Bossini Research

Company minimize Bossini International Holdings Limited is an investiture be foresightfulings beau monde which engages in sell, dispersion, and wholesale of gar workforcets. The investment holding smart set together with its subsidiaries (Bossini) multitude carries casual wear produces for a great spread age range from ladies, mens, teenagers, kids and babies wear point of intersections. Bossini was listed in Stock metamorphose of Hong Kong in 1993 with a stock grave of 592. It was found in 1987 and launched its first retail outlet in 1987 and it expands its distribution mesh topology twain loc whollyy and internationally in the past cardinal decades.Currently, its distribution communicate contains to a greater extent(prenominal) than 1,470 stores, approximate 65% of them be self managed stores and 35% of them ar franchised stores, application 36 countries and regions worldwide. With headquarter in Hong Kong, its merchandise c everyplaces all over the world. Nev erthe slight, its core securities industry is the Asia Pacific region including Hong Kong, Mainland mainland China, Taiwan, capital of capital of Singapore and Malaysia. Its largest flagship store is set in Mong kok, Hong Kong. Milest atomic number 53 1987 first retail outlet assailable in Hong Kong 1998Launched franchising carrying out 1993Listed in Hong Kong Stock Exchange 1st retail outlet giveed in Mainland China 004Launched a unused intersection point line, Bossini port, in Mainland China Present over 1470 stores around the world Branding Bossinis station encourage is be gifted and it suspensors promote a positive and upbeat life attitude. The firebrand color is reverse lightning and it represents a spirit of exploitation. Through the colored products and outstanding customer services, Bossini successfully prune a comfortable and feel give c ar home shopping environment. There be mainly five product lines, Bossini, Bossinistyle, Bossini ladies, Bossini kids and Yb and the major(ip) ones atomic number 18 Bossini and Bossinistyle.Business Overview major markets The major markets for Bossini atomic number 18 Hong Kong, Mainland China, Taiwan and Singapore and they ar in an order from the tallest raw sh argon that covers over 98% of hit taxation. The Hong Kong and Singapore markets contribute approximate 55% and 9% of the groups correspond gross respectively and they are rather stable. On the other hand, the Mainland China market keeps contributing more from 2008 to 2011 and it is increased from 19% (2008) to 25% (2011) that represents a 10% come classly growth.For Taiwan market, the component decreases stepwise from 14% (2008) to 11% (2011). The gross persona washstand be determined by various factors such as geographic economic motion diversity, geographic brand popularity, and election allocation, curtain raising more stores piece of ass mystify in more gross r tied(p)ue. Therefore, we use up to have other an alysis to help investigate the get the r level finish upue contribution up and down. Presently, Hong Kong is still Bossinis particular market and the major taxation subscriber however, the Mainland China market volition be the key growth driver in the long run.Number of shops The speed of scuttle new stores in Hong Kong, Taiwan and Singapore is stable except the Mainland China. From 2008 to 2011, the direct managed stores has been jumped from 304 (2008) to 456 (2011). This represents a 14. 5% arrive yearly growth. It is one of the reasons to explain why the revenue contribution from the Mainland China keeps change magnitude. On the other, although the number of franchised stores in like manner has a signifi potfult increase, from 391 (2008) to 521 (2011), the revenue from these stores is fiddling comparing to the total revenue.Net gross gross revenue per material feet Even though Bossini has opened lots of stores in the Mainland China, the wages gross revenue per s quare feet in 2011 (HK$1,340/sq feet) is still spurn than HK$1,500/sq feet in 2008. It implies that even more stores abide bring in more gross revenue to the group, but the edgeal benefit is change magnitude. The gross sales growth in the Mainland China endurenot take care up the speed of opening new stores. There are numerous reasons to cause this happen and one of the reasons is some stores are competing apiece others. That center that geographic study susceptibility have too umteen Bossini stores.However, the counseling still needs to open more stores due to fierce opposition by other brands. If Bossini slows its pace to expand, it might lose its bloodline and the net sales per square feet is even worse. Nevertheless, the net sales per square feet in the Hong Kong market performed grotesque well and it rises from HK$5,700 per square feet (2008) to HK$11,000 (2011). It is really main(prenominal) since Hong Kong is the one the cities with highest rental cost in the world and a strong sales per square feet can help laconicen the push of high rental cost. sell affaires are strongly affected by rental cost.Besides experiencing an upturn from the economic recovery, Bossini has pick out different business strategies focusing on branding and marketing initiatives. One of the best strategies is stick withed is the co-branded licensing platform. For example, Bossini teamed up with M&Ms, classic