+

Lotuswear Growth

Strategy

Presented by Connie Chang, Justine Cheng,

Jasmeen Dhillon, Adrian Duke, Jade Ganasi,

and Lisa Mauro

+Growth Strategy

Reposition Lotuswear as a premier

Canadian “active lifestyle” brand using a

national expansion plan.

Sell existing products to new markets

Target most active Canadian provinces and cities

Guerilla, public relations, and sponsorship

marketing

+Growth Strategy Timeline

• Calgary

• Edmonton

• Toronto2009

• Ottawa

• Thunder Bay

• Saskatoon2010

• Halifax

• Calgary

• Toronto2011

Provinces and cities with the most physically active

households:

AB 28.7% Calgary, Edmonton

ON 28.3% Ottawa, Thunder Bay, Toronto

SK 26.2% Saskatoon

NS 24.1% Halifax

+Growth Strategy Budget: Store

Opening Costs

Lululemon’s store opening costs in 2008 $26 million

Number of Lululemon store openings 27

Approximate Cost of Each Store Opening $0.93 million

Lululemon accounts for this as part of their “Selling, General,

and Administrative Expenses”

We have accounted for this cost in our “Other Selling, General,

and Administrative Expenses”

+Growth Strategy Budget: Marketing

Avg sales to marketing ratio for clothing retailers = 2.83%.

Lululemon’s average sales to marketing ratio = 1.09%

Marketing Costs = 2.18% of Sales

+Growth Strategy Budget: Revenues

Year No Expansion Expansion (3/year)

2009 $32,900,000 $41,900,000

2010 $34,800,000 $52,000,000

2011 $35,900,000 $59,800,000

Total $135,400,000 $185,700,000

+Growth Strategy Budget: Expenses

Year No Expansion Expansion (3/year)

2009 $28,900,000 $36,700,000

2010 $30,400,000 $45,600,000

2011 $31,500,000 $52,400,000

Total $118,800,000 $162,700,000

+Growth Strategy Budget: Net

Income

+Growth Strategy Pro-Forma Income

Statement (Expansion)

+Growth Strategy Pro-Forma Income

Statement (No Expansion)

+Growth Strategy Impact on EAT

Expansion

$18,914,820

No Expansion $12,239,001

Total Growth in Net Income $6,675,819

Less taxes (40%) $2,670,328

Earnings After Tax $4,005,491

+Check Figure

Lululemon Net Profit Margin = 8.37%

Industry Trends NPM = 5.5%

Lotuswear NPM = 6.00%