social and enviromental report final
TRANSCRIPT
Melissa Miller
Alright Shoes Company
Social and Environmental Report
1
Contents
OUR COMPANY ............................................................................................................. 2
FINANCIAL HIGHLIGHTS ............................................................................................... 3
INTERNET SEGMENT – NORTH AMERICA .................................................................. 4
WHOLESALE SEGMENT – NORTH AMERICA ............................................................. 5
FINANCIAL OVERVIEW ................................................................................................. 6
CASH FLOW STATEMENT ............................................................................................ 7
ALRIGHT SHOES EMPLOYEE’S ................................................................................... 8
DIVERSITY IN ACTION .................................................................................................. 9
COMMUNITY RELATIONS ........................................................................................... 10
HEALTH AND WELLNESS PROGRAMS ..................................................................... 11
DISASTER RELIEF PROGRAM ................................................................................... 12
RECYCLE AND REUSE ............................................................................................... 13
THE INDEPENDENT AUDITOR’S REPORT ................................................................ 14
2
Our Company
Dear Stakeholders:
At Alright Shoes Company we strive to deliver the best quality
shoes to our customers at an affordable price. Through our work,
we want to ensure that our customers are enjoy our products. We
want to have strong businesses connections with our partners and
the environment we share for the future. We started with an idea
of making shoes and now serve four different regions around the
world. Over the past year, we have made substantial progress
with our social responsibility and sustainability initiatives.
We are currently produces footwear at 2 plants. The company has
a 2 million-pair plant in North America and a newer 4 million-pair
plant in Asia. With the help of our management team, the
company produces more footwear models, new features, and stylish new designs to
keep up with the latest fashion trends. The company markets its brand of athletic
footwear to footwear retailers worldwide and to individuals buying online at the
company’s website.
In addition, the company strives to enhance its sales volume and standing in the
marketplace. We use concepts such as sales, advertising, mail-in rebates, contracting
with celebrities to endorse its brand, convincing footwear retailer’s dealers to carry its
brand, providing merchandising and promotional support to retailers, good delivery
times on shipments to retailers, and promoting online purchases at its website. Athletic
shoes have become the everyday footwear of choice for children, teenagers, and
adults. Athletic footwear has become an everyday shoe for most people who spend a lot
of time on their feet and to older people with foot problems.
In this report, we share recent achievements to build upon for the future, areas that
need greater attention, and the tangible goals we are working towards to improve the
lives of those who work at and with Alright Shoes Inc., and the communities in which we
do business. I invite you to read through our report, and learn, in more detail, about our
social and environmental responsibility efforts.
Sincerely,
Melissa Miller
Chairwomen, President and Chief Executive Office
3
Financial Highlights
Year 16
$74.49Year 17
$75.91Year 18
$93.36
Year 16 • 545.17
Year 17 • 573.78
Year 18• 667.39
Year 16
$60.78
Year 17
$63.94
Year 18
$121.05
Year 18 $7.76
Year 17 $5.43
year 16 $5.05
Net Profits
Net Revenues
Earnings per Share
Stock Price
Year 16 saw a 2% decrease in
net revenue, 3% decrease in net
profit, 3% decrease in earnings
per share, and a staggering 20%
rise in stock price.
Recent administrative decisions
and corporate refocusing has led
to steady, albeit small gains in the
following year, but a meteoric rise
in revenue at $667.39 million in
Year 18, up from $573.78 million
in the previous year.
This rise in revenue has led to
increasing profits at $93.36 million,
up from $75.11 million (a 24%
increase) as well as a near
doubling of our stock price from
$63.94 per share to $121.05 per
share.
Year 15 and 16 saw relatively
small, but decreasing
fluctuations in net revenue, net
profit, stock price and earnings
per share.
4
Internet Segment – North America
Market Snapshot
When comparing our internet
segment in Year 2017 to
year 2018, our company had
a significant increase in
internet sales.
In year 17 we offered
our shoes at $67.95
per pair and in year 18
we dropped the price
by 7% which gives us
a new price of $62.95.
We doubled the
amount of shoes that
we sold in year a8. In
year 17 we sold only
243 pairs of shoes
and when we
decreased the price
we sold 412 pairs of
shoes in year 18.
Another aspect to why
our sales increased in
year 18 was due to
our celebrity
endorsements. We
had no celebrities
marketing our brand in
year 17, but in year 18
we were able to sign
four celebrity contracts
to help increase our
profits.
