Matches for you business plan by Loida Dofiles

Matches for You Business Plan Cristabel Ford

2014

Table of Contents

Executive Summary ...................................................................................................................................................................... 1 Introduction ............................................................................................................................................................................ 1 Objectives................................................................................................................................................................................ 1 The Collection .......................................................................................................................................................................... 1 Market Summary .................................................................................................................................................................... 1 Strategy and Implementation ................................................................................................................................................. 1 Management .......................................................................................................................................................................... 2 Financial Plan .......................................................................................................................................................................... 2 Chart: Highlights ................................................................................................................................................................ 2 Company Summary...................................................................................................................................................................... 2 Table: Start-up Funding ...................................................................................................................................................... 3 Chart: Start-up ................................................................................................................................................................... 4 Company Ownership .................................................................................................................................................................... 4 The Collection (Product Plan) .................................................................................................................................................. 4 Business to Customer Considerations (B2C) ....................................................................................................................... 5 Business to Business Considerations (B2B) ......................................................................................................................... 5 Alterations .......................................................................................................................................................................... 5 ORGANIZATIONAL ISSUES ............................................................................................................................................................ 5 Sales and Marketing Plan ............................................................................................................................................................ 5 Market Analysis Summary ...................................................................................................................................................... 5 Market Segmentation ............................................................................................................................................................. 6 Market Needs ................................................................................................................................................................ 6 Target Market Segment Strategy ................................................................................................................................................ 7 Sales Strategy .............................................................................................................................................................................. 7 Sales Forecast ......................................................................................................................................................................... 7 Table: Sales Forecast ..................................................................................................................................................... 8 Page 1

Table of Contents

Chart: Sales Monthly ..................................................................................................................................................... 8 Chart: Sales by Year ....................................................................................................................................................... 9 Competitive Edge ....................................................................................................................................................................... 10 Marketing Strategy .................................................................................................................................................................... 10 Production and Distribution Plan ............................................................................................................................................... 10 Web Plan Summary ................................................................................................................................................................... 12 Management Summary ............................................................................................................................................................. 12 Management Expertise ......................................................................................................................................................... 12 EcommerceExpertise ............................................................................................................................................................. 12 Marketing Expertise .............................................................................................................................................................. 12 TechnologyExpertise ............................................................................................................................................................. 13 Personnel Plan ........................................................................................................................................................................... 13 Table: Personnel ............................................................................................................................................................... 13 Financial Plan ............................................................................................................................................................................. 13 Break-even Analysis .............................................................................................................................................................. 13 Chart: Break-even Analysis............................................................................................................................................... 14 Table: Break-even Analysis ............................................................................................................................................... 14 Projected Profit and Loss ........................................................................................................................................................... 15 Chart: Profit Monthly ....................................................................................................................................................... 15 Chart: Profit Yearly ........................................................................................................................................................... 15 Chart: Gross Margin Monthly........................................................................................................................................... 16 Chart: Gross Margin Yearly .............................................................................................................................................. 16 Table: Profit and Loss ....................................................................................................................................................... 17 Projected Cash Flow ................................................................................................................................................................... 18 Table: Cash Flow .............................................................................................................................................................. 18 Chart: Cash ....................................................................................................................................................................... 19 Page 2

Table of Contents

Projected Balance Sheet ............................................................................................................................................................ 19 Table: Balance Sheet ........................................................................................................................................................ 19 Business Ratios .......................................................................................................................................................................... 20 Table: Ratios ..................................................................................................................................................................... 20 Table: Sales Forecast ................................................................................................................................................................... 1 Table: Personnel .......................................................................................................................................................................... 2 Table: Profit and Loss ................................................................................................................................................................... 3 Table: Cash Flow .......................................................................................................................................................................... 5 Table: Balance Sheet.................................................................................................................................................................... 6

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Matches For You

Executive Summary Introduction Matches Fashion is an upscale women’s fashion center, which founded in London, in 1987, has 14 London stores and a website that ships to 195 countries and has 2.5 million visits per month. Having the enterprises' increasing popularity in mind, it plans to launch its own first label and collection (codenamed: Matches for You) in 2015 under monochromatic B&W theme. The following document describes some issues associated with that collection.

Objectives • Develop strong relationships with customers by utilizing fitsme app and offering services to help each woman determine the right clothes for her body. •

Build awareness of brand and services to exemplify strong store reputation.

•

Utilize personal referrals and stylists to build traffic.



To map out all the necessary components to launch its own fashion label.



To provide management with a blueprint to follow.

The Collection Matches for you Main Collection will be a mix of trousers, dresses, tops and skirts. Inspired by modern minimalist and geometric style, the collection will have a monochromatic theme, an “elegant battle” between black and white. The Capsule Collection is composed of 6 six outfits, for each piece you will find the black and white version. Matches for you will be an exclusive range designed by Matches own in house designer.

Market Summary Luxury goods market experience a moderate growth of 3-6% in 2012 due to emerging markets in Asia like China. Worldwide market of high end apparel performed well in 2012, with average upper-income shoppers spending about $1,000 on designer apparel. In Europe, particularly in the United Kingdom market, the success of online stores fueled the optimism in the upscale women’s market resulting to a £ 26 billion worth of fashion industry

Strategy and Implementation Since Matches for You is to offer luxury product, its awareness, PR and marketing campaign will be targeted on the loyal customers of its parent company, Matches Fashion. Online offering and cooperation with the few boutiques in UK are to be a core of the startup phase. Standard associated events like opening of 2 pop up stores, social media, conferences, mailing campaigns and parties) will have to be considered. Five percent of the revenues it to be spent on ongoing promotion endeavors.

