ABC Inc. is one of the largest global apparel companies in the world. It manages a diversified brand portfolio. ABC Inc. designs and markets branded dress shirts, neckwear, sportswear (casual apparel), jeans wear, performance apparel, intimate apparel, underwear, swimwear, swim products, handbags, accessories, footwear and other related products. Its brands are positioned to sell globally at various price points and in multiple channels of distribution, including company owned branded designer stores and big box retailers, like Walmart and Costco. This enables it to offer products to a broad range of consumers, while minimizing competition among its brands and reducing its reliance on any one demographic group, product category, price point, distribution channel or region.

ABC Inc. has evolved from its 1923 roots to become a diversified global company through a combination of strategic acquisitions. It has acquired several businesses and will continue to explore strategic acquisitions of businesses, trademarks and companies that it believes are additive to its overall business.

Attached are the financial statements for ABC Inc.’s 2020 and 2019 fiscal years. The economy has been very stable over the past years, with inflation at 2%.

Required:

1. Based on the company overview and a review of the financial statements, what is ABC Inc.’s strategy, differentiation or operational excellence? State full reasoning for your answer, with reference to the financial statements and case facts.
2. What are the clues, from the financial statements, that ABC Inc. is changing its strategy? Provide full reasoning by referencing the financial statements and/or applicable ratios.

 
 
 

ABC Inc. Balance Sheet As at January 31, 2020 and 2019 (in S millions) 2020 2019 Assets Current Assets Cash 143 $ 452 Accounts receivable 1,554 778 Inventories 2,424 1,732 Prepaid expenses 160 69 4,281 3,031 Property, plant and equipment Goodwill and intangible assets Total Assets 1,758 985 5,809 7,240 11,848 11,256 Liabilities Current Liabilities Short-term liabilities Accounts payable Accrued liabilities 1,137 924 450 957 Current portion of long-term debt 427 13 2,014 1,894 Long-term debt 4,838 3,702 Total Liabilities 6,852 5,596 Shareholders' Equity Common shares 1,985 1,985 Retained earnings 3,011 3,675 4,996 5,660 Total Liabilities and Shareholders' Equity 11,848 11,256