WALFORD & SHAW · W&S Mayrah – Business Plan 2015 Commercial in Confidence 2 Executive Summary WALFORD & SHAW (W&S) is a new women’s fashion house and has established a new label

WALFORD & SHAW

BUSINESS PLAN 2015

W&S Mayrah – Business Plan 2015 Commercial in Confidence 2

Executive Summary WALFORD & SHAW (W&S) is a new women’s fashion house and has established a new label ‘MAYRAH’ which will launch in 2015. W&S was founded by Sydney-based Australian fashion designer Julie Shaw, and MAYRAH is positioned as a mid-level clothing brand offering a range of uniquely designed and competitively priced fashion garments with an Australian resort aesthetic. Launching into the US and Australian markets for Spring/Summer 2015, MAYRAH will comprise an initial product offering of glamorous resort-style pieces infused with the essence of Australian spirit and lifestyle. An Australian Indigenous name, MAYRAH means ‘Spirit of Springtime’ and will be the primary fashion platform for the contemporary fashion ranges developed. Julie’s fashion experience over the past 15 years has seen her obtain design qualifications and also work for several market leading labels both in Australia and Internationally. The past 5 years of running Luela has assisted her in developing her design sense and commercial business acumen and she has built a new label based the core values of design and delivering goods on time within the industry. After winding up Luela in 2013, Julie and her business partner have pursued new career paths, however, Julie has retained and reinvigorated a new passion for fashion. Julie is the Founder and Creative Director of Walford & Shaw, overseeing the complete go to market of the brand (design, sales, production, fulfillment). Prior experience in establishing and running Australian women’s fashion label Luela (2008 – 2013) has provided invaluable insight to develop and build a well-equipped brand going forward. Credible industry contacts both domestic and international will be brought over to W&S, along with extensive market research. The experience gained and invaluable lessons learnt from the first business venture will assist in setting the W&S label up for success.


Table of Contents 1.0 Statement of Business Objectives

1.1 Objectives and Strategies 2.0 Company & Customer

2.1 History and Background 2.2 Company Organisation 2.3 Customer Profile

3.0 MAYRAH

3.1 Range Model 3.2 Season Plans 3.3 Marketing Strategies

3.3.1 Distribution Model – US and ANZ 3.3.2 MARCOMMS Model

4.0 Financial Plan

4.1 Business Funding 4.2 Sales Funding Model and Forecast


1.0 STATEMENT OF BUSINESS OBJECTIVES 1.1 Business Objectives and Strategies WALFORD & SHAW (W&S) is a fashion house created by Australian fashion designer Julie Shaw, and is a 100% Indigenous owned and operated business. Prior experience in running the Luela fashion brand (2008 – 2013) has provided invaluable insight from which to develop and build a well-equipped brand going forward. Credible industry contacts both domestic and international will be brought over to WALFORD & SHAW, along with extensive market research. The brand will be launched into the USA and Australia/New Zealand (ANZ) markets in 2015. Given the size, capacity and interest in the W&S fashion labels, the US market will remain the driving force for sales, promotion and future growth. Infused with the essence of the Australian spirit and lifestyle, W&S will through the ‘MAYRAH’ fashion label bring insight into Australia’s unique culture through Indigenous inspiration. MAYRAH is a mid-level women’s clothing brand, offering a broad range of uniquely designed and competitively priced fashion garments (diffusion range). Based in Sydney Australia, the product will be marketed and sold at a wholesale level to US fashion boutiques and department stores, aimed at the middle-tier level of women’s contemporary fashion. A similar position will be the focus of the ANZ distribution along with an online model. A selection of US fashion boutiques and department stores will be the targeted stockists, based on interest received through the initial (Luela) market research trip and extensive communication and follow up had with US buyers and sales agents in 2010. Two to three additional US research trips will be required to establish contact with buyers before finally going back to the US to launch and sell the opening Resort 2015 Collection. The primary objective for the short term (1-3 years) is to establish the WALFORD & SHAW brand in the USA market. Building stockists across the US and securing contracts with major US department stores, building the sales and profitability of the business and creating an awareness through PR activity in targeted US fashion magazines and styling opportunities (achieved through the appointment of a sales & PR brand manager based in New York).


