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Bad As Bikes: Financial Performance and Strategic Insights

Bad As Bikes has demonstrated robust financial results, with 2017 sales reaching $27.1 million and a profit after tax of $5.37 million. Our strategy focuses on high pricing and quality, especially for our premium Bolt Road Bike. Despite facing challenges such as high wastage and excess inventory, we have opportunities in the youth bike market and can capitalize on competitors’ declining quality. Our future objectives include launching a youth bike, increasing market share, and maintaining low debt. We aim for sustained growth through strategic advertising and quality investment.

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Bad As Bikes: Financial Performance and Strategic Insights

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  1. Bad As Bikes Selah Manley Nikki Reilly Sara Sutton 201005574 201006070 201006245

  2. Bad as Bikes Company Overview and Strategy • Financial Results: Sales: $27,131,525Units sold of Mountain Bike: 33,480Units sold of Road Bike: 8,663Profit (after tax): $5,372,328Share Holder Value: $49.91 • Costs:Cost of Mountain Bike(Adv1) : $620Cost of Road Bike (Bolt): $1,750 (released 2014)Cost of goods sold: $11,701,415 • Overall Strategy:- High Price, Moderate Volume • - Emphasis on quality for Bolt Road Bike • - Focus production primarily on Mountain Bikes

  3. Financial Analysis • Reduce debt (abolished all debt by 2016) • Large amount of dividends issued, cents per share is now $7.39 • Will maintain pricing between 280-300 cents per share for upcoming years • 420% increase to $49.91 in SHV in 2017 • From 2015 to 2016, wholesale sales increased 29.4%. • From 2016 to 2017 Sales increased another 23.3%. • Profit after tax increased by 19.8% ($5,372,328 in 2017) • Cost of Goods Sold (%) steady decrease

  4. Marketing Strategy Branding • Increased product branding expenditure from $500,000 to $900,000 Distribution • Distribution in Sport Stores: 0.20 to 0.32 • Distribution in Bikes Shops: 0.66 to 0.52 • Advertising/Public Relations • Advertising Expenditure = $3.35 million • Public Relation Expenditure = $2.25 million • Public Relation Rating = 0.16 for Mountain Bike 0.48 for Road Bike • Awareness Rating = 0.34 for Mountain 0.27 for Road

  5. Operations Strategy Quality, Sales & Retail Pricing • Quality rating averaged 0.80 over past three years (with .81 in 2017) • Road Bike Industry for 2017: sold approx. 1,000 units less than Wheelin’ & Peelin’ still managing to top their retail sales by more than $6,000,000. Inventory • 4,154 Bikes left in inventory at the end of year 2017. Capacity • Increased capacity to 40,000 in 2017, bumping capacity up 15,000 bikes • Wastage and Idle Time • Wastage =40% for Mountian Bike46% for Road Bike • Lower than both major competitors Buckle’$ Bike$ and Wheelin’ & Peelin’ • Current idle time is 0%, tied with Buckle’$ Bike$ for lowest in the industry.

  6. SWOT Analysis of Bad as Bikes Strengths • High Quality Rating • High Distribution in Road Bikes • Secure in the high price/high quality road bike niche Weaknesses • High Wastage • Poor Projections leading to excess inventory. • Poor Forecasting within Bad as Bikes

  7. SWOT Analysis of Bad as Bikes Opportunities • Potential to launch into Youth Bike Market • Unmet demand for low price youth bike • Potential for more sales in mountain & youth • Buckle’$ Bike$ decreasing quality could lead to potential to steal sales in road bikes • Threats • Loss of sales to competition • Buckle’$ Bike$ successful youth bike product launch resulted in high unit sales • Elite is well established in the youth bike industry with an extremely high distribution level • Bad as Bikes distribution is extremely low for Discount Stores (margin % = 20%).

  8. Positioning Chart

  9. Future Objectives • Launch of Youth Bike • Maintaining High Expenditure on Quality & Efficiency • Branding, Advertising & Distribution Spending • Increase Market Share • Maintaining low D/E, driving SHV

  10. Recommendations Launch of Youth Bike • Create a strong presence with high spending in advertising • Produce an initially more expensive model with a lower SCU number • Price aggressively low • An emphasis on advertising Maintaining High Expenditure on Quality & Efficiency • Maintain a quality rating above .81 • Increase capacity • Stay current

  11. Conclusion of Analysis

  12. Question and Answer Period

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