determine which company which is more profitable using key financial ratios and metrics accompanied with industry research and trends of the apparel retail sector.
Executive Summary This analysis studied financial information of three multinational corporations in the retail industry, Ralph Lauren, American Eagle, and Gap. This examination is predominantly and analysis of Ralph Lauren and American Eagle, and it compares its financials and performance to that of Gap. In order to reach a decision on which firm my company should invest in; we recreated and cleaned both companys financial statements followed by an analysis using key financial ratios and metrics. My company is searching for the firm that would be more profitable in the following fiscal years.After completing an in-depth analysis of these companies, we concluded that Gap would be the best investment for future growth in the industry of retail. Gaps sales growth may not be relatively high compared to other industry leaders but it is on the rise. Also the sales decrease can be related to the closing of stores and restructuring of international operations. This also relates to net income growth showing signs of regression in the past fiscal years. Gaps EBIT Margin and EBITDA Margin suggest that the company is healthy and also properly managed. These ratios show us that the sales growth and net income growth decreases are due to other factors in the business. Gap will show to be the right choice for our company to invest in as well as other industry research that we have done to help make this investment persuasive.Gap Inc.200920102011 Sales Growth-7.8%-2.3%3.3% Net Income Growth 16.1%14.0%9.3% EBIT Margin10.7%12.8%13.4% EBITDA Margin15.1%17.5%17.9% Case Write Up and Analysis All three of these multinational corporations generate their revenues in the apparel: retail brand industry. Gap is headquartered in San Francisco, California and the year-end date is January 30. American Eagle is headquartered in Pittsburgh, Pennsylvania and their year-end date is January 30. Ralph Lauren is headquartered in New York, New York and there year-edn date is April 3. To perform this case analysis to determine which company which is more profitable using key financial ratios and metrics accompanied with industry research and trends of the apparel retail sector. We have recreated and cleaned financial statements for Ralph Lauren and American Eagle, comparing both to Gap. Using these recreated financial statements, we have performed a case analysis of these three companies in order to find out which company was most profitable.Gap is the largest of the three with a market capitalization of nearly 16 billion while Ralph Lauren comes in second with roughly 15 billion market capitalization. Although Gap leads with market capitalization, American Eagle generates the most revenue that leads to highest net income as well, compared to both Gap and Ralph Lauren. Ralph Lauren does not lead these companies with its revenues and income but rather with its margins. They are consistently above the industry average and are also much higher relative to the other companies we analyzed. Ralph Lauren also shows the best percentage of sales growth in the past fiscal years. Sales Growth3 Yr Trend Polo14.3%21.8% American Eagle0.9%6.5% Gap-2.3%3.3% For apparel retailers, new fashion trends and steady flow of promotions will help a low single digits increase in sales in 2012. This is what you see with Gap and American Eagle they do not show major increases in sales growth but on steadily rising at roughly 5% in the three year trend. Ralph Lauren shows a jump of 7% which could be due to the luxury brand section of retail section because of the opportunities in emerging markets such as Asia and Latin America according to industry reports. American Eagle plans on accelerating growth through internet sales. This generates higher margins for the company, last year it accounted for 12% of company revenues. This trend is also apparent in the other two companies because most…; Executive Summary This analysis studied financial information of three multinational corporations in the retail industry, Ralph Lauren, American Eagle, and Gap. This examination is predominantly and analysis of Ralph Lauren and American Eagle, and it compares its financials and performance to that of Gap. In order to reach a decision on which firm my company should invest in; we recreated and cleaned both companys financial statements followed by an analysis using key financial ratios and metrics. My company is searching for the firm that would be more profitable in the following fiscal years.After completing an in-depth analysis of these companies, we concluded that Gap would be the best investment for future growth in the industry of retail. Gaps sales growth may not be relatively high compared to other industry leaders but it is on the rise. Also the sales decrease can be related to the closing of stores and restructuring of international operations. This also relates to net income growth showing signs of regression in the past fiscal years. Gaps EBIT Margin and EBITDA Margin suggest that the company is healthy and also properly managed. These ratios show us that the sales growth and net income growth decreases are due to other factors in the business. Gap will show to be the right choice for our company to invest in as well as other industry research that we have done to help make this investment persuasive.Gap Inc.200920102011 Sales Growth-7.8%-2.3%3.3% Net Income Growth 16.1%14.0%9.3% EBIT Margin10.7%12.8%13.4% EBITDA Margin15.1%17.5%17.9% Case Write Up and Analysis All three of these multinational corporations generate their revenues in the apparel: retail brand industry. Gap is headquartered in San Francisco, California and the year-end date is January 30. American Eagle is headquartered in Pittsburgh, Pennsylvania and their year-end date is January 30. Ralph Lauren is headquartered in New York, New York and there year-edn date is April 3. To perform this case analysis to determine which company which is more profitable using key financial ratios and metrics accompanied with industry research and trends of the apparel retail sector. We have recreated and cleaned financial statements for Ralph Lauren and American Eagle, comparing both to Gap. Using these recreated financial statements, we have performed a case analysis of these three companies in order to find out which company was most profitable.Gap is the largest of the three with a market capitalization of nearly 16 billion while Ralph Lauren comes in second with roughly 15 billion market capitalization. Although Gap leads with market capitalization, American Eagle generates the most revenue that leads to highest net income as well, compared to both Gap and Ralph Lauren. Ralph Lauren does not lead these companies with its revenues and income but rather with its margins. They are consistently above the industry average and are also much higher relative to the other companies we analyzed. Ralph Lauren also shows the best percentage of sales growth in the past fiscal years. Sales Growth3 Yr Trend Polo14.3%21.8% American Eagle0.9%6.5% Gap-2.3%3.3% For apparel retailers, new fashion trends and steady flow of promotions will help a low single digits increase in sales in 2012. This is what you see with Gap and American Eagle they do not show major increases in sales growth but on steadily rising at roughly 5% in the three year trend. Ralph Lauren shows a jump of 7% which could be due to the luxury brand section of retail section because of the opportunities in emerging markets such as Asia and Latin America according to industry reports. American Eagle plans on accelerating growth through internet sales. This generates higher margins for the company, last year it accounted for 12% of company revenues. This trend is also apparent in the other two companies because most…
