Analysis: What Went Wrong With Forzani's Group
What Went Wrong With Forzani’s Group
Managing a company is not the easiest thing to do. That being said, there are many factors in helping your company grow. Over the years a company will ‘evolve’ so to say, and will not be the same as it was 10, 20 maybe 50 years ago. Lately, Forzani Group Ltd. Has not has been doing as well as it was in the past. ‘Not so long ago, this Calgary-based company was considered an unrivalled league leader, with more than 390 stores nationwide, and a history of explosive growth in Canada 's $6.7-billion sporting goods market.’This article states that there has been some changes that has occurred which lead the company, Forzani Group Ltd. into its downfall. To the untrained …show more content…
eye, it may seem like the obvious reasons are because of the competition. This was not the case. There were many other factors in the past that has affected this company the most. Forzani Group Ltd. was a stand-alone company owned by Spot-check and was bought out by Canadian Tire, which then failed because they changed their CEO, did not go with current trends and for being overly ambitious.
Forzani has been in trouble before; this is not the first time the company has been in the spotlight. Back in the 1990’s the company decided to open up an expansion program but it later failed when the debt load of said program went through the roof, that forced Forzani to restructure all of the shares it had which dropped their $13 shares to only $1.20. The chairman and also the founder of the company, John Forzani, went on an extensive hunt search for the correct talent to help his company out of the whole it was it, and he found two accountants. The first accountant name was Bob Sartor would later become CEO, and then second Bill Gregson who is now president and chief operating officer. Both Mr. Sartor and Mr. Gregson were just the men Forzani needed for the job because both men together were able to cut out the costs in the operations of the company which in turn made it more efficient. Forzani was able to build new stores, upgrade small regional chains, quickly building a nationwide system covering every market niche and customer profile and the results were impressive, then in 2004 things changed. CEO Bob Sartor hosted a annual meeting in June and at the time Forzani’s stock was under $14, and Bob was doing everything he humanly could to make sure that he kept the company’s share holders interested and to have faith in the company, that it will bounce back from its deficit, but he was having trouble. “Things were hard all over,” Bob stated “and many competitors were barely surviving. Golden opportunities to grab, market share lay ahead, and this was the time to ‘fight the fight.’“ Later on in September of 2004, Mr. Sartor released Forzani’s results for the second-quarter for the financials for 2005. There were same-store sales dropped more than 4% and earnings stayed flat for over a year, and shareholders were unhappy with the repeat of last year 's profit warnings. They drove Forzani 's share price to a three-year low of less than $11, and since then it 's budged only slightly, and currently trades about $12.
When owning or operating a business, there will be many hardships and obstacles you will face along the road, one in particular being money.
There are many things that effect your sources of income and without money your business will quickly fall to nothing. For the Forzani Sports Group ltd. one of the major issues they faced had to do with their lack of diversity in the products they carried and keeping up with ever-changing trends. With the companies best year in business being 2003 having a net-worth of 6.75 billion Canadian dollars, sales were good and expectations were high, but during that year a trend changed drastically, starting a series of downhill events from there. (Forzani executives were caught off guard when that trend began to emerge in 2003) The executives within Forzani Group ltd. failed to spot this shift in trends and ultimately lost out on a chance to expand and diversify their company. If more planning was put into the quickly changing trends this could have been avoided. This isn’t the only issue with diversity that Forzani faces. Forzani stores carry too much product that differs from each other, thus creating too many competitors. (While struggling with product mix, Forzani has also been facing stiff competition on several fronts.) If Forzani was to focus more of their attention towards just one department and expand on that, they might find more success due to the decrease in competition. With such a vast selection of items and a large amount of competition for every one of those items, Forzani was forced to lower their prices dramatically and take a pause in the ambitions of doubling their profit in 5 years. This resulted in the company going through with some pretty questionable marketing tactics such as, increasing the original prices on product so that sale prices looked much better than usual. (The result is that Forzani has been forced to compete on price, which has damaged its earnings - and its reputation.). All of these issues
could have been addressed and taken care of at the time but due to poor managing and planning this company failed to see its earnings grow quite exponentially and was sold in 2011. Money is usually the primary focus of a business and without the right products and prices to attract customers; the hope for your business will soon fade.
