Sunday, March 8, 2015

Financial Flexibility

Flexibility and Lululemon go hand and hand in the traditional, yoga sense.

Chapter 8 delves into the strategic definition of flexiblility, “that is, the ability to change direction quickly and at low cost, given unanticipated changes in the competitive situation within which a firm is operating” (Barney 216).  This flexibility, or lack thereof, leads in to real options theory.


Last summer, rumors of a potential sale of Lululemon resulting in “Open interest in Lululemon options [increasing] 40 percent [over three months], with traders owning about 1.4 calls for every put” (Barach).  Clearly, Lulu proved it was as flexible as its stretchy yoga pants, remaining independent.  Moreover, the latest 10-Q directly speaks to said flexibility: “We believe our strong cash flow generation, solid balance sheet and healthy liquidity provide us with the financial flexibility to execute the initiatives which we believe will continue to lead our profitable growth" (10-Q).



Works Cited:

Barach, J. (2014, July 24). Lululemon Traders Say Namaste to Takeover Speculation: Options.  Retrieved March 8, 2015, from http://www.bloomberg.com/news/articles/2014-07-24/lululemon-traders-say-namaste-to-takeover-speculation-options

 

Lululemon Athletica Inc. (2014). 10-Q. Retrieved from http://biz.yahoo.com/e/141211/lulu10-q.html

1 comment:

  1. Would like to have had you stay with the weeks to get the habit...but good and fun blog. Doesn't the typo in the title drive you crazy?

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