Kasi Kicks Business Plan — Risk Analysis
Allocation withdrawal, markdown escalation, stock funding and the cash absorbed through the rollout, with trigger points for each.
Risk Analysis
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Allocation: What You Are Allowed to Sell
- 2. Executive Summary
- 3. The Size Curve: Where Footwear Margin Is Lost
- 4. The Store and the Channel
- 5. SWOT and Competitive Position
- 6. Organisation and Compliance
- 7. Financial Plan
- 8. Break-Even and Debt Service
- 9. Investment Analysis
- 10. Sensitivity and Scenario Analysis
- 11. Risk Analysis
- 12. Implementation Roadmap
- 13. Key Performance Indicators
- 14. Key Assumptions
- 15. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Allocation, Size Curve and Store Schedules
- C. Appendix C: Funding, Debt and Stock Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 11.1 The risks that matter
- 11.2 Risk register
- 11.3 Trigger points
11.1 The risks that matter
Allocation below plan is the dominant risk and it has no operational remedy. The plan assumes 4 per cent of units are limited product and 26 per cent premium general release. If the brands allocate less, the mix shifts toward carryover at R257 a pair against R812, and no amount of good retailing recovers the difference. Signed supply agreements with indicative allocation must precede any lease.
Size-curve discipline failing is medium in likelihood and severe in impact, because it is worth 20.5 per cent of gross profit on identical stock. It is mitigated by a merchandise planner from Year 1 with the authority to refuse a pre-packed assortment that does not match the curve — which is a governance point as much as a staffing one, since refusing brand-supplied assortments requires a mandate.
Trading density below plan is high in likelihood and severe in impact. Break-even is R33 387 per square metre against a mature R83 358, and the gap between an excellent mall site and a merely acceptable one is larger than that ratio suggests. Site selection is treated as a condition precedent rather than an operational task.
Stock exceeding the facility is high in likelihood and high in impact because it is structural rather than contingent: stock reaches R9 670 100 against a R6 500 000 facility. The plan retains all earnings through the projection, and the facility should be reviewed annually as the range grows rather than set once at drawdown.
11.2 Risk register
|
Risk |
Likely |
Impact |
Mitigation and residual position |
|---|---|---|---|
|
Allocation below plan |
High |
Severe |
The plan assumes 4% limited and 26% premium general release. If brands allocate less the mix shifts toward carryover at R257 a pair against R812. No operational remedy exists; signed agreements must precede any lease |
|
Size curve discipline fails |
Medium |
Severe |
Worth 20% of gross profit on identical stock. Mitigated by a merchandise planner from Year 1 with authority to refuse a pre-packed assortment |
|
Trading density below plan |
High |
Severe |
Break-even is R33387 per m² against a mature R83358. Mitigated by site selection as a condition precedent rather than an operational task |
|
Stock exceeds the facility |
High |
High |
Stock reaches R9670100 against a R6 500 000 facility and exceeds it from Year 4. Mitigated by retaining earnings; no distribution is modelled |
|
Market does not grow |
High |
High |
Forecast growth of 2.15% a year. Every pair is taken from an incumbent with greater buying power |
|
Counterfeit line accepted in good faith |
Low |
Severe |
A single counterfeit line ends the brand relationship and the account is not reopened. Mitigated by buying only through authorised channels and proving provenance on every delivery |
|
Markdown cascade deepens |
High |
High |
At a landed cost of R648 a pair discounted 55% earns nothing. Mitigated by size-curve discipline; markdown is a symptom rather than a lever |
|
Loss of a brand account |
Medium |
Severe |
Termination provisions in the supply agreements should be understood before a five-year lease is signed against them |
|
Landlord turnover clause |
Medium |
Medium |
Mall leases carry turnover rent and monthly trading disclosure; strong density protects the negotiation |
|
Shrinkage above plan |
Medium |
Medium |
Footwear is a high-theft category; R27 a pair is budgeted with security carried in store fixed costs |
|
Online returns above plan |
Medium |
Medium |
Fit uncertainty drives footwear returns. Mitigated by size guidance and by introducing online only in Year 2 once the stock file is accurate |
|
Currency movement on imported stock |
High |
Medium |
Vietnam, China and Indonesia are the dominant supply origins; landed cost escalates at 6.2% against selling prices at 5.8% |
11.3 Trigger points
|
Point |
Trigger |
Committed response |
|---|---|---|
|
Before any lease |
Fewer than three signed brand agreements |
Do not sign. The range is the business and it is granted, not bought |
|
Month 6 |
Trading density below R45 000 per m² |
Review site, range and staffing before opening store two |
|
Any season |
Full-price sell-through below 65% |
The size curve is failing. Audit the buy by size before the next order is committed |
|
Any month |
Stock cover above 110 days |
Buying is running ahead of selling; freeze the open-to-buy |
|
Before each store |
Forward trading density below R60 000 per m² at the existing stores |
Do not open. Central cost is already carried; a weak store dilutes it |
|
Any time |
A delivery without full provenance documentation |
Reject it. A single counterfeit line ends the brand relationship |