CONCLUSION: SHOP THURSDAYS: POST COVID-19 STRATEGY

Piltz was thrilled with Thursdays' past success but was eager to work alongside her mom and uncle to continue to reach consumers across Canada and internationally. With the lease renewal date of July 1, 2020, for the Exchange Tower store, Piltz needed to come to a decision quickly. Based on the current economic environment and the unknowns surrounding the COVID-19 pandemic, Piltz hoped that whether she chose to focus on the online store with influencer marketing or maintain the Exchange Tower location, her decision would result in a profit of at least $300,000.

EXHIBIT 1: SHOP THURSDAYS' SELLING PRICES AND WHOLESALE COSTS BY PRODUCT TYPE

(IN CA$)

Item Type	Selling Price	Wholesale Cost
Cashmere Lounge Set	$670.00	$255.00
Non-Cashmere Lounge Set	$195.00	$90.00
Pants	$150.00	$70.00
Dress	$140.00	$65.00
Shirt	$90.00	$45.00

Source: Company files

EXHIBIT 2: SHOP THURSDAYS' ANNUAL PROJECTED COSTS, 2021 FISCAL PERIOD

Exchange Tower Store

Store Rent	$ 78.000
Salaries and Wages	122.320
Utilities	1.440
Depreciation	1,615
Internet/Phone	1.140
Insurance	2.210
Other Tenant Fees	1.255
Point-of-Sale System	1.236
Health and Safety	1,400

Online Store

Online Manager	$ 40.000
Website Hosting Fees	13,100
Insurance	2,500
Warehouse Rent	28.000

Cost-Value Pricing Analysis

To calculate the unit contribution margin, we subtract the wholesale cost from the selling price for each item type:

Cashmere Lounge Set: $670 - $255 = $415

Non-Cashmere Lounge Set: $195 - $90 = $105

Pants: $150 - $70 = $80

Dress: $140 - $65 = $75

Shirt: $90 - $45 = $45

To calculate the contribution margin ratio, we divide the unit contribution margin by the selling price and express the result as a percentage:

Cashmere Lounge Set: $415 / $670 = 0.62 or 62%

Non-Cashmere Lounge Set: $105 / $195 = 0.54 or 54%

Pants: $80 / $150 = 0.53 or 53%

Dress: $75 / $140 = 0.54 or 54%

Shirt: $45 / $90 = 0.50 or 50%

Total Fixed Costs

Annual Fixed Costs (Exchange Tower Store)
Store Rent	$78,000
Salaries and Wages	$122,320
Utilities	$1,440
Depreciation	$1,615
Internet/Phone	$1,140
Insurance	$2,210
Other Tenant Fees	$1,255
Point-of-sale system	$1,236
Health and Safety	$1,400
Total	$210,616

Annual Fixed Costs (Online)
Online Manager	$40,000
Website Hosting Fees	$13,100
Insurance	$2,500
Warehouse Rent	$28,000
Total	$83,600

If the Exchange Tower Store were to close in 2020/21 then an additional $210,616.00 could be put toward additional influencer marketing.

Influencer Marketing Break Even

Recurring Cash Costs = Annual Fixed (Exchange Tower Store) + Annual Fixed (Online) - Depreciation

= 210,616 + 83,600 - 1,615 = $292,601

Influencer Marketing Budget = (Recurring Cash Costs x 15% Planned ) = 292,601 x .15 = $43,890.15

Influencer Cost Per Post = (1500 + 150) = $1650

Number of Budgeted Posts = 43,890 / 1,650 = 26.6

Thursdays would need to produce revenue of at least $43,890 through about 27 sponsored posts in order to break even with its 15% of recurring cash costs micro influencing strategy.

Answer the following questions by filling out the below tables and giving a small analysis:

1. Calculate and analyze the projected profitability of the Exchange Tower store for the 2020/2021 fiscal period.

Profitability Projection for Exchange Tower Store
	High Projection	Low Projection
Annually "After Work" orders (quantity)
Annually "Lunch Break" orders (quantity)
SALES
"After Work" orders $
"Lunch Break" orders $
Total Sales
VARIABLE COSTS
"After Work" orders cost
"Lunch Break" orders cost
Total Variable Costs
Contribution
Fixed Costs
Profitability

2. Calculate and analyze the projected profitability of the online store if the Exchange Tower store were to close for the 2020/2021 period.

Profitability Projection for Online Store
	High Projection	Low Projection
Each Influencer (1st Time Orders)
Entire Influencer Budget (1st Time Orders)
Influencer Reorders (2nd Time Orders)
SALES
Current Sales (1st Time)
Current Sales (2nd Time)
Influencer Sales (1st Time)
Influencer Sales (Reorders)
Total Sales
VARIABLE COSTS
1st Time order cost
2nd Time order cost
Total Variable Costs
Contribution
Fixed Costs
Profitability