1、贝恩咨询行业分析贝恩咨询行业分析-RetailCo12022-10-4贝恩咨询行业分析-RetailCo1BackgroundApproachConclusionImplementationResultsAgenda贝恩咨询行业分析-RetailCo1 Retail Co is$10+B“speciality retail”conglomerate whose financial performance has deteriorated since 1990Background贝恩咨询行业分析-RetailCo1Achieve top quartile performance-market/b
2、ook value:2.8x-return on equity:17-18%-annual earnings growth:10-12%Divest businesses that are poor fitsPrepare the company to weather challenging industry conditionsCreate a compelling vision and growth strategyFinancial ObjectivesStrategic ObjectivesBackgroundRetail Co Objectives贝恩咨询行业分析-RetailCo1
3、AgendaBackgroundApproachConclusionImplementationResults贝恩咨询行业分析-RetailCo1Define the characteristics of a successful strategy Develop a range of viable strategic alternativesAssess and prioritise the strategic alternativesBuild consensus around the preferred strategyFully quantify the impact of appro
4、priate action stepsGain final approvalLaunch implementationApproach贝恩咨询行业分析-RetailCo1Components of Successful StrategyDoable:Evolves from current business mixFits Retail Cos core competenciesIs fundableDevelops significant competitive advantagesCapitalizes on the volatility of retail cyclesUnderstan
5、dable:Communicates a clear and compelling approach to the businessWill be fully valued by analysts and shareholdersDesirable:Creates clear economic value and top-quartile financial resultsbuilds a portfolio of high-potential businessesmakes business units more valuable to Retail Co than to othersAvo
6、id excessive layers,overheads,and decision processesIs attractive to key managers in targeted businesses and functionsApproach贝恩咨询行业分析-RetailCo1 Market sizeMarket growthSegment returnsSegment profitability trendsCompetitive intensitySupplier powerSegment stabilityMarket AttractivenessMarket shareMar
7、ket share trendGeographic coverageCurrent profitability/EVAEarnings trendManagement teamRetail brand equityInfrastructure and systemsCustomer value propositionStrategic PositionCorporate experience,skills,and valuesCorporate functional supportCorporate portfolio developmentCross-divisional sharingFi
8、tRetail Co businesses were evaluated along three groups of criteriaApproachRevising the Mix of Businesses贝恩咨询行业分析-RetailCo1Fact BaseHow structurally attractive is this market segment?(projected)industry sizeindustry growthindustry profitabilitycompetitive intensitybuyer concentration/powersupplier c
9、oncentration/powercommitted capital requirementsstage in market evolutionacquisition opportunitiesHow does the stock market value this segment?industry volatilitymarket valuation multiple and timingvalue transparency to stock marketDo we have a strong position today?market share(local/regional)marke
10、t share growth trendsprofitabilityrelative cost positionbrand equitycondition of assetsDo we have the key success factors to achieve a strong position tomorrow?(or can we acquire/build them)functional process capabilitiescost structurenew product/concept developmenthuman resources/people skillscapit
11、al resourcesHow does this business fit with other Retail Co divisions and capabilities?cash flow generations/requirementscommon functional processescommon customer profileslinkage to central resourcesunique people skillsThe five questions approach was used to build fact base on every business of Ret
12、ail CoApproach贝恩咨询行业分析-RetailCo1AgendaBackgroundApproachConclusionImplementationResults贝恩咨询行业分析-RetailCo1Business Unit Evaluations(1 of 2)DivisionConclusionStrategic PositionMarket AttractivenessFitNorthLarge market ready for consolidation,good profitability,very strong positionHollandLarge potentia
13、l market with opportunity to boost growth and profitability through acquisitions and improved operating efficiencyItalyRapidly growing channel with high returns.Need to invest to capture market share and improve operating efficiencyHong KongLarge overall market with slow growth.Cash provider capable
14、 of funding growth businessesLuxembourgReevaluate growth plans.Economies of scale not yet achieved but segment extremely profitableConclusion贝恩咨询行业分析-RetailCo1Business Unit Evaluations(2 of 2)BritainModerate size segment with good profitability but strong competition;declining market share,low relat
15、ive operating marginsIrelandDeclining market segment,poor position,little opportunity for sale,potential for savings by folding into Hong KongFranceOvercapacity in segment,losing market share,below average profitabilitySwedenLarge overall market but requires substantial investment to develop new pro
16、ducts and achieve scale to improve cost position;business has poor fit with Retail Co skillsSpainSmall segment,low growth,high volatility,and seasonalityDivisionConclusionStrategic PositionMarket AttractivenessFitConclusion贝恩咨询行业分析-RetailCo1Business Unit Recommendations DivisionStrategic PositionMar
17、ket AttractivenessFitGrow(Spin Off)North*HollandItalyHong KongLuxembourgHold Britain Divest Ireland France Sweden Spain *SpinOffConclusion贝恩咨询行业分析-RetailCo1Strategic Alternatives Long-term vision:Corporate profile:The leader in selected business lineschain drugapparelfootwearhometoysBusiness line co
