Summary

This is a great opportunity for an enthusiastic and creative entrepreneur to acquire a small chain of ladies fashion clothing and accessory l boutiques in Gauteng and Durban with tremendous potential for growth.The on-line home shopping website is attracting increasing volumes. Head office, located in Durban, consists of accounts/admin, sourcing product, imported garment finishing, stock room and distribution

1. History Background

Fully describe the business's activities?

The business consists of three boutique retail ladies fashion clothing and accessory shops in upmarket shopping malls plus an on-line home shopping web site. There is a sourcing office, a finishing dept for incoming merchandise, stock room, distribition area and admin/accounts dept at head office..

How long has the business been established?

The business was started 33 years ago by a husband and wife

2. Present Market

How does the business operate on a daily basis?

The retail store managers and staff run the stores. Head office is managed by the owners, that is the finishing dept, stock room, distribution and admin/accounts. The owners travel regularly to the East to source merchandise for the collections. The owners set fashion trends, arrange the window displays and merchandising in stores

How are the clients attracted to the business?

Participate in the shopping malls fashion shows. Word of mouth Website

What Advertising/Marketing is carried out?

There is a user friendly web site that is continuously maintained with the latest collections. The shop front displays are always inviting. Word of mouth

Does the business have any contract work?

No

What competition exists?

There is strong competition in the ladies fashion and accessory market, however the owners have created a unique niche market with their off-shore sources of supply.

What are the seasonal trends?

The winter and summer seasons sales peak at Easter and Christmas respectively

3. Financial

Is the business VAT Registered?

Yes

What VAT documentation is on file?

All VAT documentation is on file.

Are there up-to-date Management Accounts available?

Management accounts for the financial year ended February 2011 and the current year to July 2011 have been used to value the business and are available. The current year to date monthly average turnover and net profit have increased over last year.

What Balance Sheet and Income Statements are available?

Annual financial statements have been prepared by a registered accountant to year ended February 2010 and are available

What percentage of the business is cash/credit?

100% cash/credit card

How could the profitability of the business be improved?

The profitability of the business could be improved by opening new retail stores and attracting more purchasing through the web site, thereby increasing sales volumes with minimal increases in the head office fixed expenses.

Is Seller finance available and for what amount?

No

What is the payback period?

38 months

What is the ROI?

32%

4. Staffing

What is the total staff complement?

17 + the husband and wife who are actively involved in procurement of product, the admin/accounts and managing the finishing, stock and distribution

Give a breakdown of staff/functions/length of service?

3x store manageress.(6-11yrs service) 9x sales ladies.(1-3 years service) 1x accounts clerk.(13 years service) 1x distribution clerk.(13 years service) 1x despatch clerk.(1 year service) 1x machinist. 1x presser.

Do any receive special perks or incentives?

Sales staff receive commission

Are they on contract?

No

Do any have management potential?

Yes

How involved is the Owner in running the business?

The owners (husband & wife) are totally involved

5. Premises

When does the current lease end?

Each of the trading entities have different expiry dates but all have at least a year to run and will be renewed at expiry.

Is there an option of renewal & what period?

All leases have option of renewal

What is the annual escalation %?

Annual escalations are between 8% and 10%

What are the trading hours?

Each retail store's trading hours are set by landlords. Head office hours are 7.30 am to 4.30pm 5 days a week

What is the square meters of the business?

Retail stores are between 35 and 70 sq mt. Head office is 200 sq mt - consists of reception, owners offices, stockrooms, finishing dept and despatch.

Is a copy of the lease available?

Copies of the leases for each of the retail shops (one in Gauteng, and two in Durban) and the Durban head office are available

Do you require a licence?

No licence is required. The business has all the necessary documentation on file from the Dept Of Customs & Excise for merchandise imports

What lease deposit and/or other surety is required?

For all the premises guarantees for R180000 have been issued.

6. Assets

Is a full asset list on file?

There isn't a listing of assets on file as the assets consist mainly of shop fittings and racking in the stock room. There are three sewing machines and a steam/vacuum iron in finishing dept. There are computers in each Store that are linked to head office computer system via the internet. Pastel software is used for accounting and payroll.

Are any items not included in the sale?

One laptop computer.

What is their overall condition?

Good

Do any require repairing?

No

How have they been valued ?

By the owners

Which assets are on lease/HP and with whom?

Nil

Are they presently insured?

Yes

7. S.W.O.T. Analysis

Strengths?

The owners creative abilities to select ladies fashion clothing and accessories for a niche market. By travelling to the East to buy ex stock in small quantities the lead times from source to retail shelf are considerably reduced. The retail shops occupy prime positions in the shopping malls and on-line shopping is becoming very popular

Weaknesses?

None perceived

Opportunities?

There are tremendous opportunities for growth by opening retail outlets in the major shopping malls in the Western Cape & Gauteng and increasing on-line shopping. There is no reason why the head office can't be re-located to another province.

Threats?

Competitive market

8. Reason For Sale

What is the reason for the sale?

The owners wish to retire

9. Conclusion

Why is this a good business?

This is a well established business with great potential for growth.

What is the price plus stock and the net profit?

The selling price of R2,250,000-00 (negotiable) includes R900,000-00 of stock. The net profit was R715,000-00 for the last 12 months