Firstly we start the planning of strategy from the less specific to the most specific. That is starting from vision, then mission statements and lastly the strategic objectives. For the Ann Taylor, the vision is “we get women”.
Ann Taylor aims to evolve with the needs of women. Ann Taylor get that a woman expresses herself through what she wears – at work, at home and at play. For the mission statement, Ann Taylor associates are committed to and driven by a simple but profound mission – ‘to inspire and connect with our clients to put their best selves forward every day’.This commitment means that they will do the best to maintain high standards and make their clients can look great and feel great about the clothes they wear. It means forging strong partnerships with suppliers so that products are made ethically.
It means investing in new programs and innovation to minimize the impact on the environment. And it means making meaningful contributions to the communities. Ann Taylor weighted ethical issues and social responsibilities very much and they a lot on them. For the objectives, it divided into long-term and short-term.Long-term objectives include evolution of company brands and channels, reduction of overall cost structure and continued pursuit of growth. By focusing these three areas, Ann Taylor will be more capable to pass through the difficult economic environment for the retail industry.
For the short-term objectives, one is that Ann Taylor planned to close 163 underperforming stores within two years. Besides that, they will invest in factory channel more because these stores offered merchandise for 25 to 30 percent less than the cost at the AT or LOFT regular stores.The factory outlet business delivered strong gross margin and considered an important growth driver although the economic environment is hard. The second objective is to ensure the balance sheet and cash position remains strong. Because good financial position and the liquidity is important for the company to be a well positioned to support the brands and focus on strengthening the underlying business.
The third objective is to turnaround the loss into profit. The company recorded a loss in 2008 about 333906 thousands of dollars and Ann Taylor aims to improve the performance.For the corporate level strategy, Ann Taylor would like to adopt internal development. Ann Taylor would develop an exclusive beauty business. It will introduce Ann Taylor label fragrance and bath and body products as a separate department within AT stores and it launch beauty products in the LOFT division during 2008.
In the past, Ann Taylor has tried into cosmetic business but it is not really successful. This time it is still testing the viability of going into these type of business. Furthermore, the company announced that the Collections line would have its own department within the Ann Taylor stores.This Collections line will offerings 40 percent more expensive than regular AT merchandise. This plan was to introduce this upscale, expensive product in some of the top selling Ann Taylor locations around the country.
Also, Ann Taylor announced that it would be creating a new chain of stores, expected to launch sometime in 2008 or 2009, targeting the ‘older-women’ segment. But due to the high risk of this market because other competitors are already in this market for a long time and being overlooked and the bad economic condition, Ann Taylor decided to delay this new concept until 2009.Financial Analysis: Although the economic environment is hard, the sales of Ann Taylor remain quite stable over these years. It’s around 2 billion. But it recorded a net loss around 333906 thousands of dollars in 2008.
It is caused by a huge amount of goodwill impairment charge. Another bad news is that over these years, Ann Taylor assets values have a trend that decreasing and the liabilities is increasing trend. It is not beneficial for a company because the liquidity will decrease. Furthermore, we compare the net profit margin with other competitors in 2008.Ann Taylor net profit margin is the worst among the eight selected leading company in the retail industry.
It is negative 15. 22 in 2008. It will be less attractive to the investors hence less capital is available for the company for further development. For the cash flow analysis, the company recorded an overall cash outflow for the past two years and the total cash and cash equivalents starting to decline from 2006.
Lack of cash is an serious problem for the company because it affect the liquidity of a company.
