rei inc,
DESCRIPTION
Social Responsibility CaseTRANSCRIPT
At REI, we inspire, educate and outfit for a lifetime of outdoor adventure and stewardship.
H a r i n d e r S a m r a I J o h n H e l l e r I L i n d s e y R e e s e I T i t u s K i m b o w a
History
Goals Recommendation Implementation Financials Conclusion
• Opened in 1938 by Lloyd Anderson and his wife Mary• 23 members started co-op with $1 investment• 2011
117 stores 8,000 employees 4 million members $ 1.7 billion in income (before dividends and taxes) $30 million net income
Goals
Goals Recommendation Implementation Financials Conclusion
Company wants to maintain growth while following core principles of environmental stewardship.
GOALS
Grow company by 5 stores a year while:Lowering Greenhouse Gas EmissionLowering Energy UseEliminating Waste
Company Goals: BY 2020 REI to become CLIMATE NEUTRAL and ELIMINATE WASTE
Recommendations
4-2-0 PLAN:
1. Social Responsibility E-Conference (SREC)2. E- Commerce3. REI Adventures® footprint reduction program (AFRP) 4. New distribution center
Goals Recommendation Implementation Financials Conclusion
SREC
Social Responsibility E-Conference• Following Kaizen principle• Empowering employee contribution to reduce carbon footprint in stores• Yearly Conference over the web
Employee Commuting Emission • Eco Punch Program• Free Bike Loans
Store Expense $200 X 10 = $2,000$2,000 X 117 Stores=
$234,000
Goals Recommendation Implementation Financials Conclusion
The Paper Problem
77%
(24.4)%
30.1%
Overall (11.5)%
Proj 2020
Goals Recommendation Implementation Financials Conclusion
E-Commerce
E-CommerceDirect Mail• Create opt-in program for catalogs • Reduce frequency of catalogs from 3 to 2 by 2015 Goal• Eliminate direct mail and catalogs by 2020
(24.4)%
Proj 2020
Goals Recommendation Implementation Financials Conclusion
E-CommerceShipping• Customer shipping box return program• Incentive for the programGoal• Design standard shipping boxes• Reduce box usage by 50% by 2015
E-Commerce Cont’d…
Proj (50%)
Proj 2015
Goals Recommendation Implementation Financials Conclusion
874
REI Adventures® Footprint Reduction Program
Largest Contributor to GHG Emission
• Customers pay Carbon Credit which is matched by REI• Partnership with TerraPass
Seattle – Sydney 15,489 miles 6,499lbs CO2
$41.54
Seattle – Lima 9,912 miles 4,316lbs CO2
$29.74
Goals Recommendation Implementation Financials Conclusion
New Distribution Center
Boulder, CO ( LEED GOLD)
Build new distribution center in St. George Utah• Reduce GHG• Reduced transportation costs to Southwest region• Allow for future Expansion of 5 stores per year
NEW DC
Sumner DC
1,111 miles
400 miles
Savings Per TruckCO2 output from
SumnerCO2 output from
UtahMiles Saved
between DC’sCO2 Reduction between DC’s
3 trip/wk Average
Lbs CO2Year Saved
Tons CO2/yr Saved
Houston, TX 5820 3637.5 1059 2182.5 6547.5 340470 170.235Los Angeles, CA 2667.5 970 711 1697.5 5092.5 264810 132.405
Goals Recommendation Implementation Financials Conclusion
With new DC projected savingTotal Saving= $ 887,328 Gas savings for California
New Distribution Center
Boulder, CO ( LEED GOLD)
Goals Recommendation Implementation Financials Conclusion
Savings Per TruckCO2 output from
SumnerCO2 output from
UtahMiles Saved
between DC’sCO2 Reduction between DC’s
3 trip/wk Average
Lbs CO2Year Saved
Tons CO2/yr Saved
Houston, TX 5820 3637.5 1059 2182.5 6547.5 340470 170.235Los Angeles, CA 2667.5 970 711 1697.5 5092.5 264810 132.405
Proj 2016
6,000
New Distribution Center
Boulder, CO ( LEED GOLD)
Fort Pierce Industrial Park550,000 SqFt45 Acres Design Cost $1 /Sqft $ 550,000
Land Cost $120,000 /acre $ 5,400,000 Const Cost $109.09 /sqft $ 60,000,000
Total Construction Cost (gross): $ 65,950,000
Cost of LEED
Increased Design Cost (10% of design cost): $ 55,000
Increased Construction Cost (25% of Construction Cost): $15,000,000
Estimated Total Cost of LEED Certification: $15,055,000
