Project for lab assignment. Picked a private BC company and developed a 3 year growth strategy. Had one week to develop with no financial information available. Financial statements with notes available below.

1. +
Lotuswear Growth
Strategy
Presented by Connie Chang, Justine Cheng,
Jasmeen Dhillon, Adrian Duke, Jade Ganasi,
and Lisa Mauro

2. +
Growth Strategy
 RepositionLotuswear as a premier
Canadian “active lifestyle” brand using a
national expansion plan.
 Sellexisting products to new markets
 Target most active Canadian provinces and cities
 Guerilla, public relations, and sponsorship
marketing

3. +
Growth Strategy Timeline
• Calgary • Ottawa • Halifax
2009 2010 2011
• Edmonton • Thunder Bay • Calgary
• Toronto • Saskatoon • Toronto
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

4. +
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”

5. +
Growth Strategy Budget: Marketing
Avg sales to marketing ratio for clothing retailers = 2.83%.

Lululemon’s average sales to marketing ratio = 1.09%

Costs = 2.18% of Sales
Marketing

6. +
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

7. +
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

8. +
Growth Strategy Budget: Net
Income

9. +
Growth Strategy Pro-Forma Income
Statement (Expansion)

10. +
Growth Strategy Pro-Forma Income
Statement (No Expansion)

11. +
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

12. +
Check Figure
Lululemon Net Profit Margin = 8.37%

Industry Trends NPM = 5.5%

Lotuswear NPM = 6.00%
