Scenario Fashion Finesse Ltd:
Kim Luong sits at her desk and contemplates the work assigned to her by her manager. Kim has recently graduated from RMIT University and had been hired as a junior analyst for a business consulting firm. Her company provides financial consulting services to a range of industry clients, and Kim’s role requires her to analyse a company’s financial statements and make recommendations for financial improvement.
For this assignment, Kim is working with Pravin, another junior analyst in the firm. Their manager wants to arrange a session with their latest client, the Chief Operating Officer (COO) of Fashion Finesse Ltd, Ms Lena Roy. Fashion Finesse Ltd is a large business selling clothes to mature women. About 50% of sales are online, and there are retail shops in all states in Australia.
Kim has been informed by one of her colleagues that Ms. Roy is a very busy executive who likes to get to the point and Kim is eager to be well prepared and make a good first impression. As Kim reviews her client’s Financial Statements and other financial data from the last four years (see Tables 1-4), she considers how to approach her analysis. She and Pravin are expected to thoroughly assess Fashion Finesse Ltd’s previous financial performance and to prepare a set of recommendations to present to the new client.
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Background
Fashion Finesse Ltd, an Australian retail enterprise, specializes in offering a diverse array of clothing tailored for mature women. Their extensive selection encompasses formal attire, resort wear, business ensembles, and casual garments.
More than thirty years ago, two sisters, Claire and Fiona O’Connell, were colleagues in an office in Melbourne. Both women, then in their early fifties, shared a common dissatisfaction with the available clothing options, particularly attire suitable for the workplace. Around this time, Claire’s daughter, Emily, was pursuing studies in fashion design and merchandising. With Emily’s assistance, Claire discovered clothing of superior quality, fit, and design, surpassing her previous expectations.
Impressed by Claire’s newfound wardrobe, Fiona expressed interest in receiving similar assistance from Emily to enhance her own clothing collection.
Fiona was thrilled with the clothing pieces Emily had sourced for her, and likewise, Emily was delighted that her fashion sense and industry knowledge had empowered her to bring joy to her mother and aunt. Emily soon recognized that this demographic of women, specifically working women aged fifty and above, presented an excellent market for her skills. Inspired by the support and encouragement from her family, she embarked on establishing a small business, naming it Fashion Finesse Ltd (FFL) after the two influential women who ignited her passion for fashion merchandising.
For her business, Emily curated a modest collection of appropriate business attire and commenced selling them through clothing parties. These gatherings, hosted in individuals’ homes, provided an intimate setting for showcasing the clothes, allowing attendees to try them on and place orders if interested. The host would invite a select group of friends and relatives, offering refreshments while guests perused the collection. Typically, the host received a small portion of the sales as compensation for their hospitality.
While Emily dedicated her evenings and weekends to conducting clothing parties, she simultaneously held a salaried position with a company specializing in clothing for young women.
The clothing parties Emily organized proved to be immensely successful. Many women, much like Claire and Fiona, were thrilled with the clothes, having also struggled to find suitable work attire. After two years, Emily realized that she found greater fulfillment in running her own business than in her salaried position. Consequently, she made the decision to resign from her job and focus solely on her venture.
Seeking professional guidance, Emily underwent a transformation in her business structure, transitioning from a sole trader to a proprietary company. Renaming her enterprise Fashion Finesse Ltd, she opted to discontinue clothing parties as her primary sales method. Instead, she secured a lease for a small shop in her local suburban shopping centre.
In its initial years, Fashion Finesse Ltd exclusively offered formal business wear, catering primarily to its original market of mature women. However, as time progressed, Emily recognized additional fashion sectors that this demographic eagerly sought. Many patrons of Fashion Finesse Ltd boasted significant disposable income, with grown children and reduced household expenses. Consequently, the clothing range expanded to encompass formal wear for occasions like weddings, smart casual attire, and resort wear.
In addition to broadening the array of clothing offerings, Emily embarked on a strategic expansion plan. Three more stores were opened, all strategically located in suburban Melbourne, to better serve the growing clientele and meet the increasing demand for Fashion Finesse Ltd’s stylish offerings.
The business thrived, and in 2007, to fuel its growth, Fashion Finesse Ltd made the strategic decision to go public by listing on the Australian Stock Exchange (ASX). Following a successful share offering, Fashion Finesse Ltd, trading as FFL, remained steadfast in its commitment to its core demographic of women aged 50 and over. It established retail outlets in key shopping centres across Australia, ensuring accessibility to its loyal customer base.
In 2018, recognizing the evolving landscape of retail, Fashion Finesse Ltd ventured into online sales. This move proved prescient when the Covid-19 pandemic struck in March 2020. Swiftly adapting to the circumstances, Fashion Finesse Ltd shifted a significant portion of its sales to the online platform, accounting for more than 60% of its total sales in the 2020 calendar year. This agility and resilience underscored the company’s ability to navigate challenging times while maintaining its commitment to serving its clientele effectively.
Table 1. Fashion Finesse Ltd
Consolidated Statement of Financial Performance for the year ended 30 June.
Table 2. Fashion Finesse Ltd
Information regarding shares earnings 2020 – 2023
Table 3. Fashion Finesse Ltd Statement of Financial Position as at 30 June
Table 4. Fashion Finesse Ltd
Consolidated Statement of Cash Flows for the year ended 30 June’23
Consolidated Statement of Cash Flows for the year ended 30 June’23
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