Financial Report of the Fashion Company Hermes - Case Study Example

? April 22, The Company; in support of this problem we will support our case on a theoretical Hermes Group Contemporary Artisan. HERMES has leapt throughout 2011 with the elegance of a mare agilely defrayal difficulty on the wings of a premise at the extremely center of their ethics. The modern artisan design enthused all the departments to disclose their absolute quantity of their ability. consequently a lot of activities were implemented internal coupled to the conversation we use by means of our clientele helped falsify individual of the a good number of prolific existence in Hermes history: artisans competed to produce the bulk stylish objects, facts was collective flanked by a variety of areas of know-how, a fiesta showcased our skill in numerous countries, and the Hearts and crafts film obtainable the sole profiles of our craftsmen. All of these event s completely illustrated the precedence we give to the equality of the objects we create. Industry: A small number of attainment in wristwatch manufacture and fleece merchandise, as sound as in the additional unidentified fields of furnishings, upholstery fabrics and wallpaper complemented. Our existing metiers, enabling us to tender our clientele a increasingly better alternative of exceptional objects.  Location; Hermes group is a France based company with global operations in most countries. Leadership of the Company: The responsibility of the managerial Chairmen is to administer the collection and proceed in its all-purpose interest, within the range of the commercial principle and focus to those powers specifically approved by decree to the decision-making Board and to General Meetings of shareholders. Hermes International’s executive administration is comprised of the administrative Chairmen and the administrative group, which consists of six administration Directors, every of whom has distinct areas of accountability. Its task is to administer the Group’s deliberate executive. The Supervisory Board movements current organize over friendship management. For this reason, it has the similar authority as the legal Auditors. The administrative Board determines the planned pay appropriation for the financial year to be submitted to the Annual General Meeting.. Products: Among the goods include; Leather Goods-Saddlery: Leather goods and saddler are Hermes founding metier and account for 47% of sales. Its goods include bags, clutch bags, briefcases, luggage, diaries, writing accessories, small leather accessories, saddles and other equestrian items. Ready to wear and fashion accessories; This group includes; Women’s Ready to wear; tiring a gaucho bonnet and with a button in give, the proviso was decent in tooled or full-grain leathers set sour by a shagreen sheen, by means of entwined jackets in squashy lambskin plus crocodile bronzed to clearness, the final achievement. Tall, slim silhouettes in jodhpur jumpsuits, Amazon skirts, bloomer shorts in strand gabardine or draped dresses in iris and bright green viscose jersey were mutual with harness-bit belts, Etriviere trinkets and Jumping boots in a jiggle to the equestrian globe. Attributing a mark to this innovative vote, clean lines exposed the exactitude of volumes and the exquisiteness of resources. Maxi-hoods, lambskin leggings or jog bottoms in knit cashmere were damaged by athletic women or regular traveler. MEN’S READY-TO-WEAR The materials were work in innovative ways by means of ground-breaking technique that lent them strange weightlessness and gentleness. “Phantom-seam” calfskin, an terrific instance of trompe l’?il, necessary tremendously precise hot stamping. in the meantime, Etriviere lambskin acquire a screen-printed lining featuring the Pegase d’Hermesmotif, addition the sum total of modification to its very manly outlook. Creating “suffer exhaustion strand” knit necessary a highly complicated manufacture progression and more than a few. ACCESSORIES The Accessories Department covers enamel and leather , jewelleries, shoes, belts, gloves and hats. JEWELLERY ACCESSORIES sketch motivation from the Hermes Conservatoire, this year’s printed enamel creations narrated a host of new equestrian tales. Thus the motifs dressing assembly jacket in three different colours of gold, magenta and silk were reinterpreted by Cathy Latham in Brandebourgs , while French, Argentinean, Chinese or Peruvian stirrups were mixed by Jamin’s Concours d’etriers . Meanwhile, the variance of the graphic decorations mixed together in Quadrige , where Pierre Perron played on equilibrium and interlacing, providing a more serious heritage of the house. Finally, a myriad of studs, a powerful emblem of Hermes, was portrayed in 3D-pimp by Paul Quenson’s Clous en trompe l’?il. Printed pieces were played on different colors and grape yarns: surprisingly, energetic mixtures were invented using the newly formed “Peinture Acrylique” a color plan that reflects enamel with vibrant shadows. In contrast, “Passe” offered a gentler harmony of very softer tones. BELTS; In the wake of the year 2011-2012, Hermes belts reserved up the beat of each an every season with material colours differentiations. The trivial and summery silk Capri belt rented print decorations beginning from tie rack, an informal“kit” form with a removable buckle. For informal wear, both men and women actually liked it (David, 2008). WOMEN’S SILKS; During the same year, the silk workshop crossed, assorted and blended creative dreams, mingling originality, conception and knowledge. In a voyage to the spirit of craftsmanship, our Carres progressed to provide a more prominence of the work in the current artisan from where we illustrated a range of magnificent stories (David,2008). 