Post on 15-Aug-2015
© 2013 Knoll Inc.
Carolyn Barrett, Katie Beattie, Julia Heid, Cara Rubin, Christine TonerD07: M, W 11:15 am
Strategic Plan
Knoll Inc. Modern Always ®
1
© 2013 Knoll Inc.
Agenda
› Company Overview
› Industry & Competitors
› SWOT Analysis
› Strategic Initiatives
› Financial Projections
› Strategic Mapping
2
© 2013 Knoll Inc.
Company Overview
› Design firm producing furniture for
offices, homes, and the government
› Furnishes: Fortune 1000 companies
› Founded: 1938, NYC
› HQ: East Greenville, PA
› Employees: 3,167
› Segments: Office, Studio, Coverings
“Modern furniture should complement architectural space, not compete with it”
Source: Knoll.com, Knoll 10K 3Home
Image captured at Knoll New York Showroom
-Bauhaus Design Philosophy That Knoll Values
© 2013 Knoll Inc.
Industry & Competitors
› Market Share: 24.4%
› Employees: 10,700
› Market Share: 12.9%
› Employees: 6,630
Source: Steelcase 10K, Herman Miller 10K, Market Share Reporter4
2012 North American Office Furniture Supplier Industry
Industry Value: $9.3B
Knoll Market Share: 8.9%Home
© 2013 Knoll Inc.
SWOT Analysis
5Source: Knoll 10K, Hoovers, First Research, Mergent Online, and Blueport.com
INTERNAL
EXTERNAL
Home
Strengths› Existing partnerships with
well-known designers
› Extensive product portfolio
Weakness› Unproductive marketing activities
› Substantial decrease in net income
Opportunities› Non-furniture retailers expanding
existing home furniture departments
› Consumer demand for textiles
Threats› Increase in furniture product
purchasing cycle
› Fluctuating economic environment
Develop Relationship
With Macy’s, Inc.
Improve Textile Segment Through
HGTV Commercials
Divest Assets Through Selling Toronto Plant
Improve Textile Segment Through
HGTV Commercials
Strategic Initiative 1 Strategic Initiative 2
Strategic Initiative 3Strategic Initiative 2
Home
© 2013 Knoll Inc.
Sell manufacturing plant in Toronto, Canada› 2nd smallest plant› Repeated functions: Manufacturing, Distribution, Warehouses, and Administration
› Within 500 miles of other plants› Canadian sales represent less than 5% of total North American sales
Employee Continuation Covenant
Strategic Initiative 1
Divest Assets
7Home
Location of Toronto Plant
Home
© 2013 Knoll Inc.
Divest Assets Strategic Initiative
1
Strategic Initiative 1
› 408,000 square foot plant Toronto, Canada
› Value of plant estimated at $35,000,000
› Sell at discounted price of $20,000,000 to HNI
Source: Knoll 10K 8HomeHome
© 2013 Knoll Inc.
Strategic Initiative 2
Strategic Initiative 2
Improve Coverings Segment
Source: Knoll 10K, hgtv.com, redbooks.com Home
How will we do this?› Produce textile commercials
and advertisements
› HGTV
› hgtv.com
› HGTV mobile application
› Increase brand awareness
and recognition
9Home
© 2013 Knoll Inc.
Strategic Initiative 2
Improve Coverings Segment
Source: Knoll 10K, hgtv.com, redbooks.com 8Home
Why Coverings?
› Growing percentage of sales year over year
› Less expensive alternative for consumers
› Not using all channels to grow business
Why HGTV?
› HGTV viewers are willing and able to
renovate home
› Household income of $83,000
› 78% over 35 years old
› 80% own a home
› 66% female
$400
$110
Home
© 2013 Knoll Inc.
Strategic Initiative 2
Strategic Initiative 2
Improve Coverings Segment
YEAR 2014 2015 2016
SALES $115,580 $122,515 $129,866
OPERATING PROFIT $37,551 $39,804 $42,193
NET INCOME $3,101 $3,228 $3,48411*Numbers expressed in thousands
Source: Knoll 10K
Marketing Communications
Initial Cash Outflow: $5 millionNPV: $3,152,490
Objective: Increase Coverings sales 6% each year for a total increase of 18.27% by 2016
HomeHome
© 2013 Knoll Inc.
