Looptworks case analysis

1. Looptworks Jeremy Berres-Paul, Taylor Hinshaw Augie Rittenberg, Ye Wu

2. BackgroundFounded September 2009 Co-owned by Scott Hamlin & Gary PeckSolution to a problemBased in Portland, Or Scott Hamlin in Entrepreneur Magazine

3. Human Resources Scott & Gary Owners Barry R. Maia P. S. Group Kiana N. Sales Head Employees Marketing Manager Designer Beth T. 12 Sales Interns Asst. Reps Designer

4. UpcyclingThe process of converting waste materials or uselessproducts into new materials or productsof better quality or a higher environmental value.

5. PEST Analysis Political - intellectual property - labor laws - environmental law Economic - recession - outsourcing

6. PEST Analysis Sociocultural &Demographic - fashion swings and trends - brands Technological - high competition - low cost solutions

7. Key Success Factors Key Success Factors In Clothing Industry Global Sourcing to Lower Costs Recognition of the Company and Brands Multi-Channel Retailing Price policy Sales Promotion Marketing Strategy

8. Existing Competitors

9. Risk AssessmentRisks that Could Impact Looptworks Performance Profit Risk: limited number of products, markets, and delivery channels result in net income risks. Financing Risk: funds are difficult to obtain. Operation Risks: Undercapitalization: poor planning Break-Even: low price

10. Risk AssessmentContingency Plan for Risks Profit Risk: creates to the companys income statement is profit risk measurement and management Financing Risk: Debt Financing: Banks, Credit Unions, Local Government Equity Financing: Venture Capitalists and Angel Investors Operation Risks: Undercapitalization: enough cash hold Break-Even: better cost controls and price increases

11. Opportunities in the Industry Apparel Industry is overcrowded with competitors SOLUTION: Differentiate yourself through innovation But how do you innovate basic, non- performance clothing items? Think process innovation rather than product innovation

12. Opportunities in the Industry More importantly- think Green Opportunity to be ahead of the pack Position yourself in an uncluttered space, less competition More Importantly, capitalize on the emergence of the Green Consumer

13. Opportunities in the Industry Who is this new Green Consumer? The fact that 18-24 year olds see themselves as green is important to marketers seeking to connect with this important consumer group* Younger people are substantially more likely to be avid green consumers** One of the biggest opportunities is capitalizing on this emergent group *Green Marketing US April 2010. Mintel Group LTD. April 2010 **Green Living US. Mintel Group LTD. February 2011

14. Recommendation Looptworks has already capitalized on the opportunity of going green Recommendation: Shift focus towards the college-aged green consumer by introducing their Upcycled products in university bookstores Inadvertently attract the non-mainstream, alternative consumer

15. Implementation Over 5 years, Looptworks will stagger the introduction of products into 9 total university bookstores Entering Oregon 1st, Washington 2nd, and California 3rd Product lines to be introduced Basic T-shirt Basic Sweatshirt Long Sleeve T-shirt Alternative Design T-shirt Basic Jacket All product lines will be tailored to the individual schools color Ambush marketing

16. Implementation: Oregon Schools targeted in Oregon:Product Distribution by year in each bookstore:2011- 1,000 (basic tees) 500 (sweatshirts)2012- 1,100 (basic tees) 550 (sweatshirts) 500 (long sleeve)2013- 1,200 (basic tees) 625 (sweatshirts) 600 (long sleeve) 750 (alt tees)2014- 1,300 (basic tees) 700 (sweatshirts) 700 (long sleeve) 800 (alt tees) 300 (jackets)2015- 1,400 (basic tees) 800 (sweatshirts) 800 (long sleeve) 850 (alt tees) 400 (jackets)

17. Implementation: Washington Schools targeted in Washington:Product Distribution by year in each bookstore:2012- 1,000 (basic tees) 500 (sweatshirts)2013- 1,100 (basic tees) 600 (sweatshirts) 525 (long sleeve)2014- 1,200 (basic tees) 700 (sweatshirts) 600 (long sleeve) 800 (alt tees)2015- 1,300 (basic tees) 800 (sweatshirts) 700 (long sleeve) 850 (alt tees) 400 (jackets)

18. Implementation: California Schools targeted in California:Product Distribution by year in each bookstore:2013- 1,000 (basic tees) 600 (sweatshirts)2014- 1,100 (basic tees) 700 (sweatshirts) 600 (long sleeve)2015- 1,200 (basic tees) 800 (sweatshirts) 700 (long sleeve) 850 (alt tees)

19. Financials 2011 2012 2013 2014 2015 Total Sales UO $ 23,950.00 $ 37,023.00 $ 49,085.75 $ 69,558.18 $ 83,262.59 OSU $ 23,950.00 $ 37,023.00 $ 49,085.75 $ 69,558.18 $ 83,262.59 PSU $ 23,950.00 $ 37,023.00 $ 49,085.75 $ 69,558.18 $ 83,262.59 UW $ - $ 23,436.95 $ 40,415.50 $ 53,534.00 $ 75,688.50 WSU $ - $ 23,436.95 $ 40,415.50 $ 53,534.00 $ 75,688.50 WWU $ - $ 23,436.95 $ 40,415.50 $ 53,534.00 $ 75,688.50 UC-Santa Clara $ - $ - $ 27,537.16 $ 46,901.00 $ 61,831.50 Cal $ - $ - $ 27,537.16 $ 46,901.00 $ 61,831.50 Stanford $ - $ - $ 27,537.16 $ 46,901.00 $ 61,831.50 Total Sales $ 71,850.00 $ 181,379.85 $ 351,115.23 $509,979.54 $ 662,347.77 COGS $ 38,080.50 $ 88,876.13 $ 165,024.16 $234,590.59 $ 298,056.50 Gross Profit $ 33,769.50 $ 92,503.72 $ 186,091.07 $275,388.95 $ 364,291.27 Operation Expenese Travel $ 1,000.00 $ 2,000.00 $ 3,000.00 $ 3,500.00 $ 4,000.00 Marketing $ 4,311.00 $ 14,510.39 $ 28,089.22 $ 40,798.36 $ 52,987.82 Logistics $ 2,155.50 $ 5,441.40 $ 8,075.65 $ 11,729.53 $ 15,234.00 Commision $ 6,107.25 $ 13,603.49 $ 22,822.49 $ 33,148.67 $ 43,052.61 EBIT $ 20,195.75 $ 56,948.45 $ 124,103.71 $186,212.39 $ 249,016.85 Taxes: 15% $ 3,029.36 $ 8,542.27 $ 18,615.56 $ 27,931.86 $ 37,352.53 Net Income $ 17,166.39 $ 48,406.18 $ 105,488.16 $158,280.53 $ 211,664.32 INPUTS: Manufacturing Costs 53% 49% 47% 46% 45% Sales Commissions 8.5% 7.5% 6.5% 6.5% 6.5% Retail build up 6.0% 5.0% 5.0% Marketing as % of Sales 6.0% 8.0% 8.0% 8.0% 8.0% Logistics as % of sales 3.0% 3.0% 2.3% 2.3% 2.3% Operation Margin 0.28108212 0.313973417 0.353455796 0.36513698 0.375960876

20. Looptworks Thanks You unique markets for unique products rewards over risks Upcycle Your Life

21. Looptworks Q&A

Looptworks case analysis

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