andy & emmy andrea deleón and emma rossoff november 2008

andy & emmy

Andrea DeLeón and Emma RossoffNovember 2008

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Mission Statementandy & emmy is the brand for city girls. Founded by two New York

City teens, Andrea DeLeón and Emma Rossoff, andy & emmy strives to provide its customers with unique, but wearable, everyday clothing.

andy & emmy’s youthful perspective of the world contributes to the individuality of the clothes that the company has created. The founders often draw inspiration from their Upper East Side Manhattan private school, The Chapin School, as well as from their travels abroad. After spending several years in a uniform, the girls cannot help but rebel through the creation of their own clothing company.

The pair has high standards when it comes to fabric, using natural fibers. All of the patterns and designs are handmade by Emmy and edited by Andy. Andy’s Thai and Dominican heritage as well as Emmy’s repeated trips to fashion capitals such as Helsinki, Tokyo, and Paris allow the girls to take design ideas from major cities around the world.

andy & emmy feels that no other brand allows young city girls to express who they truly are. Our customers are studious yet carefree, laid back yet concerned about their world, meticulous yet not afraid to make mistakes, and of course very social – they are happy, well- rounded individuals. andy & emmy wants the product not to inhibit its consumers but enhance them. Through their clothing, Andy and Emmy encourage every girl to be herself. Ultimately, remember, it is not about the clothes, but the person who is wearing them.

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Executive Summary We are designing fashion forward clothes for young women

and teens, ages 15-24, living in the greater New York City area with family incomes of $100,000 or more a year. This is a market of over $518 million.

andy & emmy was founded by Andrea DeLeón and Emma Rossoff, who have a background in business and design, respectively.

We are seeking to raise $10,000 from outside investors in the form of Preferred Equity Interests. We also plan to raise $15,000 in the form of a loan.

The investment period for this program is 2.5 years and we are forecasting approximately a 38% compound annual return on investment for our Preferred Investors, a return equal to more than 2 times the original investment amount.

Risk will be reduced by placing orders with our manufacturer only after retail sales orders are confirmed.

We are filling an important market niche with an exciting and creative product.

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Description of Preferred Interests One-half of the investments, aggregating $5,000, will be made on or about October 31st, 2008.

The second half of the investments, also aggregating $5,000, will be made on or about March 31st, 2009.

Capital will be invested for 2.5 years and will be returned to the investors at the end of the investment period, after repayment of the bank loan, on the following schedule: Return of initial investment 40% of remaining cash

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Qualifications of the Founders As New York City teenagers attending a private high school, The Chapin School, we have insight into the market we are targeting.

As a creative duo, we can provide our customers with unique clothing; this creativity shines through every aspect of our line, from the design itself to the materials used.

We are extremely social, which not only contributes to our awareness of our target consumer, but also contributes to the business aspect of our company; our congeniality gives us the ability to network and create greater awareness for our product.

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Legal Structure and Ownership andy & emmy is a Partnership andy & emmy is owned by Andrea DeLeón and Emma Rossoff, each of whom owns 50% of the partnership interests.

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Consumer and Market Analysis andy & emmy will target young women and teens, ages 15 to 24, living in the greater New York City area.

The U.S. Chamber of Commerce estimates that, in 2000, there were approximately 1.3 million girls and young women in this sector.

It is estimated that these individuals spend an average of $648 per person on clothing per year for an aggregate spend of $842.7 million.

We estimate that approximately 75% of this spending is for tops, skirts and dresses-- the items that andy & emmy will be offering.

The total market for tops, skirts and dresses amounts to approximately $632.0 million of annual spending.

We estimate that our target market, high-end shoppers, account for approximately 82% of the spending, or $518.0 million, which is equal to $1,539 per targeted shopper.

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Targeted Market Segment andy & emmy will target

fashion forward young women and teens who want to own one-of-a kind pieces to show off to their friends.

We will target the middle to upper segments of this market, with price points of $250 to $350.

We will target females who buy clothing at stores with price points similar to those found in small boutiques and high end department stores.

andy & emmy will target approximately 336,807 young women and teens who each spend approximately $2,052 per year on clothing and $1,539 on tops, skirts and dresses.