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Matches For You

Management Matches Fashion is to be brand's managing body due to almost quarter of century of its experience in the industry.

Financial Plan Startup costs is estimated to be as big as £ 1,804,500 and should be considered in detail in a separate chapter. This capital is to be formed by: a) Owner’s investment of £ 1,000,000 b) Other investors investment of £ 804,500 Detailed financial considerations are to be based on the revenues. Those will consist of the following streams (note both streams can be improved after auditing their actual performance): 

Boutique sales - those can be estimated by analyzing the chosen boutiques' income and applying assumed ratios to them (eg. brands' shares)



Online sales - basic metrics are web traffic attracted to the website (that can be estimated by profiling the advertisements), conversion rate (the actual sales vs the visits) and average sales per customer.

Chart: Highlights

Highlights 18,000,000 16,000,000 14,000,000 12,000,000

Sales

10,000,000

Gross Margin

8,000,000

Net Income

6,000,000 4,000,000 2,000,000 Year One

Year Two

Year Three

Company Summary Founded in 1987 by Tom and Ruth Chapman, Matches Fashion is a London-based company which offers a curated edit of 400-plus of established brands and designers like Alexander McQueen, Kenzo, Gucci, Stella McCartney and more, as well as emerging contemporary labels. Matchesfashion.com also has 11 stores in London. Page 2

Matches For You

Matches Fashion got a ÂŁ20 million boost in 2012 to grow its online business from venture capital firms Scottish Equity Partners and Highland Europe. Matches launched its online business six years ago and sells to 120 countries and had 14 shops.

Table: Start-up Funding Required Start-Up Funds

Amount

Totals

Fixed Assets Leasehold Improvements

500,000

Equipment

500,000

Furniture and Fixtures

100,000

Total Fixed Assets

1,100,000

Operating Capital Inventory

500,000

Legal and Accounting Fees

10,000

Rent Deposits

20,000

Utility Deposits

1,000

Supplies

12,000

Advertising and Promotions

100,000

Licenses

1,500

Working Capital (Cash On Hand)

60,000

Total Operating Capital

704,500

Total Required Funds

Sources of Funding

ÂŁ 1,804,500

Amount

Totals

Owner's Equity

0.00%

1,000,000

Outside Investors

0.00%

804,500

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Matches For You

Total Sources of Funding

0.00%

ÂŁ 1,804,500.00

Chart: Start-up

Start Up 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Expenses

Assets

Investment

Loan

Company Ownership Matches For You is a private limited company owned by Tom and Ruth Chapman.

The Collection (Product Plan)

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Matches For You

Matches For You will produce Ready-to-Wear (RTW) designer apparel lines for women. The capsule collection will be a mix of two jackets, four skirts, four tops, two trousers and six dresses. Inspired by modern minimalist style, the collection will have a monochromatic theme, an “elegant battle” between black and white.

Business to Customer Considerations (B2C) The startup phase will offer one Capsule collection per year. If the brand proves to be successful, four seasons’ collections per year would be proposed.

Business to Business Considerations (B2B) It should be noted that none of the luxury retails clothing shops online possesses its very own brand as example: Net a porter, Luisaviaroma, Joseph and Mywardrobe. Matches For You will be Matches Fashion’s own house label, which should be considered as unique B2B selling proposal and strong bargaining point. Other luxury online stores can affiliate with Matches Fashion because many women are more likely to make online purchases of clothing for convenience rather than hunt for those in regular boutiques.

Alterations Considerable changes to the brand may apply depending from customers' reactions and general economic viability of the product.

ORGANIZATIONAL ISSUES Matches For You will be considered as a supplier for Matches Fashion. The two will have a supplier-distributor relationship and will be managed by a different set of officers and staff. Matches For You will operate as a clothes manufacturing business while Matches Fashion will continue to operate as a retail store, each company maintaining their own books of account for financial statements preparation. Because each company will operate as a different entity from one another, Matches For You will consign its products to Matches Fashion with a 25% commission from the selling price.

Sales and Marketing Plan Market Analysis Summary There are various economic forces that affect apparel retailers. Consumer confidence is the most important; people don't shop when they are not feeling good. Unemployment also has an effect, in that fewer women out in the workforce means less disposable income for high-end quality clothing. Thus, the large discounters (Target, Sears and Wal*Mart) are now working with top designers to bring designer apparel to the masses. Although they can't compete on quality, their continued development of the trend could have a direct impact on retailers who sell designer clothing during tough economic times. Fortunately, the luxury goods market, of which Matches For You is a part due to the high-end brands it will carry, has remained recession-proof, as clearly indicated by the market’s performance in 2013. According to Euromonitor International the luxury goods market; Page 5

Matches For You



Is driven mainly by strength in emerging economies, overall retail growth is set to be stronger than in 2012, with luxury goods sales expected to exceed US$317 billion worldwide. This represents a year-on-year real value gain of over 3% on 2012.



