Lululemon's Cash Flow Statement: http://ca.hotstocked.com/companies/l/lululemon-athletica-inc-LLL-cash-flow-888.html
Summary:
The retailer company known as Lululemon sells yoga and running-wear materials. For their fourth period that has yet to end, Lululemon discovers that they are short of inventory due to an incredible jump in sales. This period has exceeded analyst expectations. Their profit for this quarter has doubled to a $55million and gone up 53% in revenue to the value of $245.4million. Due to such great demands, Lululemon has paid more for goods to be flown in. The cause of this sudden increase in sales may be because of our economy’s post-recession recovery where many people are finding themselves a little extra money to spend. Part of flying in the new goods also partook in negotiating agreements with multiple factories in Asia to uphold the sale needs. Undoubtedly, such profits will bring up the values of Lululemon’s shares in the stock market. To further expand their company, Lululemon is also planning on opening six new North American stores for this quarter. Lululemon is working to be more internationally known, such as becoming more aware online. So far, its’ online division has reeled a good 10% of their overall revenue. The company plans on creating options for country-specific selections and improving shipping internationally. Currently, Lululemon has a total of 137 stores already open in North America and Australia.
The retailer company known as Lululemon sells yoga and running-wear materials. For their fourth period that has yet to end, Lululemon discovers that they are short of inventory due to an incredible jump in sales. This period has exceeded analyst expectations. Their profit for this quarter has doubled to a $55million and gone up 53% in revenue to the value of $245.4million. Due to such great demands, Lululemon has paid more for goods to be flown in. The cause of this sudden increase in sales may be because of our economy’s post-recession recovery where many people are finding themselves a little extra money to spend. Part of flying in the new goods also partook in negotiating agreements with multiple factories in Asia to uphold the sale needs. Undoubtedly, such profits will bring up the values of Lululemon’s shares in the stock market. To further expand their company, Lululemon is also planning on opening six new North American stores for this quarter. Lululemon is working to be more internationally known, such as becoming more aware online. So far, its’ online division has reeled a good 10% of their overall revenue. The company plans on creating options for country-specific selections and improving shipping internationally. Currently, Lululemon has a total of 137 stores already open in North America and Australia.
Connection:
The first connection is found in Lululemon’s quarterly cash flow statement of January 2011, under operating activities. In their CFS, they have a “Decrease in Inventories” account of $7,956,000. A decrease in inventory means an increase in cash flow because Lululemon has sold the items in exchange for cash. Lululemon’s end cash for the January quarter is $316,365 and will most likely rise to a larger sum for the end of this current quarter. However, that value will be unknown until the quarter ends.
My second connection pertains to the six new North American stores that Lululemon plans on opening this quarter. I do not have numbers to provide because the quarter has not yet ended, but once it has, Lululemon’s CFS for the account “Purchase of Property, Plant, Equipment” under investing activities will increase compared to the previous quarter ended. It is an increase because the stores count as property bought, and will result in a decrease of cash flow because cash has to be exchanged for these properties.
The first connection is found in Lululemon’s quarterly cash flow statement of January 2011, under operating activities. In their CFS, they have a “Decrease in Inventories” account of $7,956,000. A decrease in inventory means an increase in cash flow because Lululemon has sold the items in exchange for cash. Lululemon’s end cash for the January quarter is $316,365 and will most likely rise to a larger sum for the end of this current quarter. However, that value will be unknown until the quarter ends.
My second connection pertains to the six new North American stores that Lululemon plans on opening this quarter. I do not have numbers to provide because the quarter has not yet ended, but once it has, Lululemon’s CFS for the account “Purchase of Property, Plant, Equipment” under investing activities will increase compared to the previous quarter ended. It is an increase because the stores count as property bought, and will result in a decrease of cash flow because cash has to be exchanged for these properties.
Reflection:
I think that Lululemon will be successful in Canada as long as the economy does not fall drastically. However, for United States and Australia, I am unsure because I do not live or shop in either countries. On the other hand, from blogging on this article, I would not be surprised to hear more about Lululemon in the future as the company continues to grow. With such demanding sales, there should be no problem in making sure their company is heard and known international-wide. They have nice numbers in profit and revenue each quarter, growing stock price values, as well as investing with the right idea: expansion for Lululemon. Perhaps I will considering checking their clothing brand the next time I go shopping due to their popularity.
After reading your blog I agree that Lululemon will be a very successful retailer company in Canada, United States, and Australia. Like you said in your first connections and article that their inventories were short due to the increase in sales this would increase their cash flows in operating activities and more cash to increase their inventories. Also with a strong cash flow this would attract potential investors to invest in Lululemon. Therefore Lululemon’s shares will rise from investments. When Lululemon plans to open six new North American stores they should tried to open their new stores somewhere else so they can expand and be internationally known because they already have 137 stores in North American and Australia and to be internationally known they should try to open their stores in Europe or Asia.
ReplyDeleteJoshua Thang
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I agree with your first connection that a decrease in inventory would result in an increase in cash flow in the operating activities section. There was an overall decrease of $7,956,000 in inventory between 2010 and 2011. In exchange for purchasing the inventory, the store has to pay more money. So like you said there was a decrease in cash flow in the operating activities. I also agree with your second connection as purchase of property, plant and equipment is certainly a decrease in cash flow in the investing activities section. Whenever you purchase property, you are spending cash in exchange for the property. I also have some new points that I would like to bring up. These suggestions could be other possibilities that you could have used in your connection. You could have stated that net income is the first item listed in the operating activities section. Then you could have stated that there was a $59,779,000 increase in net income. Also on the cash flow statement of the Lululemon retail store there was a decrease in accounts receivable. When there is a decrease in accounts receivable, your company’s debtors are paying the money it owes you. Therefore there is an increase in cash flow coming in to your company. I also agree with your connection because I think Lululemon would do well in the future based on analyzing its cash flow statement. Lululemon has higher revenue, more cash flows coming in, and a higher net income than last year. The overall increase in cash between 2010 and 2011 is $156,752,000. All the stats indicate that this company will be very successful in the future. Overall your connection was well written and well thought out. I enjoyed reading your blog. The article was very interesting and it had a huge connection to the chapter we are studying.
By Joshua Thang
I agree. Yes, of course Lululemon will be successful because they do promote such positivity and health into the community and the fact that they are expanding is a success in itself. That means that there is a demand in the market for them to expand and to commit to meeting their consumers needs around the world. Good health and an active balanced living is the epitome of life itself. I view Lululemon as a very long term company because of their intentions in the market. As with many companies they may have their ups and downs but Lululemon definitely has what it takes to keep in operation.
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