Total Cost of Construction $81,005,000
Goals Recommendation Implementation Financials Conclusion
Completion by 2016
Timeline of Implementations
Boulder, CO ( LEED GOLD)Evaluation of 4-
2-0 Plan
1 2Short Term Long Term
2012 2014 2016 2018 2020
Planning of new DC
Building of new DC
Implementation of 4-2-0 Plan
5 New stores a year LEED Certified
Social Responsibility E-Conference (SREC) held yearly
Eliminate Mailers• Reduce Mailers by 50%
• Reduce Shipping boxes by 50%
Bike Loan Program
Goals Recommendation Implementation Financials Conclusion
Financials
Boulder, CO ( LEED GOLD)
(In millions) 2009 2010 2011 2012 2013 2014 2015 2017 2020Net Sales 1,455 1,658 1,774 1,899 2,032 2,174 2,326 2,663 3,263
COGS 804 929 985 1,044 1,107 1,173 1,244 1,398 1,665 Gross Profit 650 728 789 854 924 1,000 1,082 1,265 1,597
Op Expenses:Payroll 281 331 357 386 417 450 486 567 714
Occ, G&A 268 282 304 329 355 384 414 483 609 549 613 662 715 772 834 901 1,051 1,324
Operating Income 100 115 126 138 151 165 180 214 273 Other Income, Net 14 14 14 14 14 14 14 14 14
Income before Patronage Funds and Income Taxes 114 129 140 152 165 179 194 228 287
Patronage Refunds 67 80 85 91 97 104 112 128 157 IBIT 47 49 55 61 67 74 82 99 130
Tax Provision 17 20 22 24 27 29 33 39 52 Net Income 30 29 33 36 40 44 49 59 78
Goals Recommendation Implementation Financials Conclusion
Financials with Implementations
Boulder, CO ( LEED GOLD)
Goals Recommendation Implementation Financials Conclusion
Team Recommendations2012 2013 2014 2015 2017 2020
ExpensesBicycle Program($200x10bikesx117stores (in thousands) 234 244 254 265 288 326Distribution Center 4.1 4.1 4.1 ($81 million; 3.2%int; capitalized 30 years)5 New Stores per Year 20 20 20 20 20 20Total Cost of Implementing Plan 21 21 21 25 25 25 Gain from Tax Incentives(national avg for certified buildings)(est 30% of Tax Provision) 7.3 8.1 8.9 9.9 11.9 15.6 Net Expense of Recommendations (12.9) (12.1) (11.3) (14.5) (12.4) (8.85)Net Income with Recommendations 23.83 28.57 33.68 37.88 47.33 69.17
Conclusion
Boulder, CO ( LEED GOLD)
By implementing our recommendations, REI will• Maintain its core values• Encourage Corporate Responsibility with employees• Reduce their Carbon footprint• Eliminate Waste
Goals Recommendation Implementation Financials Conclusion
THANK YOU
Index
Boulder, CO ( LEED GOLD)
1 Introduction 9 REI Adventures® Footprint Reduction Program
2 History 10 New Distribution Center
3 Goals 11 New Distribution Center
4 Recommendations 12 New Distribution Center
5 SREC 13 Timeline of Implementation
6 The Paper Problem 14 Financials
7 E-Commerce 15 Financials with Implementation
8 E-Commerce Cont’d… 16 Conclusion
Reference
Boulder, CO ( LEED GOLD)
"Best Carbon Offset Provider." TerraPass. Web. 25 Feb. 2012. <http://www.terrapass.com/>."ChiefExecutive.net." Best/Worst States for Business. Web. 26 Feb. 2012. <http://chiefexecutive.net/best-worst-states-for-business>. "City of St. George | News & Press Releases ." City of St. George | Welcome! . Web.
26 Feb. 2012. <http://www.sgcity.org/news/>."Economic Development Corporation Utah." Economic Development Corporation Utah.
Web. 25 Feb. 2012. <http://www.EDCUtah.org/>.Hoover's. Web. 25 Feb. 2012. <http://subscriber.hoovers.com.offcampus.lib.washington.edu/H/home/index .html>. "Kaizen." Wikipedia. Wikimedia Foundation, 26 Feb. 2012. Web. 26 Feb. 2012.
<http://en.wikipedia.org/wiki/Kaizen>. "Maps." Fort Pierce Industrial Park. Web. 26 Feb. 2012. <http://www.fortpierceindustrialpark.com/index.php>. "Suresites - Welcome." Suresites. Web. 26 Feb. 2012. <http://www.utahsuresites.com/index.php>."Stewardship at REI." REI Stewardship. Web. 25 Feb. 2012. <http://www.rei.com/stewardship>."St George Utah Chamber of Commerce." St George Utah Chamber of Commerce. Web.
26 Feb. 2012. <http://www.stgeorgechamber.com/index.html>.lauth.net/Includes/Docs/LEED_CaseStudy_REI_11808.pdf. [Accessed: 26/1/2012].