Latest findings indicate that luxury goods are definitely witnessing a renewed sense of positive momentum across the luxury industry:



Luxury spending in China is rising steeply despite a government clampdown on extravagant consumption.



A weaker yen is bolstering Japan’s penchant for premium brands.



Affordable luxury is still breaking new ground in Western Europe and North America.,



A rapidly expanding A class (whose gross incomes are over 200% higher than the average gross incomes of all individuals aged 15 and over) and B class (whose gross incomes are between 150% and 200% of all individuals aged 15 and over) across sub-Saharan Africa, Latin America and emerging Asia is fuelling a new culture of luxury aspiration. 1

Market Segmentation Market Needs Bolstered by the emerging markets in Asia, the luxury goods market experienced a moderated growth of 3-6% according to Bain and Company partner Erika Serow 2. An excerpt of an article from Women’s Wear Daily states that” The Robb Report is banking on high-end apparel performing well in 2012, says Brett Anderson, senior vice-president, editor in chief. The average upper-income shoppers (those earning $75,000 or more) in the U.S. spent over $900 a year on apparel in 2011, according to the Cotton Incorporated Lifestyle Monitor ™ Survey. Those earning $100,000 or more spent $975, while those making $200,000 or more spent about $1,073 on apparel. Across the globe, the ranks of Chinese consumers with disposable income only continue to grow. According to the Cotton Incorporated and CCI Chinese Consumer Survey, Chinese upper income shoppers are those making USD $925 or more per month. High-income consumers there spend $373 on apparel yearly.” In Europe, particularly in the United Kingdom market, the success of online store Net-A-Porter fueled the optimism in the upscale women’s market resulting to a £ 26 billion worth of fashion industry. An article from Telegraph states that ” At a press conference to open London Fashion WeekNatalie Massenet, chairman of the British Fashion Council, announced the increase of 22 per cent; up from £21 billion in 2009. This figure incorporates not only the direct impact of wholesale, retail and manufacturing on the economy, but also its effect on other industries including tourism and financial services. The international spotlight is on us and we aim to make the most of it. We're delighted that this week

http://euromonitor.typepad.com/files/luxury-goods-overview-for-the-giveaway-v2.pdf

http://www.wwd.com/markets-news/textiles/new-laps-of-luxury-high-end-apparel-boosted-by-established-and-emergingmarkets-5875705 Page 6

Matches For You

will not only be a showcase for fashion, but for three UK creative industries who thrive thanks to our homegrown talent. [London] is truly the global capital of creativity." 3

Target Market Segment Strategy Matches Fashion is known for its high quality collaborations with luxury designers, as well as young emerging artist. Their target market are people from their late 20s to early 40s. Their career paths are in domains such as Finance, Consulting or Law. They are people who are professionals, fashion savvy and interested to be up to date with the trends. Their income is above average, so they can afford to purchase high quality clothes. The interests and hobbies of this target market are holidays in the South of France or in Mediterranean Islands for short amounts of time. On longer vacations, they travel to South East Asia, islands in the Indian Ocean or the Caribbean. During their work periods, they enjoy sport activities, such as running, swimming, skiing, playing tennis, or going out with friends, at the cinema or trying interesting cuisine. They are from all around the world because their deliver their products to over 50 countries worldwide They live in big cities, and are reading magazines such as Vogue, Marie Claire, and Harper’s Bazaar. Matches Fashion is launching its own fashion collection – matchesforyou – whose vision is in line with the one of the brands they are collaborating with. The age range is between 30 and 40 years old, and fulfills the target persona of the entire Matches Fashion brand.

Sales Strategy Matches For You will be exclusively distributed by Matches Fashion in its 14 shops all over London and will allocate 20% of its store space for the in-house brand. Two pop up shops will be open for two weeks in Wimbledon(8-21stSeptember), after which it will be moved in Bond Street for another two weeks(22-5th October). Both popup stores will be occasions to distribute flyers offering the opportunity to participate at the competition #allyoucanbuy. Both stores will feature limited editions of products of the collection. The pop up shops will be a mixture of modern and sleek matchesfashion style and nature distilled theme. White and distorted nature walls will be match with interactive table mega screen where the customers can browse the website.

Sales Forecast Total sales are forecasted at £ 11,546,389 for Year One and £ 13,688,030 for Year Two, with an average monthly sales goal of £ 962,199. The summarized forecast for three years is listed below:

http://fashion.telegraph.co.uk/news-features/TMG10638284/London-Fashion-Week-Fashion-industry-worth-26-billion-toUK-economy.html Page 7

Matches For You

Table: Sales Forecast Year One Sales Dresses (6) Skirts (4) Shirts/Tops (4) Trousers (2) Jackets (2) Total Sales

Year Two

Year Three

5,587,043 1,862,514 1,490,011 931,007 1,675,813

6,425,099 2,141,891 1,862,514 1,163,759 2,094,766

7,388,864 2,463,175 2,328,143 1,454,699 2,618,458

11,546,389

13,688,030

16,253,339

Chart: Sales Monthly

Sales Monthly 1400000 1200000 1000000

Jackets Trousers

800000

Shirts/Tops

600000

Skirts

400000

Dresses

200000 0 Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

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Matches For You

Chart: Sales by Year

Sales Yearly 18,000,000 16,000,000 14,000,000 Jackets

12,000,000

Trousers

10,000,000

Shirts/Tops

8,000,000

Skirts

6,000,000

Dresses

4,000,000 2,000,000 Year One

Year Two

Year Three

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Matches For You

Competitive Edge Matches For You will bring high-quality clothing and value to women, and most significant competitive advantage the brand will have over all competitors is its exclusive distributorship with Matches Fashion, who provides an approachable retail atmosphere with top-notch customer service. Matches For You’s unique selling proposition is producing timeless pieces of clothes which never runs out of style and which can still be worn ten years from the day they are purchased. Women will appreciate the classic style of Matches For You line and would conclude that money spent on the brand is rewarding and a good investment.

