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Swot Analysis Of Lululemon

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The asset turnover ratio shows the $ value of sales that are made on $1.00 of assets. In the retail industry, companies have a small number of assets when compared to other industries. However, businesses in retail also have more sales when compared to other industries because that is exactly what being in retail depends on. For this reason, retail companies can expect to/should have a high asset turnover ratio. Lululemon’s asset turnover ratio has stayed around the same for the past 5 years, and is fairly low for their industry. For every $1.00 of assets, Lululemon makes around $1.39 in sales which is not significant. After taking a closer look at Lululemon’s product, it makes sense why their ratio is low. Lululemon’s products are very expensive when compared to others …show more content…

Nike, Adidas) however, they are effectively utilizing their assets. The company has little to no debt because they are generating enough profit to fund their business activities and expansions. For example, Lululemon has been working on expanding into Europe and Asia. In 2016 they opened three stores in China and one in London. While enacting this plan, the company did not see an increase in debt. This shows how their assets, a large majority being inventories, are efficiently leading to profits that can support the company’s growth. In 2016, both the Asset Turnover and ROA ratios were at one of their best points over the past 5 years showing how Lululemon’s international investment led to good things for the company. Lululemon did however identify a possible negative with expanding into new markets. Because they are inexperienced in the European and Asian markets, and unknown to consumers, it may be difficult for the company to penetrate the markets. After 2016, the ratios show a decline possibly revealing that was not utilizing its assets as successfully due to an underwhelming acceptance in these new

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