Le Chateau

Topics: Strategic management, Brand, Retailing Pages: 16 (5240 words) Published: September 28, 2012
Table of Contents

Organizational Introduction
Company Overview
Financial Performance
External Analysis
Porter’s Five Forces Analysis
Internal Analysis
Strategic Analysis
Business-Level Strategy
Corporate-Level Strategy
Objectives & Alternative Courses of Action
#1: Alter Manufacturing Process
#2: Strategic Alliance
#3: Global Expansion#4: Acquisition
Works Cited

Organizational Introduction
Company Overview
Le Chateau is a leading Canadian specialty retailer that offers contemporary fashion apparel, accessories and footwear. Founded in 1959 by Hershel Segal, the retailer was originally named “Le Chateau Men’s Wear”. The name was changed in 1962 to “Le Chateau”, when the product offering grew to include women’s clothing as well. Hershel and Jane Segal own a majority stake in the company, where through voting they control 76.4% of the company (Company Fillings, 2011). At first, Le Chateau’s target market and positioning were unclear; however, the company has evolved into a clothing retailer that attracts fashion-forward, style-conscious women and men. Through their quick identification of and response to fashion trends, Le Chateau has successfully built a strong and reputable brand. Committed to research, design and product development, they take pride in their vertically integrated operations, for approximately 40% of the apparel is manufactured in its own Canadian production facilities (Annual Report, 2010).

There are currently 238 stores in North America; 236 across Canada and two located in New York City. In addition, there are nine Le Chateau locations in the Middle East. As of 2011, the majority of their stores are located in Ontario, a total of 77, with Quebec close behind, 70 stores (Marketline, 2011).

Since 2008, the in-store sales have been steadily decreasing (Annual Report 2010). At the year-end of 2011, Le Chateau’s sales amounted to $319.04 million, a decrease of 0.8% from the previous year. This can be explained as a consequence of the cautious consumer discretionary spending in the retail sector. The brand has seen an increase in the sales of ladies’ clothing; however, this has been largely offset by the sales decline in the footwear and accessories divisions. Consequently, the brand’s EBITDA in 2011 was 14.7% of sales, compared to 19.2% in the previous year. Positioning

In light of the recent decrease in sales, the company has attempted to sustain its strength with a high level of liquidity and has begun to pursue a new confident direction, referred to as ‘Le Chateau for renewed growth’. Their current strategy is to maximize profits and grow shareholder value while repositioning the brand through further enhancing the service standards and expanding their offering through foreign licensing and franchising opportunities. The brand has launched their repositioning strategy through the revamping of their ladies’ segment into a higher quality, European-inspired style (Annual Report, 2010). Their goal is to appeal to a larger demographic of women and ultimately reposition all their divisions in a similar manner. Aligning with their objective of broadening their customer base, Le Chateau’s e-commerce website was launched in 2010 to provided a new platform to include online shoppers within their customer base. Financial Performance

Le Chateau has followed the general industry trend with respect to sales in the past few years. Due to macroeconomic factors, consumers in aggregate have been spending less. While sales have experienced moderate decreases, sales per square foot have had greater drop offs (Annual Report, 2010). This is due to the continual opening of stores in a declining sales environment. For 2011, a decrease of 7% and for 2010, a decrease of 12% was experienced with respect to sales per square foot. The combined decrease in sales and decreased in EBITDA Margin has led to poor net income...
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