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Case Study Analysis

Group 3

1. Le Van Manh

2. Nguyen Minh Thu

3. Le Pham Nhat Linh

4. Pham Thi Phuong Thao

5. Le The Vinh

6. Tran Thi Minh Phuc

7. Pham Ngoc Mai

8. Le Bao Long

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Lululemon Athletics, Inc

• Established in 1998 by Chip Wilson

• Currently: 174 retail stores in US, Canada, NZ…

• 2012 revenue: $1.0 Billion

• Its products: women's yoga apparel and running clothes for both men and women

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Is Lululemon alright?

• Their net revenue has increased from $40.7 million in 1998 to $1,000.8 million in 2011

• The company’s stock price had risen from $2.25 per share in March, 2009 to $64.58 per share in February, 2012.

• How long this such fast growth of Lululemoncould last?

• Can it carve out a sustainable position against such competing names as Nike, Under Armour, Adidas, and Reebok?

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Main competitors (wholesalers and direct

sellers)

• Nike

• The adidas Group

• Under Armour

Secondary competitors

(specialty store retailers)

• The Gap

• Athleta

• Nordstrom

• Lucy

• Bebe stores

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STRATEGIC GROUP MAP

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Strengths

Experienced managers

Premium active brand: high quality product, vertical retail strategy, selective distribution

Unique retail system: premium store location, well trained staff

Innovative features and styles

Community-centered marketing approach: build brand awareness, relationship and philanthropic activities

Distinctive corporate core value and culture

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Weaknesses

Focus almost on female

Weak brand recognition in the US

Decentralization marketing

Few retail outlets

Overprice

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Opportunities

• International expansion

• Ecommerce development

• New market segment: man and youth

• Build U.S brand recognition

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Threats

• Economic conditions may decrease consumer spending

• Strong competition

• Rapid change in customer demand

• Third party supplier failure

• No exclusive intellectual property rights in fabric and manufaturing technology

• Risks in internationalization outside North America: commercial risk, financial risk, country risk and cross-cultural risk

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StrategyLululemon uses a Focus Differentiation strategy with self reinforcing activities.

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Corporate-level strategyConcentration on a Single Business:

Diversification:

technical athletic apparel

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Business-level strategy

Offering their first unique

fabric, their signature

"luon"

Differentiation

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Financial analysis

Net revenues

148

353.5

452.9

711.7

1000.8

0

200

400

600

800

1000

1200

2007 2009 2010 2011 2012

7.7

39.4

58.3

121.8

185

2007 2009 2010 2011 2012

Net profit

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Profitability ratio

11.22

16.01

19.1

25.34

28.68

2007 2009 2010 2011 2012

Operating profit margin

Operating profit margin

10.8

18.62 18.97

24.3925.18

2007 2009 2010 2011 2012

Net return on total assets (ROA)

Net return on total assets (ROA)

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20072009

20102011

2012

1010 14

40

41

103 110133

174

Open stores

Franchised stores Corporate-owned stores

1411 14501318

1726

2004

2007 2009 2010 2011 2012

Sales per gross square foot at corporate-owned stores open

at least one full yearSales per gross square foot at corporate-owned stores open at least one full year

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Operating cash flow and capital expenditures

25.4

45.4

118

180

203.6

13.3

40.5

15.5

30.4

116.9

2007 2009 2010 2011 2012

Net cash provided by operating activities Capital expenditures

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Market value ratios

0.06

0.28

0.41

0.85

1.27

2007 2009 2010 2011 2012

Earnings per dilluted per share

Earnings per dilluted per share

20.59

25.45 25.01

30.89 30.52

2007 2009 2010 2011 2012

Return on common equity (ROE)

Return on common equity

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