Girls in our marketsegmentOther girls ages 15-24

25.9%

74.1%

Money spent on clothing bygirls in our market segment

Money spent on clothing byother girls ages 15-24

82%

18%

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Competition

Competitive Advantage

Competitor Price QualityCompared to Our

BusinessFree People $108 Mediocre Lesser quality

Not fashion forward

Urban Renewal $58 Mediocre Lesser quality and fabrics with simpler and less flattering construction

Anthropologie $350 Good More expensiveUnoriginal designs

Juicy Couture $330 Good Unoriginal designs with less flattering construction

All of our creativity is used to achieve our goal of making clothing that looks like something we have never seen before. Also, as teenagers, we know our market inside and out because ultimately, we are our market. People will want to buy clothing that is made and designed by someone their own age.

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Product Line Ten Initial Designs

3 Dresses 4 Skirts 3 Tops

5 sizes: 0,2,4,6,8 Size 4 samples 50 SKU’s 2 Seasons per year: a fall/winter line and a spring/summer line.

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Manufacturing Manufacturing will be contracted to YK Studio Inc, New York City. Manufacturer will fabricate and ship 175 units per season in the first year of

operation. The manufacturing will be done only after all sales orders are placed-- we will

only manufacture what we can sell. The economics of the average unit are as follows:

Price per Unit* $ 158.60

Direct Labor per Unit $51.43

Materials per Unit $40.95

Total COGS Per Unit $92.38

Other Variable Costs $30.91

Total Variable Costs $123.29

Gross Profit Per Unit $35.31

*Assumes 35 units sold direct retail at a price of $249 per unit and 140 units sold wholesale at a price of $136 per unit (assumes the retailer resells these units at an average price of $300 per item)

Average Unit

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Marketing Strategy Retail Price: ranging from $250-350 Product: An innovative line of clothing Promotion:

Method Description Target Consumer

Cost

Word of Mouth

People who like our clothing will tell others about it

Females, ages 15-24, in the greater New York City area

$0

Website A portfolio of our designs that will allow prospective buyers to view our line.

Store owners and buyers

$1,500

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Distribution Initial Distribution:

The Dressing Room Earnest Sewn

Targeted Future Distribution: Betsey Bunky Nini BOC Cantaloup CPW EDGE*nyNOHO Honey in the Rough LF Liana Olive and Bettes Shatzi Wink

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Start-Up Financial RequirementsStart- Up Expenses

* Please note, we intend to raise $6,000 for sample making. We will secure orders with retailers before we raise the additional $19,000.

Manufacturing (based on 175 pieces)

$21,575.75

Retail Space $975

Website $1,500

Administrative Expenses $1,000

Start-up Investment $25,000

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Forecast Income Statement

Profit or Loss: Four 1/2 Year PeriodsPeriod 1 2 3 4

8/1/09-1/31/10 2/1/10-7/31/10 8/1/11-1/31/11 2/1/11-7/31/11Units sold 175 175 210 350Average price per unit $158.60 $158.60 $154.83 $147.30Revenue $27,755.00 $27,755.00 $32,514.30 $51,555.00Expenses Preproduction costs $5,409.50 $5,409.50 $5,409.50 $5,409.50 Manufacturing costs $16,166.25 $16,166.25 $18,699.50 $28,832.50 -- Total direct costs $21,575.75 $21,575.75 $24,109.00 $34,242.00Gross Margin $6,179.25 $6,179.25 $8,405.30 $17,313.00

Selling, general and administrative costs $3,475.00 $1,000.00 $1,000.00 $1,000.00Operating income $2,704.25 $5,179.25 $7,405.30 $16,313.00Interest (at 8%) $600.00 $600.00 $600.00 $600.00Pretax Income $2,104.25 $4,579.25 $6,805.30 $15,713.00Taxes $357.72 $778.47 $1,085.22 $3,133.99Net income $1,746.53 $3,800.78 $5,720.08 $12,579.01

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Forecast Cash Flow Statement

Period 1 2 3 4Net income $1,747 $3,801 $5,720 $12,579Change in working capital Beginning period prepaid expenses($21,576) $0 $0 $0 Return of prepaid expenses $21,576 $21,576 $24,109 $34,242 End of period prepaid expenses ($21,576) ($24,109) ($34,242) $0

