017 and beyond. Further, the finalization of the APA provides greater certainty with respect to the Company’s profitability and tax obligations within the United States through fiscal 2020.

As of January 29, 2017 the Company operated 287 stores within the United States, generating revenues of $1.7 billion. The Company expects its operations within the United States to continue to expand over the next five years. However, the Company’s forecasts show that this expansion, and its $100 million share repurchase program which was announced in December 2016, are expected to be funded by future cash flows generated through its U.S. operations, without any need for repatriation of funds from LACI. The Company notes that its cash flow forecasts also consider the liquidity which is currently available in the United States following the signing of a new revolving credit facility on December 15, 2016.

With the exception of the distribution paid to finance the cumulative catchup payment required under the APA, historically, no distributions have been needed from LACI to support the operations and growth within the United States, and while a history of not distributing foreign earnings does not serve as a replacement for specific reinvestment plans, management believes that this factor combined with the Company’s current cash flow forecasts over the next five years represents compelling evidence in support of the indefinite reinvestment assertion.

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We note that you present a full non-GAAP income statement when reconciling non- GAAP measures to the most directly comparable GAAP measures on page 24 and in your first quarter earnings release. Please reconcile without presenting a full non-GAAP income statement. See Question 102.10 of the Non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016.

The Company acknowledges the Staff’s comment and will ensure that its future non-GAAP reconciliations in its periodic reports and earnings releases do not include a full non-GAAP income statement.

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The Company appreciates the Staff’s attention to the review of the 2016 Form 10-K. Please contact me at (604) 732-6124 or Michael Hutchings of DLA Piper LLP (US) at (206) 839-4800 if you have any questions about this letter. Read in the reply ↗

Please revise your discussion of your cash flows from operating, investing and financing activities to discuss your cash flows from each of these activities during all periods presented in your consolidated statements of cash flows. Refer to the guidance outlined in Instruction 1 to Item 303(a) of Regulation S-K.

The Company acknowledges the Staff’s comment and will ensure that its future annual reports on Form 10-K include a discussion of its cash flows from operating, investing and financing activities during all periods presented in its consolidated statement of cash flows. The Company notes that its prior year’s annual report on Form 10-K compared its cash flows from these activities for its 2013 and 2012 fiscal years, which would not have materially changed or provided new material information to investors if repeated in the 2014 Form 10-K.

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Nevertheless, in future annual reports on Form 10-K, the Company will ensure it carries forward its prior years' cash flow discussion.

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We note that foreign currency translation adjustments resulted in a significant reduction to your total comprehensive income during the years ended February 1, 2015 and February 2, 2014. Please explain in the notes to your financial statements or in management’s discussion and analysis, the changes in foreign currency rates or other factors that resulted in the significant foreign currency translation adjustments

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that were recognized during each of these periods. Please provide us with your proposed disclosures. 15. Income Taxes, page 54

The Company respectfully advises the Staff that the significant reductions in the Company’s total comprehensive income during the years ended February 1, 2015 and February 2, 2014 were primarily driven by the strengthening of the U.S. dollar against the Canadian dollar. Over this two year period, the U.S. dollar to Canadian dollar exchange rate moved from approximately 0.9987 to 1.2717, an increase of 27%.

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These foreign currency exchange rate changes resulted in debits to accumulated other comprehensive income (“AOCI”) of $103 million and $86 million in the years ended February 1, 2015 and February 2, 2014, respectively.

In Item 7A of the 2014 Form 10-K the Company identifies the foreign currency exchange risk associated with the translation of its foreign subsidiaries’ balance sheets into U.S. dollars and that this is recorded in AOCI. The Company also discusses the effect that changes in the U.S. dollar to Canadian dollar exchange rate can have on its reported revenues and expenses.

For illustrative purposes as to what it would include in future filings, the disclosure underlined below represents substantially the form of the disclosure the Company would add to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” based on the disclosure in the 2014 Form 10-K.

