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Lululemon Financial Analysis

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Lululemon Athletica Inc. is a company that focuses on mostly yoga apparels and exercise apparel. The company’s is successfully known for marketing a certain kind of lifestyle than the actual product itself. Lululemon is branded to as having a fun and healthy lifestyle. The company offers a huge variety of clothing such as pants, tops, shorts, and jackets that customers wear when they are engaged in fitness activities. Recently, Lululemon is shifting towards more elaborate designs and higher quality. There are people, who are wearing the products as fashion apparels. While the company mainly targets women who are pursuing a healthy lifestyle, the company is also expanding their target customers towards men and children. In fact, Lululemon is …show more content…

reported having a 16 percent increase in their second quarter sales. But it’s not all good news for Lululemon, as their gross margin has sharply declined. Gross Margin is the most basic measure of a business operational efficiency, it's to test whether a company has the ability to withstand competitions and difficulties. Gross margin also represents the percentage of each dollar of a company’s revenue after accounting for the cost of good sold. In the last quarter, Lululemon’s sales have increased to 6 percent but along with it come to the expense of the company’s profit margin. The company's gross margin has dropped from 50.5 percent a year ago to 46.8 percent today. However, in the current quarter, the company is not looking for improvement in profit margin, it focusing more towards the sales growth. Looking at the full year, Lululemon is expecting to earn $1.87 to $1.92 a share on sales of $2.023 billion to $2.055 billion. While earlier, analysts were expecting $1.86 to $1.91 a share on sales of $1.97 billion to $2.02 billion (Lisa Beilfuss). The company’s full year forecasting seems to be reasonable if the company only focus is on the sales aspect. But the company is making a wrongful move to overlook the narrowing of gross margin. Overall Lululemon profit for the second quarter is $47.7 million, which dropped from last year’s $48.7 million. On the other hand, the per-share basis earning has rose by a penny to 34 cents.

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Introduction Lululemon Athletica, Inc. is a leading designer as well as retailer of top-end yoga and sports apparel. The company was established by Chip Wilson in 1998 in Vancouver and has been operating mostly in New Zealand, Australia, and North America. Wilson created Lululemon Athletica, Inc. to address the unique preferences as well as needs of women, but later the management decided to increase its market target. As a result, the company started designing and retailing yoga and athletic apparel for the female youths and men. The company reaches out its potential customers through instructors and yoga studios.

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Overall, I don’t know how I feel about Lululemon’s product for a high price. I know fitness gurus that praise the company’s products mentioning the high quality of their product. I also know that there are many other comparable quality products out there that is half the price or less. I’m also glad that founder, Chip Wilson, is no longer affiliated with Lululemon. He did not seem like a great CEO at that time, and I’m glad the current CEO took over.

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Lululemon needs to maintain their high quality in order to gauge more customers from their existing brand

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