Specialty Fashion Group Executive Summary
Executive Summary
Specialty Fashion Group (SFG) is an Australian clothing retailer which functions primarily in the Women’s market. The company first came into operation under the name “Millers” in 1993 and hence since grown to house 5 additional brands under the group portfolio. This report was structured to first discuss the firms’ strategy in navigating the ever changing retail environment, before evaluating its’ current valuation. Following which a credit analysis was performed to determine if additional debt could be taken on to fund future strategic goals. With the results of the credit analysis, a proposed acquisition deal was structured and finally a final recommendation on what SFG should do was made.
For the valuation of SFG, …show more content…
With SFG presenting shifting capital structure for the past 5 years, a shifting beta should be used to reflect the dynamic change in risk structure. However due to the constraints faced, the data from the last 3 years was used to determine a fixed beta.
2.2.1 Assumptions
Historical period analysed (2011 to 2013) financial year, as it best reflects the current business cycle post global financial crisis (GFC)
Future growth rates obtained from IBIS world industry reports
Standard deviation of future growth rates used to determine optimistic and pessimistic scenarios was 1.2%
Terminal growth rate used for the company was 0.5% to reflect increasing competition from global competitors entering the Australian market
An average cost of debt of 6.47% was derived from the average of 2011 to 2013 borrowing facilities
From the sliding capital structure over the analysed years and prior, it is clear that SFG has a very low preference of debt. This behaviour was assumed to continue into the years ahead and appropriately factored into the valuation in the form of quick repayment (within 2 years) of any debt …show more content…
Director of UNICEF Australia
Key management personnel
Alison Henriksen
Chief Financial Officer (CFO)
Company Secretary
CFO since 2009
Company secretary since
Specialty Fashion Group (SFG) is an Australian clothing retailer which functions primarily in the Women’s market. The company first came into operation under the name “Millers” in 1993 and hence since grown to house 5 additional brands under the group portfolio. This report was structured to first discuss the firms’ strategy in navigating the ever changing retail environment, before evaluating its’ current valuation. Following which a credit analysis was performed to determine if additional debt could be taken on to fund future strategic goals. With the results of the credit analysis, a proposed acquisition deal was structured and finally a final recommendation on what SFG should do was made.
For the valuation of SFG, …show more content…
With SFG presenting shifting capital structure for the past 5 years, a shifting beta should be used to reflect the dynamic change in risk structure. However due to the constraints faced, the data from the last 3 years was used to determine a fixed beta.
2.2.1 Assumptions
Historical period analysed (2011 to 2013) financial year, as it best reflects the current business cycle post global financial crisis (GFC)
Future growth rates obtained from IBIS world industry reports
Standard deviation of future growth rates used to determine optimistic and pessimistic scenarios was 1.2%
Terminal growth rate used for the company was 0.5% to reflect increasing competition from global competitors entering the Australian market
An average cost of debt of 6.47% was derived from the average of 2011 to 2013 borrowing facilities
From the sliding capital structure over the analysed years and prior, it is clear that SFG has a very low preference of debt. This behaviour was assumed to continue into the years ahead and appropriately factored into the valuation in the form of quick repayment (within 2 years) of any debt …show more content…
Director of UNICEF Australia
Key management personnel
Alison Henriksen
Chief Financial Officer (CFO)
Company Secretary
CFO since 2009
Company secretary since