18、mpetenciesCost and experience sharing in the groupsAcquisitions to achieve business line dominanceGroup-based organisationA balanced portfolio of speciality retailersResource allocation competenciesLean corporate structureDecentralised managementGrow and keep successful businesses.Divest the unsucce
19、ssfulA leading developer of targeted growth-stage retailersSelection and expansion competenciesCorporate expertise in critical growth functionsbusiness development(R&D and research)real estatesystemslogisticsCost and experience sharing in key activities across all businessesAcquire and grow promisin
20、g concepts.Divest when value-added peaksConclusionGroup SpecialistRetail ConglomeratesGrowth-stage greenhouse(Retail Co.“Classic”)贝恩咨询行业分析-RetailCo1Revise the mix of businesses in the portfolio-allow North to pursue an independent strategy-sell France,Spain and Sweden at the right price and timeEnsu
21、re remaining businesses address the most important strategic issues-establish clear strategies for growth businesses(Holland,Luxembourg,Hong Kong,Italy)-finalise turnaround plans for businesses which cant be sold at reasonable prices-take write-offs as requiredConsider acquisitionsReduce corporate e
22、xpensesAdd value to the businesses in the portfolio-build R&D capabilities-leverage costs-upgrade the organisationConclusionAction Recommendations贝恩咨询行业分析-RetailCo1Chain drug industry is consolidatingeconomies of scale in systems investmentsrelationships with third-party payersAn independent North g
23、enerates significantly more shareholder value as it participates in the evolution of the industryNorth makes minimal use of corporate functions;there is little cost-sharing among North and the other divisionsMarket timing is attractiveNorths value is not being fully recognized in the marketplaceConc
24、lusionExample:Rationale For an Independent North贝恩咨询行业分析-RetailCo1Planned capacity additions will result in industry-wide negative comp store sales through 1998Consolidation is essential to eliminate excess capacitylowers costsallows comp store sales growthRetail Co is better suited to be a seller t
25、han a buyersynergy is equal whether France chooses to acquire or be acquiredleading competitors market value is highermanagement group at France has several significant holesConclusionExample:Rationale for the Sale of France贝恩咨询行业分析-RetailCo1Continue to pursue opportunities to consolidate and reduce
26、 over-capacityFill key executive openingsRestore the historical bargain edge with core customersincrease the mix of opportunistically-purchased goodsdeliver values averaging 20%below department store sale pricesReduce costs to support price reductionsreduce overhead costs by approximately$60MMreduce
27、 investment cost for new stores and remodelsClose unprofitable locations and exit several markets which France cannot dominateIf the sale of France takes longer than anticipated,several actions will be taken to improve Frances performance:ConclusionExample:France-Strategic Imperatives贝恩咨询行业分析-Retail
28、Co1Vision:To consolidate our position as the leading widget retailer to our target customers(high-volume purchasers of trendy widgets in their 20s and 30s)To be recognized by our target customers as the leader in product assortment and customer service for widget retail(our unique positioning)To rea
29、ch a 10%share of the national widget retail market by the year 2000Financial Goals:To reach and maintain ROIC levels of 20%To grow sales by 5%per year and net earnings by 10%per year8 1998 sales objective:$1,225MM8 1998 net earnings objective:$47MMStrategy Summary(1 of 2)Conclusion贝恩咨询行业分析-RetailCo1
30、Key ImperativesInitiativesDevelop our new concept,Widget Factory,into the second-largest non-mall based widget retailerRetail Co Real Estate audit of potential new sitesWidget Factory rapid deployment initiative(opening of 30 new stores per yearClose non-performing storesClosing of the 10 worst perf
31、orming mature stores(both XYZ and Widget Factory)each yearImprove margins by changing mix and reducing costsMix change based on GMROI approachImplementation of 4-Walls systemRedesign of logistics flow based on Retail Co studyImprove density of markets by backfillling five marketsModify our image in
32、the eyes of the customerAssortment redesign based on demand and profitabilitySales force training initiative on customer serviceLaunch of a new advertising campaignFocus new stores in Southern geographiesAcquire and integrate Southern Widget by end of 1996Retail Co Real Estate audit of potential new
33、 sitesProposed partnership with Southern Malls,Inc.Strategy Summary(2 of 2)Conclusion贝恩咨询行业分析-RetailCo1Fit with Retail Co-clear opportunity for value creation-potential to maximize sharing with related divisionsMarket attractiveness-substantial market potential-dominant market position opportunity-c
