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lululemon Valuation

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by

TuNhi Le

on 8 December 2012

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Transcript of lululemon Valuation

event calendar sun mon tue wed thu sat Mary Bull
David Huang
TuNhi Le
Dixon Palatty fri PRESENCE 174 Stores Porter's
5 Forces HIGH
Threat of
Substitutes HIGH
Supplier
Power LOW
Buyer
Power HIGH
Rivalry within
the Industry Growth Customer Niche
Market Financial Key Ratios Valuation HIGH
Threat of
New Entrants Edit Time Line Edit Risk Free Cash Flow to Firm yoga running cycling 56 Countries A word from
lululemon's CEO Shortridge
Consultants 1998 2004 2007 2011 2011 11% $1,000,000,000 $40,700,000 Threats Weaknesses Opportunities Strengths Seasonality
Raw material prices
Saturation of market
Discrepancy spending
Changing fashion trend
Limited supplier control
Highly competitive industry
Changing customer preferences Lack of patents
Limited store size
Slow geographic expansion
Sustainability of fast growth Online shopping
Educated women
Active, healthy lifestyle Brand
Quality
Management
Growth strategy
Classes and calendars
Community outreach
Grassroots marketing
Research and development Growth Customers Key
Drivers Balance Sheet Assumptions Ratios Financial Forecasts Financial Forecasts Income Statement Time Capsule $198 $36 $48 $118 $52 $108 $560 DO
NOT
BUY BUY Agenda Company Overview Industry Analysis Key Ratios & Drivers Financial Forecast Company Valuation SWOT lululemon. lululemon. lululemon. lululemon. lululemon lululemon lululemon lululemon. lululemon. lululemon. lululemon. lululemon Assumptions Sensitivity Analysis Total Revenue (in millions) Breakdown of Profits (in millions) Revenue Gross Profit Net Income Stores in North America Income Statement Ratios Balance Sheet Ratios Net Income to Stores FINAL
VALUATION MARKET
SATURATION PATENTS REVENUE
GROWTH HIGH
CASH Financial Forecast Share Price - Volume $5.72 $111.82 Price to Earnings Valuation per Share Current Share Price $70 $50 Final Recommendation 1.1-David-Video
2.3-David-Intro
3.0-David-Agenda
4.5-David-Company, Product, Customers, Community
5.5-Mary-Stores
6.7-Mary-Timeline
7.11-TuNhi-Porter’s 5 Forces
8.15-Dixon-Key Ratio
9.17-David-Key Drivers
10.22-Mary-Income Statement
11.23-Mary-Sensitivity Analysis
12.25-Dixon-Balance Sheet
13.27-David-Financial Forecast Summary
14.28-Mary-Valuation
15.29-Mary-FCFF
16.30-Mary-Share Price
17.31-Dixon, Recommendation, Questions Presentation Outline Industry Analysis Calculation for Future Balance Sheet Items Market Saturation
Revenue Growth Slowing (41%-7%)
Lack of Patents
Geographical Growth Time
No Indication of Dramatic
International Growth
Price to Earnings Ratio Calculate growth for every prior year for the account Take the growth as a percentage of a relatable income statement item in the respectable year Determine if the relationship is a consistent trend by calculating the standard deviation over the years If standard deviation is acceptable, use the average of all prior years as the assumption Cash (in millions)
2012 2013 2014 2015 2016 2017 $704 $1,164 $1,816 $2,666 $3,697 $4,843
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