Martha DesignsSharat PunditCurtis McPheeDon CumingThava Rajah

February 13, 2008

OVERVIEW

Past performance

• Cottage industry since 1972

• 30,000 sales, 5000 net profit

• Coat line: $300 - $600

• Sales from AB, SK, ND, North America and

Europe

• Limited promotion

Operations; Operational Organization

Martha Millwork (Owner/Manager)

Wolseley Operation Grenfel Operation

Operations; Work Flow

Operations; Operational location and floor plan

Operations; Floor Plan

Human Resources

One P/T staff – year 1-2 ◦converted to a full time position in year 3

Desired skill-sets:◦Fabric cutting ◦General computer skills◦ Inventory management◦Shipping and receiving

Wages:◦Part-time Salary: $10,000/yr◦Full-time Salary: $26,000/yr◦Standard pay increases based on inflation.

Human Resources

P/T employees: International students to target European cities. ◦$500/per trip◦show the product samples

Manufacturing – the company would use the contracting services of the town of Wolseley.

Job descriptions

Owner/Director: Martha Millwork◦ Specialty coat design and manufacturing experience: The core

competency this business is based on.

Cutter/Support: ◦ Cuts the raw material for sewing. ◦ Quality checks sewing from Wolseley facility◦ Process online orders, inventory management and shipping/receiving.

Contracted Student Workers: ◦ Starting from year 4- students from international students unions of

different Asian and African countries at the University of Regina and University of Saskatchewan.

Contracted Manufacturing Staff: ◦ Utilize the sewing plant located in the town of Wolseley.

Part-Time Seamstresses:

◦ Retain working relationship with local seamstresses for last minute orders.

Past Performance

Home based business

Creative design of high end coats

300 -600

Currently $30,000/year revenue with

$5000 net profit

Sales AB,SK,ND North America + Europe

Limited promotion

Current Market

Structure / Trends• Removals of barriers – 80s,GATT, NAFTA, FTA 5%• 2.1 b / m sales 2007• 2000 manufactures, Quebec 60%, • majors and independents , 298 west Canada alone• Western Canada – 5.5M cities, 7.5 provinces• North US - 5.9M cities, 12.5 M states

Competition• Chinese, US, Europe, Canadian• HBC Signature, Pendleton manufacturers• Competition basis – not on price – niche player

Product

Line of coats • High quality, unique• Differentiated – updated, trims, natural• Blend of fashion, function, tradition (history)• Pendleton, HBC, wool, canvas, denim• Value proposition oOriginal, authentic, all natural fibersoExclusivityoHigh quality materials and constructionoMade in Canada, modern, sophisticatedoHistory

Product

Positioning• high value, exclusive• Premium priced

Customers – research◦ already established – 30K◦ rising affluence 1994- 2007 , 14% ◦ 5% of disposable , trends increasing 1994◦ AB, BC above average increase◦ 25 – 65 men + women

west Canada Northern US States Eastern Canada Europe

VISION

OBJECTIVES

Goals40% gross profit margin

ROE 20%

$300k in sales in year 3

Pricing Policy• market based – flexibility options• Premium product – independents set price

VISION

Goals of Promotionbuild brand awareness

educate and develop interest in the line

build marketing and sales networks

increase direct sales

establish independent store sales

establish internet sales

Promotion continued

PersonalAttendance of fashion showsSpecial event displays at:

◦ cultural fairs ◦ exhibitions ◦ stampedes

Trade shows

Direct selling to independent stores

Promotion continuedMedia

• Local newspapers • Targeted magazines (not limited to)

• Western Living, • Western Fashion, • Up

Brochures

Internet • Develop B2B sales◦ Creation of Miyo Fashions web site◦ Internet Directory Listings

Canadian Fashion Federation Listing Canadian Apparel Foundation Listing

◦ Fashion Directories and web hubs links◦ Data base marketing

Expansion

STRATEGY- phased 1. SK, MB - internet2. BC, AB – internet on-line3. US states - agents4. East Canada, Europe

Budget and Sales

Marketing Budget 17,500 yr 1 23,500 yr 5 16%–7% Gross Revenue

Projected sales

SWOT

Strengths Weakness

Cost advantage - very low fixed costs. The town of Wolseley industry support Low staff requirements. Trained labour available Demonstrated demand for product Multiple distribution channels Flexibility of design changes to maintain

relative exclusivity Unique product

Competition - HBC Signature series and

others Narrow product line Little capital Little experience in running a commercial

enterprise Location of manufacturing not ideal Cost of low production runs to maintain

exclusivity image Marketing over a large geographic area

Opportunities Threats

Expand and increase product line Opening of dedicated Miyo Fashions stores

in major centers

Failure to generate sufficient sales for expansion program

Competition response – entrant of a new direct competitor

Finance; Capital Requirements:

