Harrington Collection:Sizing Up The Active-Wear Market

Presented By:

Rachit Gupta Poonam Chauhan Subhasish Das

Introduction : Est. 1960Preeminent Brands for women designer, elegant, high-

end fashion.

Business Divided into two segment: ManufacturingRetailingMarket Segmentation :

Designers Harrington Ltd.

Bridge Sopra and Christina Cole

Better Vigor

Financial Performance:From Company’s profit • Manufacturing Group accounted for 50.3%• Retail Group accounted for 49.7% • Three Years Financial Results:

This clearly shows the decline in profit

Year Profit Margin

2005 11%

2006 9.8%

2007 8.8%

Market Study:U.S. Women’s Apparel Market: Units Sold

Price Point Annual 2005 millions

Annual 2006 millions

Annual 2007 millions

Channels

$ 200 + 138.3 139.2 143.2 Specialty & upscale department stores$ 100-$200 219.0 218.9 222.2

$50-$100 438.0 468.9 511.5 Warehouse clubs, Super centers & othersUnder $50 489.9 524.3 584.6

Consumers became very price sensitive and 50% apparels were purchased when put on SALE.

Active-wear Market…Departmental store reports showed that active wear (consist of

matching hoodie, pants, and tee shirt) inventory sold quickly.Twice turnover rate that of current Harrington collection

apparel.2007- 7.5 million active-wear units sold Expected to double in 2009 i.e. 15 million Market share of “better” classification is expected to grow up

to 40% in 2009 from 20% in 2007 Juicy couture by Liz Claiborne –better segment active wear

leader and popular with Hollywood celebritiesPotential market in stylish active wear segment

Environmental analysis and Marketing Mix:consumera) Target customers showed interest in Active-wear segment

b) Loyal customers were interested in something fresh & comfortable rather then tailored & professional look

c) 10% of customers purchasing apparel in $100-$200 price range showed interest in buying active-wear range with superior styling, fabric & fit was available

product: stylish active wear apparel with less expensive pricing, suits the customer preference

COMPETITION:

a) Liz Claiborne’s Juicy Couture

b) Jones Apparel Group

c) Technology product and leisure-activity spending

Differentiation :

a) Top in house design staff

b) Durability

c) Marketing and

d) Outstanding service

CONTROL:a) Control over customer serviceb) Product displayc) Sales staffd) Quality

CONSTRAINTS : Outsourcing location Near by location like MEXICO to maintain

quality and competitive advantage

Brand name-Vigor division suits the segment “ trend setters” and strength

to support less expensive line Broad line and advertised nationally

Short lived Product life cycle Good inventory management to stay ahead of

product life cycle

Channel & Distribution :

a) Excellent relationship with retail trade

b) 7 % market share in better segment with company owned stores

c) Passionate support by specialty stores

Demand and Profitability analysis.Start up Cost $ 12.7 Million

Depreciated Start up Cost $ 2.54 Million

Total Fixed Operating Cost $ 10.5 Million

Direct Variable Cost per Unit $ 37.92

Indirect Variable Cost per Unit $ 8.64

Total Variable Cost per Unit $ 46.56

Wholesale Unit Price $ 95

Contribution Per Unit $ 48.44

Break even Units 269201

Active-Wear Market Size in 2009- 15 Million Units Market share of “better” segment (40%) – 6 Million UnitsHarrington’s Market size in better segment- 4,20,000

Units

Revenue $ 39.9 Million

Profit Before Tax $ 7.3 Million

Profit Margin 18.3%

Over All Profit Margin Of Harrington Collection

9%