Short-term Objectives to be achieved:

• Secure start-up capital to fund the initial stages of the business. (In Progress)

• Appoint US sales / brand agent to sell and promote MAYRAH into the US market.

• Establish contacts with off shore manufacturers for fabric sourcing, garment production, shipping and logistics (In Progress)

• Secure US freight/distribution contact.

• Appoint Business Advisors located in Sydney to help drive the business & sales strategy. (In Progress)

• Develop Marketing Plans and strategies. (In Progress)

• Build the brand image & promotion of the label.

• Build on-going relationships with all fabric & garment suppliers & manufacturers (In Progress)

• Identify and appoint Design Mentor from the Australian fashion industry.


2.0 COMPANY BACKGROUND & ORGANISATION 2.1 History and Background Over the past 15 years Julie has gained extensive fashion experience. This experience was consolidated when she co-founded the Australian brand Luela. Luela received considerable interest from the US and secured a number of relevant US industry contacts that will be utilised to launch MAYRAH into the US market. The W&S objective is to establish itself as an Australian fashion brand. The point of difference for the brand will be the reference to Australian Indigenous heritage & culture, which will be evident in the label. Our inclusive approach will be achieved through reference to Indigenous words and concepts, story-telling through collections, and collaboration with Indigenous artisans to create exclusive fabric and print works. All aspects will be dealt with in a culturally appropriate way, following correct protocol and in consultation with cultural advisors. The brand will begin by selling at a wholesale level to a targeted database of US fashion boutiques on the east & west coasts. This will be completed with the aid of an appointed US Sales/Brand Agent. Middle-top tier department stores

MAYRAH PRODUCT CATEGORIES Signature Collection

Glamour Resort Evening Cocktail Classics Corporate Weekend Casual


(Bloomingdales, Nordstrom, Barney’s, SAKS) which fit the image of the MAYRAH brand will then be targeted and approached to stock the brand. Initial research has confirmed that there is currently a gap between inexpensive mass-produced garments sold by chain store retailers and the very expensive higher end fashion labels. W&S will target this gap by positioning itself within the “diffusion” category - producing to a mid market price point whilst offering original and unique designs that tell a story, based over a broad product category covering offering: Resort-wear, Evening/Cocktail, Corporate/Classics, Weekend/Casualwear, and eventually introducing a ‘Signature’ capsule range of slightly higher-end garments (which will capture the bridal / special occasion-wear market). MAYRAH will not be a niche brand. It will offer product to the customer for her ‘every day & every night’ requirements, with the exception of the Signature Collection which will cater to her special occasion requirements. MAYRAH will target the female customer age bracket 22 – 39 years old. It will be a mid-level clothing label, where the recommended retail price (for the main Ready To Wear Collection) is positioned at $250 (RRP/MSRP). This price position allows for the brand to be built around the concept of uniquely designed product, at affordable prices. To achieve this a combination of strategic operational approaches will be used to achieve positive returns for retailers and W&S whilst achieving the desired price position. This will entail:

• Off shore manufacture in China and India

• Use of affordable fabrications

• Easy-fit garments

• Carefully planned promotional activities (ie: use of social media campaigns and utilising styling endorsement opportunities, as opposed to regularly held expensive fashion runway productions)