Marketing Strategy

Considering the high quality and luxuriousness of its products, Matches For You aims at creating the right brand awareness around the launch of its first collection. The first step is to launch the social media campaign on Facebook and Twitter, as well as sending press releases and pay for advertising space in newspapers and magazines, both online and in print. The social media campaign will contain of ads on Facebook and Twitter, as well as thelaunching of #allyoucanbuy. All you can buy is the name of the contest which will allow three lucky winners 1 minute of no limit shopping in matchesforfashion.com website. All you have to do is visit one of the our two pop up store in London from the 8th of September to 5th of October and click like at matchesfashion facebook’s page. Billboards of various sizes will be placed in the Underground stations, as well as in the Central areas of London. The event that will officially launch the matchesforyou collection will be the Matches Party on the 5 th of September. This exclusive event will take place at Matches No.23, a private shopping and events townhouse, with six floors for different use and four private shopping suites. It was designed by its owners, Tom and Ruth Chapman, the founders of Matches Fashion, and is located on 23 Welbeck Street, London. The party program will include a welcome drinks at the entrance, a short speech about the collection, a catwalk event, and then will continue with a party. Celebrities of the fashion, music, film world will be invited, as well as journalists and photographers from the most important fashion publications in London. There will be a corner having background the logo of the collection where the guests can have their photos taken. After the party, a short video containing the highlights will be launched online, on the website and on the social media. Another mega screen will be installed for the Launch the Fits.me Virtual Fitting Room: “Fits.me is the world’s most commercially successful developer and provider of virtual fitting room solutions. Its virtual fitting room solutions help boost the revenues and profitability of online clothing retailers by enabling them to overcome the Online Fit Problem. Fits.me Virtual Fitting Room solutions increase conversions, reduce garment returns and drive customer loyalty through increased brand satisfaction”.

Production and Distribution Plan Designs will be conceptualized at Matches Fashion Studio in London while clothes will be created in Italy. Gruppo Ratti S.p.A (Via Madonna, 30 - 22070 Guanzate (CO) – Italy) will provide all the fabrics, the productions and the final packaging.

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Matches For You

Production Summary Our production system shall strive to attain service excellence in addition to manufacturing quality clothes. This shall be undertaken through the engagement of modern production techniques using up-to-date technology. This will also result in low production costs being attained by the company. We also intend to ensure that the suppliers we engage are committed and reliable so as not to let down the final consumer in terms of the quality of the product and time of delivery. In order to improve productivity in our plants we intend to reduce waste and duplication in our shops by streamlining administrative functions and promoting and instilling a business culture that focuses on the teamwork rather than individual productivity. By the undertaking the above we will optimize our productivity given our available resources.

Suppliers Currently the company obtains the vast majority of its raw materials from European suppliers. However as we are committed to fair terms of trade and promotion of local business we intend to engage local suppliers. Hence textiles and fabrics may be sourced from local suppliers avoiding intermediaries so as to minimize costs, ultimately benefiting the final consumer. The major advantages of doing so being higher margins, faster payments and lower risks of payment default. Through the use of economies of scale we aim to maintain low input and production costs. Hence we intend to establish good rapport with all our suppliers and hence long mutually beneficial business relationships. This shall be undertaken through working closely with suppliers to ensure uninterrupted deliveries.

Receiving Recognizing that the receiving of our textiles and fabrics is an essential element in our entire business, we intend to ensure that it is done by responsible persons who will be present during off loading to check the quantity and condition of the items. During the actual receiving the quality assurance personnel thoroughly checks raw materials. Non-confirming raw materials in terms of quality will only be approved with the consent of the managing director who would have undertaken further analysis of it.

Storage It shall be the policy of the company to ensure that all fabrics are stored in a secure, clean and pest free manner. Stock takes and reconciliations shall be undertaken on a regular basis, initially done at least once a week. The stock principle of Just In Time (JIT) shall be implemented. Whenever a fabric is taken out it shall be recorded on a separate stock or bin card, with reconciliations of materials issued to the cutting department, issued to sewing, losses, opening and closing stock taken. Should any deviations arise these must be explained.

By-Products Matches For You intends to utilize every resource it has to the fullest possible extent. We realize that there shall be a lot of by-products that will be produced from our production of the main product lines. However not wanting to pollute the environment, and our community at large, we plan to utilize by-products whenever possible. This will ensure that our resources are fully utilized.

