Introduction
The Basics
In order to gain a better understanding of the profit generating differences between small and large cap companies within the clothing industry, this report will focus on two companies: Urban Outfitter and L. Brands Inc. Within this report, Urban Outfitters will serve as the target company and it will be compared L. Brands Inc., the benchmark company.
Background
Urban Outfitters is a small cap clothing company that was founded in 1970 as the Free People Store in Philadelphia, Pennsylvania. The company was incorporated in 1980, and today it trades on the NASDAQ under the ticker symbol URBN. With 47 years under its belt, 2016 revenue of $3.45 billion, and a market cap of $3 billion, Urban Outfitter is one of the
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Brands Inc. are successful corporations that were both founded within the U.S. and are both listed on U.S. exchanges. While they share the same industry (clothing/fashion), they serve the needs of different customers. Whereas Urban Outfitter focuses on young adults, L Brands focuses heavily on woman of all ages. Additionally, L. Brands’ products tend to carry a premium price over those sold by Urban Outfitters. Sizewise, L. Brands is the larger and more established company, both in terms of locations, employees, and market cap. Nevertheless, both companies are at risk due to the dwindling amount of shoppers who visit retail …show more content…
The first ratio that will be used is the profit margin ratio. This ratio is computed by dividing net income by sales. The second ratio to be used is known as the return on assets ratio (ROA). Return on Assets is computed by dividing net income by total assets. The final ratio that will used within this report is called the return on equity ratio (ROE). This ratio can be calculated by dividing a company’s net income by its total equity.
There are quite a few reasons for choosing the three ratios mentioned above. One big reason for our selection is due to the popularity of these ratios. By having a lot of popularity, we can be sure that our audience will be familiar with what we are talking about, without having to waste too much time explaining. Another reason for choosing these three ratios is that they are relatively easy to calculate. A final reason for picking our three ratios is because they allow us to understand why a company may be outperforming or underperforming in term of profitability, without having to be a professional.
Other Qualitative and Quantitative Information to be
After careful review of the American Eagle Outfitters, Inc. 2014 Annual Report, it was noted that the company have four areas that they are focusing on. The first being to make more money by adding more “compelling product assortments” by providing an unique costumer experience both online and in stores. The second being to expand their Omni-Channel capabilities. The report defines Omni- Channels as stores including displays and kiosks, web, mobile devices, social networks and email. The third is growing their digital business. The final area is improving profitability.
On average, competitors from the retail family clothing industry would experience lower sales and would possess too much inventory in comparison to American Eagle Outfitters and Urban
The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic
Urban Outfitters is a corporation that sells clothing, music accessories, home décor and more. This company is targeted at people in their teenage years and people in their early twenties. The official name of the company is Urban Outfitters Inc. The CEO of Urban Outfitters is Trish Donnelly. Other companies that supply the same types of products
This report presents data describing the differences amongst the two department stores, their fundamental visions, and comparative statistics. Macy’s or Dillard’s: Differences amongst these competitors There are several aspects you can analyze from each department store. Major pieces do set each one apart from the other. Brand names carried by Macy’s and Dillard’s from an average shoppers point of view can go completely unnoticed unless price is involved. For trend shoppers brand names can either make or break a retail store. It can easily determine if he or she will walk to Macy’s or Dillard’s because they already know the store does or does not carry that brand. This is consistent with each department throughout both stores and
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
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.
Urban Outfitters, often referring to itself as simply ‘UO’, is the corporate entity that includes retail chains Urban Outfitters, Anthropolgie, Free People, Terrain, and BHLDN, has became the greatest global retailer in the world. Back in the beginning, the first Urban Outfitter store was opened on a street nearby Pennsylvania University in 1970 by Dick Hayne and Scott Belair, both are the company’s chief executive officers (CEO). The first store’s name was Free People and it sold furniture, second-hand clothing, accessories, and decorative items. The store’s target market was young people, especially college students and it continues to dominate this market segment.
success factors. However, the company has a few weaknesses and threats they need to address in
The first ratio used in the financial analysis was a profit ratio which is the Return on Total Assets (ROA).
Lululemon is a large company, making clothing for athletic activities, not only are they in the women’s athletic range, but they have hit the men’s market and youth range as well. A SWOT analysis will be used to break down Lululemons strengths, weaknesses, opportunities, and threats to the business. Strengths which Lululemon have achieved include multi-faceted and community-based approach strategy, making customers feel part of a community through marketing strategies like there “ambassador program, social media, in-store community boards and grassroots initiatives” (Lululemon, 2016 Annual Report, 2016, p. 3). Touchpoints which have been a part of this multi-channel include Lululemons websites www.lululemon.co.nz and ivivva.com which is based around female youth active ware. With Lululemon having 12,500 full-time employees worldwide (Lululemon Athletica Inc. (LULU), 2017) with 406 stores (Lululemon, 2016), their large market capital of $8.33 billion (Lululemon Athletica Inc. (LULU), 2017), shows the total value of Lululemons shares of stock. Lululemon having $581.1 million in net revenue, this is an increase of 13% while their gross profit increased by 17% rising to $297.4 million. (Lululemon Athletica Inc. Announces Second Quarter Fiscal 2017 Results, 2017). This shows a steady increase in profit for Lululemon for 2017 which is a strength for them.
Even though H&M follows a strategy which differs significantly from Inditex’s approach it is the closest competitor from the financial point of view. H&M differs from Zara because it outsources all of the production, it is more price oriented and spends more money on advertising. But both companies are based in Europe, are fashion forward at lower price retailers, and have a strong international expansion strategy. Exhibit 6 indicates that the financial results of Inditex and H&M seem to
In this paper I will discuss Macy’s Incorporated by analyzing their business level strategies to determine which I think is the most important to their long term success and if I think it is a good choice. I will analyze their corporate level strategies to determine which I think is the most important and whether or not I believe it is a good choice. I will analyze the competitive environment to determine the corporations’ most significant competitor and compare the two companies’ strategies at each level and evaluate which company I think is most likely to succeed in the long term. Once the
American Apparel, is an American multi-national clothing manufacturer, distributor and retailer since 1988based in Los Angeles, California. Dov Charney, a Canadian business man was a founder and former CEO of the company. He was involved in nearly every part of the business process from design and manufacturing to marketing. The Ernst & Young named Charney Entrepreneur of the Year in 2004. He was also termed "Man of the Year" by various fashion
Ever since the creation of the well-known body wear Under Armour in 1996, Kevin Plank 's formal University of Maryland football player. The band has under gone rapid expansion and popularity throughout the world today being that it all started in a basement. It has taken over the performance workout apparel market in the United States and worldwide, over the years it has begun to outsell another well-known sporting apparel such as Nike and Addidas. Under Armour Inc. has even expanded its market way beyond performance apparel line and brings products such as footwear and casual wear also workout wear. The company has prided itself on maintaining a competitive advantage by always having top-notch products and adopting new ideas to outcompete the rivals.