Kuwait Cake & Bakeries Division February 2014 Commentary

Introduction

The performance of the Kuwait Cake and Bakeries Division was above average considering the fact that the stores has a relatively fewer operational days (Year-to-date) as compared to the previous year. For example, this fiscal year’s Year-to-date was 24 days as compared to 2006’s Year-to-date. Additionaly, the stores was also hit by a number of factors apart from seasonal influences such as midterm school holidays, national holidays and low customer turn-up. For example, this year, the school mid tern holydays affected the cake and bakery division as it lasted 12 days meaning that the division did not operate for 12 days due to the midterm’s schools holiday from January 29, 2014 until February 09, 2014. Additionaly, this tear, there were two major national holidays that affected the customer’s turn-up at the stores. The national holidays were on Tuesday 25, 2014 and Saturday March01, 2014. During those two days, the stores was either not operational or experienced low sales due to the fact that many customers were eating at home and were in no hurry as other working days. Therefore, in addition to 91% YTD sales were relatively below the forecasted. The pastries achieved 92.6 percent of the targeted sales, while S&S achieved 86.8%. On the other hand, KSA achieved 92.2% whole tenders achieved 99.5% of the projected sales. KSA performed poorly in February 2014 as compared to 2013 because it grossed at negative 11% from KWA 138,777 to KWD 134,783. This dismal performance can be attributed to the holidays and the midterm

Bakery:

Bakery performed exceptionally well as compared to the S&S, Saudi cake, and sandwich and salad. Additionaly, the success of the bakeries can be attributed to the sales promotion campaign dubbed “More Filling More Joy” that improved increasing the flavors and filling the croissants made up of Cheese, Chocolate, Strawberry, and Honey. The company’s outdoor activities especially the buses and over the radio campaign must have been a success as it helped the bakeries sales improve from KWD 225,315 to 237,492. Co-ops improved from KWD 99,048 to KWD 101,274 in 2013, and 2014 respectively. The branches performed exceptional grossing 10% increase while the cash van did not make any significant improvement. The co-ops grossed only 2% improvement while supermarket made 9% gross. Branches improved from KWD 27,128 to KWD 29,749 in 2013, and 2014 respectively. Super markets improved from KWD51, 471 to KWD 57,799 in 2013 to 2014 receptively. Cash van imported from KWD37, 695 to KWD 37,806 in 2013 and 2014 respectively.

S&S

The sandwich and salad performed well despite the poor sales reported by the branches and the “other”

The co-ops grossed 1% increase, while super market grossed 31% increase (highest). On the other hand, cash van grossed over 19% increase while the branches underperformed making a negative 2% gross. Additionaly, cash van performed 100%, while supermarket achieved 90%. Additionaly branches also tried at 93% of the budget. The February 2014 national day actually affected the performance of the sandwich and salads because the sandwiches and the salads can only stay fresh for three days beyond which their shelf life is over. This did not only lead to loss in revenue but also loss to the company. The 6 days holidays meant that the company made sandwich and salads sales and the company had to dispose the perished salads.

The Saudi cake

The Saudi cake performed dismally and this can be attributed to the public holidays and the school midterms. For example, from the co-ops, the poor performance leads to -10% gross, while cash van made -6% gross. Despite supermarket’s exceptional performance grossing 21%, the further performance of the branches made the Saudi cake a disappointment. The company should focus on how to improve all the trade channels to make Saudi cake main revenue earners as it has been from the beginning

New market segment

It is also worth noting that despite the company’s performance, the company has just realized that it can improve its sales considering the fact that there are close to 116080 travelers who travel out of the country. The company will therefore strategize on how to target these customer segments as it represents a very large segment that can help the company to drive its growth and revenue from sales. The company has identified the market segments (travelers) as a possible source of alternatives revenue during the off-peak season.

Out of stock

Since most stock were purchased some time ago and restocking id almost due, it is important to bring to your attention the following items that are currently out of stock or will be out of stock in the coming few days. These need to be rescued to avoid inconveniencing the customer because we aim to exceed the customer’s expectations.

Conclusion

The company sales may have been good had the number of holidays been shorter and the amount of perished salads and sandwiches been low. However, considering the performance of the stores, it is important for the store to strategies more effectively by retargeting. The company needs to identify other market segment s to help in driving revenue and growth. The company should leverage the peak seasons to cover for the off-peak and public holidays when the sales is low. The company should also consider increasing allowance or budgeting for the sales promotions as it has shown real potential to drive revenue by 20%.

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