logistics assignment

Assignment # 2 – Understanding Financial Logistics

Case Study: lululemon athletica inc.

lululemon athletica inc. is a Canadian athletic apparel retailer that is known primarily for its stylish yoga-inspired leisure and athletic apparel. Lululemon was founded in 1998 by Chip Wilson in Vancouver, British Columbia, Canada. Due to an amazingly efficient and sustainable supply chain, lululemon athletica has been able to expand its international operation through retail stores in numerous countries and the company has been especially successful in developing an innovative online platform. The company's corporate social responsibility strategy, "Community Legacy", is built around five elements that are each directly or indirectly connected to the fields of logistics that you will be studying in this course: community, sourcing and manufacturing, people, efficiency and waste reduction, and green building spaces.

In 2007, lululemon athletica inc. became a public company when it issued an initial public offering (IPO) of its shares. A public company means that anyone could have bought shares in LULU on a public stock exchange such as NASDAQ at the initial price of $18 US. Lululemon stock typically trades at around $150 US nowadays – very nice gain per share! Christine Day, a former co-president of Starbucks International, and Laurent Potdevin, former president of TOMS Shoes, were chief executive officers of lululemon athletica inc. for 5 years each.

Public companies are required to disclose their financial statements so we have the opportunity with this assignment to try to understand the financial dealings of a public fashion company like lululemon athletica inc. I have posted a relatively short press release on Blackboard that summarizes the consolidated financial statements of lululemon athletica; the press release dated March 27, 2018 contains most of the important information that you will require to answer the questions in this Assignment #2.

For this Assignment, you are required to answer each of the 5 questions set out below. Please email your assignment answers by 10 pm on Sunday, February 10, 2019 to [email protected]. Remember that your submission must be a minimum 500 words to receive a passing mark (out of 5%).

Note: LOGISTICS is about delivering a quality product on time so please do not submit your assignment after the due date. Kindly note that I will accept ALL submissions with late submissions being subject to a 20% penalty per each day of lateness.

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1. lululemon athletica inc. reports profits based on a 365-day fiscal year. Identify (a) the most recent reported fiscal year end date for lululemon athletica inc.; and (b) the company’s approximate revenues or sales for its most recent fiscal year ending in 2018 (specify the currency in which sales are reported).

2. According to the textbook (page 66), an “income statement shows revenues, expenses, and profit for a period of time”. lululemon athletica inc. calls its income statement a Condensed Consolidated Statement of Operations (see page 4 of press release). Explain the meaning of the following two common financial terms AND the calculations or formula needed to determine: (a) Cost of Goods Sold (COGS) and (b) Gross Profit.

3. Explain the nature of the costs that are included in the category referred to as “SGA” expenses or “Selling, General and Administrative expenses”; and describe the main difference between SGA expenses and COGS expenses.

4. Understanding financial and business trends is important for management of the company’s supply chain and for planning and forecasting. Compare year-to-year figures and explain the trend in respect of each of the following selected financial figures for lululemon athletica inc. :

(a) net revenues;

(b) gross profit as a percent of net revenue;

(c) selling, general and administrative expenses as a percent of net revenue;

(d) net income; and

(e) basic earnings per share.

5. Looking simply at the lululemon athletica inc. Condensed Consolidated Statement of Operations please provide your best answers in respect of the following questions:

A. Did lululemon athletica inc. conclude more sales during its Christmas 2017 season or its Christmas 2016 season?

B. Generally, what % of total annual sales were concluded by lululemon athletica inc. in its 4th Quarter: (i) 25%, (ii) 35%, or (iii) 50%.

C. lululemon athletica inc. reported a big increase in its sales in the 4th Quarter of fiscal 2017 and in the most recent fiscal year end. Was the sales increase attributable to:

(i) increases in the number of goods sold at a discount or on sale?

OR

(ii) more goods sold but fewer sales or discounts were provided to customers?