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FlashFash-LaMode Acquisition Analysis

FlashFash, a $25 billion apparel company, is considering acquiring LaMode, a leading online luxury retailer. LaMode has recently launched its own fashion brand. FlashFash must determine if acquiring LaMode will boost sales and reduce costs through revenue and cost synergies. Key questions include LaMode's potential market share in Asia's rapidly growing online apparel market, potential synergies based on the companies' operations, and ideas to accelerate LaMode's organic growth. The case challenges require analyzing value creation opportunities and integration risks to provide a recommendation on whether FlashFash should acquire LaMode.

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310 views8 pages

FlashFash-LaMode Acquisition Analysis

FlashFash, a $25 billion apparel company, is considering acquiring LaMode, a leading online luxury retailer. LaMode has recently launched its own fashion brand. FlashFash must determine if acquiring LaMode will boost sales and reduce costs through revenue and cost synergies. Key questions include LaMode's potential market share in Asia's rapidly growing online apparel market, potential synergies based on the companies' operations, and ideas to accelerate LaMode's organic growth. The case challenges require analyzing value creation opportunities and integration risks to provide a recommendation on whether FlashFash should acquire LaMode.

Uploaded by

Bảo Trung Nguyễn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Weekly Case Challenge

Merge & Acquisition


FlashFash
Deadline: 23h59 - 02.04.2022
Problem statement narrative
Our client is FlashFash, a US multinational apparel company with $25b revenue. The company owns some of
the best-known mid-market brands. It sells 70% of its products through its network of corporate owned
stores, and 30% through multi-brand retail chains.
FlashFash operates a unique business model: instead of committing a large percentage of production for the
next fashion season, it commits a small amount and uses customer feedback and an efficient production
network to replenish stores with new products weekly. New styles take as little as 15 days to go from design to
production.
As part of its growth strategy, FlashFash is considering the acquisition of LaMode, the leading independent
online retailer of luxury brands, which accounts for 3% of all online apparel sales in North America. LaMode's
business model involves curating products from the best brands to present a unique collection of over 30,000
items.
LaMode has recently launched its own fashion brand, which already accounts for 5% of its revenue. The CEO
of FlashFash has asked us: Should they acquire LaMode?
Framework
1. Value and growth potential of LaMode?
a. Growth of online apparel market
b. Market share of LaMode
c. Costs

2. Can FlashFash use LaMode to boost sales and reduce costs?


a. Revenue synergies
b. Cost synergies

3. Does FlashFash have the capability to execute?


Key questions
Question 1. The client believes that there is an opportunity for LaMode to realise a third of its global sales in Asia within five years,
as the apparel market in Asia is expected to double and the share of purchases made online to triple over this period.
What share of the Asia online apparel market would LaMode need to reach to capture this opportunity?

Question 2. The client would like you to look at synergies. We have compiled this exhibit with information about both our client
and the target. (share Exhibit 1) Let me know your thoughts on whether there are potential synergies that seem appealing, based
on this information.

Question 3. Beyond potential synergies with FlashFash, what ideas do you have to accelerate the organic growth of LaMode?
Guidance for interviewer and information provided upon request
• The client believes that there is an opportunity for LaMode to realise a third of its global sales in Asia within five years,
as the apparel market in Asia is expected to double and the share of purchases made online to triple over this period.

• The global sales of LaMode are $2b, and are expected to triple over the next 5 years

• The size of the online apparel market in Asia today in £8b


Exhibit 1:
Global sales, $m FlashFash LaMode Transactions FlashFash LaMode

Total 25,400 2,014


Average purchase $78 $413
North America 9,500 1,802
Cost of goods sold 46% 72%
Europe 8,6000 212

Asia 5,000 0 Transaction cost $6 $48

Rest of world 2,300 0


Own brand, $M FlashFash LaMode
Annual growth 4.20% 31.30%
Total sales 25,400 104

Online presence FlashFash LaMode Cost of goods sold 11,684 63

% Sales online 22% 100% Annual growth 4,20% 123,40%


Recommendations Risks Next Steps
• Submit your video on time via link: https://forms.gle/iwGo67424WUqJRqj9
• Deadline: 23h59 - 02.04.2022 (Saturday)
• If you need any further supports, please contact fanpage The Trainee Club or reply email
from thetraineeclub@gmail.com.
• Wish you all the best!

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