Strategic Initiative 2
Strategic Initiative 3
10Source: Knoll 10K, Macy’s, Inc. 10K, Hoovers, Blueport
Relationship with Macy’s, Inc.
Five Year Implementation Select Studio
Segment PiecesSell Knoll into Macy’s, Inc.
Sell to Bloomingdale’s Consumers
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Sofas, Chairs, Tables Bloomingdale’s specific Consumers: Wealthy & Trendy
HomeHome
© 2013 Knoll Inc.
Strategic Initiative 2
Strategic Initiative 3
11Source: Knoll 10K, Macy’s, Inc. 10K, Hoovers, Blueport
› Fulfills consumer design search
› Expanding home department solution
› Category thought leadership
› Differentiating factor: exclusive merchandise
Relationship with Macy’s, Inc.Value Proposition for Bloomingdale’s
HomeHomeHome
© 2013 Knoll Inc.
Marketing Segmentation
Initial Cash Outflow: $15 MillionNPV: $6,323,300
Objective: Increase Studio sales 10% each yearfor a total increase of 61.05% by 2018
Strategic Initiative 2
Strategic Initiative 3
Relationship with Macy’s, Inc.
YEAR 2014 2015 2016 2017 2018
SALES $169,949 $186,944 $205,638 $226,202 $248,822
OPERATING INCOME $55,215 $60,737 $66,810 $73,491 $80,841
NET INCOME $4,560 $4,925 $5,517 $6,069 $6,67613*Numbers expressed in thousands Source: Knoll 10K
36 department stores
HomeHome
© 2013 Knoll Inc.
Financial ProjectionsYear 2012 (Actual) 2013 (Actual) 2014 2015 2016 2017 2018
Sales 887,499 862,668 879,921 897,520 915,470 933,780 952,455
Financial Projections Without Strategies
Financial Projections With Strategies
Year 2014 2015 2016 2017 2018
Studio Segment 169,949 186,944 205,638 226,202 248,822
Coverings Segment 115,580 122,515 129,866 129,866 129,866
Total Studio and Coverings Sales 285,529 309,459 335,504 356,068 378,680
Total Sales With Strategies
Year 2014 2015 2016 2017 2018
Total Combined Sales 890,651 920,632 952,789 985,699 1,020,912
13*Numbers expressed in thousands Home
Gross Profit Margin: 32.5% Net Profit Margin: 2.68%
Home
© 2013 Knoll Inc.
Strategic Mapping
Strategic Issue 1
Divest Assets By Selling Canada Plant
Improve Textile Segment Develop Relationship With Macy’s, Inc.
Strategic Initiative 1 Strategic Initiative 2 Strategic Initiative 3
Strategic Objective 1
Strategic Objective 2
Increase textiles sales by 6% to a total increase of 18.27% by 2016.
Increase Studio sales 10% each year to a total increase of
61.05% by 2018.
Strategic Issue 2
How to develop Textile Segment Demand and Awareness?
How to introduce and expand products into department stores?
15HomeHome
© 2013 Knoll Inc. 16
Thank You! Questions?
Company Overview
Industry and Competitors
SWOT Analysis
Divest Assets Overview
Divest Assets Financials
Textile Strategy Overview
Textile Strategy Financials
Macy’s, Inc. Overview
Macy’s, Inc. Financials
Financial Projections
Strategic Mapping
© 2013 Knoll Inc.