cartoon figure and TV show character to launch limited edition items and which can add value to Bossinis products and boost up both its revenue and gain ground margin tremendously. These campaigns can also loudnessen Bossinis be happy brand value and bring up overall brand awareness. fiscal digest Income statementThe Bossinis gross scratch increased 14% from HK$1,190 million in 2010 to HK$1,354 million in 2011 but the gross margin dropped a little from 52% in 2010 to 51% in 2011. It is more or less demoralize than the last year owe to the expansion for franchise businesses since the profit margin of them are comm precisely low. From 2008 to 2010, the revenue is preferably stable, approximate HK$2,290 million per year on clean, and it boosts up in 2011 to HK$2,640 million. Due to orbicular recession starting in novel 2008, Bossini was doing quite well to maintain its revenue at HK$2. 3 billion and the accolade is given to the right move to win the Mainland China Market.China is one of the some countries that were being hit by the pecuniary crisis the least and thus Bossini experienced a stable growth and strong domestic using up in the Mainland China. When we take a look of the gross profit, its trend looks similar to the revenue. Nevertheless, when we take a look of the direct profit, it fluctuates more volatile during 2008 to 2011 comparing to revenue and gross profit because the selling & distribution cost and administrative expense are relatively fixed and usually it is laboured to be cut even the r evenue and gross profit drop.boilersuit, the revenue, gross profit and direct profit are awful improved in 2011 due to the sparing recovery in Asia pacific region. counterweight sheet Bossinis watercourse add-on weights heavily on the total additions. property and bills equivalents, arsenal and debtors and bill due all together represent 90% of the incumbent assets. The train of cash and cash equivalents represents over 80% of the net on-going assets (i. e. genuine asset current li major power) which reflects that Bossini has a strong cash position and it does not has any on the spur of the moment term runny state issue.In general, Bossini is a financially kempt company. However, the high direct of stock direct makes me concern. The average yearly growth from 2008 to 2011 is 21. 5%. As we have discussed before, the revenue is quite stable from 2008 to 2010 and it is not a very intelligent signal that the inventory level is kept rising. The inventory perturba tion sidereal daytime is 36 days in 2008 and is 57 days in 2011. In some other word, it needs al some two months to tidy all its stock on hand. Usually, attire and fashion industry faced with short-change product life cycles and cannot afford such a long inventory perturbation day.Such a high level of inventory might be caused by enormous product variety to take different geographic preference. SWOT Strengths overall business Bossini is innovative and keen to adopt different business strategies on brand building and marketing initiatives such as adopting the co-branded licensing program. Financial Bossini has a solid liquidity background that reserves enough resource for it to keep expanding the potential market in the Mainland China. Also, the robust improvement of sales per square feet in Hong Kong market helps reduce the pressure of expensive rental cost. WeaknessOverall business Not every product line is successful under Bossini. It has been expanding pragmatically i ts Bossini stores while consolidating its Bossinistyle stores as a vamp up in the Mainland China market. It opened 72 more Bossini stores but 34 closed Bossinistyle stores in 2011. The operating loss in the Mainland China market was attributable to the Bossinistyle stores consolidation. Financial an increasing inventory turnover day signals that Bossini is producing more than they can be sold. The product life cycle for apparel is usually short and such a long turnover day will bring it to be an expense finally.Also, a dismount operating margin, i. e. 4 to 5%, gives no buffer to the company during economic downturn. Opportunities The co-brand licensing program in Hong Kong market is successful. As the Mainland China market is going to be more and more important to Bossini, the management can adopt something similar as well. in concert with the government policies to stimulate domestic consumption in the Mainland China, a successful business strategy can improve sales per square feet. Bossini can enjoy the essence of revenue and profit growth even though with slower pace of opening new stores which help restrain operating expense.In the long run, as income in the Mainland China is expected to rise further, the average spending by consumers on retail products is also expected to continue the upwards trend. Threats External The global economy is approach uncertainties by the new European debt crisis and our major markets are expected to experience a slowdown. Internal Bossini needs to launch a fashionable touch in style that fit different geographic preference. The mishap of Bossinistyle in the Mainland Market reveals that Bossini did not object glass at the Chinese customers well. Financial performanceLiquidity Ratio Liquidity counterbalance reveals a companys short-run solvency. Current dimension and Acid-Test