MGT 401 Lecture Notes - Lecture 7: Tpg Capital, J.Crew, Profit Margin
7 May 2015
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Document Summary
After 4 years of investing in j. crew, texas pacific group (tpg) began doubting its decision in acquiring the fashion specialty retailer due to its negative most recent financial data. However, in comparison to before it was acquired by tpg, j. crew"s performance has improved tremendously and there"s still opportunity to grow. Thus, tpg should not compromise its investment and sell j. crew to american eagle for million. When tpg first acquired j. crew, they identified the first problem in the company: high operating expenses. This resulted in its narrow gross profit margin which can be improved through reducing cost and modifying operational strategies. Thus, tpg reorganized j. crew"s operations and its effort was paid off when j. crew"s net profit margin (based on ebidta) went from approximately. However, by the third quarter, j. crew"s operational progress slowed down and its sales plummeted from million to million.
