Classic Knitwear

Classic Knitwear and Guardian: A perfect fit

Problem\issue:

Classic knitwear operates in the unbranded category which has no brand recognition among retail customers. It is a manufacturer and distributer in non fashion category. Classic revenue comes from Wholesalers and Retail Channels. 75 % of classic revenue comes from wholesalers which in turn come from selling to screen-print channels [1]. Classic screen- print channel category gross margin is 18 % which is comparatively low, to the leading branded manufacturer of 30% to 40 %. Problem for Classic Knitwear is the driving force from the board member to increase the gross margin over 20 % which is currently 18%. Since company unknown brand recognition and limited relations with other companies, top leaders are having hard time to bring margin up.

Other issue of Classic was under non-screen-print portion in which market had 2005 US revenue of $22 billion. Branded product accounted for $10 billion, and private-label $12 billion where as Classis accounted just $137 million which is slightly more than 1 % of private-level sector. Hence they are trying to explore their better chances in the new product development and consider partnering via a licensing agreement with Guardian (an insect repellent expert and manufacturer).

[1] Screen-print channels are those companies who customized classic product with logos of every things from rock bands to small business to tourist destination.

Analysis:

Classic Knitwear current gross margin of 18 % is coming from $24.5 billion category of screen-prints channels and had 1 % of the private-label revenue from non-screen-prints portion.

Screen –print channels: (24.5 billion markets)

Classic reported $550 million with 18 % gross margin. Not a huge share in the market but survival margin in the industry, Analyst believed that Classic was the #2 player in this sector, with 16.5 % market share.

Non-screen print channels: ($22 billion market)

Branded product...