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Recommending A Strategy

Recommending A Strategy. Ideas for today and tomorrow. BARRY. MERCADO. SALINAS. SITAR. Financial Overview. 2009 Sales of $14.2 Billion vs. 2008 Sales $14.5 Billion 2009 Profit Margin of 7.7% vs. 2008 Profit Margin of 6.9%

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Recommending A Strategy

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  1. RecommendingA Strategy Ideas for today and tomorrow BARRY MERCADO SALINAS SITAR

  2. Financial Overview 2009 Sales of $14.2 Billion vs. 2008 Sales $14.5 Billion 2009 Profit Margin of 7.7% vs. 2008 Profit Margin of 6.9% Mitigated costs of goods sold resulting in profit margin improvement Earnings per share increase $0.24 cents a share vs. 2008

  3. Market Share Overview

  4. Altman’s Z-Score The interpretation of Altman Z-Score Z-Score Above 3.0 – “Safe” based on the financial figures only. Z-Score between 2.7 and 2.99 – ‘Exercise Caution’ Z-Score between 1.8 and 2.7 - Good chance of the company going bankrupt within 2 years of operations from the date of financial figures given. Z-Score below 1.80 – Probability of financial catastrophe is high. GAP Inc., has a score of 8.3, which indicates the company is in good financial standing.

  5. Today’s Challenges Financial Crisis Increase in Supply Costs Low Barrier to Entry Strong Buyer Power

  6. Today’s Opportunities Develop a Plus Size Clothing Line Utilize Resources to Pursue Growth in the Asia Market Capitalize on the Increase in Online Retail Expansion of GapKids Product Line

  7. Market Segmentation Gap Inc. failed to keep up the high demand for plus sized apparel in its stores despite rising obesity rate. 2010 Plus sized segment had become a $27 billion segment in the industry. Summer 2007, Old Nave discontinued their plus size category and made it only available online.

  8. Girls Plus Sizes Chart

  9. Plus Size Market Analysis Only 5% of retail space is dedicated to plus size products. The average American woman is size 14 and plus sizes Sizes 14 -34 account for 67% of the population

  10. Plus Size Consumer Behavior Attribute – Plus size product Psychosocial consequences – Feel more attractive Functional Consequences – Cut fitting the body shape Value – Self-esteem

  11. Strategy Development

  12. Available Options Capitalize peak shopping season by utilizing booths in shopping malls where stores are not present Expand product line to include plus size clothing line Expand operations in Asia

  13. Market Penetration • Goal #1: Capitalize peak shopping season by utilizing booths in shopping malls where stores are not present. • Participants: • Chief Financial Officer • President • Human Resources • Marketing, • Legal Department

  14. Market Penetration • Steps: • Review business cases and assumptions to ensure performance metrics will be met (CEO, CFO, Sales) • Review contractual agreements for leases related to booths (Legal Department) • Determine key locations to maximize profitability (Marketing and Sales) • Source positions at various locations (Human Resources)

  15. Product Development • Goal #2: Expand product line to include plus size clothing line • Participants • Chief Financial Officer • President • Marketing Department • Research and Development • Sales Department • Design Team • Consumer Focus Group • Legal Department

  16. Product Development • Steps: • Conduct research to determine demand for new products (Focus Group) • Review pro-forma to determine profitability expectations (CEO, CFO , Sales) • Create clothing design (Design Team) • Determine stores to carry clothing line (R&D, Marketing, Sales) • Introduce marketing campaign to drive sales (Marketing Sales)

  17. Market Development • Goal #3: Expand Operations in Asia • Participants: • Chief Financial Officer • President • International Strategist • Human Resources • Marketing Department • Legal Department

  18. Market Development • Steps: • Assess product needs within the overseas market. (R&D, Marketing, Sales) • Develop entry plan (President, CFO, International Strategist) • Develop understanding of culture, laws and regulations in Asia (President , CFO, International Strategist, Human Resources) • Utilize similar strategies used in previous global expansions (President , CFO, International Strategist, Human Resources)

  19. Stock Performance

  20. Questions????

  21. New GAP is Coming Pardon Our Dust http://youtu.be/VG8pA0b2PNU

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