Projections of Body Shop Essay Example | Topics and Well Written Essays - 2000 words

Projections of Body Shop - Essay Example Income Statement 2002(GBP) 2002(% sales) 2003(GBP) 2003(% sales) 2004(GBP) 2004(% Sales) Turnover 413.1 100 428.5 100 442.6 100 Cost of Sales 158.3 39 168.1 39.2 182.3 39.2 Gross Profit 254.8 61 260.4 60.3 260.3 58.8 Operating Expenses excluding exceptional costs 209.3 45.4 228.1 46.1 239.7 42.3 exceptional costs 0 0 0 0 0 0 restructuring costs 0 0 0 0 0 0 Net interest expense 0.9 0 1.8 1.5 2.3 1.9 Profit Before Tax 4.1 5.3 16.44 4.1 15.5 2.9 Tax Expense 10 4.2 7.8 5.7 2.1 0.88 Profit(loss) after tax 2.1 3.8 13.2 7.1 6.1 3.7 Ordinary dividends 14 5 18 4.1 11 4.1 Profit ( loss retained) 19 4.7 8.1 7.4 3.2 4.1 Income Statement 2005(GBP) 2005(% sales) 2006(GBP) 2006(% sales) Turnover 479.2 100 502.8 100 Cost of Sales 208.1 43 238.6 47.45 Gross Profit 271.1 57 264.2 52.65 Operating Expenses excluding exceptional costs 242.1 47.1 267.2 50.3 exceptional costs 0 0 0 0 restructuring costs 0 0 0 0 Net interest expense 1.1 0 0 1.8 Profit Before Tax 2.9 3.1 7.3 9.2 Tax Expense 2.7 3.1 19.1 10.7 Profit(loss) after tax 5.1 6.2 9.8 7.1 Ordinary dividends 7.3 6.8 9.9 5.1 Profit ( loss retained) 14.1 9.1 6.2 8.2 A brief analysis of the historical data reveals that Financially The Body Shop is on a sound footing financially and was so until the purchase by L'Oreal. There is a healthy growth in the Turnover averaging around 8%. The cost of sales rarely exceed 40% leaving a fairly healthy margin to work with. That margin is again reflected in the fact that the gross profit is consistently around the 60% mark. And except during a couple of years where there were exceptional costs and restructuring costs , there is a healthy profit before tax. Hence the decision to delist body Shop ( an automatic event on... Body Shop is in a unique position of not having to market itself in the conventional sense because of it’s strong customer base. It has a strong following   of loyal customers , because among others , it’s percieved social values. The political issues which it has attached itself include being 100% vegetarian and not use animal testing. Using Environmentally Friendly products and champion other social causes like AIDS. Even Anita Roddick , on her deathbed ( she died recently of Hepatitis C) was actively campaigning   A recent stockholder survey   revealed what the stock holders think.   Some of the responses were â€Å"The way that the Body Shop strives to produce open, honest and fair annual report and accounts and interim reports, and manages to send them out to shareholders reasonably promptly.† â€Å"Would not like the Body Shop to stop its social audit. In fact would like more info in audit.†Ã‚   â€Å"Asking for opinions, such as this.† â€Å"The format of the Annual Report.† â€Å"Keep the campaigning and values but improve the marketing. No more paperwork than at present.†Ã‚   â€Å"Thank you for not producing huge, glossy reports – a waste of paper and always a sign of desperation†In other words the group of people who are Body shop shareholders are from the same set of people who are it’s customers. It has a unique market which is very strong.The weaknesses which maybe exposed now , because of the the purchase of the Company by Loreal is that all key decisions and strategy were centered around Anita and Gordon Roddick.