tues_4pm_jung lee_h&m ppt

Agenda

• Company background• Industry Analysis• Competitor Analysis• Client Analysis• Strategic

Recommendations

COMPANY BACKGROUND

Retail clothing company for men, women, teenagers, and children

Founded by Erling Persson in 1947 as women's clothing store Hennes

Business concept: “Fashion and quality at the best price.”

Acquired Mauritz Widforss in 1968 and began including men's and children's clothing in stores

Company name then became

Hennes & Mauritz (H&M)

H&M was listed on

Stockholm Stock Exchange

in 1974

Expanded into US, Europe, Asia, Africa, and South America

Currently one of the largest

clothing retailers in the

world

INDUSTRY Analysis

The evolution of the industry

Porter’s Five Forces Model

- Intensity of competitive rivalry:

Threat of new entrants:

Threat of substitutes:

Bargaining power of supplier:

Bargaining power of buyer：

• High

• High

• Low

• Low

• High

Critical Drivers for Success Affordable price Better fashionable

design

COMPETITOR ANALYSIS

• Fast distribution network• Distinctive business model (low inventories etc.)• Policy of zero advertising

Strengths

• Outdated operating system• Lack of marketingWeaknesses

Stre

ngth

s Attractive pricesVarious style linesOnline presence

Wea

knes

ses Copyright

infringement Software piracyLawsuits• Copy infringement • Software piracyPoor working conditions

CLIENT ANALYSIS

SWOT ANALYSISST

REN

GTH

Deliver on trend fashions at an affordable priceEfficient supply chain and distribution channelAbility to adapt and influence customer’s shopping behaviorsRestocking store inventories dailyEffective relationship with customersCollaborated with many designers

WEA

KNES

S

A gap between customer behaviors and brand attachmentsThe high cost of maintaining inventory in order to respond to changes in fashionH&M’s largest target market is comprised of 20 to 27 year olds

OPP

ORT

UN

ITY

Developing home related productsH&M has developed an interactive online website

THRE

AT

Does not have absolute control over the quality of the products being madeCost of products may increase due to wage increases around the world

Financial Analysis

2014 2013

Net Sales $18,022,000 $15,302,000

Gross margin % 58.8% 59.1%

Operating margin 16.9% 17.2%

Earnings per share $1.44 $1.23

Current Ratio 2.11 2.94

Financial Analysis

H&M is financially stable with increasing sales

Gross margin and operating margin decreased due to cost of inputs

However, increasing earnings per share is encouraging

Financial growth has allowed for expansions and implementations of new initiatives

STRATEGIC RECCOMENDAT

IONS

•Increase online sales

•Expand Internationally

•Target millennials

• Utilize online platforms in all major markets

• Cater online stores to customers• Fashion Studio

Increase online sales

EXPA

ND

IN

TERN

ATIO

NAL

LY • Increase stores in US and China• Expand into Southern

Hemisphere• Brazil, Argentina, and

Indonesia

Targ

et M

illen

nial

sCelebrity endorsements• David Beckham

commercial during Super Bowl

Event sponsorships• Sponsored an event

at CoachellaIncrease presence on Facebook, Instagram, and Twitter

THANK YOU FOR

LISTENING

Yung Le Julie Pham Vincent Truong

Joe Zhang Vivian Pham