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GUCCI - Essay Example

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GUCCI (House of Gucci) is an Italian haute couture company. It was originally established by Guccio Gucci who lived in Florence in 1921. The high fashion(Griffiths, 2000) company, Gucci, started as a family owned saddlery and leather goods store in Florence in 1921…
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Download file to see previous pages Exhibit A and Exhibit E show in the new 2006 Ready to Wear advertisement that GUCCI Blouses are far advanced in terms of trends and fashion design as compared to many of its blouse competitors like DKNY, D & G, BCBG, Burberry, Diesel, and others. The financial statement of DKNY shows that the net profit is only a low 8% of the net sales. (www.edgar-on-line.com)
The key functions of buying and merchandising and other liaison with retail and marketing include ranging, pricing, promotions and space allocation. Buyers also identify market opportunities to meet changing consumer needs The market opportunity, based on the trend forecast, shows that GUCCI blouses are one of the top fashion statements that many of the "rich" clients love to keep as display items both on their person and at home.
In accounting, the projected Income statement is estimated by first projecting the future sales. In this case the blouse sales have been estimated to be 2.5% higher than its previous 7% per year. To get the sales for three months, the annual sales of 7% of 210 million pounds is multiplied 3 months and divided by 12 months. The months are July, August and September. Therefore the estimated sales are 4.99 million pounds for the three month period.
The projected sales as stated in the problem is 210 million and blouses took 7% of the sales. This year you are looking for a 2.5% increase and you are expected to operate on 8 weeks cover. This will translate to ([210 million x (.07+.025) ] x (3/12) = $1.322 million for the 3 month period.
Therefore the buying department will have to spend 1.322 million pounds for the entire three month blouse purchases. Exhibit C shows the balance sheet for 2002 to 2004.
The blouses will then be presented to the brand director for approval. After approval from the brand director, the blouses will be presented to the retailers for display in its regularly assigned store shelves and show rooms. Exhibit D shows the WSSI estimates.
The retail stores prefer companies, like GUCCI, that have fast moving items since most retail stores base their commissions on total sales. If the sales are slow, then the retail outlets will have lower commissions. GUCCI, also, has its own fashion galleries and stores plus its many catwalk presentations that will increase sales.
Buying price ranges for each Gucci blouse (Eicher, 2003) is 30 pounds, 40 pounds, 50 pounds, 60 pounds, 70 pounds and 80 pounds. These will be respectively sold at 113 pounds, 150 pounds, 188 pounds, 226 pounds, 264 pounds and 300 pounds respectively.
Gucci products are being sold in over fifty countries. This includes United States, Europe, Asia, Canada and others.
Regarding the retail marketing it does against competitors etc, "Companies like Gucci and Max Mara, with their own stores and no-frills management style, may be better fixed than others. And as Mr. Maramotti said after the Max Mara show, with its romantic peasant blouses, sashed dresses in men's-wear fabrics and crisp Sergeant Pepper jackets, 'we make nice clothes for real people.' '' (http://query.nytimes.com/gst/fullpage.htmlres=9501E1DA123DF931A35753C1A9679C8B63&pagewanted=print)
Gucci product ranges include fashion jewelry, ...Download file to see next pagesRead More
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