Oxford Brookes University Bsc in Applied Accounting
I will use this report writing oopportunity to practice and practically implement my learning in evaluating business and financial performance of a business which spreads its activities from one continent to another. 1. 3 Reasons behind choosing X&Y For me and for my family’s clothing needs I found X&Y as a better place to buy as it sells better and fashionable cloths at lower price.
But, this is not what attracted my attention. I got interested on X&Y because in this time of recession and money crisis while all high street giants struggling to survive I found X&Y continuing to open new stores in different locations in every few months.
Not only that, Interbrand ranked in their latest 2009 report X&Y as the world’s 2X no. brand with 11% increasing brand value from last year to 15,375m USD. Last year X&Y was ranked number 2X. X&Y is in the top position as a high street apparel brand. It seems X&Y is becoming more popular hence mearns greater market. 1. 3. 1 X&Y history Present is the result of history; I always enjoy it so decided to look back where everything really begun. A former Swedish salesman, named Exxx Pxxxx, discovered an amazing clothing retail concept during his trip to the United States.
He noticed high turnover can be achieved by lowering the sales price. After came back home; in 1947, he opened a store exclusively for women’s clothing in Vxxx, Sxxx. He named the store ‘X’. Swedish for hxxx. In 1968 Exxx Pxxxx brought men’s concept in his retail store and changed its name to ‘X&Y’. He continued to add new concepts like clothing for children, young people, trendy people and sportive people. To stimulate growth in home and abroad, X&Y went public with a listing in Sxxxx Stock Exchange in 1974.
X&Y started its business using concept ‘fashion at low price’ but later developed to ‘fashion and quality at best price’ The Pxxxx family still 4 holding the largest share of the company stock, leaving control securely in the family’s hands. 1. 3. 2 X;Y at present day ‘Before you can really start setting financial goals, you need to determine where you stand financially. ’ – Bach, David X;Y is a rapidly growing business. Every year it is expending its market, i. e. stores, steadily. According to X;Y annual report 2008; by the end of financial year 2008 X;Y Group had 1,738 stores globally.
In the year 2008 X;Y opened 216 stores worldwide and entered in five new different markets (Japan, Egypt, Oman, Bahrain and Saudi Arabia). In 2009 X;Y Group planning to open 225 new stores. Though X;Y mainly provide clothing at competitive price but they also have PST range which offers exclusive and expensive clothing collection. Around 73,000 employees helping X;Y to run and grow. Source: X;Y Group Annual Report 2008 1. 3. 3 Business to compare I was thinking around which organization I shall choose to compare.
I browsed through websites of top clothing retailer’s e. g. Primark, Gap, Topshop, and Zara. 5 Then I found Inditex Group (owner of Zara) as the most appropriate business for comparison with X;Y Group as, in terms of revenue, Inditex is the top largest clothing retailer in the Europe and X;Y is the second. Though clothing ranges of Inditex mainly includes high priced items unlike X;Y’s main ranges but both of them highly expended their operation beyond their originate country. Inditex have 4,430 stores in 73 countries while for X;Y the number is 1,738 in 34 countries.
Inditex Group includes fashion brands Zara, Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Oysho and Uterque. Zara is the most popular brand among others of Inditex Group. Interbrand, in their year 2009 report, ranked Zara in no. 50 according to brand value (6,789m USD) while X;Y ranked number 2X with 15,375m USD brand value. 1. 4 Aims and objectives The aim of this research and analysis project is to establish an evaluation of the business and financial performance of X;Y Group based on financial reports, comments and projections made by board members and using the views of other stakeholders.
My project will evaluate the financial performance of X;Y over financial year-ending 2006 to 2008 and assess its future prospect. Economic decisions taken by stakeholders are highly dependent on the financial performance of the relevant company. Now-a-days stakeholders are getting more and more interested on management’s performance and internal control. Management’s ability in taking effective long-term decisions is very important as taking efficient short-term decisions. Shareholders are concerned about short-term return e. g. ividend and share price but they are also very concerned about managements’ plan on future growth, expansion, roadmap on how to deal with expected or not-expected adverse conditions. I will use various rations e. g. profitability ratios, efficiency ratios, investment rations during my report writing process. In addition, I will do SWOT analysis, as it is a key 6 instrumental framework to assess the overall business position, to identify the strength, weaknesses, threats and opportunities for X;Y. 2. INFORMATION As this report is the first of its kind I am doing so I had to start from the very beginning.
I had to understand what type of report I was going to do, what type of format I shall use, how can I gather information and how can I use those in writing this report and on above all of these where will I find relevant information. I discussed about the report writing techniques I shall use and information source I shall use with my senior and fellow sstudents who already wrote this type of report for their university degree. I attended an introductory meeting in …… where Mr …… pointed out possible sources of information.
I browsed through websites of X;Y and Inditex. I downloaded and printed out the annual report of last three years. I also read through the Chairman’s report and CEO’s report to understand business and financial performance from their point of view. I also read through newspaper reports on X;Y and Inditex. I used Google search engine and Yahoo Finance to find out news related to these two businesses. 2. 1 Source of information I divided my source of information in two groups; primary source and secondary source.
As far as this business and financial performance report concern I really not necessarily had to collect information through primary source. More importantly, the secondary source of information was so sthrong that it made using primary source insignificant. The main sources I used during preparation of this report are as follows: 7 Published financial statements of X;Y Group and Inditex Group (Year ending 2006, 2007, 2008) I found financial statements as the main source of information as this gives us the financial knowledge of the both companies and very relevant to my chosen topic area.
But, more importantly financial statements are audited by independent auditors and provides high level of assurance and great deal of reliability. Chairman, CEO and Directors statements These statements gives information which highlights business performance, i. e. specific areas where the business done well or areas where business is finding difficulties. These statements also give future strategies and plans business willing to and going to adopt and implement. These statements also ensure stakeholders on business plan on how they will adopt or eliminate expected or unexpected risks.