Form Amount ($) Debt 0

Equity 120,000 Total 120,000

Coats Sold

# of Private Orders (growth rate) Initial OrdersInternet 15% 80North America 5% 75Europe 8% 10

Number of Coats sold in stores 10Wool Coats - Hudson Bay/Pennington 10%Wool Coats 40%Dennim Coats 25%Canvas Coats 25%Total Quantity 100%

Stores we Sell from 2008 2009 2010 2011 2012Stores in NA (stores/city) 12 24 36 48 60 Eurpean Cities Approached (per/yr) 2 - - 2 2 2 # of Eurpean Stores - - 4 8 12

Mark-up Ratios

Coats sold - Direct Orders (% of Sales)Wool Coats - Hudson Bay/Pennington 70%Wool Coats 10%Dennim Coats 10%Canvas Coats 10%

Total Quantity 100%Coats sold - Internet (% of Sales)

Wool Coats - Hudson Bay/Pennington 70%Wool Coats 10%Dennim Coats 10%Canvas Coats 10%

Total Quantity 100%

Selling Prices (per coat) in Stores (Markup)Wool Coats - Hudson /Penningtons 20.0%Wool Coats 75.0%Dennim Coats 110.0%Canvas Coats 110.0%

Selling Prices (per coat) direct sales (Markup)Wool Coats - Hudson Bay/Penningtons 60.0%Wool Coats 125.0%Dennim Coats 185.0%Canvas Coats 185.0%

Finance; Projected Income Statement

Year 2008 2009 2010 2011 2012 Revenue 108,769 149,924 204,453 262,822 325,393 Net Income (20,520) (4,525) (6,796) 12,250 31,093

Finance; Projected Balance Sheet

Finance; Ratio Analysis

2008 2009 2010 2011 2012

Profitability Ratios

Gross Profit Margin 38.7% 39.1% 39.4% 39.6% 39.7%

Net Profit Margin -18.9% -3.0% -3.3% 4.7% 9.6%

Return on Total Assets -19.9% -4.6% -7.3% 11.6% 22.7%

Return on Equity -19.9% -4.6% -7.4% 11.8% 23.0%

Finance; Break Even Analysis

Sensitivity – Gross Margin

MarginsFor the Year ended December 31 2008 2009 2010 2011 2012

Income Before Taxes +10% Margin (15,947) 1,788 1,705 25,630 50,835

Income Before Taxes Base (20,520) (4,525) (6,796) 14,670 37,237

Income Before Taxes -10% Margin (25,093) (10,837) (15,297) 3,711 23,640

1 2 3 4 5

-30000

-20000

-10000

0

10000

20000

30000

40000

50000

60000

For the Year ended De-cember 31Income Before Taxes +10% MarginIncome Before Taxes BaseIncome Before Taxes -10% Margin

Sensitivity – Growth Rates

Growth Rates

For the Year ended December 31 2008 2009 2010 2011 2012

Income Before Taxes Base GR+10% -20520 -4217 -6084 15910 39158

Income Before Taxes Base GR -20520 -4525 -6796 14670 37237

Income Before Taxes Base GR -10% -20520 -4832 -7500 13458 35380

1 2 3 4 5

-30000

-20000

-10000

0

10000

20000

30000

40000

50000

For the Year ended De-cember 31Income Before Taxes Base GR+10%Income Before Taxes Base GRIncome Before Taxes Base GR -10%

Sensitivity - % Sales

% SalesIncome Before Taxes +10% sales (16,425) 1,024 953 24,353 48,758

Income Before Taxes - Base (20,520) (4,525) (6,796) 14,670 37,237

Income Before Taxes -10% sales (24,434) (9,878) (14,331) 5,212 25,958

1 2 3 4 5

-30000

-20000

-10000

0

10000

20000

30000

40000

50000

60000

Income Before Taxes +10% salesIncome Before Taxes - BaseIncome Before Taxes -10% sales

Conclusion

◦Marginally viable at first

◦Long term viability

◦Dependent upon sales volumes and mark-up

◦No positive net income till year 4

◦Martha received a set wage of $35,000/yr