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1) Identify and close the least profitable stores.
We look at profitability, profit and cost figures for each store and al...
By shutting down these stores, Dillard’s can save costs of $28,367,321.96 and lose only $1,121,249.06
of profits.

2) Redu...
Store 6803
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Total Sales

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Day of W...
The above table shows 5 brands with least profit (maximum losses). By removing these brands from
the stores where they are...
Appendix
Screenshots of Analysis
Question 1

Question 2
Question 3
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Dillards analysis

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Dillards analysis

  1. 1. 1) Identify and close the least profitable stores. We look at profitability, profit and cost figures for each store and all the stores together. In the below table we present the figures for these metrics in the current scenario and of the stores with profitability below a certain % are closed. The total number of stores is 453. Profitability Profit Cost Case KPI PROFIT COST RETAIL Reduction Reduction Current 10.48% $87,330,929.80 $746,335,208.60 $833,666,138.40 0 0 Close if <5% 10.72% $86,209,680.74 $717,967,886.64 $804,177,567.38 -1% -4% Close if <6% 10.93% $84,479,503.11 $688,258,308.45 $772,737,811.56 -3% -8% Close if <7% 11.19% $81,688,367.67 $648,027,483.68 $729,715,851.35 -6% -13% Close if <8% 11.60% $76,137,670.20 $579,990,413.53 $656,128,083.73 -13% -22% Close if <9% 12.09% $68,775,160.42 $500,148,820.22 $568,923,980.64 -21% -33% Close if <10% 12.97% $55,364,616.03 $371,455,464.08 $426,820,080.11 -37% -50% If we close the stores with profitability less than 5%, then we will lose 1% of our profits but cut 4% of our costs. We improve our Profitability by .24%. We would be closing 17 stores (4% of the total stores). Similarly, if we close the stores with profitability less than 6%, then we will lose 3% of our profits but cut 8% of our costs. We improve our profitability further by .21%. Notice that the gain is not significant as in the first case. We would be closing 33 stores (7% of the total stores). For other cases, the loss in profitability is >5% and hence we do not recommend them at this point of time. Between 5% and 6% scenarios, we notice that in the 5% scenario, the ratio between drop in profit to drop I cost is 1:4 whereas it is just 1:2 in the 6% case. So we recommend shutting down the stores that have profitability below 5%. The store Ids of these stores are: 104 1704 2603 6803 9603 4803 9303 303 6302 2503 5303 9503 7502 4904 6202 903 703
  2. 2. By shutting down these stores, Dillard’s can save costs of $28,367,321.96 and lose only $1,121,249.06 of profits. 2) Reduce hours of its least profitable stores. The following graphs show the sales at 3 of the least profitable stores by day of week. Store 1704 350000 300000 Total Sales 250000 200000 150000 100000 50000 0 1 2 3 4 5 6 7 (blank) 7 (blank) Day of week (1- Sunday to 7-Saturday) Store 2603 1400000 1200000 Total Sales 1000000 800000 600000 400000 200000 0 1 2 3 4 5 6 Day of week (1- Sunday to 7- Saturday)
  3. 3. Store 6803 1200000 Total Sales 1000000 800000 600000 400000 200000 0 1 2 3 4 5 6 7 (blank) 7 (blank) Day of Week (1- Sunday to 7- Saturday) Store 9603 1600000 1400000 Total Sales 1200000 1000000 800000 600000 400000 200000 0 1 2 3 4 5 6 Day of Week (1- Sunday to 7- Saturday) From the above 3 graphs, we can infer and generalize that the sales are at their peak on Saturdays and at a minimum on Sunday and Monday. So Dillard’s should shut down its stores on Sunday and Monday and may be run for extra hours on Saturday to ensure increased profitability. 3) Discontinue some of the least profitable products in stores where those products are generating the least profit. Row Labels POLO FAS TAHARI/A KASPER A JONES/LA CM SHAPE Grand Total Values Profitability KPI -7.23% -25.37% -34.21% -8.26% -28.62% -11.14% PROFIT COST ($5,318,174.05) ($2,530,652.09) ($2,190,958.14) ($1,396,706.08) ($1,374,197.30) ($17,144,991.61) $78,851,708.39 $12,507,192.34 $8,594,751.05 $18,310,205.80 $6,175,952.64 $171,078,016.81
  4. 4. The above table shows 5 brands with least profit (maximum losses). By removing these brands from the stores where they are causing losses, we arrive at the following figures for each of these brands. Curre nt Profit ability Brand Current Profit Current Cost POLO FAS $ (5,318,174.05) $ 78,851,708.39 TAHARI/A $ (2,530,652.09) KASPER A Future Profita bility Future Profit Future Cost -7% $ 68,141.95 $ 711,995.81 9% $ 12,507,192.34 -25% $ 124,642.50 $ 705,779.15 15% $ (2,190,958.14) $ 8,594,751.05 -34% $ $ 4,987.81 13% JONES/LA $ (1,396,706.08) $ 18,310,205.80 -8% $ 399,788.20 $ 5,950,380.06 6% CM SHAPE $ (1,374,197.30) $ 6,175,952.64 -29% $ $ 20,457.34 0% Overall $ (12,810,687.66) $ 124,439,810.22 -11% $ 593,328.12 $ 7,393,600.17 7% 727.93 27.54 From these two tables, we can see that by eliminating the 5 most unprofitable brands from the stores where they are causing losses, we can improve our profits by $13,404,015.78 [Overall Future Profit – Overall Current Profit] while reducing our costs by $117,046,210.05 (Overall Current Costs – Overall Future Costs). The profitability from these 5 brands goes up from -11% to 7%. The overall profitability goes up from 10.5% to 13.8%. The table below summarizes the number of stores from which each of these brands needs to be removed. Due to space constraints all the stores are not listed here but the top 5 stores with highest losses related to this product are shown. Brand POLO FAS TAHARI/A KASPER A JONES/LA CM SHAPE # of Stores 323 255 323 262 325 Top 5 Losing stores 1704, 4904, 2809, 9909, 5104 3603, 4903, 1703, 3403, 9603 2309, 3809, 1609, 3609, 3709 6009, 8109, 9309, 1203, 4603 8209, 3709, 3609, 9309, 3809
  5. 5. Appendix Screenshots of Analysis Question 1 Question 2
  6. 6. Question 3

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