1. LuLulemon Athletica Created By: Amanda Brunssen, Chris Fleischmann, Sam Heston, Sean Lewis & Haley Muir

2.  Industry & Description  Company Background  Annual Earnings, Quarterly Earnings, Stock Performance  Economic Overview  SWOT  Industry Outlook  Competitors  Leader  Price Estimates & Financial Statement Analysis  Shareholder Questions  Top Three Reasons to buy this stock Overview

3.  Industry: Textile- Apparel Clothing  Distributes athletic apparel for women, men and female youth  increased athletics among women  Apparel includes fitness pants, shorts, tops, and jackets for healthy lifestyle activities, such as yoga, running and general fitness  Accessories include bags, socks, underwear, yoga mats, instructional yoga DVDs, and water bottles  47 stores in Canada, 108 in the US, 18 in Australia and 1 in New Zealand Industry & Description

4.  Key managers  CEO- Christine Day  CFO- John Currie  Executive Vice President, Retail Operations North America- Delaney Schweitzer  Executive Vice President, Chief Product Officer- Sheree Waterson  Chairman of the BOD- Dennis Wilson  Competitive Advantage  No long-term debt  Loyal customers  High-quality products  Strong/popular industry  Fast-growing company  brings more popularity  How long have they been around?  Founded: 1998 in Vancouver, Canada  IPO= 2007 Company Background

5.  What is their market cap?  10,920,000,000  How has the stock performed?  Increased by 26% last quarter  Vs. 4-5% by competitors  Any splits coming up?  2 for 1 on 7/11  Nothing currently scheduled  Any dividends?  N/A Company Background Cont.

6. Annual Earnings

7. Quarterly Earnings

8. Stock Performance

9.  GDP: Growth of 2.3 % in 2012  Unemployment: Around 8% by ‘13  Interest rates: little or no increase  Inflation: 2% in ‘12  Retail sales: 6% growth in ‘12 Economic Overview

10. SWOT Strengths  High quality products and a successful connection with the yoga/fitness community  Higher quality= higher prices= more money  Considered the ‘unofficial sponsor’ of yoga  Yoga class provided by Lululemon shows customers that it fully believes in using yoga as a form of physical activity  Brand loyalty Weaknesses  Not enough stores for personal selling  Limited store locations means more customers have to order online, and aren’t able to fully experience the Lululemon experience.  Not diversified

11. SWOT Cont. Opportunities  Innovation  For example, expansion on men’s line  Expand internationally Threats  May lose customers to competitors when the economy is down due to high prices

12.  Spending on yoga currently around 6 billion dollars  Yoga Journal  Niche  Good quality  Brand name  Loyal customers Industry Outlook

13.  Nike  comparing to Lulu with rates  Nikes market is saturated  Others:  Under Armour  Doesn’t reach out to the yoga market  Doesn’t reach out to women  Women buy more Competitors

14.  The company has run off nine straight quarters of double-digit sales and earnings growth  It passed $1 billion in annual revenue last year, up from $453 million only two years earlier  Loyal customers Why Lululemon is the Leader!

15.  Mean target: 79.63  Median target: 83  High target: 100  Low target: 46  Number of brokers: 16 Price Estimates

16. Financial Ratios Liquidity Ratios Lululemon AthleticaNike 201120102009201120102009 Current Ratio4.563.692.582.853.262.97 Quick Ratio3.892.941.432.172.652.25 Industry 3.2 2.1 Asset Management Ratios Lululemon AthleticNike Industry 201120102009201120102009 Inventory Turnover12.3810.286.797.689.328.144.2 DSO4.686.644.1654.950.8754.89(NA) Fixed Asset Turnover8.585.724.236.936.786.72(NA) Total Asset Turnover1.431.471.671.391.321.451.3

17. Financial Ratios (continued) Debt Ratios Lululemon AthleticNike Industry 201120102009201120102009 Debt Ratio21.81%24.13%26.83%34.37%32.35%34.39%38.00% Profitability Ratios Lululemon AthleticNike Industry 201120102009201120102009 Operating Margin25.60%19.19%17.25%13.49%13.08%13.05%(NA) Profit Margin17.12%12.87%11.13%10.22%10.03%7.75%9.21% Basic Earnings Power 36.48%28.29%28.81%18.76%17.25%18.89%(NA) ROA24.40%18.97%18.60%14.22%13.22%11.22%12.60% ROE31.21%25.00%25.42%21.67%19.55%17.10%18.98% Market Ratios Lululemon AthleticNike Industry 201120102009201120102009 Price/Earnings79.7868.8821.4219.2418.7514.4427 Market/Book16.376.741.583.83.262.575.43

18. Analysis of Ratios Current Ratio – Helps determine how much is available in cash or near cash items to meet current obligations Quick Ratio – Can the firm meet it’s short term obligations relying on only near cash assets Liquidity Ratios Lululemon AthleticNike Industry 201120102009201120102009 Current Ratio4.563.692.582.853.262.973.2 Quick Ratio3.892.941.432.172.652.252.1

19. Analysis of Ratios (continued) Are we generating an adequate return based on sales and total investment? Profitability Ratios Lululemon AthleticNike Industry 201120102009201120102009 Profit Margin17.12%12.87%11.13%10.22%10.03%7.75%9.21% ROA24.40%18.97%18.60%14.22%13.22%11.22%12.60% ROE31.21%25.00%25.42%21.67%19.55%17.10%18.98%

20. Analysis of Ratios (continued) Helps assess the firms performance relating our fundamental goal of stock price maximization to internal numbers effected by managerial decisions. Market Ratios Lululemon AthleticNike Industry 201120102009201120102009 Price/Earnings79.7868.8821.4219.2418.7514.4427 Market/Book16.376.741.583.83.262.575.43

21. Questions for Shareholder  How long do you expect to maintain a 30% yearly sales increase?  What are your international expansion plans?  From your experiences, does Lulu perform well during economic downtime?  How can you compete with other companies who price their yoga pants at lower prices? Do you think some people deter away from Lulu, because of your higher prices?  What are some new products coming out?  At 58.5 and 10.7 P/E and Price/sales, respectively lulu is considerably high compared to the industry at 25 P/E and 3.0 price/sales. What steps is Lulu taking to bring in more sales and earn more to lower these ratios?

22.  Fast-growing stock  26% last quarter  No long-term debt  Bright future  spending in the retail market is increasing  yoga market is currently at 6 billion  Recommendation  buy, and hold Top Three Reasons to Buy this Stock

23.  http://www.kiplinger.com/businessresource/economi c_outlook/  Lulu Annual Report  http://shop.lululemon.com/home.jsp  http://investing.money.msn.com/investments/key- ratios?symbol=lulu&page=FinancialCondition Sources