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CaseQuesta Case Problem

Foot Locker sees significant growth opportunities in India's growing footwear market and seeks to establish a presence through acquiring an established Indian company. ABC Capital Advisors recommends Bata India as an acquisition target given its market leadership, brand recognition, and reasonable valuation based on a DCF analysis. The acquisition provides an entry point while mitigating risks through Bata's existing infrastructure and customer base.

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Lavish gupta
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33 views

CaseQuesta Case Problem

Foot Locker sees significant growth opportunities in India's growing footwear market and seeks to establish a presence through acquiring an established Indian company. ABC Capital Advisors recommends Bata India as an acquisition target given its market leadership, brand recognition, and reasonable valuation based on a DCF analysis. The acquisition provides an entry point while mitigating risks through Bata's existing infrastructure and customer base.

Uploaded by

Lavish gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CaseQuesta, APOGEE ‘24

Background:

Foot Locker, Inc. is a leading American sportswear and footwear retailer headquartered in
New York City. Established in 1974, Foot Locker has grown into one of the largest athletic
footwear and apparel retailers globally. Originally founded as a division of the F. W.
Woolworth Company, Foot Locker became an independent company in 1988.
Foot Locker operates various retail brands, including Foot Locker, Kids Foot Locker, Lady Foot
Locker, Champs Sports, Footaction, Eastbay, and Sidestep. These brands cater to different
segments of the athletic footwear and apparel market, serving customers of all ages and
preferences.

Foot Locker is renowned for its extensive selection of athletic footwear, including sneakers,
running shoes, basketball shoes, and other sports-specific footwear. The retailer also offers a
wide range of athletic apparel, accessories, and equipment from popular brands such as
Nike, Adidas, Puma, Jordan, Under Armour, and many others.

With a strong emphasis on customer service, product innovation, and exclusive


collaborations with athletes and celebrities, Foot Locker has established itself as a go-to
destination for sports enthusiasts, sneakerheads, and casual shoppers alike. The company's
retail stores, online platforms, and mobile apps provide customers with convenient access to
the latest trends, styles, and technologies in the athletic footwear and apparel industry.

The Indian footwear retail market is experiencing rapid growth and transformation, driven
by factors such as rising disposable incomes, urbanization, changing lifestyles, and increasing
fashion consciousness among consumers. With a diverse consumer base spanning urban and
rural areas, India presents a dynamic landscape for footwear retailers, characterized by a mix
of traditional and modern retail channels.

Domestic players dominate the market, offering a wide range of footwear options across
various price points, styles, and categories, including casual, formal, sports, and ethnic
footwear. Additionally, international brands are gaining traction, capitalizing on evolving
consumer preferences and aspirations.

E-commerce platforms have emerged as a significant sales channel, providing consumers


with convenience and access to a vast array of footwear choices. Against this backdrop, the
Indian footwear retail market presents both opportunities and challenges for retailers
seeking to establish a competitive presence and capitalize on the country's burgeoning
demand for quality footwear products.

(Foot Locker Inc. is a listed American footwear company and the company information is
available online as well)
Prompt:

Foot Locker, Inc., is eyeing expansion into the lucrative Indian market in 2024. With India's
growing middle-class population, increasing disposable incomes, and rising interest in fitness
and athleisure, Foot Locker sees a significant opportunity to tap into this burgeoning
consumer base.
Foot Locker is also looking to acquire a publicly traded Indian company which could provide
them with an established market presence, an existing customer base, and operational
infrastructure.

Deliverables:

You are a team of Investment bankers in a private equity firm, ABC Capital Advisors which
holds a majority stake in Foot Locker Inc. The company has approached you to devise a
market entry strategy and identification of a potential acquisition to navigate the
complexities of the Indian market and establish a competitive presence.

Develop a market entry plan for the footwear retailer. This should include but not limited to:
1. A comprehensive market analysis to understand the competitive landscape,
consumer preferences and regulatory environment in India.
2. Identification and evaluation of a potential acquisition target.
3. Use an appropriate valuation technique to arrive at an acquisition price and justify it.
4. Risk assessment and implementation plan.

Caveats:
1. Create a presentation for the strategy of not more than 15 slides (title and references
included) to be submitted in .pdf format.
2. A DCF model (if made) should be submitted in the form of an excel (.xlsx) file.
3. All assumptions need to be mentioned clearly.
4. All references should be listed explicitly.

Appendix: (You can use your own researched data as well)

Indian Footwear retailers’ financials (As on 18th March 2024)


Company Market Market Market EV/EBITDA Sales P/E EPS
Price Captalization Debt (Cr)
(Cr) (Cr)
Metro Brands 1045.10 28392.89 1059.75 39.04 2317.85 87.14 11.99
Relaxo Footwear 854.75 21205.19 224.95 49.27 2931.79 104.78 8.13
Bata India 1377.25 17702.72 1262.83 22.19 3459.33 61.22 20.58
Campus 228.65 6970.67 327.31 35.40 1432.18 87.53 2.61
Activewear
Mirza 46.10 645.03 51.10 12.52 631.28 49.01 0.95
International
https://www.screener.in

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