Interco Case Analysis

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Interco Case Analysis

Group 6


Interco Case Analysis
1) Company Background
Interco was founded as International Shoe Company in 1911 as a footwear manufacturing company. By 1966, Interco was a major manufacturer and retailer of consumer products and services. Most of Interco’s growth during this period was through the acquisition of related businesses. In 1988 Interco was made up of 4 main business segments:

* Apparel Manufacturing
* General Retail Merchandising
* Footwear Manufacturing and Retailing
* Furniture and Home Furnishing
2) Interco’s Financial Performance
The whole company financial performance is showed as follow: * Overall financial performance was solid
* Return On Equity was up 11.7% in 1988 compared to 9.7 in 1987 * Interco’s board wanted to increase this ROE to 15% * In 1988 sales increased 13.4% and net income increased 15.4% year over year. Interco’s financial performance varied greatly between business segments, the detailed information show as follow: a) Apparel Manufacturing Financial performance:

* Overall, the apparel manufacturing performance was down because of decreased consumer spending. * More and more manufactures moved factories out of the US in order to reduce the cost of labor. * Interco was forced to lower its apparel prices in order to compete. Because of the change In the market, Interco’s apparel manufacturing sales went up * Operating profits dropped from 47.3 million in 1987 to 20.2 million in 1988 because of lower margins b) General Retail Merchandising Financial performance:

* General retail merchandising suffered from the same problems that plagued apparel manufacturing. * The operating unit’s sales slightly increased, but operating profits decreased by 3.7%. c) Footwear Manufacturing and Retailing Financial performance: * Footwear had the...
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