Net change in working capital ($21,576) ($2,533) ($10,133) $34,242

Net cash flow ($19,829) $1,268 ($4,413) $46,821Cash at beginning of period $25,000 $5,171 $6,439 $2,026Cash at end of period $5,171 $6,439 $2,026 $48,847

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Forecast Balance Sheet

Period 1 2 3 4

AssetsCash $5,171 $6,439 $2,026 $48,847Prepaid Expenses $21,576 $24,109 $34,242 $0Total $26,747 $30,548 $36,268 $48,847

Liabilities and Net WorthBank Debt $15,000 $15,000 $15,000 $15,000Preferred Equity $10,000 $10,000 $10,000 $10,000Retained Earnings $1,747 $5,548 $11,268 $23,847Total $26,747 $30,548 $36,268 $48,847

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Return On Investment

$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40$1.60$1.80$2.00

ROI

Original $1invested inbusiness$ returned peroriginal dollarinvested

9/30/08 3/31/09 9/30/10 3/31/11Investment amount 5,000$ 5,000$ -$ -$

Return of capital 10,000$

42% of remaining cash $10,016

Total return to investor 20,016$

Internal Rate of Return 32%

Multiple of original investment 2.0

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Return on Sales

$0.00$0.10$0.20$0.30$0.40$0.50$0.60$0.70$0.80$0.90$1.00

Period1

Period2

Period3

Period4

$1 in sales

Operating profitper $ of sales

Period 1 2 3 4

Return on Sales .09 .19 .23 .32

For every $1 in sales we forecast our business will earn:

$.09 $.19 $.23 $.32

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Financial Ratio Analysis

Startup Investment Doubling

1st Period Break-Even on 175 Units Manufactured

158

Years for my start-up investment to double in value

2.0

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Key Investment Considerations andy & emmy will create unique, but wearable, everyday clothing targeted at an important market niche: young women and teens, ages 15-24.

Our potential customers in the greater New York City area spend approximately $518 million per year on the items andy & emmy will market.

We have identified our distribution outlets and will contract manufacture only what we can sell.

andy & emmy will promote its products through the New York City private school network.

Our business model forecasts profitability in the first period of operations and a 2.5 year program that will double the investment of our initial investors.

Thank you for your consideration of:

andy & emmy

Appendix

Part I: Sketches for the Fall/ Winter 2009 linePart II: Breakdown of production costs

Fall/ Winter 2009

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Production Costs105 garments140 garments175 garments210 garments350 garments3 sets 4 sets 5 sets 6 sets 10 sets

Pattern $2,300.00 $2,300.00 $2,300.00 $2,300.00 $2,300.00Muslin $500.00 $500.00 $500.00 $500.00 $500.00Sizing $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00Sample Making $1,200.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00Fabric for samples $409.50 $409.50 $409.50 $409.50 $409.50Pre-Production Total $5,409.50 $5,409.50 $5,409.50 $5,409.50 $5,409.50Cutting $3,500.00 $3,500.00 $3,500.00 $3,500.00 $3,500.00Sewing: Tops $750.00 $1,000.00 $1,250.00 $1,500.00 $2,500.00Sewing: Skirts $750.00 $1,000.00 $1,250.00 $1,500.00 $2,500.00Sewing: Dresses $1,800.00 $2,400.00 $3,000.00 $3,600.00 $6,000.00Fabric (avg. $40.95/garment) $4,299.75 $5,733.00 $7,166.25 $8,599.50 $14,332.50Manufacturing costs $11,099.75 $13,633.00 $16,166.25 $18,699.50 $28,832.50Total $16,509.25 $19,042.50 $21,575.75 $24,109.00 $34,242.00Avg. Cost / Garment $157.23 $136.02 $128.43 $118.76 $99.83Wholesale # 70 105 140 175 315Wholesale Price $136.00 $136.00 $136.00 $136.00 $136.00In-store Retail Price $299.20 $299.20 $299.20 $299.20 $299.20Wholesale Revenue $9,520.00 $14,280.00 $19,040.00 $23,800.00 $42,840.00Direct Retail # $35.00 $35.00 $35.00 $35.00 $35.00Direct Retail Price $249.00 $249.00 $249.00 $249.00 $249.00Direct Retail Revenue $8,715.00 $8,715.00 $8,715.00 $8,715.00 $8,715.00

