1) Identify and close the least profitable stores.

We look at profitability, profit and cost figures for each store and all the stores together. In the below

table we present the figures for these metrics in the current scenario and of the stores with profitability

below a certain % are closed. The total number of stores is 453.

Case Profitability KPI PROFIT COST RETAIL

Profit Reduction

Cost Reduction

Current 10.48% $87,330,929.80 $746,335,208.60 $833,666,138.40 0 0

Close if <5% 10.72% $86,209,680.74 $717,967,886.64 $804,177,567.38 -1% -4%

Close if <6% 10.93% $84,479,503.11 $688,258,308.45 $772,737,811.56 -3% -8%

Close if <7% 11.19% $81,688,367.67 $648,027,483.68 $729,715,851.35 -6% -13%

Close if <8% 11.60% $76,137,670.20 $579,990,413.53 $656,128,083.73 -13% -22%

Close if <9% 12.09% $68,775,160.42 $500,148,820.22 $568,923,980.64 -21% -33%

Close if <10% 12.97% $55,364,616.03 $371,455,464.08 $426,820,080.11 -37% -50%

If we close the stores with profitability less than 5%, then we will lose 1% of our profits but cut 4% of our

costs. We improve our Profitability by .24%. We would be closing 17 stores (4% of the total stores).

Similarly, if we close the stores with profitability less than 6%, then we will lose 3% of our profits but cut

8% of our costs. We improve our profitability further by .21%. Notice that the gain is not significant as in

the first case. We would be closing 33 stores (7% of the total stores).

For other cases, the loss in profitability is >5% and hence we do not recommend them at this point of

time.

Between 5% and 6% scenarios, we notice that in the 5% scenario, the ratio between drop in profit to

drop I cost is 1:4 whereas it is just 1:2 in the 6% case. So we recommend shutting down the stores that

have profitability below 5%.

The store Ids of these stores are:

104 2503

1704 5303

2603 9503

6803 7502

9603 4904

4803 6202

9303 903

303 703

6302

By shutting down these stores, Dillard’s can save costs of $28,367,321.96 and lose only $1,121,249.06

of profits.

2) Reduce hours of its least profitable stores.

The following graphs show the sales at 3 of the least profitable stores by day of week.

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Store 1704

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Store 2603

From the above 3 graphs, we can infer and generalize that the sales are at their peak on Saturdays and

at a minimum on Sunday and Monday. So Dillard’s should shut down its stores on Sunday and Monday

and may be run for extra hours on Saturday to ensure increased profitability.

3) Discontinue some of the least profitable products in stores where those products are generating

the least profit.

Values

Row Labels Profitability KPI PROFIT COST

POLO FAS -7.23% ($5,318,174.05) $78,851,708.39 TAHARI/A -25.37% ($2,530,652.09) $12,507,192.34 KASPER A -34.21% ($2,190,958.14) $8,594,751.05 JONES/LA -8.26% ($1,396,706.08) $18,310,205.80 CM SHAPE -28.62% ($1,374,197.30) $6,175,952.64

Grand Total -11.14% ($17,144,991.61) $171,078,016.81

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Store 6803

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Store 9603

The above table shows 5 brands with least profit (maximum losses). By removing these brands from

the stores where they are causing losses, we arrive at the following figures for each of these brands.

Brand Current Profit

Current Cost

Current Profitability

Future Profit

Future Cost

Future Profitability

POLO FAS $ (5,318,174.05) $ 78,851,708.39 -7% $ 68,141.95 $ 711,995.81 9%

TAHARI/A $ (2,530,652.09) $ 12,507,192.34 -25% $ 124,642.50 $ 705,779.15 15%

KASPER A $ (2,190,958.14) $ 8,594,751.05 -34% $ 727.93 $ 4,987.81 13%

JONES/LA $ (1,396,706.08) $ 18,310,205.80 -8% $ 399,788.20 $ 5,950,380.06 6%

CM SHAPE $ (1,374,197.30) $ 6,175,952.64 -29% $ 27.54 $ 20,457.34 0%

Overall $ (12,810,687.66) $ 124,439,810.22 -11% $ 593,328.12 $ 7,393,600.17 7%

From these two tables, we can see that by eliminating the 5 most unprofitable brands from the stores

where they are causing losses, we can improve our profits by $13,404,015.78 [Overall Future Profit –

Overall Current Profit] while reducing our costs by $117,046,210.05 (Overall Current Costs – Overall

Future Costs). The profitability from these 5 brands goes up from -11% to 7%.

The overall profitability goes up from 10.5% to 13.8%.

The table below summarizes the number of stores from which each of these brands needs to be

removed. Due to space constraints all the stores are not listed here but the top 5 stores with highest

losses related to this product are shown.

Brand # of Stores Top 5 Losing stores

POLO FAS 323 1704, 4904, 2809, 9909, 5104

TAHARI/A 255 3603, 4903, 1703, 3403, 9603

KASPER A 323 2309, 3809, 1609, 3609, 3709

JONES/LA 262 6009, 8109, 9309, 1203, 4603

CM SHAPE 325 8209, 3709, 3609, 9309, 3809

Appendix

Screenshots of Analysis

Question 1

Question 2

Question 3