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Case Study Analysis-Footwear India LTD

The company has been losing money for the past two years due to a decrease in sales and increase in costs. The distribution model A, which the company heavily relies on, has high fixed overheads and low sales per retail outlet. To address these problems, the company should focus on increasing sales of higher margin accessories, strengthen distribution model B to capture a larger share of sales, increase prices where possible, and improve both revenue and profits.

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gyanboy
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2K views4 pages

Case Study Analysis-Footwear India LTD

The company has been losing money for the past two years due to a decrease in sales and increase in costs. The distribution model A, which the company heavily relies on, has high fixed overheads and low sales per retail outlet. To address these problems, the company should focus on increasing sales of higher margin accessories, strengthen distribution model B to capture a larger share of sales, increase prices where possible, and improve both revenue and profits.

Uploaded by

gyanboy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Problem areas

1. Decrease in sales
2. Increase in costs
3. Low sales per retail outlet in Dist A Model
4. Company heavily dependant on Dist A model where
fixed overheads are high
5. Loss making since 2 years
Total Sales - 500 Crs
Sales from Dist A= 500 x 60%= 300 crs
Sales from Dist B= 500 x 40%=200 crs

Avg. sales p/m per store from Dist A model


= 300/12/1500= Rs 1.66 lacs
Minimum cost structure p/ store
1) Sales floor staff salary
- Sales exec.Sal= 2x10,000= 20,000
- Shop assistant= 1x 5000= 5000
2) Sales staff commission= 1,66,000 x 2.25 % =3735
3) Rent= 25,000 for min 200 sq ft store
4) Cost of goods = 20% = 1,66,000 x 25%= 33,200
5) Other exp=15,000

Total cost = 84,000


Gross profit per store= Rs 82,000/-
Some logical analysis
• Focus more on increasing share of sales of high
margin accessories to at-least 20 – 25%
• Company has to strengthen Dist B model to
increase sales-should contribute at-least 50
-60% share
• Increase sales of other footwear brands in Dist A
model
• Increase price of its products wherever possible
• Focus on improving top-line and bottom line both

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