FINAL Policy Presentation
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Transcript of FINAL Policy Presentation
Andrew Havern Megan Kavanagh Jamie KnabelTrevor WargoNick Welch
Agenda2. Key Facts3. Brands4. Company Segmentation5. SWOT6. Objectives 7. Strategy #1: Maternity Clothing Line12. Strategy #2: Expansion of Side-By-Side Stores15. Strategy #3: Carter’s Smartphone App19. Conclusion
1
Key Facts
2
Largest Children’s Apparel Marketer
Retail
International
16.5% Market Share
Ecommerce
Wholesale
Brands
3
Company Breakdown
Retail49.2%
International10.9%
Wholesale39.9%
OshKosh Wholesale2.5%
Carter’s Wholesale37.4%
Carter’s Retail37.6%
OshKosh Retail11.6%
4
SWOT AnalysisStrengths• Strong presence in the
market place• Brand loyalty with
customers
Weaknesses• Concentration of Carter’s
trade customers• Lack of use of technology
WO StrategiesStrategy 3: Carter’s
Phone App
SO StrategiesStrategy 1: Maternity
Clothing LineStrategy 2: Side-by-
Side Stores
Threats• Declining birth rate in
the United States• Competition in the
marketplace
Opportunities• Increase in demand for
children’s clothing• Growth in Ecommerce • Diversify our company
by expanding portfolio
WT StrategiesST Strategies
5
ObjectivesDiversify Portfolio of Brands
Increase Customer EngagementIncrease net sales by 10%
Strategy 1:Maternity
Clothing Line
Strategy 2:Side-By-Side
Store Expansion
Strategy 3:Mobile
Application
-Incremental Sales Growth
of 5%-Obtain 3%
Market Share by 2017
-Open 60 side-By-side
locations-Increase retail
net sales by 11%
-Achieve 750,000
downloads by the end of
2017
6
Strategy 1
Maternity Clothing Line
MOMMY TO BE
7
Place
Development of one stop shop to increase spending per customers.
Strategy 1: Mommy To Be
Maternity T-shirts, Tanks, Sweaters, Dresses, Shorts, and Pants
$10.00-$50.00
Social Media, Print Ads, In Store Ads
Introducing maternity line in retail and wholesale on January 1st, 2015
Carter’s Retail and Wholesale Locations
Promotion
Price
Product
Brand Debut
8
Strategy 1: Mommy To Be Advertising
Introducing
MOMMY TO BE by Carter’s
Maternity Line!
Introducing
MOMMY TO BE by Carter’s
Maternity Line!
Introducing
MOMMY TO BE by Carter’s
Maternity Line!
9
Expected net sales growth of 12% from 2015 to 2017Expected net income growth of 28% from 2015 to 2017
Strategy 1:Mommy To Be Financials
(in thousands) 2015 2016 2017
Net Sales $140,956.00 100.00% $153,683.46 100.00% $159,363.37 100.00%
Operating Income $53,882.00 38.23% $59,523.38 38.73% $61,995.35 38.90%
Net Income $13,593.00 9.64% $17,204.00 11.19% $18,786.00 11.79%
10
Strategy 2
Side-By-Side Store Expansion11
Strategy 2:Side-By-Side Expansion
• Continue to grow market share (grew sales volume by 4.7%) and spread the launch of our maternity line
• Locations: • Northeast- 10• Midwest- 10• West- 15• Southwest- 10• Southeast- 15
1010
10 15
15
12
Strategy 2:Side-By-Side Expansion Marketing
Two Big Brands, One Small Stop
Download our new Carter’s App for more info
13
Strategy 2: Side-By-Side Expansion Financials