2.2 Company Organisation In the initial stages, Julie Shaw will be the first full time staff member of the business, with all other functions to be performed by contractors. Julie will be supported throughout the set up and growth stages by business advisor and


mentor Lawrence Potter of Strategon Capital. Whilst the business will commence as a small organisation, the aim is to secure and outsource manufacture and distribution of the ranges. All design and creative work will be completed in Australia and then manufactured off shore. The utilisation of third party suppliers will assist in minimising overhead costs in the initial period. Further, this will allow the business to focus on it core benefits which is design and range placement. In the short term the business needs to invest in areas that are essential to the growth of the business and this means sales focused and marketing related activity in order to secure the brand platform. As such, investment will be in marketing communications and sales management, activities that directly contribute in the short term to returns for the business. The chart below is a developed function chart for the organisation that depicts the activities of the company. Staff will be appointed as required, however initial ‘staff’ will all be on retainer based employment and these will include, digital marketing support (web site) and US sales management. All other business activities will be the responsibility of the External Advisory Investment Board and Julie.

JULIE SHAW

DESIGN MANUFACTURE & DISTRIBUTION

SALES & MARKETING

External Advisory & Investor Board


2.3 Customer Profile • Female, ages 22 – 39

• Fashion aware, the MAYRAH customer prides herself in acquiring clothing that is well-priced, but which embodies unique styling and is not mass-produced.

• She will buy design-led product from specialist/branded fashion boutiques, leading department stores and also on-line.

• A mid-level income earner, she has some disposable income to spend on her wardrobe, and seeks out product that has an element of that something ‘special’ - but which is also affordable.

• The MAYRAH customer likes to wear garments that make her feel gorgeous/unique/individual.

• She searches for trend ‘inspired’ fashion items that are unique.

• She likes to discover the next new thing.

• She may work in the creative industry, or aspire to work in the creative industry.

• She is corporate yet creative. Conservative yet contemporary.

• She is trend driven but not a fashion victim.

• The MAYRAH customer keeps up to date on current trends through fashion magazines (domestic and international), online fashion blogs, following fashion Instagram and Pinterest accounts.

• She aspires to international designer brands such as Isabel Marant, Chloe, Celine, Valentino.

• Australian brands she may already has in her wardrobe include Zimmerman, Fleur Wood, Camilla, Thurley, Suboo – coordinated with items from Zara, H&M and Topshop.

• She likely attends designer sample/warehouse sales and/or purchases designer product online through flash sale sites in order to acquire designer pieces (as one-off items in her wardrobe).

• She loves the outdoors. She loves to travel.




3.0 MAYRAH With origin in Dreamtime folklore, ‘MAYRAH’ is an Australian Indigenous name meaning ‘Spirit of Springtime’ in the Yuwaallaraay language of North-west NSW. This ethereal concept resonates with a brand with a key focus on resort-wear, and which is infused with the essence of the Australian spirit and lifestyle. There is much interest in Australian designers at the moment, a trend that is set to continue as people search for design that is innovative, sincere and ethical. Design with meaning. Design with story. MAYRAH presents an opportunity to offer a truly unique Australian brand to the international market. Fusing fashion, culture and story, MAYRAH combines sophisticated, contemporary designs with textured fabrications, fresh and vibrant colour palettes, and unique design encompassing fashion and lifestyle. The Indigenous theme ‘MAYRAH’ will become the unique point of difference for the brand, translated through an exclusive Signature Range to sit alongside the main fashion line. The theme will be interwoven throughout the brand in many facets, creating inspiration through branding of logo, website design and collection concepts, use of contemporary Indigenous artworks, and through a collaborative effort with Indigenous artisans. It is envisaged that fashion accessories and home-wares will eventually be added to the brand house. Designer and Creative Director, Julie Shaw, is a descendant of the Yuwaallaraay people of Lightning Ridge in outback NSW, and it is through this heritage that the inspiration for the brand comes about. 3.1 MAYRAH Range The MAYRAH Range is designed to provide a full fashion concept story. This will be developed by a focus initially on the apparel market, however W&S will continue to create a series of design led categories including fashion accessories and lifestyle ranges. As a core focus of the Fashion label the following initiatives are being applied:


• Brand Identity: MAYRAH, means “Spirit of Springtime” for the Indigenous Yuallaaraay people, from who is a descendant. Drawing on this theme and heritage the MAYRAH ranges will be influenced through contemporary styling bringing new fashion offerings each season. The MAYRAH collections will reflect the diffused market approach that sets W&S apart in the fashion market.

