MKTG Management 9/8/2011 Coach, Inc. Case Study Executive Summary (Problem) The global luxury goods industry consists of men’s, women’s and children’s designer apparel, fine watches, jewelry, and leather goods and generated revenues of over $105 billion in 2005. U.S. companies held a 14% share of the market following Swiss, French and Italian companies who accounted for 19%, 22% and 27% market shares respectively. The market in the U.S. has grown recently in part due to the weak state of the U.S. dollar; companies are able to benefit from the converting of the international currency back to the U.S. currency. Buying habits of U.S. consumers have also characterized the growth of the industry. Middle-income consumers have begun to desire products with higher levels of quality and style.
• NPAT* excluding sass & bide put option revaluation $129 million, down 5.1% • Strong cash flow supports final dividend of 8 cps, full year dividend 18 cps, fully franked “Continued execution of five-point plan” * Excludes sass & bide put option revaluation: FY2012 ($3.0 million gain) and FY2013 ($2.2 million expense) Image: TBC (TBC) Image: Orla Kiely DELIVERING OUR PLAN / 3 Full year highlights • Sales and gross profit growth in key categories • Myer Exclusive Brands now 20.0% of sales mix • sass & bide double-digit sales and profit growth • Increased recognition of our customer service journey • Ongoing investment: new stores, refurbishments, brands, online • MYER one strengthened with Platinum tier, app launched • Online sales, page views and average monthly visits doubled • Net debt down 11.2%, lending facilities refinanced Image: sass & bide OVERVIEW / 4 12 September 2013 2 MYER Full Year Results 2013 • • • • • Overview Financial update Delivering our five-point plan Investing for the future Outlook Image: Wayne by Wayne Cooper (Myer Exclusive Brand) Financial
Growth platforms and logistic pipeline adopted by Crocs are briefly discussed to highlight the reasons why and how Crocs evolved its supply chain practices. The basic core competencies of Crocs are: effective and responsive supply chain, an unique product, an unique material and a global strategy. First, the most significant Croc’s core competency is the highly effective and responsive supply chain. The company developed a strategic three-step method to shorten time, offer flexibility and lower the cost of the supply chain process. Therefore, It will give bigger profits and an easier operation system.
Share of own SF rose significantly from 22% to 28 % in Period 6 Price for Allround continuously increased from $ 5.99 to $6.20 and $6.39 in Period 6 according to inflation rate, main competitors and market development. I increased the Advertising budget form $20 to 24 Million and slightly changed AD message and started the comparison with Coughcure, because I compared cheaper Allround+ with Besthelp. Allstar’s Retail Sales rose from $669.8 to $743.5 and $873.7 Million. These positive results were followed and promoted by a slight decrease in discounting. Stock price rose from $60.85 to $71.38 and $89.31 in Period 6.
Dick’s Sporting Goods is rapidly growing and achieving things that many people thought would be impossible. This year alone, Dick's Sporting Goods has exceeded expectations with its third-quarter results and they have also pleased their shareholders with its plans to start paying dividends. Dick’s Sporting Goods now operates more than 450 shops across 42 states, along with 81 Golf Galaxy stores in 30 states and they do not plan to stop here. Dick's third-quarter net sales rose by 9.3% from the year-earlier, to almost $1.2 billion, with the help of additional sales from 19 newly opened stores. The company's gross margins went up by 126 basis points, to 29.7%, mainly because of better inventory management and a change in the product mix and selling and administration expenses range in at $274.4 million.
• In the last 5 years, the share price for the company has grown strongly with a CAGR of 43%. While the growth in share price for the competitor has remained relatively weak at a CAGR of 13%. • Average Year on Year sales growth for Tremblant has been close to 40% (compared to competitor’s year on year growth rate of 20%). Future projection: • As seen in the below chart, the tipping point for the brewer sales is seen in the year 2008 indicating the adoption of the technology by the consumers. Tipping point is also driven by the increasing use of K-cups in 2008 well supported by “network effect” of increasing adoption of brewers.
Krispy Kreme managed to expand rapidly around the turn of the millennium – each time they opened a new franchise, they sold high profit margin equipment to the franchisee, and charged a high upfront fee, yielding lucrative one-time profits. As expansion slowed in 2003, so did their profits. Coupled with an accounting scandal, analysts quickly changed their recommendations from “buy” to “sell,” and the company found itself headed in the wrong direction. Analysis/Assumptions • Possible but unlikely delisting from NYSE • Revenue grew an average of 32% annually between 2000 and 2004 • Lost $2.5 Billion in equity since 2003 • Significant upfront, one-time charge for new franchisees artificially boosted profits • Decided to wait for SEC investigation to file financial statements reducing 2004 pretax income • Failure to provide financial statements to lenders by January 2005 constitutes default under the company’s $150 million credit facility Conclusions Krispy Kreme entered the new millennium with a positive outlook, but tried to expand excessively quickly, while claiming it would continue to boast high profits and growth. The company focused on opening new stores instead of opening them well – analysts claim that the company was not “focused on operations.”
Overview: In the year of 2003 Zara, Inditex’s largest chain of stores, were facing a problem of whither to upgrade their DOS based point of sale (POS) terminals. Inditex and Zara were fast expanding at the time. At the beginning of 2003, Inditex operated 1558 stores in 45 countries, of which nearly 550 were part of the Zara chain. The group opened on average one store per day across the world. Forty-six percent of the group’s sales were inside Spain.
Zara’s economic logic: Zara’s founder built the chain upon two rules: give customers what they want, and give it to them quickly. So, knowing what customer wants and reducing the delivery time are two keys for ZARA’s business success. Keep refreshing products continuously makes Zara attractive to customers because each time people go to Zara’s retail stores, they will have the most recent fashion able goods. Thus, people are likely to buy more. The short cycle time reduced working capital intensity and facilitated continuous manufacture of new merchandise, letting Zara commit to the bulk of its product line for a season much later than its key competitors Zara undertook 35% of product design and purchases of raw material, 40%-50% of the purchases of finished products from external suppliers, and 85% of the in-house production after the season had started, compared with only 0%-20% in the case of traditional retailers.
In spite of the economic downturn globally during the fourth quarter of 2008, Alibaba.com announced that total revenue for the company increased 39 percent over 2007, and registered users jumped by 80 percent. More than 1 million new members joined during each of the third and fourth quarters of 2008. Questions • What are the implications of the company's new ownership structure and shareholder expectations? Over the years, Alibaba.com has developed an effective group of programs and tools to make using the site easier, safer, and more rewarding. Alibaba.com must keep the customers royalty by developing more easy to use, advanced tool on the website, better service to make distinct with the competitors.