Industry Analysis Using Financial Ratios

Our marketing activities were very similar compared to the most successful firm, Company C. We spent $456 million in this segment, which was only $5.5 million more than Company C's. Since Company C had a higher revenue, their marketing activities as a percentage of sales was lower, at 14% compared to our 16.1%. It may have been beneficial for us to spend some extra money on advertising to gain on our market leader. Since our overall business strategy in the first four years was poor, additional marketing could have helped reduce our problems, but marketing is by no means the underlying issue or the cause of the problems that we faced.

An analysis of the warehouse and distribution report reveals how much more competitive, Company C was than our company. We calculated Company C's total sales to be over $3.2 billion, while our total sales were a little over $2.8 billion. This is a difference of about 13.5%. However since Company C's warehousing expenses were only 6.3% of net sales and warehousing costs comprised of 10.2% of our sales, we faced a significant competitive disadvantage. Despite being outsold cumulatively by over $38 million, our warehouse expenses exceeded company C's by over $86 million, or a percentage increase of 42.56%. The main reason for this discrepancy was that we only opened two plants, which made us geographically distant from two of our regions, which means that we were shipping our products further away and this increases time and costs.

Most of our manufacturing benchmarks fell very short from the industry leader. The majority of our analysis will be directed towards online and wholesale footwear since we discontinued our private-label footwear. Our average material costs for branded footwear cost us $10.86 per pair, which was about $2 off of the industry leader.