Active Gear, Inc.
Active Gear, Inc. is an athletic shoe company, which, at the time of the case focuses on casual and recreational footwear aimed at a core demographic of suburban family members aged 25-45. The shoes are generally considered to be fashionable and functional. The casual line of shoes is sold in general retail stores, department, and specialty stores via wholesalers and independent distributors. The athletic line is made through independent sales representatives to a small number of sporting goods stores, pro shops, and specialty athletic stores.
AGI has in part maintained their perceived high quality brand image by abstaining from selling through discount retailers. Although they feel this decision has preserved operating margins, they believe it has hurt sales growth.
By focusing on a smaller portfolio, Active gear has been able to maintain relatively simple and efficient production an supply chains. This has led to a competitive advantage by way of avoiding poor industry cycles, write-downs, and missed profit opportunities. AGI’s days in inventory is 42.5, much lower than the industry average of 50.9.
Despite the fact that AGI is among the most profitable firms in the industry, AGI has started to believe their smaller than industry average size is resulting in a competitive disadvantage.
Mercury Athletic Mercury is a smaller shoe company with a highly niche market. The demographic for the company is 15 to 25 year olds with an interest in extreme sports. The company was previously acquired by West Coast Fashions, but the companies quickly determined that they were not a good fit thus, after a couple failed experiments with new Mercury products, WCF decided to sell off the Mercury footwear. Mercury has gained a nonconformist, extreme sports reputation, which it has attempted to utilize in its product lines. Unfortunately, a variety of