A major reason for the decline in the Forzani’s group comes from the company being overly ambitious. “Instead of growth, Forzani should concentrate on improving performance at existing stores before considering major expansions, upgrades and acquisitions”(Canadian Tire Acquires the Forzani Group) said Howlett . Instead of improving their brand name, and the quality of their service, Forzani continued with expansion. Analyst Keith Howlett compares Forzani’s expansion to that of Chapter Inc., a company that in the end was bought out after not being able to produce sufficient profits. During the years 1999-2002 Forzani’s group had massive growth, though the company had already become a multi-billion dollar business they wanted more. The people at Forzani’s group were too much into making more money and disregarded the quality of their brand. This is a story very similar to that of Forzani’s group, which at one point was worth $6.753 billion and ended up being bought by Canadian Tire for $771 million. For Forzani’s group to become as they once were they must improve on what they have by having competitive prices, developing their brand name and to appeal to their customers in creative ways. After being sold a number of executives from Forzani’s were replaced, thus creating a new set of people that would run the business. "We have appointed a great mix of skills and experience, coupled with previous executives from Forzani and new executives from Canadian Tire. I am confident that this is the team to lead Forzani on a path of strong growth." said Stephen Wetmore. By replacing these executives it is implied that the problem lies with the people running the company. The problem that the previous executives had is that they were too ambitious and tried to make too much money far too fast.
Citations
Gray, D., Shaw, H., Howlett, K., & Spreng, J. (2004, Subject: The forzani group ltd. company: Canada 's largest sports equipment and clothing retailer. problem: Profits are shrinking as fashions change and competition grows. question: How can forzani win back customers and recharge its earnings? National Post Business, , 34-36,38. Retrieved from http://search.proquest.com/docview/205865862?accountid=27351
Kristin Craik (19 AUG 2011). Canadian Tire Acquires the Forzani Group
. Retrieved from http://www.businessreviewcanada.ca/business_leaders/canadian-tire-acquires-the-forzani-group
Managing a company is not the easiest thing to do. That being said, there are many factors in helping your company grow. Over the years a company will ‘evolve’ so to say, and will not be the same as it was 10, 20 maybe 50 years ago. Lately, Forzani Group Ltd. Has not has been doing as well as it was in the past. ‘Not so long ago, this Calgary-based company was considered an unrivalled league leader, with more than 390 stores nationwide, and a history of explosive growth in Canada 's $6.7-billion sporting goods market.’This article states that there has been some changes that has occurred which lead the company, Forzani Group Ltd. into its downfall. To the untrained …show more content…
eye, it may seem like the obvious reasons are because of the competition. This was not the case. There were many other factors in the past that has affected this company the most. Forzani Group Ltd. was a stand-alone company owned by Spot-check and was bought out by Canadian Tire, which then failed because they changed their CEO, did not go with current trends and for being overly ambitious.
Forzani has been in trouble before; this is not the first time the company has been in the spotlight. Back in the 1990’s the company decided to open up an expansion program but it later failed when the debt load of said program went through the roof, that forced Forzani to restructure all of the shares it had which dropped their $13 shares to only $1.20. The chairman and also the founder of the company, John Forzani, went on an extensive hunt search for the correct talent to help his company out of the whole it was it, and he found two accountants. The first accountant name was Bob Sartor would later become CEO, and then second Bill Gregson who is now president and chief operating officer. Both Mr. Sartor and Mr. Gregson were just the men Forzani needed for the job because both men together were able to cut out the costs in the operations of the company which in turn made it more efficient. Forzani was able to build new stores, upgrade small regional chains, quickly building a nationwide system covering every market niche and customer profile and the results were impressive, then in 2004 things changed. CEO Bob Sartor hosted a annual meeting in June and at the time Forzani’s stock was under $14, and Bob was doing everything he humanly could to make sure that he kept the company’s share holders interested and to have faith in the company, that it will bounce back from its deficit, but he was having trouble. “Things were hard all over,” Bob stated “and many competitors were barely surviving. Golden opportunities to grab, market share lay ahead, and this was the time to ‘fight the fight.’“ Later on in September of 2004, Mr. Sartor released Forzani’s results for the second-quarter for the financials for 2005. There were same-store sales dropped more than 4% and earnings stayed flat for over a year, and shareholders were unhappy with the repeat of last year 's profit warnings. They drove Forzani 's share price to a three-year low of less than $11, and since then it 's budged only slightly, and currently trades about $12.