2. INDUSTRY What is the Industry? We the Hermes has been operating our business in production and distribution of leather based artifacts varying from a simple design jewels to a more complex and diverse perfumes, all distributed in our major distribution stores found all over Asia, Europe, North America, South America and the Pacific regions (David,2008). Competitors? Our major competitors are the companies in Africa particularly from South African which carries export trade in leather jewels to Europe, South East Asia, and North America; we have been able to counter this competition in numerous ways; Firstly, Hermes has had that 'personal or human touch' that is so endearing to consumers. We make it a point to harness this strength. We tell our target market about our stirring soul story, about how we initiated our business, and what drives us to dish up the customers. By doing this, we are structuring a valuable bond with our clients, and forging a cherished relation with them, winning their loyalty to our products instantly. Secondly, it has been stressed that it’s the culture that shapes the company to link up with its target market. It has made the clients aware that by the person, that is the 'guy next door', it knows precisely what he wants, and how he wants it. After all, the firm being in the community is a assurance it understands the market and its derivatives better than any other giant firms out there; as such we deserve their trust more than ever. Implementing on Pricing Thirdly, we have validated to competitive pricing to our products , and emphasized this to our clientele. The products are best-priced as compared those of our competitors,' stressing this fact as one great power. Hermes has not acknowledged to the fallacy that small firms have higher prices by basing its product rates a wee bit higher. To beat the giants, it has invalid dated this perception. Pricing is vital to any product or service. Once people learn that you have cutthroat prices to offer, you will surely win them over (Warren, 2010). Fourthly, Hermes has been able to use its size to be supple in the market. It has few things to worry about . It has used this as a gain. Keeping itself alert for new trends that emerge, and act on them as quickly as possible; so that while the big companies tackle a tax cuts, for example, it is getting ahead by supplying a new demand to its alcove market. Finally, explore our creativity freedom. One great advantage of Hermes is that it has been able to create as many headfirst products to target markets. Shelling several fun videos and uploading them online.  Done some podcasting. All of these creative marketing strategies have worked for the company. Where do they rank We at Hermes are the global leader in the production and distribution of ready to wear and fashion accessories, jewelers, accessories,perfumes,belts, diaries, leather boots; with global presence in most of the countries experiencing our quality services and up to date technologies which enhances our competitive advantage the distribution industry(Warren, 2010). We boast of a pool of well trained personnel who are dynamic and competent enough to handle critical tasks and deliver a quality work with the required specific outlines. All these factors are our pillars of being a global leader (Warren, 2010). 3. GLOBAL REACH Do they sell in other countries? Yes, Hermes sell its products in all most the countries including, France, Austria, Denmark, Germany, United States of America, Spain , Netherlands,Italy,Finland, Ireland, Sweden, United Kingdom, Japan, India, China, Canada, Luxembourg, among others of which it has its branch network (David,2008). What they make in other in countries; Within the UK, Hermes runs a series of 7,500 lifestyle store that provides cut throat doorstep deliveries. This supple, welcoming and local advancement way that customers understands the practice and preferences of personal clients, facilitating the growth of up to 85 per cent of goods are delivered on real time. Hermes has in current years integrated from the company’s catalogue brands to effort with a variety of primary fast moving products, catalogue and virtual retailers in UK together with Next Directory, sit-up channels, ASOS, QVC, Tesco, John Lewis, among otherst. In Germany, the Hermes Logistik Gruppe (HLG) has turn out to be the country's largest autonomous door to door delivery service in the Business to Consumer and Consumer to consumer delivery services (Warren, 2010). Differences on what they sell somewhere else as opposed to country or origin; The only difference is that their products are differentiated to the segment market to match the population of that locality. Secondly, the marketing strategies used are also different. The marketing strategy used in Brazil is not the same as that used in Luxembourg. 