Calibration of price tags, the quality of available raw materials that are used to manufacture a company’s products, can harm the ability to satisfy customer demand and the cost of goods. The availability and price of raw materials may vary depending on the cost of transportation, natural resources, increased labor costs, increased costs of components, and environmental conditions. While the company has recently raised prices due to inflation in the US and may soon increase prices again, it cannot be said that such a price increase will be acceptable to buyers. As a result, the company may lose a significant share of revenue and affect margins.
All leather and soft materials products are manufactured by third parties. The company does not have long-term contracts with these manufacturers and therefore has to compete with other companies for production capacity. The Company may experience that third-party manufacturers may not always adhere to their obligations to manufacture, supply, and ship goods, which may cause difficulties in the operating sector. As a result, there may be difficulties associated with third-party manufacturers, such as insufficient quality control, shortage of raw materials, missed production deadlines, pandemic-related delays, or increased production costs. The company’s success largely depends on establishing close relationships with current and future manufacturers of products, and long-term relationships with third-party manufacturers. At the same time, these third-party factories must meet all the requirements related to the quality of the product and its price. Any difficulties arising in relations with current manufacturers may affect the company’s ability to distribute and manufacture products, thereby losing market share.
Accounts payable increased by 29.0% over the past two years by 51.7 million. Inventory over the past two years increased by 17.5% or 51.6 million dollars. Accounts receivable also increased, by 11.0% or 25.3 million, mainly due to increased sales. Sales profit for 2020 was $770,356 and for 2021 was $966,374, indicating a return to pre-pandemic levels. The cost of goods sold (COGS) for 2021 was 51.7 million.
The company is increasingly dependent on information systems in the areas of web resources, transaction processing, control of purchases and sales, as well as the delivery of raw materials and finished goods. In 2022, the company plans to introduce a new global system of points of sale for products, which will begin with European retail stores. Information systems can malfunction due to factors such as hacker attacks, malware, and program failures. Any malfunction in information systems can lead to the unavailability of information for employees and customers and delays in the delivery of goods due to incorrect display of information about orders. For these reasons, the company may lose demand for its products, which in the future will lead to a loss of customer demand. This can also negatively affect the company’s ability to respond to market trends promptly, and also lead to a loss of buyers’ interest in the company’s products.
The competition for personnel in the fashion industry is very high. Many factors affect a company’s ability to attract competent employees. The key factors are the level of morale, competitive benefits, and wages, the company’s reputation, and internal growth opportunities for employees. Since the company does not have employee life insurance policies, the loss of any key employee can result in a serious loss of income. The company should also pay more attention to retaining qualified employees in the retail field to achieve all goals. The competition and staff turnover in this area is very high, so it is worth offering employees favorable working conditions. If a company fails to retain or hire qualified employees in the retail sector, this can negatively affect financial results.