Harrington Collection

Topics: Variable cost, Cost, Costs Pages: 4 (806 words) Published: March 1, 2013
Case Analysis
Harrington Collection
Submitted by
J. G.

I. Factual Summary:

1. Harrington Collection, a large manufacturer and retailer of high-end women’s apparel faced declining sales and shifting consumer tastes, and the company needed to consider new strategies to compete in the women’s apparel industry. 2. Harrington Collection’s retail group operated 120 company stores: 70 stores sold a combination of Harrington Limited and Christina Cole merchandise, and 50 of the stores were dedicated solely to the Vigor division. 3. The U.S. women’s apparel industry market is mature; the average growth rate from 2005 to 2007 was 4.66 percent. 4. There are six categories of clothing in which companies compete: haute couture, designer, bridge, better, moderate, and budget. Each category targets customers with different needs and different price ranges, with haute couture and designer clothing ranging upwards from $10,000 and moderate to budget clothing as low as $50. 5. The primary channels by which retail sales occurred was specialty stores at 58.6 percent; department stores – 19 percent; discount and mass merchandise stores – 11.4 percent; warehouse clubs/supercenters – 8.1 percent, and other channels – 2.9 percent. 6. What is a unit? Since active wear is sold as separates, the ratio of hoodies to tee shirts to pants was not equal. One unit equals ½ hoodie + 1 ½ tee shirt + 1 pant. II. Case Problem:

How should Harrington Collections put forth their new active-wear line? After three years of unimpressive sales and low margins, Harrington Collection must evaluate launching a new active-wear product line in order to increase profits and maintain industry leadership. III. Alternatives:

A:“Better” pricing with the same channel.
1. Break-Even = 269,255 units ($25,579,186.45).
2. Profit Margin = 18 percent.
3. Brand Image = High quality, fashionable merchandise with status branding ($220/unit). 4. Smaller Market Size...
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