4. Environmental outreach; We would like to gain more competitive edge in business and do something that not many others are doing. We are looking for a big picture idea that we can implement, that will help grow our profile, brand, and sales. Then it’s called Corporate Social Responsibility (CSR). Hence, CSR is an all-embracing idea covering topics such as: Environmental matters Employees' well-being Supply chain/business to business transactions Community/society support a).Environmental matters; ISO 14001 accreditation; Waste minimization, reuse and recycling schemes; The use of energy from renewable sources; Membership of environmental organizations; Environment reporting b) Employees' well-being; investing in people through continued education programs. Work-Life balance policies; Family-friendly workplaces with up to date IT infrastructure; Social events for staff such as Christmas and New Year parties; Employees sent to undertake community projects in a different work station; Employment of older and disadvantaged people like Albinos and the minority groups like Africans; 1-1 mentoring programs; 360 degree appraisal systems (David,2008). c) Supply chain/business to business transactions; Being involved in business associations; Seeking to develop long-term relationships with suppliers and customers; Supplier learning schemes; Participating and supporting local business awards through entrepreneurship wards, creative business ideas and innovative production processes; Over the years we have taken part in industry best practice programs. This follows the directives of the environmental players and other governmental and non governmental agencies(David,2008). d) Community/society support; We donate a certain percentage of our profits to charities particularly in China, Japan and Brazil, this monies goes towards funding children homes and upgrading the local facilities such as construction schools. Sponsorship of local sporting teams; We Hermes sports Academy. This academy is being run by the company itself. Employing people from the local community; we mostly employee the local communities mostly in our areas of operations such as Brazil. Work experience placements: Hermes places its employee in work experience programme. Our employees are sent to our branch stores in other countries for a period of not more than two years, this arguably makes them to adopt and appreciate other cultures. 5 .FINANCIAL Balance Sheet Hermes corporation Balance Sheet For the Year Ended 31 December   2012 Debit Credit 2013 Debits         Cash 5000,000 73,000   27,000 Accounts receivable 95,000 15,000   80,000 Allowance for doubtful debts -4,500   1,400 -3,100 Inventory 145,000   30,000 175,000 Prepaid expenses 7,500 700   6,800 Land 100,000 40,000   60,000 Buildings 287,000 43,000   244,000 Accumulated depreciation -35,000   22,000 -13,000 Patents 20,000   15,000 35,000   715,000     611,700 Credits         Accounts payable 900,000   6,000 84,000 Accrued liabilities 454,000 9,000   63,000 Bonds payable 155,000   75,000 60,000 Common stock 140,000 - - 100,000 Retained earnings-appropriated 810,000   70,000 10,000 Retained earnings-unappropriated 251,000 31,700   302,700 Treasury stock, at cost (15,000) 7,000   (8,000)   715,000     611,700           Cash flows from Operating Activities:         Net income   63,300     Depreciation expense   22,000     Amortization of patents   5,000     Cash dividends declared and paid     25,000   Increase in accounts receivable     15,000   Decrease in inventory   30,000     Increase in accounts payable   6,000               Cash Flows from Investing activities:         Purchase of Property     83,000   State of cash Flow Hermes Corporation Ltd Statement of Cash Flows For the Year Ended 31 December 2004   2004 Debit Credit 2003 Debits         Cash 132,000 72,000   60,000 Short term investment 180,000 180,000     Accounts receivable 306,000 -   306,000 inventory 414,000 54,000   360,000 Long term investment 120,000 -60,000 60,000 180,000 Plant assets 1,020,000 420,000   600,000 Accumulated depreciation -270,000 - - -270,000 Patent 54,000   6,000 60,000           total assets 1,956,000     1,296,000 Credits         accounts payable and accrued liabilities 498,000   66,000 432,000 Notes Payable (nontrade) 174,000   174,000 - Common stock 480,000   60,000 420,000 additional paid in capital 240,000   90,000 150,000 Retained earnings 564,000   270,000 294,000             1,956,000     1,296,000           meaning