MARKETING PLAN

Marketing Plan

Marketing Plan

There are three common valuation methods that are used to value retail type businesses:

Asset-based valuationThe basic formula to use for this method is: The fair market value of a company's assets less the fair market value of its liabilities = the fair market value of a company's equity.

Income approach to value (capitalization of earnings)This method is most the accurate for retail clothing companies, which usually have a constant growth of earnings.

Income approach to value (discounted cash flow)The value of equity utilizing this method is equal to the present value of free cash flows available to equity holders over the life of the business.

Market approach to value This method utilizes market indications of value such as publicly traded comparable retail clothing companies company stock and acquisitions of privately held retailers. (Hermes 2008)

Description of the Industry

The U.S retail clothing store industry (SIC 5611, 5621, 5632, 5641, 5651, and 5699), includes approximately 100,000 stores nationwide and accumulates a combined $150 billion in revenues each year. The retail clothing industry is very concentrated and the 50 largest companies bring in 65% of the total industry revenue. Most companies in the retail clothing industry are specialized and have found a niche market of customers to appeal to such as women's wear, sporting apparel, maternity, men's clothing, or children's clothing. The size of retail clothing companies range from small independently owned boutique shops to large department stores. (CNET 2008)

Industry Trends

Trends in the retail clothing industry have changed dramatically over the past couple years, especially in response to the recent economic turmoil. A few of the most significant for 2009 and upcoming years are:

Reduction in Advertisement SpendingLike many companies today, retail clothing stores are looking to cut costs wherever possible. Many clothing stores are reducing their spending on advertising.

Increase in Coupons and Sales (Gardner 2000)In an effort to help boost revenues many stores are increasingly offering coupons and sales. Retail stores are looking for any incentive to get people in the door and shopping.

Fewer Premium-Priced Products IntroducedSince many consumers are not currently buying things that are not deemed as "necessary", many retail clothing stores will introduce fewer premium priced products and instead focus their efforts on more affordable apparel. (Investment Strategies 2008)

Key Retail Clothing Performance Metrics

The following are performance metrics that the retail clothing industry use to benchmark their performance to others in the industry:

Sales per Square ...