Presentation BF2 Usman Ali Ahmed- Final1

8/12/2019 Presentation BF2 Usman Ali Ahmed- Final1

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Should TSG invest $30 million in Urban Brands Idea


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Two main entities involved;

TSG Capital fund &Urban BrandsRelationship b/w: Urban Brands (clothing store)seeking an investment from TSG to use the funds for

store expansion in other cities and overall growth.


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Parent Company, Operates Special Retail stores targetedtowards ethnic consumers (African-american, &Hisphanic)

Typically manufactures womans clothing Plus sizessegmentExpected to grow as huge potential in women apparelGeographic concentration of African American and

Hispanic segments dispersed across East and Southern USOther KEY drivers that make the investment sound forTSG are: 1)increased % OF working women2) Increased population of plus size consumers Obesity

3) more ethnically diverse population in years to come


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Ashley Stewart: A niche retail store ConceptCatering to Plus Size Women

Most retail stores Stock petite and StandardFashion SizesProblems for Plus Size women, Particularly thosefrom African American and Hispanic EthnicBackground


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Urban Brands has Been Approaching severalprivate Equity firms and VCs for Equity

support

Proposal asks for US $ 30 Million forExpansion and paying off Current LiabilitiesPlans to open 25 30 Stores in the next 5years, currently operating 21 stores on itsown


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Should they invest??


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Feasibility analysis is the process of determiningwhether a business idea is viable.It is the preliminary evaluation of a business idea,conducted for the purpose of determiningwhether the idea is worth pursuing.Feasibility analysis takes the guesswork (to a

certain degree) out of a business launch, andprovides an entrepreneur with a more securenotion that a business idea is feasible or viable.

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For VCs, Feasibility can be a bit different


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Product/Service Feasibility AnalysisIs an assessment of the overall appeal of the product or service that is part of the proposal

ProductFashionable & Professional Apparel

Career Apparel 70%- Skirts, Jackets, Suits and coats etcCausal Apparel 30% - Jeans, T-shirts and Sweaters etc

Target Consumer ProfileWomenPlus size- 16 or higher

Demographic segmentation

African- American and Hispanic WomenEthnic MarketWorking WomenExtremely High degree of Brand loyalty

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Great product with competitive edgeVC look for a solution to a real problem that hasn't been solvedbefore.Products that customers can't do without because it's so muchbetter.VCs look for a competitive advantage in the market.Fewer direct competitors, the better.

Bloomingdales Plus Sized Shop for Women - increased 20% sales4 micro drivers:

Aging female population Increased % of working women Increase in population of plus size women More ethnic diverse population


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Untapped market Segment- Couldn't purchase due to unavailability of stores

Estimated number of potential customers- 28 million American African & Hispanic women in US- 50% potential customers = 14 million

Average annual consumption per potential customerOn average 2 units- assumption

Average selling priceJeans $30

14million * 2 units* $30 = $ 840 millionmarket potential


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Industry/Market Feasibility AnalysisGrowing Segment- Plus Size Segment Accounts for 23 %of all Womens Garments sales

Niche Segment VCs generaly look for IdentifiedDistinctive Niche Segments

Allows for Quick Establishment of the Market( product Concept) Urban Brands has an identified Specific Niche Segment: African

American and Hispanic Plus Size Females

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Identification of a Niche MarketA niche market is a place within a larger market segmentthat represents a narrower group of customers with similarinterests.For a new firm, selling to a niche market makes sense for atleast two reasons.

It allows a firm to establish itself within an industry without

competing against major competitors head on. A niche strategy allows a firm to focus on serving a specialized

market very well instead of trying to be everything to everybody in a broad market, which is nearly impossible for a new entrant.

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Characteristics of attractive industries for new ventures

Are large and growing (with growth being more important than size).Fastest growing segment 1990-1995

Plus size apparel growth 43% VS All Womens Apparel 23%

Have high rather than low operating margins.

high Margins Demonstrated by Ashley Stewart

Are not crowded.No other retail Brand Catering to segment


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Being a first mover can confer the advantages of:Brand loyalty and technological leadershipPreemption of scarce assets

Exploiting buyer switching costsReaping increasing returns advantages .

However, first movers often bear disadvantages also:High research and development expensesUndeveloped supply and distribution channelsImmature enabling technologies and complementsUncertainty of customer requirements

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Financial Factors Associated With Promising Business Opportunities

Steady and rapid growth in sales during the first 5 to 7 years in a clearly

defined market niche. High percentage of recurring revenue.

Availability of an exit opportunity for investors to convert equity to cash.


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Financial Feasibility( All Figures in Millions)

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1991 1992 1993 1994 1995 1996 1997 1998 1999 2000Net sales 0.703 5.401 8.332 11.971 22.355 36 62.929 101.062 149.17 209.33GP 0.307 2.011 3.363 5.207 9.785 16.2 29 47.643 73.394 106.758GPMArgin 44% 37% 40% 43% 44% 45% 46% 47% 49% 51%

N incomE -0.145 -0.773 0.056 0.224 0.178 0.56 1.375 4.539 10.871 19.553Margin - - 0.7% 1.9% 0.8% 1.5% 2.2% 4.5% 7.3% 9.3%

Ahsley Stores 1 10 10 14 20 35 57 79 104 129

Per Store Sales 0.703 0.5401 0.83320.85507142

9 1.11775

Sales Growth - 768% 154% 144% 187% 161% 175% 161% 148% 140%GP Growth - 655% 167% 155% 188% 166% 179% 164% 154% 145%NP Growth - - -7% 400% 79% 312% 247% 330% 240% 180%


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1995: TSG invested $30bn in URBANBRANDSTill 2000: UB opened 115 stores in 20 states

1998: Sitt divested interest in UB andengaged in development & acquisition of realestate through THOR EQUITIES


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2008-2010: incurred net losses, liabilitiesgrew

Filed for Bankruptcy( Chapter 11 ) in 20102010: UB filed for bankruptcy, sold GB Creditfor $20.6 mAgain Filed for Bankruptcy ( Chapter 11) in20122014: Further liquidated 27 stores, sold toClearlake Capital Group for $18 m

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Presentation BF2 Usman Ali Ahmed- Final1