Download - Case Study Analysis Lululemon
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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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