• MAYRAH Ranges: MAYRAH will consist of several sub-product categories. These will have a specific focus

and channel offering. The categories of Glamour/Resort will offer ranges to the leisure and holiday sector; Weekend/Casual will deliver a relaxed styled range of separate’s; Evening/Cocktail will consist of ranges for special events and through to more formal occasions; and Classics/Corporate stylish contemporary corporate apparel for the working woman.

MAYRAH will offer a unique ‘Signature Collection’ for the market. This range embraces elegance and sophistication. It will draw its inspiration from the broader fashion market capturing unique fabrics, design, and an artisan approach in order to create a contemporary capsule collection.

MAYRAH PRODUCT CATEGORIES Signature Collection

Glamour Resort Evening Cocktail Classics Corporate Weekend Casual


• Competitive landscape: Current media reporting would indicate that the fashion market is a risk sector for investors. A key benefit of WSPL is the prior brand experience and lessons learned form Luela. This will assist in minimising the start-up dimension of the brand as W&S has the established peripheral network of manufacturers, buyers, agents and media to create an interest in the label. However, the contemporary design and concept of the brand will position the MAYRAH pieces as a desirable fashion garment choice by the target market. This is because we offer a unique product that is not widely marketed like other brands such as GAP, ZARA, TopShop, H&M and Country Road.

Given the finite retail market sector in Australia, fashion brands need to be responsive with the flexibility to expand overseas to help achieve operational efficiencies and profit. Given the Luela and 15 years fashion experience, Julie is well credentialed to drive the brand to achieve this outcome in a realistic timeframe.

3.1.1 Major Growth Opportunities / Horizon Plan: Once the business has been established, has regular stockists in the USA and begins to grow in sales and volume orders, there is opportunity to expand into additional product categories – such as:

• Sleepwear: Aussie style sleepwear utilizing colour, cotton fabrics, unique design, detailing and print. An extension of the main collection, but transferred into easy-wear styles (sizes could range from S – M – L with the opportunity for high volume of re-cuts)

• Knitwear: This product category can be offered in place of swimwear / resort during the winter months of the year. Cut & Sew classic style knitwear (cut & sew being the most affordable option, perfectly suited to the main WS label).

• Accessories: Handbags, clutch purses, beach bags can be easily sourced out of China. Julie and Strategon have networks of accessory suppliers in Guangzhou where there is unlimited amount of suppliers offering ready-made product, and also the opportunity to select own colours, details, sizes, as well as custom-made pieces. These accessories could be sold through the online store to complement


the main collections. Product could be listed on the online store are available for purchase all year round.

• Jewellery: As above – sold through the online store to complement the main collections. TO BE COMPLETED with next Version:

3.2 Season Plans 3.3 Marketing Strategies

3.3.1 Distribution Model – US and ANZ 3.3.2 MARCOMMS Model


4.0 FINANCIAL PLAN & INVESTMENT PROGRAM 4.1 Business Funding The WS business model will be in line with normal wholesale fashion industry practices and this impacts cash flow. Impacts on the business are summarised below:

• A product range is designed and samples produced for sales and marketing purposes. Up-front cash outlay is required to have the garments samples produced, and to pull together the seasonal photo shoot which will underpin the marketing / promotional material for the selling process (and create the Sales Kit). The following price components are necessary for the photo shoot: fashion photographer, professional fashion model, professional hair & make-up stylist, and the hire of photographic studio for full day. Graphic designer will then need to be appointed to compile the Sales Look book (for selling purposes) plus any additional design of promotional content (which could include: sales catalogue, buyer’s invitation, press release marketing imagery).

• The range is then taken to market over a relatively short time frame (4 to 8 weeks) and orders taken from retailers (stockists).