of ratios for the company; Gross Profit Ratio; The ratio may mean that selling price might reduce with considerable losses from operations of the company(Lucey, 2002) Net Profit Ratio; On the other hand shows how efficient the top managers are, any increase would mean that effective internal operations has been modified. Earnings per Share Ratio; Facilitates the exploration of the company’s share prices in the stock market. A comparison of the Hermes and another will make the management consider the company to be in its growth platform(Lucey, 2002) Price Earnings Ratio; Aids the investors with the investments decisions. Operating Ratio; It tries the operational efficiency with which the firm is being managed. It should be low enough to make leave a portion of sales to give a fair return to the investor. Payout Ratio; it determines the amount of profit which has been reinvested into the business. Dividend Yield Ratio; Aids an aspiring investor on the expected returns on investment he will be expecting at the end of his investment period (Lucey, 2002) 6. FUTURE OF THE COMPANY Sales growth of 21.9% in the first half The group's consolidated revenue in the first half of 2012 totaled €1,591.4 million, an increment of 21.90% at an swap rate and of 15.37% at stable swap rates. In the second half trading period, sales escalation was 20.89% at current exchange rates. Inspite of the very high base of contrast,sales sustained to inflate rapidly mutually in the Group's own stores and in the wholesale channel. Sales by division and area (at stable swap rates, if not indicated) In the opening of 2012, all areas register escalation: Non-Japan Asia (+24.99% facilitated by China, Singapore and Hong Kong) and Japan (+2.98%) France (+9.97%) and the rest of European nations (+21.03%), North America (+9.04%), regardless of an extraordinarily elevated foundation of contrast in 2011 (+33%). All production f acilities recorded an increment, underpinned by the merit of the group’s technological and a stable watercourse of innovations (Lucey, 2002) . In Leatherwork & Saddlery, which continue to spend in increasing manufacturing capability, sales will constantly continue to rise by almost 10% per year. Ready-to-wear & Fashion Accessories will go up by almost 22%). Silk & Textiles reported a significant increase of 15.43%, steered by the region's expensive collections. Perfumes went up by approximate 12.89%) rely this was a constant and an upward trend facilitated by the success of Terre d’Hermes and the foreword of Voyage d’Hermes cologne in the beginning of the first trading period. The Watch sector beared their first fruit of its ongoing reserves in knowledge, and increased by approximately 22.90%. Other Hermes Sectors (Jewellery and Art of Living) turned in a remarkable improvement during the first trading period and went up by 49.56%). Significant actions at the end of June, money fluctuations were constructive and had shaped an increment of € 85.57 million on revenue. throughout the first half, Hermes International sustained redeem back shares for its staff members in the share ownership schemes. The firm was able to buy back 90 582 shares for €20.89 million. On June 30th, its held up 1 457 682 shares valued at €310 million, exclusive of shares enclosed by a liquidity agreement. Some of these shares be purchase in link with extra share strategy award to staff. First-half outcome was available on August 31 2012. Chronic in service income is expected to increase in line with revenue growth (David,2008). Analysis for 2012; It is hard to project for the whole annual results for the year 2012 owing to economical uncertainties which sometimes outlook the normal trading situations and again currency fluctuations always overrides the economic performances. However, provided these sale indexes in the first half, the group stand by its goal of consolidated proceeds growth of 9.9% over the year at stable swap rates. The original in service edge is predictable to be flanked by 2010 and be highly attained in 2011 (Columbus,2009). During the second half, Hermes will keep on to pursue its policy of growing the sharing net, reinforce manufacturing capability and secure organize over sourcing. The 2012 premise of the year, "The gift of time", engraves the brilliance reflected in the complete skill of our saddlers, the scrupulous accuracy of our watchmakers, the intelligence of our engravers and the devotion to excellence of all our craftsmen and designers. Devoid of time, not anything permanent or gorgeous might be brought into being(Adams,2007). References: Adams, B.(2007), Accounting Policy Analysis: New York, Columbia University Press. Columbus, D(2009), Financial Ratios Analysis and Management: England, MacMillan Publishers. David,C .(2008),The Analysis of Profitability of A business Entity: New York, Chicago University Press. Lucey, T.(2002),Management and Financial Accounting: London, MacMillan Press. Warren, Fess, C (2010), Introduction To Financial Management; London. MacMillan Press. Read More