We currently generate a significant portion of our net revenue and incur a significant portion of our expenses in Canada. We also hold a significant portion of our net assets in Canada. The reporting currency for our consolidated financial statements is the U.S. dollar. A strengthening of the U.S. dollar against the Canadian dollar results in:

• a reduction in our net revenue upon translation of the sales made by our Canadian operations into U.S. dollars for the purposes of consolidation;

a reduction in our selling, general and administrative expenses incurred by our Canadian operations into U.S. dollars for the purposes of consolidation; and foreign exchange gains by our Canadian subsidiaries on U.S. dollar cash and receivables denominated in U.S. dollars.

During the year ended February 1, 2015, the strengthening of the U.S. dollar against the Canadian dollar resulted in a $103.3 million increase in accumulated other comprehensive loss within stockholders' equity. During the year ended February 2, 2014, the strengthening of the U.S. dollar against the Canadian dollar resulted in an $85.5 million increase in accumulated other comprehensive loss within stockholders’ equity.

15. Income Taxes, page 54

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You disclose in note 15 that the income tax provision in fiscal 2014 includes $33.7 million of U.S. income and applicable foreign withholding taxes on dividends of $473.7 million due to repatriating foreign subsidiaries earnings to the U.S. parent entity to fund the share repurchase program. You also disclose you have not provided for U.S.

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and foreign withholding taxes on $471 million of accumulated undistributed earnings of foreign subsidiaries at February 1, 2015 because you intend to reinvest these earnings for the foreseeable future. It is not clear from your present disclosures how management overcame the presumption that all undistributed earnings of subsidiaries will be transferred to the parent and therefore require the accrual of an income tax payable as outlined in ASC 740-30-25-3. Please tell us how you have determined that you have both the ability and intent to indefinitely prevent accumulated undistributed foreign earnings from being repatriated without tax consequences. See ASC 740-30-25-17 and 25-18. In doing so, tell us the following: • Explain the specific evidence (e.g. experience of the entity, definite future plans and past remittances, etc.) to substantiate the parent’s assertion of the indefinite postponement of remittances from foreign subsidiaries; • Identify the entities and periods where the parent claims permanent reinvestment; • Tell us why you have not disclosed that the remittance of undistributed earnings is postponed indefinitely as opposed to the foreseeable future, which is the point used in ASC 740-30-25-19 to describe when it is apparent that a temporary difference reverses and a deferred tax liability is required to be recognized; and • Tell us how your decision to repatriate the $473.7 million of funds during 2014 in order to fund your share repurchase program was considered as part of your determination that the $471 million of accumulated undistributed earnings of foreign subsidiaries referenced above continue to be permanently reinvested as of February 1, 2015.

The Company respectfully submits that there is sufficient evidence to show that the Company has the ability and intent to indefinitely reinvest the accumulated undistributed foreign earnings, such that the presumption in ASC 740-30-25-3 that the undistributed earnings will be transferred to the parent is overcome and, in accordance with ASC 740-30-25-17 and 25-18(a), no deferred tax liability should be recognized.

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Set forth below is background information regarding the accumulated undistributed earnings of foreign subsidiaries and the factors the Company has considered in concluding that undistributed earnings will be indefinitely reinvested, which addresses bullets 1, 2 and 4 in the Staff’s comment, and a brief discussion of disclosure changes the Company intends to make in its next annual report on Form 10-K in response to the third bullet of the Staff’s comment.

Background

The Company respectfully advises the Staff that the $471 million of accumulated undistributed earnings of foreign subsidiaries as of February 1, 2015 relates entirely to lululemon athletica canada inc. (“LACI”), the Company’s principal Canadian operating entity (also referred to as the “intermediate parent company”). The accumulated undistributed earnings of all other foreign subsidiaries as of February 1, 2015 were immaterial, individually and in the aggregate.