Distribution Summary Page 11

Matches For You

We believe that through our obsession for improvement, and commitment to a leadership position in our respective markets, we can overcome the traditionally binding constraints of resource base, firm size and narrow conceptualization of our business domain. This shall be undertaken through coordination and logical integration of our distribution operations. We aim to reduce cycle time for key processes, eliminate rework and waste, and optimize our human resources utilization. Trade Channels: ď&#x201A;ˇ ď&#x201A;ˇ

Retail Distribution Channels (B2C) o Online, pop-up and brick and mortar store of Matches Fashion Wholesale Distribution Channels (B2B) o To be implemented soon

We intend to ensure that our shops are located close to our major fashion centers not only to minimize costs but also to enable our clothes to be easily available, in the best condition, in the different markets nationwide. By engaging and establishing good relationships with the current loyal customers of Matches Fashion we intend our products to be readily available to our target market. In terms of actual delivery for every vehicle the daily fuel used, kilometers driven, repairs and maintenance costs must be recorded and compared with the set standard.

Web Plan Summary The Matches Fashion website will serve as a source of information of Matches For You for online visitors. Plans for year 1 include search engine optimization and social media marketing year 2. Matches For You will benefit from the successful ecommerce business of Matches Fashion for its affiliate luxury brands. The site will include the fitsme app, a virtual fitting room that gives online customers the in-store fitting room experience providing shoppers with a photo-accurate, mirror-like visualization of fit. This app increases site visits to sales conversion by 21% and, reduces garment returns.

Management Summary As it has been mentioned already, the management over the Matches for You brand is given to Matches Fashion network.

Management Expertise Ruth Chapman, 51, is the co-founder and joint chief executive of Matches Fashion, which employs more than 350 staff, has 14 London stores and a website that ships to 195 countries and has 2.5 million visits per month.

EcommerceExpertise Nicolas Pickaerts, Head of Ecommerce of Matches Fashion was the Ecommerce Director at Etat Pur and Head of Business Development at Pixmania.com. He got his education from INSEEC Paris Business School and, IPAG Paris Business School and Lycee St. Louis St. Clement.

Marketing Expertise Page 12

Matches For You

Pina Giannotto, Customer Marketing Manager at Matches Fashion, is a creative marketer with over 10 years experience in B2C marketing roles specialising in CRM for subscriber based Recreation and ISP industry and online media industries.

TechnologyExpertise Sam Lowe, CTO at Matches Fashion, is an experienced Technology Director / CTO with a preference for growing commercially-focused operations around new online and digital technologies - such as Web Platforms, e-commerce, Digital and Social Media, Software-as-a-Service, Cloud Computing, Consumer Smartphones/Tablets, and Internet-of-Things.

Personnel Plan The personnel plan is included in the table, below. In addition to the owners, there will be five full time Managers and Designer and 30 full time production workers, seamstress and pattern cutter by the end of the first year. The Manager and Designers will be paid £ 32,500 per month and the production workers will be paid at a rate of £17.00 per hour, plus benefits.

Table: Personnel Personnel Plan Year 1

Year 2

Year 3

Owners

£240,000

£247,200

£254,616

Managers and Designers

£390,000

£401,700

£413,751

£1.060,000

£1,092,624

£1,125,403

Total People

Total Payroll

£1.690,000

£1,741,424

£1,793,770

Production Workers

Financial Plan Matches For You looks to bring in annual sales of £ 11,546,284 with an operating profit margin of 16%. Gross margins are at 63%, which is higher than the retail industry average but in line with retail boutique averages. First-year cash flows are positive due to the cash-based business of Matches For You. Matches For You remains very liquid with no Current Liabilities forecasted for end of Year One . Startup costs are estimated at £ 1,744,500 with one thirdh of these costs going to startup inventory. See the Start-up Table, above, for details.

Break-even Analysis Page 13

Matches For You

Fixed expenses for the break-even are based on cost of goods sold, salaries and wages, and operating expenses. In addition, Matches For You plans to maintain an average 63% retail markup. Matches For You plans to maintain sales revenues well above the break-even level noted below.

Chart: Break-even Analysis $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000

TFC

$600,000

TVC

$400,000

$200,000

$0 ($200,000)

200

400

600

800

1,000 1,200 1,400 1,600 1,800 2,000

($400,000) ($600,000)

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even

ÂŁ 636,081

Assumptions: Average Percent Variable Cost

63% Page 14

Matches For You

Estimated Monthly Fixed Cost

ÂŁ 400,500

Projected Profit and Loss The projected Profit and Loss for three years is detailed in the table and charts following.

Chart: Profit Monthly

Profit Monthly 300,000 250,000 200,000 150,000 100,000 50,000 (50,000)

Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Jul Aug

(100,000)

Chart: Profit Yearly

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Matches For You

Net Income Yearly 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Year One

Year Two

Year Three

Chart: Gross Margin Monthly

Gross Margin 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Jul

Aug

Chart: Gross Margin Yearly

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Matches For You

Gross Margin Yearly 12000000 10000000 8000000

6000000 4000000 2000000 0 Year One

Year Two

Year Three

Table: Profit and Loss Year One Sales Dresses (6) Skirts (4) Shirts/Tops (4) Trousers (2) Jackets (2)

Year Two

Year Three

5,587,043 1,862,514 1,490,011 931,007 1,675,813

6,425,099 2,141,891 1,862,514 1,163,759 2,094,766

7,388,864 2,463,175 2,328,143 1,454,699 2,618,458

Total Sales Cost of Sales Dresses (6) Skirts (4) Shirts/Tops (4) Trousers (2) Jackets (2)

