Analysis of JNY and LIZ Financial Data
The following paper will compare the five-year performance of two apparel manufacturers utilizing the DuPont Framework and Return on Equity. Then a three- year analysis of common-size income statements will be undertaken to explain changes in income and expenses within each company. Jones Apparel Group (JNY) and Liz Claiborne (LIZ) are the industry leaders in the manufacturing of better clothing, footwear, fragrances, and costume jewelry, and the subject of this analysis.
Jones Apparel Group’s recognized brands include: Jones New York, Polo Jeans Company, Nine West, Napier, and costume jewelry licensed under the Tommy Hilfiger brand. Jones aims to gain stability in the apparel industry as well as retail markets through building “complete lifestyle brands serving a wide breadth of consumers in a wide range of income levels and shopping destination preferences.” (PR Newswire, 2/7/01).
Liz Claiborne’s brands include: Claiborne, Curve, Lucky Brand, Monet, and licenses to produce DKNY Jeans and DKNY Active. The company’s success can be attributed to its “multi-brand, multi-channel strategy” of diversification in the apparel marketplace. (PR Newswire, 2/23/01).
The apparel industry is among the most volatile sectors in the market today. Subject to overnight changes in trends and fashion, the industry leaders must be accurate with their predictions and quick to accommodate changes. Because of these fluctuations, it is very hard to assign a competitive advantage to one company over another. While Jones Apparel Group seems to have a comparative advantage in profitability and leverage, Liz Claiborne has been historically more effective at generating revenue from its assets. While Liz is surging to eclipse Jones’ ROE numbers as of late, Jones Apparel Group holds a historical comparative advantage in return on equity and overall financial health.
One look at the common-size income statements for these companies can tell a story. While Jones Apparel Group was lagging at year ended 1998, even with a restructuring charge on Liz Claiborne’s income statement, 1999 was a different story. Huge growth at Jones lead to revenues double of that one year ago while Liz, while increasing, was quickly falling behind. The growth for both of these companies continued into the year ended 2000, but Jones Apparel Grou...
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...eaders must be accurate with their predictions and quick to accommodate changes. Because of these fluctuations, it is very hard to assign a competitive advantage to one company over another. While Jones Apparel Group seems to have a comparative advantage in profitability and leverage, Liz Claiborne has been historically more effective at generating revenue from its assets. While Liz is surging to eclipse Jones’ ROE numbers as of late, Jones Apparel Group holds a historical comparative advantage in return on equity and overall financial health.
One look at the common-size income statements for these companies can tell a story. While Jones Apparel Group was lagging at year ended 1998, even with a restructuring charge on Liz Claiborne’s income statement, 1999 was a different story. Huge growth at Jones lead to revenues double of that one year ago while Liz, while increasing, was quickly falling behind. The growth for both of these companies continued into the year ended 2000, but Jones Apparel Group’s results were brilliant compared to Liz Claiborne’s. One billion dollar growth in revenues as well as higher net income is making Jones Apparel Group the company of the future.
In the fiscal-second quarter that ended Feb. 14, the Memphis, Tennessee-based auto parts retailer reported net sales of $2 billion, an increase of 7.3% from the same period a year ago. Accordingly, domestic same-store sales increase 4.3% for the quarter. Net income for the quarter increased by as much as 9.4% - to $192.8 million – over the same period last year, while diluted earnings per share grew 18.8% to $5.63 per share, marking the thirtieth consecutive quarter of double digit earnings per share growth. These are remarkable figures by any means and reflect the company’s ability to sustain growth.
Does Macy’s have the right resources and capabilities for their current strategy? Why or why
Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and P/E ratio all indicate an upbeat future for the company. The current ratio, which is defined as current assets divided by current liabilities, is a measure of how much liabilities a company has compared to its assets. Wal-Mart in the year of 2007 had a current ratio of .90, and as of January 2008 it had a current ratio of .81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. Wal-Mart in the year of 2007 had a quick ratio of .25, and as of January 2008 it had a ratio of .21. Both the current ratio and quick ratio are a measure of liquidity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged.
Taking a deeper look at the competition between two major retailor companies, JCPenney and Macy’s. We can see that JCPenney has a -31.8% of return on equity compared to a
Lululemon Athletica Inc. encounters continual business pressure due to the increasing number of companies in the athletic clothing industry. Since the time Lululemon was founded in Vancouver in 1998, a rapid popularity has grown for top-quality athletic clothing especially in the yoga line. The success resulting from this industry created competition for Lululemon. As of today, Lululemon is not the sole company to provide consumers with high-end athletic clothing. Thus, causing business pressures like market pressure and technology pressure
The market in which this company operates may be considered a division of the fashion industry. This industry is known for being highly competitive and dynamic. Also for obvious reasons many companies within it concern themselves with company image.