34、oncept in early stages of a long lifecycleFinancial opportunities-affordable within target capital structure-meets minimum return and growth hurdlesLimited risk factors-existing management talent or supplementable-low to moderate volatilityConclusionCriteria for Acquisition贝恩咨询行业分析-RetailCo1Corporat
35、e Cost Reduction Opportunities *Excluding interestConclusion贝恩咨询行业分析-RetailCo1 Primary Levers:Corporate Roles:Corporate portfolio developmentKeep aware of market and customer trends driving potential opportunitiesDevelop criteria for screening acquisitions and partnerships or alliancesIdentify and e
36、valuate new concepts and consolidation opportunitiesDevelop a network of deal contactsStructure,negotiate and close dealsCoordinate effective integration planningEvaluate opportunities to spin-off/exit businessesFinancial controlsDefine primary measures of financial performanceSet specific financial
37、 return and earnings growth targetsDevelop financial planning and control systemsAllocate capital and other resourcesBusiness oversightDefine management decision-making processesCoach divisional managementfocus managers on measurable resultsquestion assumptions and challenge thinkingProvide leadersh
38、ip on critical issues(e.g.,division strategy,value disciplines,and priority and resource conflicts)Identify opportunities to improve operations and set specific improvement goalsPrimary Levers Available to Add Value(1 of 2)Conclusion贝恩咨询行业分析-RetailCo1 Primary Levers:Corporate Roles:Expertise sharing
39、 and operational improvementInstill company wide commitment to spreading best practicescoordinate regular experience sharing at all levelsfacilitate communication among divisions and functionsDrive value disciplines to improve operations across all processes,functions and divisionsProvide leadership
40、 and expertise to support improvements in performanceManagement allocation and developmentAttract,motivate and retain the best managementrecruit top tier candidatesreward based on performancepromote based on abilityProvide strong,profit-related incentives linked to corporate objectivesRotate manager
41、s across functions and divisionsDevelop formal training programsStrategydevelopmentPerform analysis to support strategic decision-making(corporate and divisional)Define corporate strategic directionAssess market attractiveness,performance,position and fit of divisionswork with divisions to build hig
42、h-quality,fact-based strategic plansIntegrate division plans with corporate strategyCentralservices and infrastructure sharingProvide scale services and functions to achieve lower cost and higher qualityLeverage infrastructure across businessesPrimary Levers Available to Add Value(2 of 2)Conclusion贝
43、恩咨询行业分析-RetailCo1Projected Earnings NorthNew Retail Co*From Monte Carlo analysisNote:Earnings equals net income after taxes and interestConclusion贝恩咨询行业分析-RetailCo1*With$300MM share repurchaseGap vs.SBP ProjectionsGap vs.RealisticROE target:ROE*:(Gap)/surplus:11.1%12.0%$10.8MM15.9%19.2%$35.6MM17.0%2
44、1.6%$61.3MM11.1%9.4%($22.4MM)15.9%13.4%($28.6MM)17.0%14.9%($30.2MM)ConclusionGap Analysis贝恩咨询行业分析-RetailCo1AgendaBackgroundApproachConclusionImplementationResults贝恩咨询行业分析-RetailCo1Corporate GovernanceThe decisions of the Board will be evaluated under the traditional business judgement rule standardT
45、he distribution of North should not require shareholder approvalthe distribution is a dividend which requires only board approvalAT&T precedentThe potential divestitures should not be considered a sale of substantially all of Retail Co remaining assetsNew Retail Co will be a substantial entity with
46、estimated sales of$4.2B,net income of approximately$119,and assets of$2.1BImplementation贝恩咨询行业分析-RetailCo1Note:Distribute North stock dividend at appropriate time3Q954Q951Q962Q963Q964Q961997Approve all components of Strategic ReviewClose France transactionClose Spain transactionlClose Sweden transac
47、tionReorganize Corporate officeClose loss storesClose North IPOComplete merger of Ireland/Hong KongComplete MIS and telecommunications outsourcing projectsPilot centralization of Accounts Payable,General Accounting,and Sales AuditSpin-off NorthInitiate merger of Ireland and Hong KongImplementationTi
48、ming贝恩咨询行业分析-RetailCo1StrategyCorporate managementCorporate employeesDivision presidentsDivision employeesMediaFinancial communityRetail industry consultantsIndividual shareholdersLandlordsVendors/factorsLocal officialsInitiate all communications from Retail Co headquarters in order to maintain cont
49、rolled,consistent messagesFully explain the rationale of the plan and how it will enable Retail Co to take advantage of its unique strengths,skills,and opportunities over the long termDefine a clear strategy and vision for Classic Retail Co going forwardExplain how the plan is expected to enhance sh
50、areholder valueAssure employees in divisions slated to be spun off or sold that Retail Co will do everything possible to ensure an orderly transition and communicate potential benefits of the plan for these divisionsInitiate direct contact with all landlords who will be affected by store closings on