11,546,389

13,688,030

16,253,339

2,069,273 689,801 551,826 344,808 620,665

2,379,664 793,271 689,782 431,010 775,832

2,736,614 912,262 862,228 538,762 969,789

Total Cost of Sales Gross Margin

4,276,373 7,270,016

5,069,559 8,618,472

6,019,655 10,233,684

Salaries and Wages Owner's Compensation Salaries Full-Time Employees

240,000 390,000 1,060,800

247,200 401,700 1,092,624

254,616 413,751 1,125,403

Total Salary and Wages

1,690,800

1,741,524

1,793,770

Fixed Business Expenses Advertising Commssion Car and Truck Expenses Bank & Merchant Fees

577,319 2,886,597 12,000 6,000

684,402 3,422,008 12,360 6,180

812,667 4,063,335 12,854 6,427

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Matches For You

Contract Labor (security) Customer Discounts and Refunds Dues and Subscriptions Web Hosting Insurance (Liability and Property) Legal and Professional Fees Office Expenses & Supplies Postage and Delivery Rent (on business property) Sales & Marketing Telephone and Communications Travel Utilities Total Fixed Business Expenses Operating Income (before Other Expenses) [EBITDA] Other Expenses Amortized Start-up Expenses Depreciation Total Other Expenses Net Income

24,000 60,000 24,000 12,000 12,000 12,000 6,000 6,000 36,000 60,000 12,000 24,000 6,000

24,720 61,800 24,720 12,360 12,360 12,360 6,180 6,180 37,080 61,800 12,360 24,720 6,180

25,709 64,272 25,709 12,854 12,854 12,854 6,427 6,427 38,563 64,272 12,854 25,709 6,427

3,775,917

4,427,769

5,210,216

1,803,300

2,449,179

3,229,698

28,900 162,857

191,757

1,611,542

2,257,422

3,037,941

Projected Cash Flow The projected Cash Flow for five years is detailed in the table and chart following.

Table: Cash Flow ` Beginning Cash Balance Cash Inflows Income from Sales Accounts Receivable Total Cash Inflows Cash Outflows Investing Activities Cost of Sales Operating Activities Salaries and Wages Fixed Business Expenses Total Cash Outflows Cash Flow Operating Cash Balance

YEAR ONE 1,000

YEAR TWO 1,853,477

YEAR THREE 4,311,778

11,546,389 -

13,688,030 -

16,253,339 -

11,546,389

13,688,030

16,253,339

4,227,195

5,060,437

6,008,729

1,690,800 3,775,917 9,693,912 1,852,477 1,853,477

1,741,524 4,427,769 11,229,730 2,458,300 4,311,778

1,793,770 5,210,216 13,012,714 3,240,624 7,552,402

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Chart: Cash

8,000,000 7,000,000 6,000,000 5,000,000 Net Cash Flow

4,000,000

Cash Balance

3,000,000

2,000,000 1,000,000 YEAR ONE

YEAR TWO

YEAR THREE

Projected Balance Sheet

Table: Balance Sheet Year One

Year Two

Year Three

Assets Current Assets Cash

1,912,477

4,370,778

7,611,402

Inventory

500,000

500,000.0

Prepaid Expenses

115,600

86,700

57,800.0

2,528,077

4,957,478

8,169,202.2

Leasehold Improvements

500,000

500,000.0

Equipment

500,000

500,000.0

Furniture and Fixtures

100,000

100,000.0

1,100,000

1,100,000.0

162,857

325,714

488,571.4

3,465,220

5,731,763

8,780,630.0

Total Current Assets Fixed Assets

Total Fixed Assets Less: Accumulated Depreciation Total Assets Liabilities and Owner's Equity Liabilities

Page 19

Matches For You

Accounts Payable

49,178

58,299

69,225.5

49,178

58,299

69,225.5

Common Stock

1,804,500

1,804,500.0

Retained Earnings Dividends Dispersed

1,611,542

3,868,964

6,906,905.3

Total Liabilities Owner's Equity

Total Owner's Equity Total Liabilities and Owner's Equity

3,416,042

5,673,464

8,711,405.3

3,465,220

5,731,763

8,780,630.0

Business Ratios

Table: Ratios Ratio Liquidity Current Ratio Quick Ratio Safety Debt to Equity Ratio Debt to Coverage Ratio Profitability Sales Growth COGS to Sales Gross Profit Margin SG&A to Sales Net Profit Margin Return on Equity Return on Assets Owner's Compensation to Sales Efficiency Days in Receivables Accounts Receivable Turnover Days in Inventory Inventory Turnover Sales to Total Assets

Year One

Year Two

Year Three

51.4 38.9

85.0 75.0

118.0 110.0

0.0 36.1

0.0 41.5

0.0 46.2

0.0% 37.0% 63.0% 47.3% 14.0% 47.2% 46.5% 2.1%

18.5% 37.0% 63.0% 45.1% 16.5% 39.8% 39.4% 1.8%

18.7% 37.0% 63.0% 43.1% 18.7% 34.9% 34.6% 1.6%

0.0 0.0 42.1 8.6 3.3

0.0 0.0 35.5 10.1 2.4

0.0 0.0 29.9 12.0 1.9

RISK MANAGEMENT PLAN A number of factors may affect the results and business of the Matches For You Group. Most of these can be dealt with through internal routines, while certain others are affected more by external influences.