(in thousands) 2015 2016 2017
Net Sales $71,421.00 100.00% $154,269.36 100.00% $165,016.38 100.00%
Operating Income $4,211.02 5.90% $56,370.00 36.54% $63,822.11 38.68%
Net Income $2,695.05 3.77% $36,076.80 23.39% $40,846.15 24.75%
Expected Net sales growth of 57% from 2015-2017Expected Net income growth of 93% from 2015-2017
14
Strategy 3
Carter’s Smartphone App15
Strategy 3:Carter’s Smartphone App
Registry
My Purchases
Browse Products
My Account
Blog & Videos
Connect With Us
Donate To Carter’s Causes
Mu My Carter’s Reward’s Card
My Store
Carter’s Rewards Card
registry
Find A Registry
Create Registry
Browse
Carter’s Rewards Card your first in-app purchase
16
Strategy 3:Carter’s Smartphone App
Registry
My Purchases
Browse Products
My Account
Blog & Videos
Connect With Us
Donate To Carter’s Causes
Mu My Carter’s Reward’s Card
My Store
17
Carter’s Rewards Card
0
SHOP
Baby Girl Sets
3-Piece Bodysuit & Diaper Cover Set
$11.00
Add to Cart
Ship-To-HomeFree In-Store Pickup
Narrow BySort By
3-Piece Bodysuit & Diaper Cover Set
$11.00
Carter’s Rewards Card
Mommy Knows Best__________________________________________________
Make Mother’s Day Special!
How To: Shop Healthy on A BudgetIf anyone knows what is best for their children, it is naturally Mommy! Because after all, Mommy Knows Best! Here are the latest and greatest tips all Mommy’s should know when making a top notch shopping list:
Strategy 3:Carter’s Smartphone App Marketing
Of your first in-app order! JANUARY 1, 2016
follow us on
…and mommy
too!
Introducing MOMMY TO BE by Carter’s Maternity Line!
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Strategy 3: Carter’s Smartphone App
(in thousands) 2015 2016 2017
Net Sales $1,500.00 100.00% $1,620.00 100.00% $1,749.60 100.00%
Operating Income $132.00 8.80% $648.00 40.00% $699.84 40.00%
Net Income $179.52 11.97% $414.72 25.60% $447.90 25.60%
19
Expected Net sales growth of 15% from 2015-2017Expected Net income growth of 60% from 2015-2017
Conclusion
20
Base Sales Forecast
2015 2016 20178% Net Sales 3,125,377 100.00% 3,375,408 100.00% 3,645,440 100.00%
60% CoGs 1,875,226 60.00% 2,025,245 60.00% 2,187,264 60.00%Gross Profit 1,250,150.98 40.00% 1,350,163.05 40.00% 1,458,176.10 40.00%
30% Selling, General & Administrative Expenses 937,613.23 30.00% 1,012,622.29 30.00% 1,093,632.07 30.00%Royalty Income (37,500.00) -1.20% (37,500.00) -1.11% (37,500.00) -1.03%Operating income 350,037.74 11.20% 375,040.76 11.11% 402,044.02 11.03%Interest Expense 30,000.00 0.96% 32,000.00 0.95% 34,000.00 0.93%Interest Income (500.00) -0.02% (500.00) -0.01% (500.00) -0.01%Other expense, net 3,000.00 0.10% 3,300.00 0.10% 3,600.00 0.10%Income before income taxes 317,537.74 10.16% 340,240.76 10.08% 364,944.02 10.01%
36% Provision for income taxes 113,360.97 3.63% 121,465.95 3.60% 130,285.02 3.57%Net Income 204,176.77 6.53% 218,774.81 6.48% 234,659.01 6.44%
CAGR of net sales-8%234,659.01
3,645,440
21
