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Lululemon financial analysis. Lululemon Athletica is a yoga-inspired retail store that produces athletic apparel that promotes healthy and active living. Established in 1998, lululemon has been able to grow as an international athletic brand, with 124 sto

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Introduction

Table of Contents Executive Summary 3 The Company and Its Position in the Market 4 Accounting, Finance, Legal and Environmental Issues 6 Primary Shareholders 7 Restated Statements & Policy Changes 7 Discontinued Operations 8 Legal Issues 8 Environmental Issues 9 Horizontal and Vertical Analysis 11 Profitability Ratios 12 Liquidity 14 Solvency 15 Investment Recommendation 17 Business Tenets 17 Management Tenets 17 Financial Tenets 18 Recommendation 18 Bibliography 19 Figure 1: Lululemon Sales by Segment - Fiscal Year 2010 22 Figure 2: Lululemon Sales by Country - Fiscal Year 2010 22 Appendix A-J 23 Executive Summary Lululemon Athletica is a yoga-inspired retail store that produces athletic apparel that promotes healthy and active living. Established in 1998, lululemon has been able to grow as an international athletic brand, with 124 stores across Canada, the United States, and Australia. Lululemon has consistently developed unique athletic products and demonstrated innovative marketing techniques to gain market share, in the highly competitive athletic apparel industry. Dominated by large well-established corporations, lululemon has grown their niche by marketing their products to women that are both socially and physically conscious, that strives to create a well-balanced and healthy lifestyle. Lululemon has no significant changes in reporting principles between years. Financial statements are comparable and consistent. In terms of common shares, lululemon has diversified itself, which eliminates the chance of individuals controlling activities. Lululemon owns all of its trademarks however share its patents and intellectual property rights with their suppliers. Lululemon has faced 4 class action lawsuits since 2007. Two of which were related to breach of employment contract and two of which were violations to the Californian Labour Code. Three external forces have been identified that influence the way lululemon operates: social trends through the increasing popularity of yoga, economic conditions due to the current instability in the United States economy, and charitable opportunities. Lululemon is active in building strong relationships with communities in which they are located. ...read more.

Middle

In both cases, lululemon agreed to general terms of settlement.23 Environmental Issues Three external forces have been identified that impact the way lululemon operates. These highlighted external factors include social trends, economic conditions, and charitable opportunities. Lululemon's focus is on yoga inspired athletic apparel. Today yoga is no longer a fitness fad, but has become a lifestyle trend. Unfortunately, trying to appeal to the social growth of an active and healthy lifestyle has created a trend in the textile industry of making unsubstantial claims about sustainable fibers in clothing such as seaweed, bamboo and soybeans. In 2007, lululemon released their vitasea line, which was infused with seaweed fiber and claimed to have therapeutic benefits. The Competition Bureau along with a test administered by the New York Times, were unable to prove lululemons' claims.24 The Textiles Labelling Act states that "it is illegal to make false or misleading claims related to a garment, including in regards to its fiber content."25 Therefore, the Competition Bureau had lululemon remove all claims and labels indicating that the Vitasea line had health benefits.26 Lululemon also promotes functional everyday clothing as many women sport lululemon's stylish "groove pants" or hooded sweaters as casual wear. This gives lululemon a competitive edge in the athletic apparel industry.27 Economic conditions also impact the way lululemon operates, as they can adversely affect consumer spending. Lululemon is considered a specialty retailer and because of this, their operations depend significantly on economic conditions. The current instability in the United States economy has resulted in an overall decrease in the growth of the retail sector because of decreased consumer spending. This has negatively affected lululemon's sales. 28 The recent economic downturn has also had some positive effects on lululemon. Instead of price reductions, lululemon expanded their product line and invested in improving the quality and varieties of their athletic wear. In doing so they were able to attract customers into the store with new and improved products, namely their new running outfits.29 Before the recession, lululemon was facing a mass expansion strategy and growth into the United States. ...read more.