Page 20

Matches For You

There are risks and uncertainties related to fashion, weather conditions, macroeconomic changes, climate change, trade interventions, external factors in production countries and foreign currencies, but also in connection with expansion into new markets, the launch of new concepts and how the brand is managed. Fashion Operating in the fashion industry is a risk in itself. Fashion has a limited shelf-life, and there is always a risk that some part of the collections will not be well received by customers. Within each concept it is important to have the right volumes and achieve the right balance in the mix between fashion basics and the latest trends. In summary, each collection must achieve the right combination of sustainable fashion and quality at the best price. To optimise fashion precision, the company produces on an ongoing basis throughout the season. The production patterns are relatively similar in the various markets, although differences do exist. The start of the season and the duration of a season may, for example, vary from country to country. Delivery dates and product volumes for the various countries and stores are therefore adjusted accordingly. Sustainability is an increasing important factor, and consumers are becoming more and more aware of sustainability issues. Matches For You works hard on sustainability matters, including the environment, ethics and human rights, and works on a daily basis to offer customers increased sustainability in all its collections. Weather Matches For You clothes are produced in order to be sold on the basis of normal weather patterns. Deviations from normal weather conditions may affect sales. This is particularly true at the transition between two seasons, such as the transition from summer to autumn. Negative macroeconomic changes There is a risk that negative macroeconomic changes in one or more countries will result in an economic downturn, which is likely to change consumer purchasing behaviour and thus affect the company’s sales. It is therefore important to be aware of such changes which may affect the company’s business and to have a flexible buying model that can be adjusted to different market conditions. The company’s reserved funds for these negative macroeconomic changes is 20% of its Retained Earnings. External factors in production countries Uncertainties also exist concerning how external factors such as raw materials prices, transport costs and suppliers’ capacity will affect buying costs for the company’s products. There are also risks associated with social tensions in certain sourcing markets, which may lead to instability at the suppliers and in manufacturing. The company therefore needs to monitor such changes closely and have strategies in place to deal with fluctuations as advantageously as possible for both the company and external stakeholders. Climate change There is a risk that Matches For You business may be affected by future regulation and increased costs, e.g. in the form of emissions trading and carbon taxes in the company’s various sales markets. These can essentially be regarded as competitionneutral. The risks that may arise as a result of climate change and natural disasters primarily in production countries can be Page 21

Matches For You

considered very limited bearing in mind Matches For You flexible business model, which can be adapted quickly to changed circumstances. To lower this risk, the company takes on a insurance for liability and property with a face value of £ 2M. Trade intervention Buying costs may be affected by decisions at a national level on export/import subsidies, customs duties, textile quotas, embargoes, etc. The effects primarily impact customers and companies in individual markets. Global companies with operations in many countries are affected to a lesser extent, and among global corporations trade interventions may be regarded as largely competition-neutral. Foreign currencies Just over half the company’s sales are made in euros and the most significant currencies in which the company’s purchasing takes place are the US dollar and the euro. Fluctuation in the US dollar/euro exchange rate is the single largest transaction exposure for the company. To hedge flows of goods in foreign currencies and thereby reduce the effects of future exchange rate fluctuations, the Company’s flows of goods are hedged under forward contracts on an ongoing basis .

Page 22

Appendix

Table: Sales Forecast Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Dresses (6)

167,610

223,480

475,899

670,440

558,700

446,960

370,535

393,949

509,464

548,284

579,217

642,505

Skirts (4)

55,875

74,500

158,647

223,500

186,250

149,000

123,523

131,328

169,837

182,778

193,090

214,188

Shirts/Tops (4)

44,700

59,600

126,918

178,800

149,000

119,200

98,818

105,063

135,869

146,222

154,472

171,350

Trousers (2)

27,930

37,240

79,302

111,720

93,100

74,480

61,745

65,646

84,895

91,364

96,519

107,065

Jackets (2)

50,274

67,032

142,744

201,096

167,580

134,064

111,141

118,164

152,812

164,456

173,734

192,717

346,389

461,852

983,510

1,385,556

1,154,630

923,704

765,761

814,150

1,052,877

1,133,105

1,197,031

1,327,825

Page 1

Appendix

Table: Personnel Personnel Plan Year 1

Year 2

Year 3

Owners

£240,000

£247,200

£254,616

Managers and Designers

£390,000

£401,700

£413,751

£1.060,000

£1,092,624

£1,125,403

Total People

Total Payroll

£1.690,000

£1,741,424

£1,793,770

Production Workers

Page 2

Appendix

Table: Profit and Loss

Sept Sales

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sales

Dresses (6)

167,610

223,480

475,899

670,440

558,700

446,960

370,535

393,949

509,464

548,284

579,217

642,505

Skirts (4)

55,875

74,500

158,647

223,500

186,250

149,000

123,523

131,328

169,837

182,778

193,090

214,188

Shirts/Tops (4)

44,700

59,600

126,918

178,800

149,000

119,200

98,818

105,063

135,869

146,222

154,472

171,350

Trousers (2)

27,930

37,240

79,302

111,720

93,100

74,480

61,745

65,646

84,895

91,364

96,519

107,065

Jackets (2)

50,274

67,032

142,744

201,096

167,580

134,064

111,141

118,164

152,812

164,456

173,734

192,717

346,389

461,852

983,510

1,385,556

1,154,630

923,704

765,761

814,150

1,052,877

1,133,105

1,197,031

1,327,825

Dresses (6)

