Holly Fashion

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cASE 6 HOLLY FASHIONS RAT I O A N A LYSI S Billion-dollal a pparel c ompanies s uch a s C alvin K lein a nd L iz C laiborne a re unusual i n t he g arment i ndustry, w hich c onsists p rimarily o f m uch s malier apparel m akers. O ne s uch f irm i s H olly F ashions ( HF), l ocated i n C herry F lill, New J eriey. H F w as s tarted 1 4 y ears a go b y W illiam H amilton a nd J ohn W hite, who b etween t hem h ad o ver 2 5:yearso f e xperiencew ith a m ajor g arment m anufacturer. A nd t he p artnership i nitially b lended v ery w ell. H amilton, r eserved and i ntrospective, i s e xtremely c reative w ith a r eal f lair f or m erchandising a nd trend s potting. M ainly a s a r esult o f h is g enius, t he H F l abel i s s…show more content…
WORKING CAPITAL CONCERNS Hamilton s uspectst hat F {F'si nventory i s " excessive" a nd t hat " capital i s u nnecessarily t ied u p i n i nventory." \ n/hite's p osition i s t hat a l arge i nventory i s n ecessary t o p rovide s peedy d elivery t o c ustomers.H e a rgues t hat " our c ustomers expect q uick s ervice a nd a l arge i nventory h elps u s t o p rovide i t." Hamilton is skeptical of this argument and wonders if there isn't a mole efficient w ay o f p roviding q uicker s ewice. H e k nows t hat a c onsultant r ecommended t hat H I " very s eriously" c onsiderb uilding a s tate-of-the-artd istribution center. T he p roposed f acility w ould a liow F {F t o r educe i nventory a ld a lso handle big orders from retailers such as Kmart and Wal-Mart. VVhite rejected the suggestion a rguing t hat t he e sttnated $ S-million t o $ 8-mi11ion ost i s e xcessive. c Hamiiton a lso q uestions \ / hite's c redit s tandards a nd c ollection p rocedures. Hamilton t hinks t hat \ / hite
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