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Lululemon

Luncheon is poised and well positioned to move to another level in the luxury sports apparel marketplace. While our challenges over the last 18 months have been Impacting, we have maintained profitability and have not lost significant market share. In response, our leadership team conducted environmental and organizational scans over the last 30 days.

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From these scans, we have identified some future strategic opportunities and challenges that when addressed, will set us up to become the #1 sports luxury apparel brand in the world.

We will continue our innovation by Introducing new products lines; there is a great opportunity for us to expand Into a children’s line. Another opportunity for Luncheon Is to Investigate new channel strategies In diversification of sales revenues. In tandem with these opportunities, we urgently need to address several threats inclusive of diversifying our supply chain and improving public relations to resonate our core values and brand.

Our environmental scan included a macro trends report, examination of our industry/ competition, and a comprehensive review of our stakeholders’ needs and expectations. Significant macro trends worth noting Include: sustained popularity of yoga fitness for the near term, continued growth in online sales, and sustained usage of social media (with women representing a disproportionately large amount of users engaging our brand). Due to the use of petroleum and cotton products, material and labor costs for Luncheon can sometimes be unpredictable based on fluctuations in these commodity markets.

Our Industry analysis Indicates that the sports apparel brand Is a $106 billion dollar Industry with the two biggest players only owning 14 recent of the market share, [See Financial Analysis Slide]. We are the top ranked premium sports apparel organization and the 5th highest ranking organization overall. Our suppliers are more than suppliers; they are partners, [See Industry/ Competitive Analysis Slide]. Our collaborative relationship with our suppliers helps us create some of the most innovative products in the market.

Supplier issues with materials and manufacturing have posed an ongoing issue due to various recalls creating a drop In company stock price, which In turn, has raised concerns with dockworkers, [See stakeholder Analysis slide]. These problems have caused Luncheon to face intense scrutiny in the market and media, which eventually resulted in negative Public Relations related issues. The inability for the Public Relations department to thwart such incidents has impacted the overall product brand within the market place.

With that said, the financial health of the company Is good. Net revenue for the fiscal year 2013 Increased 16% to $1. 6 billion from $1. 4 billion In fiscal 2012. The company ended with $698,649,000 cash on hand, enough to fund its operating activities. Our operational support reveals Luncheon customer satisfaction remains high despite recent and ongoing manufacturing issues, [See Stakeholder Analysis Slide]. We possess a loyal customer base and have recently moved all of our stores from the franchise model to being ran internally to maximize on our culture.

From this environmental scan, we were able to conduct a comprehensive and In-depth Internal analysis to determine how well prepared we included an operational health report, a financial report, and a review of our culture. The current organization is structured so that there is an opportunity for open immunization throughout the business, while wellness programs create high employee satisfaction. Since our inception, our culture has been about creating components for people to live long, healthy, and fun lives.

This culture permeates through our employees, our in-store experience, and of course our customer base. We believe in support of the communities in which we are a part by creating various festivals, retreats and continually focusing on sustainability. Overall, our internal report shows we are poised for growth and have the tools to take advantage of our opportunities while meeting our challenges head on. Luncheon is the leader in luxury sports apparel. In order for us to stay the premier luxury sports apparel provider, we have to make sure we keep our core competencies aligned.

Our core competencies are defined as follows: 1 . Developing innovative luxury designs, 2. Grass roots marketing, 3. Creating a motivated workforce, 4. Creating a second to none positive customer experience. Our four recommendations outlined in the beginning of the memo align perfectly with these core competencies, and our reports show we have the ability to achieve success in each area. Developing new product lines, especially focusing on a line for the youth, will assure we stay diversified.

In developing these lines we can start to diversify our suppliers by finding other markets in which to partner. Currently our depth in suppliers is large, however, the diversity is nominal. Our suppliers are primarily concentrated in one region, Asia-Pacific, leaving us susceptible to natural disasters, border wars, and other issues that can affect production, [See Stakeholder Analysis Slide]. Creating additional channels of sales will work to enhance our second to none customer experience.

Working with luxury hotels and other recognizable high end partners known for great customer service will also help with our grass roots marketing along with increasing our positive public relations presence. Also, by controlling our public relations and placing an increased emphasis on it, we will be able to better position our image and brand for lasting resonance in the marketplace. We are excited for Luncheon and look forward to partnering with you on implementing these four strategic objectives that will propel our great organization to another level.