Within the group consisting of the Company and its subsidiaries (the “Group”), LACI is the intermediate parent company of all of the Group’s subsidiaries outside of Australia, New Zealand and the United States. The Company expects that LACI’s subsidiaries will be a significant driver for future growth of the Company’s operations as it invests and expands into markets where it does not have significant or mature operations. LACI is also the primary Canadian operating entity that operates the Group’s head office, employing approximately 1,100 people as of February 1, 2015.

Factors Considered in Concluding Undistributed Earnings Indefinitely Reinvested

In reaching the conclusion that LACI’s undistributed earnings will be indefinitely reinvested, the Company considers on an ongoing basis its short term and long term capital needs; specifically, the Company evaluates its international expansion plans, Canadian expansion plans, projected working capital needs, projected head office capital investments, forecasted cash flow requirements within the United States, and other factors the Company believes are relevant, such as past history of dividend payments and other possible reasons why excess foreign earnings may be needed by the U.S. parent (for example share repurchase activity). The Company’s assertion of permanent reinvestment and the reversal criterion does not exclude any subsidiaries or periods.

The Company notes that ASC 740-30-25-17 requires management to compile evidence to support its assertion that the foreign unremitted earnings are indefinitely reinvested in order to qualify for the indefinite reversal exception, and that a history of not distributing foreign earnings does not serve as a replacement for specific reinvestment plans.

Management’s evidence includes the following specific plans:

International expansion plans

With the exception of entities in Australia, New Zealand and the United States, LACI is the intermediate parent company of all of the Group’s subsidiaries. The Company plans that LACI will make significant equity investments in these subsidiaries, and other subsidiaries that are yet to be incorporated, to fund the Company’s expansion plans into markets outside of North America, Australia, and New Zealand.

As of February 1, 2015, LACI had subsidiaries incorporated in Hong Kong, Japan, the People’s Republic of China, Korea, Malaysia, Singapore, Taiwan, France, Germany, Luxembourg, the Netherlands, Sweden, Switzerland, and the United Kingdom. These subsidiaries have been recently incorporated and the operations in these countries are in their startup phase and will require significant ongoing funding as the operations are established and stores are opened. The Company is evaluating expansion into a number of other countries. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

As of February 1, 2015, the Company only operated two stores in Europe and one store in Asia. These stores were all opened during the year ended February 1, 2015. Over the next few years the Company intends to expand its presence outside of North America and Australia, as part of its long term business strategy, which will require capital investment. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

Canadian expansion plans

The Company has plans to open additional stores in Canada as well as invest in its current Canadian stores. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

Projected working capital needs

To support the expansion of international and Canadian operations as outlined above, the Company requires additional working capital outside of the United States in order to operate its business in these markets. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

Projected head office capital investments

The Company’s head office is located in Vancouver, British Columbia. The vast majority of the capital and head office costs of running the Company’s business is incurred by LACI, and this is forecasted to continue indefinitely. In addition, there will be additional regional head office costs incurred by LACI’s subsidiaries as operations in Asia and Europe grow. LACI will fund these costs through equity investments in its subsidiaries. Over the next five years the Company expects to make significant investments in information technology as it implements new systems and upgrades and replaces existing systems. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

Cash flow requirements within the United States

The Company expects its operations within the United States to continue to expand over the next five years. However, the Company has forecasted for growth, expansion and general working capital to be funded by the existing U.S. operations, with no forecasted repatriation of funds from LACI. As of February 1, 2015 the Company operated 211 stores within the United States, generating revenues of $1,257 million. Historically, no distributions have been needed from LACI to support the operations and growth within the United States, and while a history of not distributing foreign earnings does not serve as a replacement for specific reinvestment plans, management believes that this factor combined with the Company’s current cash flow forecasts over the next five years represents compelling evidence in support of the indefinite reinvestment assertion.

