Market Cap : 37.96 B | Enterprise Value : 38.25 B | PE Ratio : 68.35 | PB Ratio : 17.64 |
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Lululemon Athletica's gross profit for the three months ended in Oct. 2020 was $627 Mil. Lululemon Athletica's gross profit for the trailing twelve months (TTM) ended in Oct. 2020 was $2,262 Mil.
Gross Margin % is calculated as gross profit divided by its revenue. Lululemon Athletica's gross profit for the three months ended in Oct. 2020 was $627 Mil. Lululemon Athletica's Revenue for the three months ended in Oct. 2020 was $1,117 Mil. Therefore, Lululemon Athletica's Gross Margin % for the quarter that ended in Oct. 2020 was 56.14%.
Lululemon Athletica had a gross margin of 56.14% for the quarter that ended in Oct. 2020 => Durable competitive advantage
During the past 13 years, the highest Gross Margin % of Lululemon Athletica was 56.89%. The lowest was 48.39%. And the median was 54.02%.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Lululemon Athletica's Gross Profit falls into.
Gross Profit is the different between the sale prices and the cost of buying or producing the goods.
Lululemon Athletica's Gross Profit for the fiscal year that ended in Jan. 2020 is calculated as
Gross Profit (A: Jan. 2020 ) | = | Revenue | - | Cost of Goods Sold |
= | 3979.296 | - | 1755.91 | |
= | 2,223 |
Lululemon Athletica's Gross Profit for the quarter that ended in Oct. 2020 is calculated as
Gross Profit (Q: Oct. 2020 ) | = | Revenue | - | Cost of Goods Sold |
= | 1117.426 | - | 490.072 | |
= | 627 |
Gross Profit for the trailing twelve months (TTM) ended in Oct. 2020 was 810.826 (Jan. 2020 ) + 334.402 (Apr. 2020 ) + 489.501 (Jul. 2020 ) + 627.354 (Oct. 2020 ) = $2,262 Mil.
Gross Profit is the numerator in the calculation of Gross Margin.
Lululemon Athletica's Gross Margin % for the quarter that ended in Oct. 2020 is calculated as
Gross Margin % (Q: Oct. 2020 ) | = | Gross Profit (Q: Oct. 2020 ) | / | Revenue (Q: Oct. 2020 ) |
= | (Revenue - Cost of Goods Sold) | / | Revenue | |
= | 627 | / | 1117.426 | |
= | 56.14 % |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Lululemon Athletica had a gross margin of 56.14% for the quarter that ended in Oct. 2020 => Durable competitive advantage
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