Growing a US-based high-end fashion brand’s presence in Europe

Business case

Growing a US-based high-end fashion brand’s presence in Europe

Context

A US-based high-end fashion house encountered some difficulties in the European market as a result of some unfavourable market and business conditions, affected by the 2008/09 financial crisis. A combination of low consumer confidence and a shift in local consumer preferences towards essential items only led to our client asking us to perform due diligence on the European business.

Key Takeaway

The team found various reasons for the poor performance of one of the brands: production was centralised in the USA; too many stores were located in rural areas; and the brand had an image problem where it was associated with an older clientele. However, the other brands were profitable because they were well-positioned and popular among the wealthy. Thanks to our input, the fashion house closed certain stores, converted others and set up operations in other European countries. Our added value was that beyond the initial due diligence, we were able to model various strategic options, giving our client the tools necessary to make an informed decision.

Accuracy Role

Our work identified the fashion house’s strengths and weaknesses in Europe, discovered why the European operations were struggling and provided different scenarios on ways forward with the business. Initially, we conducted a strategic and profitability review of the house’s three clothing brands. We then performed a store-by-store analysis to determine the outcome of selling lease rights or even the entire business to a third party. Finally, we reviewed the budget for the current year and prepared standalone profit and loss accounts for the house’s main brand.