• Product is manufactured to meet the orders taken and delivered to WS in an 8-10 week turn-around (to be negotiated with manufacturer. A cash deposit of 30-50% must be paid to the manufacturer upon order placement (standard practice) so that the manufacturer can start the production by purchasing bulk fabrics). Balance of the amount must then be fully paid for by WS prior to delivery from the China based manufacturer.

• Standard practice in Australia for delivery of product to the retailers is an agreed 30 day credit payment. Whilst some retailers can be persuaded to pay for all product in full before delivery is arranged (and this can be negotiated with new suppliers where there is no track record of payment), the norm is for the 30 day payment terms. Past experience has proven this to be a major constriction on cash flow for the business, since the payment of goods for manufacturer must be produced and paid in full before shipment from China. To then wait 2 weeks for delivery from China, and an additional 30 days for payment from the retailer, puts immense pressure on the cash flow. In many cases it is difficult to receive


full payment at the 30 day point from retailers, and much effort is put into chasing payment (particularly from smaller boutique retailers).

• WS will produce 2+ collections per year in the initial stages of the business. As the business grows, the

range frequency of the main line will increase to satisfy the retailer’s need for new product. The business will produce to order only (minimising the risk of dead stock) and will not carry additional stock except where orders are placed for the internal e-boutique sales. The e-boutique will also act as a means of moving / on-selling any additional stock from unclaimed orders (in some instances the stores may cancel an order or not have the funds to pay for the order, although this is in the worst case scenario of negotiations including payment plans). As indicated by the above model, although the business will not carry significant amounts of stock throughout the year it will have periods of large cash outflows when a delivery is shipped from the manufacturers that it will have to fund up-front for 4 to 6 / 6 – 8 weeks before it is delivered and paid for by customers. This is where the financial model of utilizing capital investment to fund the production of ranges will be imperative to the success of the business. The investors would be billed with the amount required for the complete production process upfront upon orders being confirmed and consolidated. These funds would then be utilized to pay the manufacturer’s deposit immediately (to get them started and without holding up precious production time) and then upon completion of the goods, the balance of funds would be transferred directly to the manufacturer, and shipping costs paid. This process ensures the timely delivery of goods, which is important particularly when dealing with department stores who are very strict with delivery deadlines (in case of late delivery, late fees may be enforced).


4.2 Sales Funding Model & Forecasts The WS Revenue model is summarised below. A detailed P&L and Cash flow are included as an Attachment to the Plan (Attachments ## and ##). Revenue Model – Work in Progress (to be finalised) Resort 2015 PRE-Fall 2016 AW 2016 SS 2016 Resort 2016

Revenue 200,000 200,000 200,000 300,000 500,000

COGS 90,000 90,000 90,000 135,000 225,000

Gross Profit 110,000 110,000 110,000 165,000 275,000 GP % 55.0% 55.0% 55.0% 55.0% 55.0%

Expenses 158,000 97,000 109,200 145,500 195,000

Operating Profit -48,000 13,000 800 19,500 80,000 OP % -24.0% 6.5% 0.4% 6.5% 16.0%

Key to the sustainability and profitability is the requirement to fund the production and initial cash flow over the first 2 years. Initial sales reflect that whilst the business will be profitable it will require the support of additional investment funds whilst it builds its sales platform. Two approaches are being considered to fund the business.

Option 1 – Direct Investment This model considers the funding of the business in return for equity and a buy back option. This model given the positioning to the US market will be focused on the US investor. We will also seek support from the Australian market. Funds would be accessed on a draw down model.


Option 2 – Order Book The investors will be offered the opportunity to fund the order book and take a risk percentage on the order book funded. This is much like ‘invoice financing’, however needs to be with an investor that appreciates the value and cost of the fashion business model.

TO BE COMPLETED with next Version:

4.3 Investment Model and P&L

Documents

WALFORD & SHAW · W&S Mayrah – Business Plan 2015 Commercial in Confidence 2 Executive Summary WALFORD & SHAW (W&S) is a new women’s fashion house and has established a new label