Mercury Athletic Footwear
Mercury Athletic Case
Nicholas Thebeau, Student ID 50927830
Presented to: Professor Kevin Wall
West Coast Fashions, Inc. (WCF), a large designer and marketer of men’s and women’s branded apparel recently announced plans for a strategic reorganization. Active Gear, Inc. (AG), a privately held footwear company, was contemplating an acquisition opportunity. John Liedtke, the head of business development for AG, was interested in a WCF subsidiary. The subsidiary that Liedtke and AG intended to acquire was Mercury Athletic (MA), a footwear company. Liedtke thought acquiring Mercury would roughly double AG’s revenue, increase its leverage with contract manufacturers and expand its presence with key retailers and distributors. In order to provide a solid recommendation to Liedtke, further analysis must be performed.
Market Overview
The apparel or footwear industry is highly competitive with low growth. The market is influenced by fashion trends, price, quality and style. Companies can reduce risk factors by not following fashion trends which equates to efficient and effective inventory management and missed profit opportunities.
Active Gear
AG is a relatively small athletic and casual footwear company. It has annual revenues of $470.3M (42% of revenues came from athletic shoes), and $60.4M of operating income. Casting a shadow over these numbers are AG’s typical competitors. AG’s typical competitor has annual sales over $1.0B. Because of Chinese manufacturing contract consolidations, AG’s size was becoming a disadvantage due to low buying power vs. competitors.
AG’s initial focus was to produce and market high-quality specialty shoes for golf and tennis players. AG was among the first companies to offer fashionable, walking, hiking and boating footwear. Over the years, the firm’s athletic shoes had evolved from high-performance footwear to athletic fashion wear with a classic image. The firm’s traditional casual shoes also offered classic styling, but were aimed
Nicholas Thebeau, Student ID 50927830
Presented to: Professor Kevin Wall
West Coast Fashions, Inc. (WCF), a large designer and marketer of men’s and women’s branded apparel recently announced plans for a strategic reorganization. Active Gear, Inc. (AG), a privately held footwear company, was contemplating an acquisition opportunity. John Liedtke, the head of business development for AG, was interested in a WCF subsidiary. The subsidiary that Liedtke and AG intended to acquire was Mercury Athletic (MA), a footwear company. Liedtke thought acquiring Mercury would roughly double AG’s revenue, increase its leverage with contract manufacturers and expand its presence with key retailers and distributors. In order to provide a solid recommendation to Liedtke, further analysis must be performed.
Market Overview
The apparel or footwear industry is highly competitive with low growth. The market is influenced by fashion trends, price, quality and style. Companies can reduce risk factors by not following fashion trends which equates to efficient and effective inventory management and missed profit opportunities.
Active Gear
AG is a relatively small athletic and casual footwear company. It has annual revenues of $470.3M (42% of revenues came from athletic shoes), and $60.4M of operating income. Casting a shadow over these numbers are AG’s typical competitors. AG’s typical competitor has annual sales over $1.0B. Because of Chinese manufacturing contract consolidations, AG’s size was becoming a disadvantage due to low buying power vs. competitors.
AG’s initial focus was to produce and market high-quality specialty shoes for golf and tennis players. AG was among the first companies to offer fashionable, walking, hiking and boating footwear. Over the years, the firm’s athletic shoes had evolved from high-performance footwear to athletic fashion wear with a classic image. The firm’s traditional casual shoes also offered classic styling, but were aimed