Lululemon Case Study

In: Business and Management

Submitted By Annai
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From a strategic planning perspective, the well-known Canadian fitness retailer Lululemon has a lot of factors to consider when laying the foundation for a five year plan. There are many opportunities as well as challenges that the company encounters from its external environments. Each of these is outlined in the following paragraphs and must be embraced in order for Lululemon to position itself strategically and successfully in the market.

Economical environment: The economical environment that circles around Lululemon Athletica shows a strong revenue growth. In September 2012 Lululemon posted a 33% increase in revenue to $282.6-million (U.S.) and an increase of 15% in same-store sales (refer to figure 2). Along with that we can observe the company’s stable financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, net income growth and good cash flow from operations. Lululemon was pretty successful among many investors as it consistently raised quarterly profits and revenues in a struggling fitness retail industry (see figure 3). In reference to the article, “Lululemon athletica inc. Stock Quote & Summary Data”, unemployment rate made some effect on the company’s Gross Income as of in 2009 when the unemployment grew to the level of 8.5% company’s Gross Income was only 23.56% (see figure 1 and 2). But in 2011 when the unemployment growth was at a level of 7.2% company’s Gross Income became 77.04%. This also depicts sales growth as 30.95% and 57.14% in 2009 and 2011, respectively. As mentioned in the article, “Annual financials for Lululemon Athletica Inc.”, despite the prosperity in 2011 the company warned in their annual report that it expects slower sales growth in the high single digits from the fourth quarter of 2012. According to Freeman, the leading global financial services company Credit Suisse…...

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