American Eagle Outfitters Case Summary

The purpose of this paper is to advise analyze the financial statements of Dillard’s, Inc. in order to recommend whether or not my client should invest $1 million in the large retail company. I will compare the financial statements of Dillard’s, Inc. its competitor, Kohl’s Corporation. Investing in retail can be risky because a retail company’s performance is very heavily influenced by factors that have nothing to do with the actual company such as the overall performance of the economy or the weather during the holiday shopping season. There is, however, potential for profitability within the retail sector. Based on my analysis, I recommend that the client should not invest in Dillard’s, Inc. for the following reasons. First, Dillard’s has experience a decline in net income in the last three years. Second, liquidity ratios indicate that they could face possible liquidity constraints in the future. Third, long-term debt paying ability ratios indicate that the company could have trouble paying off the principal of its current debt obligations. Fourth, the profitability ratios are well below industry averages, suggesting that there are more profitable companies to invest in within the industry. And finally, Investor analysis ratios provide mixed opinion of the future performance of the company. I conclude that retail can be a profitable industry to invest in if an investor has the risk tolerance and risk capacity to withstand the uncertainty, but neither Dillard’s

Advertising expenses are included as part of SG&A in the income statement. Additionally, attracting top management talent will further increase the company’s expenditure on SG&A since they have to incentive individuals to join such a company that has recently emerged from the bankruptcy. Based on projections, Eddie Bauer expected that SG&A as a percentage of net sales will decrease from 37.6% in 2004 to 34.3% in 2008, indicating a deviation from economic reality, regardless of expected operational efficiencies. Eddie Bauer would need to maintain its SG&A percentage to run new marketing campaigns and attract top talent. Eddie Bauer may be understanding its assumptions about how much it needs to invest to drive these strategic initiatives. Thus, it would be more appropriate to increase SG&A to around 40% of net sales to account for these large expenditures. Next important metric would be based on the company’s intent to resize to an optimal store size of 5,500 square feet as mentioned in the case. It is helpful to compare the company’s sales per square foot with top 10 comparable companies in the retail industry to determine whether Eddie Bauer’s projections are aligned with economic reality. Eddie Bauer is approximated to have 1.975 million square feet in retail space in 2006. Thus, Eddie Bauer should expect to attain retail

Lowe’s is the 14th largest retailer in the United States and is presently planning aggressive expansion, opening a new store on average every three days. Lowe's revenue growth is primarily a function of penetration of the market increase resulting from a burst of new locations instead of the same store sales. Although Lowe’s has grown tremendously, it remains half the size of Home Depot and has serious debt burden that increases its risk level drastically. Lowe’s is Home Depot’s largest competitor because both companies have the same products, services, and enormous warehouse formats. In this major retail market Lowe’s and Home Depot stores go toe

The internal analysis of the company paints a picture of a firm that is well endowed with resources, both human and capital. The company boasts of an asset base of $11.4 billion according to the financial reports for the year 2012. This is huge, and it shows that the company is well grounded and has the capacity to gain a competitive edge in the highly competitive retail market in which it operates (Britton & Jorissen, 2007).

Target Corporation uses an interesting capital-budgeting system. Projects are proposed using Capital Project Requests (CPRs) and must be approved before money can be spent. The level of approval needed depends on the amount being requested. For projects requiring less than $100K, lower management can approve, but anything above this amount goes to the Capital Expenditure Committee (CEC) which is comprised of 5 executive officers. For projects requiring greater than $50 million, the Board of Directors must approve.

The companies that were chosen for a company analysis include Macy’s, Kohl’s, and Burlington. Since the retail industry has been lagging behind lately, these companies will help determine the prospective financial investment in the retail industry. As Macy’s as our primary company, we chose Kohl’s and Burlington to be the two comparative companies. These companies are comparable due to the same SIC code of 5311 in the subgroup of department stores. These companies offer similar products and services with little differentiation between the three.

