Summary
This article talks about Lululemon's recent rise in profit. The purveyor of yoga-inspired athletic wear said revenue jumped 14% to $97.7-million from $85.5-million in the same period last year. Despite the profitable second quarter, the sales might have been even higher had the retailer been able to meet unexpectedly buoyant consumer demand. Earnings fell to $9.2-million, compared with $11.1-million, or $0.16 per share, a year earlier. Analyst estimates expected earnings of $0.10 per share before items and revenue of $87.1-million. In an attempt to draw in customers, Lululemon dropped the prices of its top selling yoga mat to $28 from $54, and introduced more apparel items in the price range of $50 to $70. Finally, because of the bad state of the economy, the retailer plans to open only 7 stores in 2009 as opposed to the original plan of 35 stores, in order to save money.
Connections
The connection that this article has with the text has to do with the inventory cycle being critical to economic recovery. Because of the recession, Lululemon should have purchased a more sufficient amount of goods in case customer demand went up. For a large company like them, they also should have known that merchandise sells quickly. This retailer is a business that buys merchandise and sells them to earn profit. Therefore, according to the inventory cycle, they should have renewed their stock regularly to prevent insufficient quantities, no matter whether there was a recession or not.
Reflection
What impressed me the most about Lululemon was that despite the economic crisis and small inventory that they had, they were still able to increase their revenue. I really felt that they made a wise decision by dropping their prices on top selling goods to attract customers, and yet still make good profit by doing so. Another thing that impressed me was their prudent decision to open 7 stores in 2009 instead of 35 which would save them a lot more money in the future. Last but not least, despite the recession this year they still earned more profit than last year when the economy wasn't nearly as bad. That just goes to prove they did exceed expectations, although unexpectedly. Finally, it also shows that Lululemon is a very successful company.
Tuesday, October 13, 2009
Thursday, September 17, 2009
ACC 12- CH 1 - HOVERING KRAFT
http://www.economist.com/businessfinance/displayStory.cfm?story_id=14396368
Summary
The article reports that Kraft Foods, America’s largest food and beverage company, made a takeover purchase for Cadbury, a British confectioner, with a £10.2 billion ($16.7 billion) deal. The bid was, however, quickly rejected by Cadbury, deeming that the amount of money was a statement of fundamentally undervaluing the company. The purpose of this purchase was to form a global powerhouse in snacks, confectionary, and quick meals with a potential annual revenue of US $50 billion, according to Kraft Foods. The American giant stated it would expect to raise its long-term revenue growth target to more than 5 per cent from over 4 per cent should the transaction happen. In addition, its goal for growing per-share earnings would increase to between 9 and 11 percent from 7 to 9 percent. Furthermore, Cadbury also happens to be in good financial position as it nearly tripled its net profit in the first half of the year from the sale of beverages and a rise in chocolate consumption. Therefore, Kraft sees a lot of benefits in this project of working with Cadbury and there are many good reasons for them to believe so.
Connections
The connection to the chapter is the financial benefits (revenue) that two companies can receive if they collaborate. The article also taught us that making a deal with a company at a time when it's at a good financial position is vital to the success of both companies, as well. However, until the two sides can agree to terms on a deal that will see them work together, there will not be any financial benefits yet. Just as money is profit, it is also a problem in this case. That issue was evident in the article as it stated Cadbury rejected the bid from Kraft Foods to purchase it simply because it felt that the offer was too low. However, Kraft still made a smart move by trying to purchase the British firm that is doing so well financially, knowing that only positive results will come of it.
Reflections
As far as the finances go, I think that it would be good for the two companies to work together. If Kraft will merge with Cadbury it will become even more dominant in the market than it already is. Therefore, I think this deal benefits Kraft more than it does for Cadbury. Now, in terms of how good the product is, I would be disappointed to see Cadbury fall into America's hands because I don't think Kraft would be able to produce the same kind of good quality chocolate that Cadbury did. In addition, Cadbury has been one of Britain's very successful firms for a long time so it would be sad to see the British give up another product that they make so well.