Consolidated income statement with 3 strategiesin (000s) 2014 2015 2016 2017net sales 2,893,868$ 100% $3,339,254 100.00% 3,684,980$ 100.00% 3,971,570$ 100.00%COGS 1,709,428$ 59% $2,015,560 60.36% 2,204,769$ 59.83% 2,374,358$ 59.78%Gross Profit 1,184,440$ 41% $1,323,694 39.64% 1,480,211$ 40.17% 1,597,211$ 40.22%Selling General & Administrative 890,251$ 31% $949,613 28.44% 1,024,674$ 27.81% 1,105,890$ 27.85%marketing -$ 0% $2,568 0.08% 1,200$ 0.03% -$ 0.00%royalty income 39,156$ -1% -$37,500 -1.12% 37,500-$ -1.02% 37,500-$ -0.94%operating income 333,345$ 12% $409,013 12.25% 491,837$ 13.35% 528,821$ 13.32%interest expense 27,653$ 1% $30,000 0.90% 32,000$ 0.87% 34,000$ 0.86%interest income 403$ 0% -$500 -0.01% 500-$ -0.01% 500-$ -0.01%other expense, net 3,189$ 0% $3,250 0.10% 3,555$ 0.10% 3,860$ 0.10%income before income taxes 302,906$ 10% $376,263 11.27% 456,782$ 12.40% 491,461$ 12.37%provision for income taxes 108,236$ 4% $135,455 4.06% 164,442$ 4.46% 176,926$ 4.45%net income 194,670$ 7% $240,808 7.21% 292,341$ 7.93% 314,535$ 7.92%cannablization* -$ 0% $20,891 0.63% 20,891$ 0.57% 20,891$ 0.53%net income less cannabalization 194,670$ 7% $219,917 6.59% 271,449$ 7.37% 293,644$ 7.39%
Consolidated Pro Forma with 3 Strategies
CAGR of net sales- 11%
net income growth from base Pro Forma 7.16% 19.40% 20.09%
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3,971,570
7.16% 19.40% 20.09%
Questions?
23
Backup SlidesStrategy 1• Mommy To Be Financials• Mommy To Be AssumptionsStrategy 2• Side-By-Side Expansion Financials• Side-By-Side Expansions Assumptions• Side-By-Side Expansions Assumptions LeasingStrategy 3• Carter’s Smartphone App Financials • Carter’s Smartphone App Assumptions
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Strategy 1: Mommy To Be
in (000s) 2015 2016 2017105% Net Sales 140,956$ 100.00% 153,683.46$ 100.00% 159,363.37$ 100.00%
60% CoGs 84,573$ 60.00% 92,210.07$ 60.00% 95,618.02$ 60.00%Gross Profit 56,382$ 40.00% 61,473.38$ 40.00% 63,745.35$ 40.00%marketing 500.00$ 0.35% 200 0.13% 0 0.00%SGA-variable- 2,000.00$ 1.42% 1750 1.14% 1750 1.10%Operating income 53,882$ 38.23% 59,523.38$ 38.73% 61,995.35$ 38.90%Interest Expense -$ 0 0Interest Income -$ 0 0other income -$ 0 0Income before income taxes 53,882.30$ 38.23% 59,523.38$ 38.73% 61,995.35$ 38.90%
36% Provision for income taxes 19,397.63$ 13.76% 21,428.42$ 13.94% 22,318.33$ 14.00%Net Income 34,485$ 24.46% 38,094.97$ 24.79% 39,677.02$ 24.90%cannabalization* 20891 14.82% 20891 13.59% 20891 13.11%net income less cannabalization 13,593$ 9.64% 17,204$ 11.19% 18,786$ 11.79%
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Strategy 1:Mommy To Be Assumptions
in (000s) cannablizationretail sales 54,404.72$ COGS 32,642.83$ taxes 11,751.42$
20,891.41$
sales (000s) stores sales per store(000s) % of maternity sales- 5% of store storescarters 1088094 531 2,049 5% 102.46 531 54,404.72$
wholesale108,188.80 is 10% of wholesale carters retail total retail and wholsesale
80%86,551.04 total wholesale maternity 2015 54,404.72$ 140,955.76
85%91,960.48 total wholesale maternity 2016 54,404.72$ 146,365.20
