Lululemon's profit beats expectations

Chapter 11 Blog
http://www.nationalpost.com/story.html?id=1982949


SUMMARY

The article clarifies Lululemon’s profit being exceptionally well compared to other retailers. Despite the recession, Lululemon’s revenue increased from $85.5 million to $97.7 million relative to Reitmans Canada Ltd’s revenue which declined by 2.2%.Though the company managed to have a profitable second quarter; the sales may have been amplified if the “Vancouver-based retailer” were able to assemble the significant customer demand. However, certain cutbacks such as decreasing the price of yoga mats and proposing new apparel at reduced prices were necessary to draw in customers and enhance sales. Furthermore, many setbacks were conducted to save money. For instance, instead of opening an objective of 35 stores, only seven will open in 2009.

CONNECTIONS
The connection between the article and text is regarding the net inventory. Lululemon is a retail business which buys merchandise and sells to the public for profit. Because of the recession, Lululemon reduced there purchases in anticipation of lower sales and by lowering the amount of purchases it resulted in the reduction of sales. This decision which Lululemon took was necessary in order to maintain the gross profit during the recession. However, if Lululemon had been prepared for the unpredicted demand; the purchases would have increased and resulted in the advance of sales leading to an enlargement in gross profit. Comparing with the text, the connection is primarily concerning the cost of goods sold formula.


REFLECTION
Despite the fact that Lululemon’s inventory wasn’t quite a large amount; the retailer still managed to increase in revenue with the specific cutbacks prepared to ensure customer satisfaction. Although Lululemon was prosperous, it astonished me of how Lululemon earned such a vast profit because even though prices were dropped, the apparel and materials were still expensive. However, the business did make a right decision with the circumstances of the recession by delaying the quantity of products to make certain whether sales would decline or enhance but also it may have been an undesirable choice because of the unexpected customer demand which was shocking. Although, they were unprepared for the customer demand, they had enough flexibility to respond quickly to customer demand. For instance, they somehow managed to handle 800,000 units of merchandise from there suppliers which means that Lululemon has an incredibly good connection with there suppliers or manufactures. Moreover, interesting enough Lululemon actually earned more in the second quarter with the recession than the previous year excluding the recession which proves that Lululemon’s profits did beat expectations compared to other retailers.

Vegas accounting firm shut down by the SEC

SUMMARY

Though common issues in local or major businesses occur quite often, I was intrigued to know that this article included the fault of promoters from B.C. By looking in depth in the Vancouver article, I found that even CPA's like Micheal J. Moore can be the most skill lacking professionals. Moore was in charge of an accounting firm named Moore & Associates in which the employees were given minor jobs for instance filling out checklists. In addition to these circumstances, public shareholders were shocked to know the shares they held were forgeries and the result of a $900,000 profit to a 4.3 millon dollar loss. Also many mining companies were displeased to know that the financials reports they had given were being treated carelessly. From all this evidence the SEC voided the firm's authorization and discharged Moore from progressing under any public accounting assosciation further on.

CONNECTION

The connection is related to the accountant Moore. The connection primarily concerns the work of an audit which Moore contravened as a CPA. A proficient auditor with a CA qualification would have maintained a standard organization following most principles of accounting and the audits precisely managed which in truth Moore lacked. For example the SEC assumed the firm`s audit ``were so deficient that they amounted to no audits at all.`` Besides being an indolent auditor he also didn`t follow one of the GAAPs, the principle of conservatism which indicated that ones business should be fair and reasonable. Assuming that with these circumstances the SEC had the right to conclude his qualification as an audit.

REFLECTON

As a certified accountant Moore should have managed the business with a proper and fair approach but instead pursued his own path which followed up to a dilemma. By not following the principle of conservatism, he not only went against the proffession as an audit but also burned the reputation of truthful accounting corporations. Aside from causing inconvenience with the SEC he also left public shareholders with nothing but paper. Despite that he was acting fragulent, we should take this into consideration and beware of these situations during our future years. Because you never know when these circumstances could occur to you...

http://www.vancouversun.com/business/shuts+down+Vegas+accounting+firm+favoured+promoters/1948817/story.html