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

Past history of distributions and share repurchase activity, and future intentions

The Company has not previously paid any dividends to its stockholders and, prior to fiscal 2014, had not previously implemented a share repurchase program. The Company evaluated whether the decision to finance the share repurchase with funds repatriated from LACI to the Company would impact its indefinite reinvestment assertion with respect to the remaining $471 million of undistributed earnings of LACI. The Company applied the guidance in ASC 740-30-25-19.

The Company’s decision to repurchase shares was made at a time when the Company’s stock price had reached its lowest point in a number of years. The decline in stock price and ultimate share repurchase program (funded with LACI earnings) was not anticipated by the Company but rather was considered to be a change in circumstances that made it apparent that a portion of the undistributed earnings within LACI would be “remitted in the foreseeable future.”

The Company has no current plans to repurchase additional shares, nor to cause LACI to make any distributions or pay any dividends to the Company. The remaining $471 million of LACI earnings will be needed to fund LACI’s growth and expansion plans as specifically outlined above.

Future Changes to Disclosure Regarding Accounting Policy

The Company’s summary of significant accounting policies states, on page 45, that “income taxes on unremitted earnings of foreign subsidiaries which the Company has determined to be indefinitely reinvested have not been recognized.” In future filings, the Company will update the terminology used in the footnote disclosures to be consistent with its accounting policy and state that the unremitted earnings of foreign subsidiaries are reinvested indefinitely, rather than “for the foreseeable future.”

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In future filings, please revise your discussion of critical accounting policies in Item 7 to disclose the amount of cash and short term investments held by foreign subsidiaries. Please also include a statement that the company would be required to accrue and pay taxes if these funds were repatriated back to the U.S. and indicate that the company does not intend to repatriate such funds, if true.

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Also, if your assertion of permanent reinvestment and the reversal criterion excludes certain subsidiaries or periods, please also disclose this fact, as applicable. Please provide us with your proposed future

The Company respectfully advises the Staff that as of February 1, 2015 the Company had cash and cash equivalents of $304 million outside of the United States, including $265 million in Canada. The Company does not consider the taxes that would be due on the repatriation of the funds from foreign subsidiaries other than Canada to the United States to be material. The Company’s assertion of permanent reinvestment and the reversal criterion does not exclude any subsidiaries or periods.

Set forth below is an illustrative example of the Company’s proposed disclosure in future filings.

Rest of the answer

In response to the Staff’s comment, the proposed disclosure underlined below represents substantially the nature and form of the disclosure the Company would add under the heading “Critical Accounting Policies and Estimates-Income Taxes” in Item 7, based on the disclosure in the 2014 Form 10-K. Should the accumulated undistributed earnings of foreign subsidiaries other than LACI become material in the future, then the Company would update its disclosures accordingly.

Income Taxes. Deferred income tax assets are reduced by a valuation allowance, if based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The recognition of a deferred income tax asset is based upon several assumptions and forecasts, including current and proposed tax legislation, current and anticipated taxable income, utilization of previously unrealized non-operating loss carry forwards and regulatory reviews of tax filings. Given the judgments and estimates required and the sensitivity of the results to the significant assumptions used, we believe the accounting estimates used in relation to the recognition of deferred income tax assets are subject to measurement uncertainty and are susceptible to a material change if the underlying assumptions change.

We have not recorded U.S. income tax expense for foreign earnings that we have determined to be indefinitely reinvested outside the United States. We periodically assess the need to utilize these unremitted earnings to finance our foreign operations. This assessment is based on cash flow projections by tax jurisdiction. Such estimates are inherently imprecise since many assumptions utilized in the cash flow projections are subject to revision in the future. The possibility exists that amounts determined to be indefinitely reinvested outside of the United States may ultimately be repatriated. For instance, the cash needs of our U.S. entities may exceed our current expectations, or the actual cash needs of our foreign entities may be less than our current expectations. This would result in additional income tax expense in the year we determine that amounts were no longer indefinitely reinvested.

U.S. income and foreign withholding taxes have not been provided on approximately $471.3 million of cumulative undistributed earnings of a Canadian subsidiary as of February 1, 2015. These earnings are indefinitely reinvested outside of the United States. Income taxes of approximately $44.1 million would be incurred if these earnings were repatriated to the United States.