90%97,369.92 total wholesale maternity 2017 54,404.72$ 151,774.64
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Strategy 2: Side-By-Side Expansion
in (000s) 2015 2016 2017Net Sales 71,421.00$ 100.00% 154,269.36$ 100.00% 165,016.38$ 100.00%CoGs 55,109.98$ 77.16% 86,597.36$ 56.13% 90,686.22$ 54.96%Gross Profit 16,311.02$ 22.84% 67,672.00$ 43.87% 74,330.15$ 45.04%marketing 2,000.00$ 2.80% 1,000.00$ 0.65% -$ SGA-variable 10,100.00$ 14.14% 10,302.00$ 6.68% 10,508.04$ 6.37%Operating income 4,211.02$ 5.90% 56,370.00$ 36.54% 63,822.11$ 38.68%Interest Expense -$ -$ -$ Interest Income -$ -$ -$ other income -$ -$ -$ Income before income taxes 4,211.02$ 5.90% 56,370.00$ 36.54% 63,822.11$ 38.68%Provision for income taxes 1,515.97$ 2.12% 20,293.20$ 13.15% 22,975.96$ 13.92%Net Income 2,695.05$ 3.77% 36,076.80$ 23.39% 40,846.15$ 24.75%
26
Carter's2015
calculating net sales (000s)60 carter's stores sales per store sales stores
1-Apr 75% 1440 1080 20 21,600 1-Jul 50% 1440 720 20 14,400
1-Oct 25% 1440 360 20 7,200 43,200 stores in 2015
20161.08 1440 1555.2 60 93,312 stores in 2016
20171.08 1540 1663.2 60 99,792 stores in 2017
Osh Kosh1-Apr 75% 940.7 705.525 20 14,111 1-Jul 50% 940.7 470.35 20 9,407
1-Oct 25% 940.7 235.175 20 4,704 28,221 stores in 2015
20161.08 940.7 1015.956 60 60,957 stores in 2016
20171.08 1006.549 1087.07 60 65,224 stores in 2017
2015 total 71,421 2016 total 154,269 2017 total 165,016
Strategy 2: Side-By-Side Store Assumptions
27
Strategy 2: Side-By-Side Expansion Assumptions
opertaing leases price per sq foot sqaure feet in storestores operating lease$110.00 4200 60 27720000
SGA variable10 workers
1,125.00$ mimimum wage per month12 months60 stores
8,100,000.00$ salary expense2000000 miscelaneous
10,100,000.00$ SGA variable
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Strategy 3: Carter’s Smartphone App
in (000s) 2015 2016 2017Net Sales 1,500.00$ 100.00% 1,620.00$ 100.00% 1,749.60$ 100.00%CoGs 900.00$ 60.00% 972.00$ 60.00% 1,049.76$ 60.00%Gross Profit 600.00$ 40.00% 648.00$ 40.00% 699.84$ 40.00%marketing 68.00$ 4.53% -$ -$ SGA-variable- CREATING APP 400.00$ 26.67% -$ -$ Operating income 132.00$ 8.80% 648.00$ 40.00% 699.84$ 40.00%Interest Expense -$ -$ -$ Interest Income -$ -$ -$ other income -$ -$ -$ Income before income taxes 132.00$ 8.80% 648.00$ 40.00% 699.84$ 40.00%Provision for income taxes 47.52$ 3.17% 233.28$ 14.40% 251.94$ 14.40%Net Income 179.52$ 11.97% 414.72$ 25.60% 447.90$ 25.60%
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Strategy 3: Carter’s Smartphone App Assumptions
assumptionscreating an appnet sales- approximate sales based upon other retailers creating an appsales growth- based on base pro forma sales growthinitial cost- between 350,000-500000 to create an appdesignated our initial cost for an app at $400,000COGS- 60% based on our base pro forma COGSmarketing- 68,000 for intiial marketing strategies to make it knowntax rate- 36%profit- making $447,900 at the end of 2017
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