Internal
Analysis
Submitted to: Professor Ken Grant
Course: BUS 800 Date: October 22,
2014 Team Members: Samia Attlassy,
Peter Burkholder, Maria Castellanos,
Bobby Panesar & Feroze Shah
Team #9: Strategy+
Internal Analysis
Overall Current Strategy
*The following information taken directly from the case*
• Grow the store base in North America, primarily United States
• Open additional stores outside North America
• Increase awareness of the lululemon brand and apparel line
• Incorporate next-generation fabrics and technologies in the company’s products to strengthen consumer association of the lululemon brand with technically advanced apparel products and enable lululemon to command higher prices for its apparel
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Although some years the value did decrease by a few percent, in 2012 the gross profit margin is the highest it has ever been since the fruition of the business.
• Net Profit Margin o In summary this analysis shows the percent of every dollar in sales that is profit. As seen in Figure 1, in the Appendix, the boxes highlighted in red showcase the net profit margin values. From 2007 lululemon has had growth in their net profit margin, which in summary showcases their ability to be an efficient business resulting in increased profitability. From 2007, with a net profit margin of 5% to a current net profit margin of 18% in 2012, lululemon is essentially making $0.18 profit for every dollar in revenue.
Key Conclusions
Based off lululemon’s comprehensive financial data, it shows continuous growth and stability in revenue and profits. This fused with effective cost controlling measures allow for greater profitability year-to-year. With lululemon’s strategy primarily focusing on growing the store base and filling those stores with differentiated products, it puts emphasis towards capital expenditures being made by the organization. It can be assumed heavy efforts are being placed on Research and Development, which adhere to luluemon’s strategy of developing next generation fabrics that make their products superior to competition.
Additional research would be toward the site selection of future lululemon corporate owned stores. The financial data shows a
To ensure that they continue to provide our customers with advanced fabrics, our design team working closely with their suppliers to incorporate innovative fabrics that meet particular specifications into their product..In addition, to ensure the product quality of our fabric and its authenticity, we test our products using a leading testing facility. We also partner with a leading independent inspection, verification, testing and certification company, which conducts a battery of tests before each season on all of our fabrics across all product lines, testing for a variety of attributes including content, pilling, shrinkage, and color fastness. We collaborate with leading fabric suppliers to develop fabrics that we ultimately trademark for brand recognition whenever possible.
David Jones’ gross profit margin for the past three years has remained stable with minimal fluctuations. The following calculated figures are for the year 2010, 2011, 2012, and 2013; 39.73%, 39.10%, 37.50% and 37.8% respectively. Such an observation is desirable as it is indicative that the company is financially stable as it is generating enough income to cover its operating expenses and make savings. It suggests that the industry in which the company operates has not experienced drastic economic fluctuations that can affect the company’s cost of goods sold. However,
A snapshot of the Net Margins for Wal-Mart Stores Inc. is shown below: Net Margin Wal-Mart 2010 3.90% 2011 3.50% 2012 3.60%
A typical Gross profit margin depending on the industry may be 25 to 30%. Nucor’s Gross profit margin ratio indicates that industry is intense and cost of goods is one of the main of factor in profitability. After examining the five year
COMPONENT PERCENTAGES INCOME STATEMENT (each item is expressed as a percentage of net sales revenue)
This report has been created with the intent to analyze the athletic apparel industry with a specific focus on Lululemon Athletica, Inc., further refered to as Lululemon. In this report you will find that the strengths and weaknesses of Lululemon’s current strategies and future goals are analyzed and compared to that of its closest competitors. In conclusion to the analysis, recommendations have been made to potentially guide Lululemon Athletica, Inc. in a positive direction in regards to its future endeavors. The following
Economic: Continued economic struggles, especially within the European Union, have the potential to negatively affect Lululemon’s international expansion(Thomas
The first Lululemon store was initially created as a place for people to gather to learn and share ideas about a healthy lifestyle. As the company expanded, Lulu could no longer target every individual walking into the store with knowledge of healthy living. At this point, the company shifted its focus to educating their employees who could positively influence everyone who walked into the stores. The thought and reasoning that went into the first Lulu store has continued as the company has grown. It has continued to target active people while pushing everyone towards a healthy lifestyle. Its main target market is young woman, between 15 and 34 years old, in the middle to upper classes. One of
Lululemon is a rapidly growing company with a different niche for its products. Its philosophy as well as their business model has allowed them to increase revenue over the past years. The dilemma they faced is how to continue expanding without losing their special niche, grassroots and a nontraditional feel of the brand that sets them apart from their competitors.
In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37.1% and 14.3%, respectively (MSN Money, 2010).
As a group, with retail revenue growth of 4.2% vs. 4.9%, the top 10 grew more slowly than the Top 250 in 2012. Profitability for the broader group also has been lagged by that of the leaders. At 2.8%, the composite net profit margin of top 10 was
This paper commences by defining the problems that were faced by Lululemon Athletica Inc in 2013. After, the author explores the causes of the issues that the company was experiencing and the effects that they had on Lululemon Athletica Inc. The next step is to look at ways in which the issues could have been addressed both for the short-term and long-term. When all is said and done, the audience will fully appreciate why “Lululemon Athletica Inc should revert to its fundamentals – that is, to concentrate on the needs of the consumer”.
On the other hand, we see that Reebok had a somehow constant Profit Margin around 8.5%.
The Gross profit margin stays relatively constant at around 36 %. However, there is a slight rise from 2000 to 2004.
Operating profit margin figures in the table above show the return from net sales[13]. However profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during 2011-12. Sales revenue increases with a higher rate than gross profit so there is a poor