As of February 1, 2015 we had cash and cash equivalents of $304.1 million outside of the United States. We do not intend to repatriate these funds to the United States. If our intentions change, we would be required to accrue the income taxes which would be due upon repatriation.

We file income tax returns in the United States, Canada and various foreign and state jurisdictions. The 2011 to 2013 tax years remain subject to examination by the U.S. federal and state tax authorities. The 2010 tax year is still open for certain state tax authorities. The 2007 to 2013 tax years remain subject to examination by Canadian tax authorities. The 2008 to 2013 tax years remain subject to examination by tax authorities in certain foreign jurisdictions. Our policy is to recognize interest expense and penalties related to income tax matters as a selling, general and administrative expense. At February 1, 2015, we do not have any significant accruals for interest related to unrecognized tax benefits or tax penalties. Our intercompany transfer pricing policies are currently subject to audits by various foreign tax jurisdictions. Although we believe that our intercompany transfer pricing policies and tax positions are reasonable, the final outcomes of tax audits or potential tax disputes may be materially different from that which is reflected in our income tax provisions and accruals.

* * *

The Company hereby acknowledges that:

the Company is responsible for the adequacy and accuracy of the disclosure in its Commission filings;

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings; and the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company appreciates the Staff’s attention to the review of the Form 10-K. Please contact me at (604) 732-6124 or Michael Hutchings of DLA Piper LLP (US) at (206) 839-4800 if you have any questions about this letter.

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We note your response letter dated July 1, 2011 regarding comment 1 of our letter dated June 17, 2011. Your response refers to the services provided by your Luon manufacturers and indicates that those services could be obtained from one or more additional manufacturers with little or no additional expense or delay.

Rest of the question

We also note statements by management during your recent earnings call regarding the impact of the black Luon issue, including the time it may take to obtain additional sources for manufacturing your key fabrics and the estimated impact on diluted EPS of $0.25 to $0.27 for the full fiscal year. Please provide further analysis regarding whether you are substantially dependent on one or more manufacturers for the major part of your requirements of goods or services. Please refer to Item 601(b)(10)(ii)(B) of Regulation S-K and Question 146.04 of the Compliance & Disclosure Interpretations of Regulation S-K.

The Company respectfully advises the Staff that it currently sources the Luon fabric it uses in its products primarily from a single manufacturer. Although this manufacturer currently produces all of the Luon fabrics used by the Company, the Company continues to believe that these services could be obtained from one or more additional manufacturers with little or no additional expense to the Company.

Rest of the answer

Based in part on the recent Luon issue, the Company believes the process of identifying and using an additional manufacturing source to supply the Company’s Luon fabric could range from little or no delay in the timeliness of the Company’s production process to a delay of up to six months. As the Company explained during its conference call held on March 21, 2013, the Company has identified two additional sources for its Luon fabric and believes it will begin obtaining product from these sources during the fall of 2013.

The Company also confirms that it has no long-term formal written or oral agreement with its Luon manufacturers. When the Company elects to purchase products from one of its Luon manufacturers, it issues a purchase order to such manufacturer. By accepting a purchase order, the manufacturer agrees to fulfill the purchase order in accordance with the terms of the purchase order and a supply agreement between the Company and the manufacturer. The Company has considered Item 601(b)(10)(ii)(B) of Regulation S-K and Question 146.04 of the Compliance & Disclosure Interpretations of Regulation S-K and intends to file a copy of the supply agreement between the Company and its principal Luon manufacturer, as well copies of exclusivity agreements between the Company and the same manufacturer, with its next periodic report filing.

The Company hereby acknowledges that:

• the Company is responsible for the adequacy and accuracy of the disclosure in its SEC filings;

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings; and the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

The Company appreciates the Staff’s attention to the review of the Form 10-K.

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