62,078

82,770

176,259

248,311

206,926

165,541

137,235

145,907

188,690

203,068

214,525

237,965

Skirts (4)

20,694

27,592

58,757

82,775

68,980

55,184

45,748

48,639

62,901

67,694

71,513

79,326

Shirts/Tops (4)

16,555

22,073

47,004

66,219

55,182

44,146

36,597

38,910

50,319

54,153

57,209

63,459

Trousers (2)

10,344

13,792

29,370

41,377

34,481

27,584

22,868

24,313

31,442

33,838

35,747

39,653

Total Sales Cost of Sales

18,620

24,826

52,868

74,479

62,066

49,653

41,163

43,764

56,596

60,909

64,345

71,376

Total Cost of Sales

Jackets (2)

128,290

171,054

364,257

513,161

427,634

342,107

283,611

301,532

389,948

419,662

443,338

491,779

Gross Margin

218,099

290,798

619,253

872,395

726,996

581,597

482,151

512,618

662,929

713,443

753,693

836,045

Owner's Compensation

20,000

Salaries

32,500

Salaries and Wages

Full-Time Employees

88,400

140,900

Advertising

17,319

23,093

49,175

69,278

57,732

46,185

38,288

40,707

52,644

56,655

59,852

66,391

Commssion

86,597

115,463

245,877

346,389

288,658

230,926

191,440

203,537

263,219

283,276

299,258

331,956

1,000

500

2,000

Total Salary and Wages Fixed Business Expenses

Car and Truck Expenses Bank & Merchant Fees Contract Labor (security)

Page 3

Appendix

Customer Discounts and Refunds

5,000

Dues and Subscriptions

2,000

Web Hosting Insurance (Liability and Property)

1,000

Legal and Professional Fees

1,000

Office Expenses & Supplies

500

Postage and Delivery

500

Rent (on business property)

3,000

Sales & Marketing Telephone and Communications

5,000

1,000

Travel

2,000

500

129,917

164,556

321,053

441,667

372,389

303,111

255,728

270,245

341,863

365,931

385,109

424,347

Utilities Total Fixed Business Expenses Other Expenses Amortized Start-up Expenses

2,408

Depreciation

13,571

Total Other Expenses

15,980

(68,698)

(30,637)

141,320

273,849

197,727

121,606

69,542

85,493

164,186

190,632

211,704

254,818

Net Income

Page 4

Appendix

Table: Cash Flow

Sept

Beginning Cash Balance

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

60,000

20,111

9,730

186,350

491,069

696,223

825,256

904,929

1,008,194

1,197,201

1,406,784

1,636,835

Income from Sales

346,389

461,852

983,510

1,385,556

1,154,630

923,704

765,761

814,150

1,052,877

1,133,105

1,197,031

1,327,825

Accounts Receivable

346,389

461,852

983,510

1,385,556

1,154,630

923,704

765,761

814,150

1,052,877

1,133,105

1,197,031

1,327,825

115,461

166,777

344,937

498,270

436,187

350,660

289,460

299,740

381,107

416,690

440,970

486,935

140,900

129,917

164,556

321,053

441,667

372,389

303,111

255,728

270,245

341,863

365,931

385,109

424,347

Total Cash Outflows

386,278

472,233

806,890

1,080,837

949,476

794,671

686,089

710,885

863,870

923,522

966,979

1,052,182

Cash Flow

(39,889)

(10,381)

176,620

304,719

205,154

129,033

79,673

103,265

189,007

209,583

230,051

275,642

Operating Cash Balance

20,111

9,730

186,350

491,069

696,223

825,256

904,929

1,008,194

1,197,201

1,406,784

1,636,835

1,912,477

Line of Credit Drawdowns

Ending Cash Balance

20,111

9,730

186,350

491,069

696,223

825,256

904,929

1,008,194

1,197,201

1,406,784

1,636,835

1,912,477

Cash Inflows

Total Cash Inflows Cash Outflows Cost of Sales Operating Activities Salaries and Wages Fixed Business Expenses Financing Activities

Page 5

Appendix

Table: Balance Sheet Year One

Year Two

Year Three

Assets Current Assets Cash

1,912,477

4,370,778

7,611,402

Inventory

500,000

500,000.0

Prepaid Expenses

115,600

86,700

57,800.0

2,528,077

4,957,478

Leasehold Improvements

500,000

500,000.0

Equipment

500,000

500,000.0

Furniture and Fixtures

100,000

100,000.0

1,100,000

162,857

325,714

3,465,220

5,731,763

49,178

58,299

69,225.5

49,178

58,299

69,225.5

Common Stock

1,804,500

1,804,500.0

Retained Earnings

1,611,542

3,868,964

6,906,905.3

3,416,042

5,673,464

8,711,405.3

Total Current Assets

8,169,202.2

Fixed Assets

Total Fixed Assets Less: Accumulated Depreciation Total Assets

1,100,000.0 488,571.4 8,780,630.0

Liabilities and Owner's Equity Liabilities Accounts Payable Total Liabilities Owner's Equity

Total Owner's Equity

Page 6

Appendix

Total Liabilities and Owner's Equity

3,465,220

5,731,763

8,780,630.0

Page 7