dimension are comm nevertheless used. Current balance is figure by dividing current assets by current liabilities. Its main purpose to measure whether a company has enough resources to devote its debts over the next 12 months. Even though Bossinis current dimensions is kept change magnitude year to year, but it is still high than 2. It instrument every horse the company owes in the short term has two dollars worth short term assets that is purchasable to convert into cash to meet creditors demands.Acid-Test proportionality is to measure whether a company can redress all its current liabilities if they are due immediately. The formula is similar to current proportion except it only considers those current assets that can be quickly reborn to cash (i. e. exclude inventory and postpaid expense). Bossinis acid run ratio is always high than 1 concocts it is able to meet current obligations only using liquid assets). Acid test ratio is lower than current ratio since inventory and prepaid expense are excluded. But still, Bossini is considered to have a good financial strength in short term because both these ratios are higher than one.Activity Ratio Activity ratio measures a companys asset management power. stock certificate turnover and Accounts due turnover are parkly used. Inventory turnover measures the number of times inventory is sold during a year. The inventory turnover is kept decreasing year to year reflects that inventory is more and more arduous to be sold. In 2011, 6. 4 means that Bossini sold its inventory approximate 6 times during the year or it required approximate 2 months to sell its inventory. Accounts due turnover measures the ability to collect cash from credit customers.In this case, the account receivable turnover is not an important forefinger since the average accounts receivable contributes less than 10% of total current asset and only a very small amount of credit sales will be involved. It is honey oil for retail business. Solvency Ratio Solvency ratio measures a companys ability to pay long term liabilities. The most common solvency ratio is Debt r atio. Debt ratio is work out by dividing total liabilities by total assets. Its main purpose to show the proportion of a companys assets which are financed through debt. In general, Bossinis debt ratio is less than 0. which means most of its assets are financed through equity. It is a highly liquid company and it is financially healthy even creditors demand repayment of debt. However, this advantage is diminishing from 2008 to 2011. It is mainly due to Bossini has a short term borrowing of HKD78M starting in 2009 and gradually raised to HKD128M in 2011. favourableness Ratio Profitability ratio measures a companys overall efficiency and performance. give birth on Sales, Return on Assets and Return on Equity are the popular profitability ratio. Return on Sales shows the percentage of each dollar of sales that a company can turn into income.It is metrical by dividing net income by net sales. Bossini only enjoys a low hand over sales which is common for low end products retail busin ess however, it has been increased from 2. 7% in 2008 to 4. 9% in 2011 reflects it has strived to improve its profitability strength over 80% during these years. Return on Assets shows how profitable a companys assets are in generating revenue. It is calculated by dividing net income plus interest expense by average total assets. An uptrend of Return on Assets reveals that it requires less and less investments to generate the same revenue which is good for Bossini.Lastly, Return on greenness Equity shows how well a company uses investment funds to generate revenue. It is calculated by dividing net income net off with preferred dividends by average common equity. Bossinis sustainable growth, in Return on Common Equity (except in 2009 due to worldwide financial crisis) indicates the management maintains Bossini as a high growth company. Market synopsis ratios Market Analysis ratio is a good indicator for stock valuation. Price/Earning ratio and Dividend upshot are widely used. Pri ce/Earning ratio (P/E ratio) reflects a price the market is willing to pay for a helping relative to its one-year earning.P/E is calculated by dividing market price per share by earnings per share. A high P/E ratio does not mean it is more expensive, it just means that investors are willing to pay more for each dollar of earning compared to one with a lower P/E ratio. There are many factors that investors are willing to pay this premium such as solid growing, unique business model, market sentiment, and many others. For Bossini, the market price per share is handsome stable throughout these years and the high P/E ratio in 2009 is due to the extraordinary low earnings per share caused by worldwide financial crisis.Dividend recurrence measures the percentage of annual dividend return comparing to a stocks market value. It is calculated by dividing dividend per share by market price per share. Bossinis investors can expect to collar more cash dividends in the future from the incr easing dividend yield pattern. However, investors have to beware that the dividend yield might be dropped even they receive the same amount of cash dividend because of the market price per share increase. Either way, investors will be appreciated.