McKinsey & Company: Company InFormation

Table of Contents

Year One
Year Three
Year Five
References

The companys objectives, particularly financial goals are driven by the pricing plan, market trends, and business performance projections. For instance, the suggested prices are as listed below:

Hoodies and sweatshirts $60-$90
Joggers and pants $80-$110
T-shirts (short- and long-sleeved) $30-$70
Matching sets (short and long) $100-$180

Year One

In year one, the estimated units to be ordered are 780 for each item. The costs will also vary with the item design and demand. The items with the highest markup will be the jumpsuits ate 85.6%. The clothes will be attained at $25.84 per item and resold at $180 per item contributing to the highest profit margin. Other items with high profit margins in year one will include hoodies at 84.2% and sweatshirts at 81.4%. The items with the lowest markup will be tank top at 51.1 percent through a buying price of $14.67 and a selling price of $30. The total cost of orders in year one is estimated at $118,318 with an estimated overall profit of $200,000.

Year Three

In the third year the total estimated cost of orders is $250,863.60. The amount is achieved from all the items including hoodies, tank tops, jumpsuit shorts, joggers, sweatshirts, short-sleeved t-shirt, and long-sleeved t-shirts. The company is projected to have an increasing number of orders over the years. The estimated cost and retail prices of the items as elaborated in the table below. For example, the hoodie will be purchased act $30.19 for reselling at $100. The company will make a total of 1560 units of orders for each of the 8 items. The item with the highest price or profit margin will be the jumpsuit which will be acquired at 25.10 dollars and sold at $180. The mark-up rate is at 86.1% followed by that off sweatshirt which will be acquired at 17.8 $9 and resold at $100. The mark-up rate of sweatshirts will be at 82.1%. Item with the lowest markup rate is the tank top that will buy at $13.92 for reselling at $30 only. Overall, the company will have a total of $857,250 as the earned revenue in 3 years. The gross margin for all the items in 3 years will be at 70.7%. Other incurred include costs for the e-commerce website and domain hosting. In addition, such courses salaries marketing recruitment and bags including others will also be included in the total cost totaling to 182,737.50. The estimated profit for year 3 will be at $500,000.

Year Five

Although year fives financial projections can be estimated, the pricing and product quality will vary with previous years performance. For instance, the tank top has the lowest markup rate from the two evaluated years; year 1 and 3. Thus, to improve its performance, the company will improve its value or eliminate it from the product listing. Thus, the financial projections for year five are based on a 3 percent cost increase from year 3. The item with the lowest buying price will be the tank top and that with the highest cost will be the joggers. Equally, the retail costs will also be adjusted appropriately to accommodate the adjusted prices to maintain a high profit margin. The total cost of order in year five will be $376,576.20. The Jumpsuits will have the highest markup rate of 84.8%. Other items with high markup or profit margins include the hoodies, and sweatshirts. The items with the lowest markup rate include the tank top. The total profit after deductions for year five is estimated at $1,000,000.

The total estimated discounts in years five will be at 10%. A total of 2300 units are expected to be sold with a total earned revenue of 1,335,150. The revenue will be based on each items selling cost for the estimated units. The highest expected gross margin will be from the sale of jumpsuits.

A population overview for Los Angeles demographics reveals a promising and growing market with 8,485.9 people per square mile (Census profile). The largest age group, 51% are from 18 to 64 years. This gap indicates a wide age range. The second majority of the population include those under 18 years, who constitute 20% of the population. As a result, it is apparent that this population will soon join the middle age, 18 t 64, who constitute the majority of the companys potential customers.

Fashion also matches with various historical trends, which can have a positive or negative implication on a companys performance. In a recent publication investigating the state of fashion, especially in the post-COVID-19 era, the authors argue that people are more likely to shift their fashion taste to those considered indoor types (McKinsey, 2021). The reason is based on the increasing need for working from home, which has pushed people to also shift their daily activities to those suited for the confines of their homes. As a result, more people are likely to spend more time at home, hence buy more home clothes including loungewear. This is a positive trend for We Are One as it reflects increased financial performance.

An evaluation of competitors past financial performance can also hint on the prospective financial performance of the company. For instance, in an article published in Business Wire, the authors estimate a positive trend in of 7.60% financial performance growth in loungewear sales in 2020 (Maida, 2020). The positive trend is partly attributed to the impact of COVID-19, which pushed many people to work from home and spend more time in their homes during quarantine. At this time, many people understood the need for loungewear and other stay home clothing as essentially, not only in the current pandemic, but also in future scenarios. In application, the article supports the projection of positive financial performance in the company in the future. The current report indicated a positive financial trend in the next five years, from $200,000 in year one to $1,000,000 in year three.

We Are One has a positive trend in financial performance as supported by the existing market demand and industry analysis. Moreover, the companys consideration for a gender-neutral fashion can allow the business to reach a broad customer base. A recent analysis on the overall performance of L Brands indicates a growing trend based on growing awareness of fashion in the potential markets (L Brands, Inc., 2019). Coupled with the existing coronavirus pandemic needs, the company is estimated to achieve a positive financial performance within the first through to the fifth year. The company will sustain its performance through product review and improvement to meet the customer demand and adjust the financial performance of items with low profit margins.