The organization that I have chosen for the purpose of this corporate finance analysis is Wal-Mart. As is well known, Wal-Mart is the global market leader of the global retail industry and has been in operation for more than 100 years. The organization is listed primarily on the New York Stock Exchange where it has the market capitalization of 250.55 billion dollars and average trading volume of 6,075,000 shares (Yahoo Finance, 2013).
Miss Ford is a portfolio manager for Northpoint Group, a mutual-fund management firm. Kimi is considering buying shares of Nike Inc. for the NorthPoint Large-Cap Fund she is managing. A week before starting the research, Nike had presented the fiscal year 2001 results in an analysts meeting. Main purpose of this meeting was to communicate the new strategy to revitalize the company. Nike had seen her revenue stream stagnating since 1997 to a level of $9.0 billion. Within this time period, net income had been decreasing with $220 million to $580 million in 2001.
Mr.Lauren had more dreams to fulfill. He chose the name Polo for his line of ties because the sport repsented to him a lifestyle of athletic grace and discreet elegance, an image of men who wore well-tailored, classic clothes and wore them with style. With that image in mind, Mr Lauren established Polo as a separate menswear company in 1968, producing a complete line of men's clothes. Using only the finest fabrications, Mr. Lares's menswear was distinctive, innovative, but always classic and refined. His suits blended the American Ivy League natural shoulder silhouette with the fitted shape and expensive fabrics of the best European custom tailored clothing. His shirts were all cotton, richly patterned and expertly made. This same care was, and still is, applied to every element of...
JCPenney is a chain of American mid-range department stores that is based out of Texas that started over 100 years ago. JCPenny has been successful for most of its time up until the last three to four years. The company is trying relentlessly to overcome the lingering effects of the makeover that former CEO, Ron Johnson, had implemented in order for the company to take a new direction in hopes of increasing sales. The new CEO, Myron Ullman, has taken a close look into the markets demographic segmentation along with the income segmentation in order to attempt to return the retailer back to its old self, which is to appeal to middle-market customers. A couple issues of major concern for the company are the dissolving of Johnson’s Boutiques, the price of their products, and overall revenue.
(Agrawa &Kamakura, 1995) Fast fashion retailers are landing advertisements in famous fashion magazines such as Vogue, ELLE and Marie Claire, etc. The brands display their products through the advertising platform that was formerly the sole domain of luxury brands. This changes customers’ perception towards fast fashion by displaying their products in the magazines in a splendid way. (Okonkwo, 2007) Additionally, fast fashion retailers are cooperating with famous luxury brands designers to offer limited and exclusive products: H&M collaborations with Alexander Wang, Isabel Marantz, Versace, Marin, Mayson Martin Mariela, etc. (Okonkwo, 2007) These kind of collaborations raise the brand awareness by sharing the reputations of famous designers and succeed in boosting their sale by attracting fashion conscious
The article provides examples of companies that have faced the crisis. For instance, the premium position captivity reason was among the main factors causing Levi Strauss to lose its share of market. ...
Many clothing companies encounter difficulties in terms of monitoring consumer behaviour and managing customer demand. However, these difficulties are solved by implementing a business strategy known as fast fashion. Fast fashion is “a business model that encourages new designs in stores every few weeks instead of every fashion season.”( Okonkwo, 2009 p.229). The retail fashion industry has seen a major transformation in recent years. Fast fashion companies introduce the newest collection of clothes in accordance with their research of latest fashion trends and are manufactured rapidly and efficiently to enable consumers to benefit from the latest pieces at lower prices. This assignment discusses the concept of fast fashion by identifying the relevant characteristics and how they affect company approaches to capacity planning. It will also look at how fashion companies meet their demand and how it contributes to Zara’s success in particular.
Ann Taylor, like many other fashion retailers, went through a period of decline during the economic recession in 2008 (Pearce & Robinson, 2013, p. 2–1). While many retailers were struggling the National Retail Federation suggested that these businesses try to focus on areas where their performance was lacking and improve those areas rather than immediately closing their doors (p. 2-1).
Carr’s (2003) analysis of the commoditisation of IT represents food for thought for Zara. IT capability is valuable, regardless of whether or not it is a commodity, only if it enables the business’ strategy. Zara uses a vertically integrated supply chain to deliver their competitive strategy of fast fashion. IT is a vital component of its strategy as its employees need access to information across all stages of its value chain. The data contained on its network is vital to support critical business decisions. The fast fashion strategy requires all personnel to be in a position to respond quickly and effectively to changing fashion trends and customer demands. Zara are fast followers of fashion and IT is important for keeping its designers in contact with its suppliers.