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Module 1-Foot Locker, Inc.

Module 1-Foot Locker, Inc. Taylor Blaney. Module 1-Overview. Reasoning for valuation Quantifies effects of a business decision on shareholder value Allows for forecasting company future Gives information to investors on potential future value of companies and current value of companies

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Module 1-Foot Locker, Inc.

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  1. Module 1-Foot Locker, Inc.

    Taylor Blaney
  2. Module 1-Overview Reasoning for valuation Quantifies effects of a business decision on shareholder value Allows for forecasting company future Gives information to investors on potential future value of companies and current value of companies Allows for intertwining of accounting information and its effect on finance decision making
  3. Module 1-Cont. Understanding a business and its environment Porters Value Chain Model Analyzes the value chain to understand how a company creates value and profit Assisted by the industries competitive intensity which is made up of Industry competition, buyer and supplier power, threat of new entrants, and substitute products SWOT Analysis Strengths, Weaknesses, Opportunities, and Threats Looks both internally and externally Can be too subjective at times Company Life Cycle Must understand where a company is in its life cycle to be able to forecast
  4. Sporting Goods Stores Industry Overview Sporting goods stores sell sporting equipment typically from outside goods manufacturers Goods in the industry range from camping equipment to basketball hoops to shoes Annual Revenue for the sporting goods industry is over $42 billion and annual growth is steady around 2.5%-3.5% however the number of companies is slowly declining
  5. Current State of Industry Becoming Highly concentrated Top four firms generate 40% of revenue Mergers and acquisitions of smaller stores are becoming the norm Customer growth Specifically in U.S. there is a growing interest in sports both young and old Significant disposable income in U.S. being spent on sporting goods Adolescent Demographic Consumer Confidence Life Cycle Maturity stage
  6. Competitive Landscape Competition in industry is high Rise in consolidation of firms Big Box retail stores Price wars Globalization Competition from China Barriers to entry High startup costs Supplier relationships Distribution channels
  7. Future of the Industry Becoming more and more competitive Fewer but larger firms Exclusive Contracts Online retail Growing customer base Baby boomers Increase interest in sport involvement Industry Growth Expanding into new technology based sports equipment
  8. Foot Locker, Inc.
  9. Foot Locker Overview Global retailer of athletic shoes and apparel Located primarily in North America, Europe, Australia, and New Zealand Largest retailer of athletic shoes in the U.S. Nearly $6.2 billion in sales in 2012 (73% within U.S.) Develops few products, mostly supplied by a few top-end product manufacturers Operate in two ways: Athletic Stores Direct to Customers
  10. Foot Locker, Inc.- Athletic Stores Over 3,300 retail stores worldwide Split into 6 different stores: Foot Locker Lady Foot Locker Kids Foot Locker Champs Sports Footaction CCS Closed over 200 stores in 2008 alone
  11. Foot Locker- Direct to Customer Sales made online and shipped directly to customers homes Done through CCS, Footlocker.com, and Eastbay, Inc. All orders are supplied from Foot Locker, Inc.’s four distribution centers Growing part of business compared to shrinking athletic store segment
  12. Foot Locker in the Industry Market share-11.2% No threat of acquisition Consumer confidence leading to growth in shoe sales Exclusive Contracts Growing Online Retail New Technology Adolescent Demographic Largest buyer of basketball shoes in U.S.
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