AppendixIncome Statement - Studio
Income Statement - Coverings
Five Year Forecast
HGTV Best Case Scenario
HGTV Average Scenario
HGTV Worst Case Scenario
Macy’s Best Case Scenario
Vertical Analysis
Horizontal Analysis
Current Ratio
Quick Ratio
Operating/Activity
Profitability Ratio
Debt Ratio
Dupont Analysis
Business Segments
Business Segment Total Sales
Full Vertical Analysis
Manufacturing Plant Locations
Geographic Sales Distribution
Industry Projected Growth
Porter’s Five Forces
Bloomingdales Locations
Market Analysis
Non-Furniture Retailer Sales
Media Spending
Macy’s Worst Case Scenario
Macy’s Average Case Scenario
Toronto Plant Employee Count
© 2013 Knoll Inc.
Income Statement - Studio
Appendix Home
© 2013 Knoll Inc.
Income Statement - Coverings
Appendix HomeAppendix Home
© 2013 Knoll Inc.
Five Year Forecasted Income Statement
Appendix HomeAppendix Home
© 2013 Knoll Inc.
Best Case Scenario- HGTV Partnership
Appendix HomeAppendix Home
© 2013 Knoll Inc.
Average Scenario- HGTV Partnership
Appendix HomeAppendix Home
© 2013 Knoll Inc.
Worst Case Scenario- HGTV Partnership
Appendix HomeAppendix Home
© 2013 Knoll Inc.
Best Case Scenario- Macy’s Inc. Partnership
Appendix Home
© 2013 Knoll Inc.
Average Scenario- Macy’s Inc. Partnership
Appendix Home
© 2013 Knoll Inc.
Worst Case Scenario- Macy’s Inc. Partnership
Appendix Home
Vertical Analysis2013 2012 2011
Sales 100% 100% 100%
Cost of Goods Sold 67.51% 66.83% 68.08%
Total Operating Expense 27.73% 23.26% 22.58%
Operating Profit 4.76% 9.90% 9.34%
Interest Expense 0.69% 0.72% 1.06%
Other (Income) Expense (0.40%) 0.36% (0.16%)
Net Profit Before Taxes 4.47% 8.83% 8.45%
Taxes 1.79% 3.19% 3.34%
Net Profit After Tax 2.68% 5.63% 5.11%
Source: Knoll 10K Appendix HomeAppendix Home
Horizontal AnalysisIncrease or Decrease
BALANCE SHEET 2013 2012 Amount Percent
Total Current Assets 236.20 258.53 (22.33) (9.45%)
Net Fixed Assets 137.89 124.84 13.05 9.46%
Other Noncurrent Assets 303.24 311.69 (8.45) (2.79%)
Total Assets 677.33 695.06 (17.73) (2.62%)
Total Current Liabilities 168.31 175.95 (7.64) (4.54%)
L / T Debt (Inc. Financial Leases) 173.00 193.00 (20.00) (11.56%)
Other Noncurrent Liabilities 107.59 138.01 (30.42) (28.27%)
Total Liabilities 448.90 506.96 (58.06) (12.93%)
Preferred Stock - - - 0.00%
Common Stock 228.44 188.10 1.21 0.53%
Total Stockholders' Equity 228.44 188.10 1.21 0.53%Total Liabilities & Stockholders' Equity 677.34 695.06 (17.72) (2.62%)
Source: Knoll 10K*Amount in millions Appendix HomeAppendix Home
Current Ratio
Source: Hoovers
RatiosLiquidity
Appendix HomeAppendix Home
Quick Ratio
Source: Hoovers
Furniture Companies
Appendix HomeAppendix Home
RatiosACTIVITY
Knoll Steelcase Herman Miller Industry Median
Inventory Turnover 5.51 13.51 16.18 4.55
Asset Turnover 1.25 1.86 1.94 0.94
Source: Hoovers Appendix HomeAppendix Home
RatiosPROFITABILITY
Knoll Steelcase Herman Miller Industry Median
Gross Profit Margin 32.49% 31.68% 33.53% 43.94%
Net Profit Margin 2.99% 3.14% (1.17%) 4.77%
Return on Equity 13.26% 14.34% (6.39%) 8.66%