Summary
The article reports that Kraft Foods, America’s largest food and beverage company, made a takeover purchase for Cadbury, a British confectioner, with a £10.2 billion ($16.7 billion) deal. The bid was, however, quickly rejected by Cadbury, deeming that the amount of money was a statement of fundamentally undervaluing the company. The purpose of this purchase was to form a global powerhouse in snacks, confectionary, and quick meals with a potential annual revenue of US $50 billion, according to Kraft Foods. The American giant stated it would expect to raise its long-term revenue growth target to more than 5 per cent from over 4 per cent should the transaction happen. In addition, its goal for growing per-share earnings would increase to between 9 and 11 percent from 7 to 9 percent. Furthermore, Cadbury also happens to be in good financial position as it nearly tripled its net profit in the first half of the year from the sale of beverages and a rise in chocolate consumption. Therefore, Kraft sees a lot of benefits in this project of working with Cadbury and there are many good reasons for them to believe so.
Connections
The connection to the chapter is the financial benefits (revenue) that two companies can receive if they collaborate. The article also taught us that making a deal with a company at a time when it's at a good financial position is vital to the success of both companies, as well. However, until the two sides can agree to terms on a deal that will see them work together, there will not be any financial benefits yet. Just as money is profit, it is also a problem in this case. That issue was evident in the article as it stated Cadbury rejected the bid from Kraft Foods to purchase it simply because it felt that the offer was too low. However, Kraft still made a smart move by trying to purchase the British firm that is doing so well financially, knowing that only positive results will come of it.
Reflections
As far as the finances go, I think that it would be good for the two companies to work together. If Kraft will merge with Cadbury it will become even more dominant in the market than it already is. Therefore, I think this deal benefits Kraft more than it does for Cadbury. Now, in terms of how good the product is, I would be disappointed to see Cadbury fall into America's hands because I don't think Kraft would be able to produce the same kind of good quality chocolate that Cadbury did. In addition, Cadbury has been one of Britain's very successful firms for a long time so it would be sad to see the British give up another product that they make so well.
Wednesday, September 16, 2009
ACC 12 - CH 1 - HOVERING KRAFT
Summary
America
Connections
The connection to the chapter is the financial benefits (revenue) that two companies can receive if they collaborate. The article also taught us that making a deal with a company at a time when it's at a good financial position is vital to the success of both companies, as well. However, until the two sides can agree to terms on a deal that will see them work together, there will not be any financial benefits yet. Just as money is profit, it is also a problem in this case. That issue was evident in the article as it stated Cadbury rejected the bid from Kraft Foods to purchase it simply because it felt that the offer was too low. However, Kraft still made a smart move by trying to purchase the British firm that is doing so well financially, knowing that only positive results will come of it.
Reflections
As far as the finances go, I think that it would be good for the two companies to work together. If Kraft will merge with Cadbury it will become even more dominant in the market than it already is. Therefore, I think this deal benefits Kraft more than it does for Cadbury. Now, in terms of how good the product is, I would be disappointed to see Cadbury fall into America's hands because I don't think Kraft would be able to produce the same kind of good quality chocolate that Cadbury did. In addition, Cadbury has been one of Britain's very successful firms for a long time so it would be sad to see the British give up another product that they make so well.
Connections
The connection to the chapter is the financial benefits (revenue) that two companies can receive if they collaborate. The article also taught us that making a deal with a company at a time when it's at a good financial position is vital to the success of both companies, as well. However, until the two sides can agree to terms on a deal that will see them work together, there will not be any financial benefits yet. Just as money is profit, it is also a problem in this case. That issue was evident in the article as it stated Cadbury rejected the bid from Kraft Foods to purchase it simply because it felt that the offer was too low. However, Kraft still made a smart move by trying to purchase the British firm that is doing so well financially, knowing that only positive results will come of it.
Reflections
As far as the finances go, I think that it would be good for the two companies to work together. If Kraft will merge with Cadbury it will become even more dominant in the market than it already is. Therefore, I think this deal benefits Kraft more than it does for Cadbury. Now, in terms of how good the product is, I would be disappointed to see Cadbury fall into America's hands because I don't think Kraft would be able to produce the same kind of good quality chocolate that Cadbury did. In addition, Cadbury has been one of Britain's very successful firms for a long time so it would be sad to see the British give up another product that they make so well.
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