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Cost of Materials / Direct LaborManufacturing Costs: 1 Claire DressSewing costs for one unit

Cutting costs for one unit Total

$40 $17.50 $57.50

Materials

Material Description Cost /Quantity Cost per Unit

Camel wool $18/ yd (3 yds) $35

Camel Lining$34 / yd (1/4 yd) $8.50

Zipper $3 / zipper $3

5 buttons$3.50 / (1/2 spool) $1.75

TOTAL $48.25

TOTAL MATERIALS/DIRECT LABOR $105.75

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Cost of Materials / Direct LaborManufacturing Costs : 1 Julia DressSewing costs for one unit


$40 $17.50 $57.50

Materials


Blue wool$14 / yd (2.5 yds) $35

Blue lining$20 / yd (1/2 yd) $10


$3.50 / (1/2 spool) $1.75

TOTAL

$ 49.75


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Cost of Materials / Direct LaborManufacturing Costs : 1 Sloan DressSewing costs for one unit


$40 $17.50 $57.50

Materials


Black wool$8.50 / yd (2.5 yds) $21.25

Black lining$34 / yd (1/2 yd) $17


$3.50 / (1/2 spool) $1.75

TOTAL

$ 43


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Cost of Materials / Direct LaborManufacturing Costs: 1 Chloe TopSewing costs for one unit


$25 $17.50 $42.50

Materials


Camel cotton $14 / yd (2 yds) $28

Red wool$34 / yd (1/10 yd) $3.40


$3.50 / (1/2 spool) $1.75

TOTAL $36.15


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Cost of Materials / Direct LaborManufacturing Costs: 1 Alex TopSewing costs for one unit


$25 $17.50 $42.50

Materials


Blue wool $8 / yd (1/2 yd) $4

Grey Jersy $34 / yd (1 yd) $34


$3.50 / (1/2 spool) $1.75

TOTAL

$ 42.75


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Cost of Materials / Direct LaborManufacturing Costs: 1 Jesse TopSewing costs for one unit


$25 $17.50 $42.50

Materials


Brown wool $14 / yd (1 yd) $14

$34 / yd (1/4 yd) $8.5


$3.50 / (1/2 spool) $1.75

TOTAL

$ 27.25


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Cost of Materials / Direct LaborManufacturing Costs: 1 Rima SkirtSewing costs for one unit


$25 $17.50 $42.50

Materials


Grey wool $14 / yd (2yds) $28

Grey lining$34 / yd (1/5 yd) $6.80


$3.50 / (1/2 spool) $1.75

TOTAL

$ 39.55


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Cost of Materials / Direct LaborManufacturing Costs: 1 Charlotte SkirtSewing costs for one unit


$25 $17.50 $42.50

Materials


Camel Wool $14 / yd (2yds) $28

Red Wool$34 / yd (1/5 yd) $6.80


Camel Lining$3.50 / (1/2 spool) $1.75

TOTAL

$ 39.55


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Cost of Materials / Direct LaborManufacturing Costs: 1 Anna SkirtSewing costs for one unit


$25 $17.50 $42.50

Materials


Brown wool $14 / yd (2yds) $28

Red wool$34 / yd (1/5 yd) $6.80


Brown lining$3.50 / (1/2 spool) $1.75

TOTAL

$ 39.55


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Cost of Materials / Direct LaborManufacturing Costs: 1 Chapin SkirtSewing costs for one unit


$25 $17.50 $42.50

Materials


Blue wool $14 / yd (2yds) $28

Blue lining$34 / yd (1/5 yd) $6.80


$3.50 / (1/2 spool) $1.75

TOTAL

$ 39.55


andy & emmy andrea deleón and emma rossoff november 2008

Documents

andy emmyandrea delen

young city girls

new york city teens

chapin school

mission statementandy

unique clothing

preferred investors

clothing company