Conclusion

12 "lululemon athletica Inc. Notice of 2010 Annual Meeting of Stockholders," page 33, filed April 27, 2010. http://investor.lululemon.com/secfiling.cfm?filingID=950123-10-38895. 13 "lululemon athletica Inc. Notice of 2010 Annual Meeting of Stockholders," page 33, filed April 27, 2010. http://investor.lululemon.com/secfiling.cfm?filingID=950123-10-38895. 14 "lululemon athletica Inc. Notice of 2010 Annual Meeting of Stockholders," page 33, filed April 27, 2010. http://investor.lululemon.com/secfiling.cfm?filingID=950123-10-38895. 15 Yahoo Finance, "FMR LLC Company Profile," Yahoo Finance, November 2010, accessed November 12, 2010, http://biz.yahoo.com/ic/40/40150.html. 16 Yahoo Finance, "Fidelity Investments Company Profile," Yahoo Finance, November 2010, accessed November 12, 2010, http://biz.yahoo.com/ic/789/71829.html. 17 Kimmel, et al., Financial Accounting. 4th ed. Wiley: 2009, 615. 18 Lululemon. Lululemon Athletica Inc. Quarterly Report, EDGAR Online, Inc.,February 2008, 16. 19 Lululemon. Lululemon Athletica Inc. Quarterly Report, EDGAR Online, Inc.,February 2008, 23. 20 "lululemon athletica, Inc. - Annual Report," pages 9,16,24, filed March 25, 2010, http://files.shareholder.com/downloads/LULU/1057731206x0xS950123-10-28033/1397187/filing.pdf. 21 Lululemon, Lululemon Athletica Inc. , Annual Report (EDGAR Online, Inc., 2008), 24. 22 "lululemon athletic, Inc. - Annual Report," page 23, filed March 27, 2009, http://investor.lululemon.com/secfiling.cfm?filingID=909567-09-292. 23 "lululemon athletica, Inc. - Annual Report," pages 9,16,24, filed March 25, 2010, http://files.shareholder.com/downloads/LULU/1057731206x0xS950123-10-28033/1397187/filing.pdf. 24 CBC News, "Lululemon to Remove Claims from Seaweed Clothing Line, " CBC News, November 16, 2007, accessed November 6, 2010, http://www.cbc.ca/money/story/2007/11/16/lululemonseaweed.html. 25 Minister of Justice, "Textile Labelling Act," Department of Justice Canada, http://www.laws.justice.gc.ca/PDF/Statute/T/T-10.pdf. 26 Competition Bureau, "Lululemon VitaSea Clothing : Competition Bureau Takes Action to Ensure Unsubstantiated Claims Removed from Lululemon Clothing," Competition Bureau Canada, November 16, 2007, accessed November 6, 2010, http://www.marketwire.com/press-release/Lululemon-VitaSea-Clothing-Competition-Bureau-Takes-Action-Ensure-Unsubstantiated-Claims-794132.htm. 27 "lululemon athletica," 2010, accessed November 6, 2010, www.lululemon.com. 28 Marina Strauss, "Lululemon rides out recession in quality fashion," The Globe and Mail, May 12, 2010, accessed November 6, 2010, http://www.theglobeandmail.com/report-on-business/lululemon-rides-out-recession-in-quality-fashion/article1512745/. 29 Marina Strauss, "Lululemon rides out recession in quality fashion," The Globe and Mail, May 12, 2010, accessed November 6, 2010, http://www.theglobeandmail.com/report-on-business/lululemon-rides-out-recession-in-quality-fashion/article1512745/. 30 The Vancouver Sun, "Lululemon credit recession with focusing expansion stategy," The Vancouver Sun, September 20, 2010, November 6, 2010, http://www.vancouversun.com/business/Lululemon+credits+recession+with+focusing+expansion+strategy/3550992/story.html. 31 Lululemon Athletica, "Lululemon Athletica Media Kit," lululemon athletica, October 2009, accessed November 13, 2010, http://www.lululemon.com/media/press_kit/lulu_media_kit.pdf. ?? ?? ?? ?? 2 ...read more.

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