When owning or operating a business, there will be many hardships and obstacles you will face along the road, one in particular being money.
There are many things that effect your sources of income and without money your business will quickly fall to nothing. For the Forzani Sports Group ltd. one of the major issues they faced had to do with their lack of diversity in the products they carried and keeping up with ever-changing trends. With the companies best year in business being 2003 having a net-worth of 6.75 billion Canadian dollars, sales were good and expectations were high, but during that year a trend changed drastically, starting a series of downhill events from there. (Forzani executives were caught off guard when that trend began to emerge in 2003) The executives within Forzani Group ltd. failed to spot this shift in trends and ultimately lost out on a chance to expand and diversify their company. If more planning was put into the quickly changing trends this could have been avoided. This isn’t the only issue with diversity that Forzani faces. Forzani stores carry too much product that differs from each other, thus creating too many competitors. (While struggling with product mix, Forzani has also been facing stiff competition on several fronts.) If Forzani was to focus more of their attention towards just one department and expand on that, they might find more success due to the decrease in competition. With such a vast selection of items and a large amount of competition for every one of those items, Forzani was forced to lower their prices dramatically and take a pause in the ambitions of doubling their profit in 5 years. This resulted in the company going through with some pretty questionable marketing tactics such as, increasing the original prices on product so that sale prices looked much better than usual. (The result is that Forzani has been forced to compete on price, which has damaged its earnings - and its reputation.). All of these issues
could have been addressed and taken care of at the time but due to poor managing and planning this company failed to see its earnings grow quite exponentially and was sold in 2011. Money is usually the primary focus of a business and without the right products and prices to attract customers; the hope for your business will soon fade.
A major reason for the decline in the Forzani’s group comes from the company being overly ambitious. “Instead of growth, Forzani should concentrate on improving performance at existing stores before considering major expansions, upgrades and acquisitions”(Canadian Tire Acquires the Forzani Group) said Howlett . Instead of improving their brand name, and the quality of their service, Forzani continued with expansion. Analyst Keith Howlett compares Forzani’s expansion to that of Chapter Inc., a company that in the end was bought out after not being able to produce sufficient profits. During the years 1999-2002 Forzani’s group had massive growth, though the company had already become a multi-billion dollar business they wanted more. The people at Forzani’s group were too much into making more money and disregarded the quality of their brand. This is a story very similar to that of Forzani’s group, which at one point was worth $6.753 billion and ended up being bought by Canadian Tire for $771 million. For Forzani’s group to become as they once were they must improve on what they have by having competitive prices, developing their brand name and to appeal to their customers in creative ways. After being sold a number of executives from Forzani’s were replaced, thus creating a new set of people that would run the business. "We have appointed a great mix of skills and experience, coupled with previous executives from Forzani and new executives from Canadian Tire. I am confident that this is the team to lead Forzani on a path of strong growth." said Stephen Wetmore. By replacing these executives it is implied that the problem lies with the people running the company. The problem that the previous executives had is that they were too ambitious and tried to make too much money far too fast.
Citations
Gray, D., Shaw, H., Howlett, K., & Spreng, J. (2004, Subject: The forzani group ltd. company: Canada 's largest sports equipment and clothing retailer. problem: Profits are shrinking as fashions change and competition grows. question: How can forzani win back customers and recharge its earnings? National Post Business, , 34-36,38. Retrieved from http://search.proquest.com/docview/205865862?accountid=27351
Kristin Craik (19 AUG 2011). Canadian Tire Acquires the Forzani Group
. Retrieved from http://www.businessreviewcanada.ca/business_leaders/canadian-tire-acquires-the-forzani-group