Return on Assets 3.74% 5.83% (2.28%) 4.43%
Source: Hoovers Appendix HomeAppendix Home
Ratios
DEBT
Knoll Steelcase Herman Miller
Total Debt* $448.90 $1,049.60 $618.80
Debt to Equity 0.76 1.55 0.67
Equity Multiplier 2.97 2.55 2.66
Sources: Knoll 10K, Herman Miller 10K, Steelcase 10K, Hoovers*Debt in thousands Appendix HomeAppendix Home
Dupont Analysis
Knoll Steelcase Herman Miller
Net Profit Margin 2.68% 3.14% (1.17%)
Asset Turnover 1.25 1.86 1.94
ROA 3.74% 5.83% (2.28%)
Equity Multiplier 2.97 2.55 2.66
ROE 13.26% 14.34% (6.39%)
Source: HooversAppendix HomeAppendix Home
Business Segments›I) Office
Seating, storage, tables desks
›II) StudioLounge seating, café and dining chairs, barstools
›III) CoveringsTextiles, felt, leather
Source: Knoll 10K Appendix Home
Business Segments/ Total Sales
Total Sales Office Studio Coverings
2013 862,668 599,554 154,417 108,696
2012 887,499 633,674 147,324 106,499
2011 922,200 663,984 147,324 105,130
Source: Knoll 10K Appendix HomeAppendix Home
Full Vertical AnalysisINCOME STATEMENT 2013 2012 2011
Sales Revenue 862.67 100.00% 887.50 100.00% 922.20 100.00%
Less: Cost of Goods Sold 582.39 67.51% 593.15 66.83% 627.80 68.08%
Gross Profits $280.28 32.49% $294.35 33.17% $294.40 31.92%Less: Operating Expenses:
General / Admin. Exp. 224.62 26.04% 206.45 23.26% 202.08 21.91%
Restructing Cost 5.70 0.66% 0.00 0.00% 0.70 0.08%
Intangible Asset Impairment Charge
8.90 1.03% 0.00 0.00% 0.00 0.00%
Curtailment Benefit - - 5.45 0.59%Total Operating Expenses 239.216 27.73% 206.450 23.26% 208.221 22.58%
Operating Profits 41.064 4.76% 87.900 9.90% 86.179 9.34%
Less: Interest Expense 5.941 0.69% 6.350 0.72% 9.753 1.06%
Less: Other (income) Expense (3.430) -0.40% 3.215 0.36% (1.508) -0.16%
Net Profits Before Taxes 38.553 4.47% 78.335 8.83% 77.934 8.45%
Less: Taxes 15.4030 1.79% 28.3350 3.19% 30.8150 3.34%
Net Profit After Taxes $23.150 2.68% $50.000 5.63% $47.119 5.11%
Source: Knoll 10K Appendix HomeAppendix Home
Manufacturing Plant Locations
Source: Knoll 10K Appendix HomeAppendix Home
© 2013 Knoll Inc.
Geographic Sales Distribution
Source: Knoll 10K Appendix HomeAppendix Home
© 2013 Knoll Inc.
Industry Projected Growth
Source: First Research Appendix HomeAppendix Home
© 2013 Knoll Inc.
Porter’s Five Forces
Source: Knoll 10K Appendix HomeAppendix Home
© 2013 Knoll Inc.
Bloomingdale’s Locations
Source: Macysinc.com Appendix HomeAppendix Home
© 2013 Knoll Inc.
Market Analysis
Source: Business.library.wisc.edu Appendix HomeAppendix Home
© 2013 Knoll Inc.
Non-Furniture Retailer Sales
Source: Blueport.com Appendix HomeAppendix Home
© 2013 Knoll Inc.
Media Spend
Appendix HomeSource: Redbooks.com Appendix Home
© 2013 Knoll Inc.
Estimated Employee Count of Canada Knoll Manufacturing Plant
•
•Total Employees of Knoll – •3,167 Employees• •Total Manufacturing Plant Square Footage – •2,424,000 Square Feet / 408,000 (Size of Canada Plant) = (16.8%) = 17%• •17% x 3,167 Total Employees = (538) Approximately 500 Employees
Appendix Home Appendix HomeAppendix HomeAppendix Home