American Eagle Outfitters Inc. uses straight-line method to find depreciation of plant and property. The estimated useful lives of its buildings is at 25 years while its leasehold improvements and fixtures and equipment have estimated useful lives of lesser of 10 years or the term of the lease and 5 years, respectively. The cost of property and equipment for the fiscal year ending February 1, 2014 was $1,594,360,000 and its book value was $632,986,000. For the fiscal year ending January 31, 2015, the cost was $1,684,709,000 and the book value was $694,856,000. The depreciation expense trend for the past three years was generally upwards. While depreciation expense decreased by $5,995,000 from fiscal year 2013 to fiscal year 2014, it increased by $15,768,000 from fiscal year 2014 to fiscal year 2015.

When it comes to warehouse-style club stores, there are really only four names out there: Costco, Sam’s Club, Wal-Mart and BJ’s. This paper will discuss the Costco and BJ’s. The different type of strategies being utilized by each company, the purpose of the financial statements, their Vertical & Horizontal analysis, how each financial rations ties into the two company’s strategies, Solvency & Performance for each company, a SWOT analysis of each company and finally if the expectations of the stakeholders of each company are being met.

This paper commences by defining the problems that were faced by Lululemon Athletica Inc in 2013. After, the author explores the causes of the issues that the company was experiencing and the effects that they had on Lululemon Athletica Inc. The next step is to look at ways in which the issues could have been addressed both for the short-term and long-term. When all is said and done, the audience will fully appreciate why “Lululemon Athletica Inc should revert to its fundamentals – that is, to concentrate on the needs of the consumer”.

As one of the major retailers in the United States, JCPenney has 1,104 department stores in 49 states and Puerto Rico as of February 2, 2013. The key success of its business is tremendously depending on the sales performance. However, the retail business is highly competitive, with low barriers to entry and low profit margin. Due to large sales plunge in 2012, the company is in financial trouble. The thorough analysis of JCPenney’s financial statements is vital to judge the future performance of its business.

With the exception of ROE, most financial ratios and even absolute values bear testimony to Wal-Mart’s recognition as the leader in the retailing industry. The reason behind Sears’s higher ROE can be explained by a comparison of the 3 ratios that constitute the ratio known as DuPont identity that is profit margin, asset turnover and equity multiplier. While both firms had similar profit margins, Wal-Mart’s asset turnover was 2.8 compared to Sears’ 1.1 due to the firm’s effective utilization of assets and lease agreements to facilitate revenue generation.

As the leading discount retailer in the United States, WalMart (NYSE:WMT) has consistently shown an exceptional ability to master the complexities of logistics, supply chain management, retailing and pricing management. The WalMart supply chain is among the most advanced and sophisticated in its use of analytics and information systems globally, often computing pricing variation and analysis literally overnight based on satellite uploads of information (WalMart Investor Relations, 2013). WalMart has also successfully taken a capital-intensive business model and transformed it into a retailing business capable of generating high profitability from low margin products based one efficiency alone (Zhu, Singh, Manuszak, 2009). WalMart is also one of the most-researched companies in the world, and continues to provide in-depth financial data on their Investor Relations site (WalMart Investor Relations, 2013). The purpose of this analysis is to evaluate the mission, vision, and overall strategy of WalMart and also define three objectives for improving the organization's financial position, showing how the objectives defined relate to the mission, vision and strategy of the company. In addition for each objective, meaningful performance measures are provided in addition to defined expected level of performance as well. For each of the objectives chosen at least one new

Under Armour is currently one of the leading companies in the sports apparel industry whose mission is to “Make all athletes better through passion, science, and the relentless pursuit of innovation”.1 When Under Armour first broke into the sports apparel industry it was a disruptive pioneer that initially made the two giants, Nike and Adidas, a little weary. Under Armour revolutionized the sports apparel industry by creating apparel that used synthetic materials as an alternative to natural fibers, such as cotton, or other materials, such as polyester. This all-important switch to these materials resulted in a 2“shirt that provided compression and wicked perspiration off your skin rather than absorb it. A

The following financial report provides an analysis of the financial ratios of David Jones with its close competitor in the retail sector, Myer. The financial ratios analyzed include profitability ratios, leverage ratios, efficiency ratios and market ratios for the two companies. The analysis utilizes individual company time-series analysis as well as industry cross-sectional analysis with the aim of determining the competitiveness of David Jones relative to its close competitor Myer.