Our market share
increased from 12.8%
to 19.4% within the
North America market.
Year 17
Price per Pair
$67.95
S/Q Rating
7
Free Shipping
No
Advertising Cost
16,000
Celebrity Appeal
0
Year 18
Price per Pair
$62.95
S/Q Rating
6
Free Shipping
No
Advertising Cost
16,000
Celebrity Appeal
300
5
Wholesale Segment – North America
Market Snapshot
Looking at our wholesale
segment, our prices stayed
mostly the same through
year 17 and year 18.
In our wholesale
market we started with
selling our pair of
shoes at $46.25 in
year 17 and in year 18
we increased our price
to 45.79. This is a
decrease of only 1%.
The S/Q rating was at
7 stars in year 17 and
only dropped by one
star in year 18 to 6
stars.
In year 17 we started
off with a high rebate
offer of $6 dollars and
reduced that amount
to $4 dollars in year
18. The rebates
helped the company
produce sales.
Our retail stores sold
2,909 pairs of shoes
in year 17 and in year
18 we sold 3,286
pairs of shoes. This
number increased
due to having
celebrity
endorsements.
Year 17
Retail Stores
4,107
Retail Demand
2,844
Market Share 21.0%
Pairs sold
2,909
Price $46.25
Year 18
Retail Stores
4,301
Retail Demand
3,226
Maarket Share
23.2%
Pairs Sold
3,286
Price $45.79
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Financial Overview
Revenues North America Europe - Africa Asia - Pacific
Latin America Overall
Internet $30,055.00 $31,806.00 $24,876.00 $27,210.00 $113,947.00
Wholesale $160,531.00 $161,970.00 $124,940.00 $131,208.00 $578,649.00
Private-Label $0.00 $0.00 $0.00 $0.00 $0.00
Gross Revenues from Footwear Sales
$190,586.00 $193,776.00 $149,418.00 $158,418.00 $692,596.00
± Exchange Rate Adjustments
$0.00 $5,474.00 -$3,206.00 -$27,473.00 -$25,205.00
Net Revenues from Footwear Sales
$190,586.00 $199,250.00 $146,610.00 $130,945.00 $667,391.00
Operating Cost ---
Cost of Pairs Sold $101,367.00 $102,168.00 $77,068.00 $81,998.00 $362,301.00
Warehouse Expenses $11,617.00 $11,778.00 $10,518.00 $10,502.00 $44,415.00
Marketing Expenses $32,616.00 $30,313.00 $22,794.00 $22,752.00 $108,475.00
Administrative Expenses $3,981.00 $3,902.00 $3,637.00 $3,611.00 $15,131.00
Operating Profit (Loss) $41,005.00 $51,089.00 $32,593.00 $12,082.00 $136,769.00
ASSETS
Cash On Hand $132,533.00
Accounts Receivable $166,848.00
Footwear Inventories $20,745.00
Total Current Assets $320,159.00
Net Plant Investment $366,305.00
Construction Work in Progress $0.00
Total Fixed Assets $366,305.00
Total Assets $686,464.00
Shareholder Equity Beginning Balance Change in Y18
Common Stock $13,825.00 -$1,800.00 $12,025.00
Additional Capital $142,952.00 -$130,518.00 $12,407.00
Retained Earnings $500,641.00 $90,349.00 $590,990.00
Total Shareholder Equity $657,391.00 -$41,969.00 $315,422.00
Return on Average Equity for Year 18 14.70%
LIABILITIES
Accounts Payable $25,542.00 Overdraft Loan Payable $0.00 1-Year Bank Loan Payable $0.00 Current Portion of Long-Term Loans $6,500.00 Total Current Liabilities $32,042.00 Long-Term Bank Loans Outstanding $39,000.00
Total Liabilities $71,042.00
7
Cash Flow Statement
Cash Flow Statement
Beginning Cash Balance $130,421.00
Cash Receipts from Sales $643,986.00
Inflows Bank Loans $0.00
Year 1 $0.00
Year 5 $0.00
Year 10 $0.00
Stock Issues $0.00
Sale of Existing Plant Capacity $0.00
Loan to Cover Overdrafts $0.00
Interest on Y17 Cash Balance $2,608.00
Total Cash Available from All Sources $777,015.00
Payments to Materials Suppliers $106,118.00
Production Expenses $164,376.00
Distribution and Warehouse Expenses $62,505.00
Marketing and Administrative Expenses $123,605.00
5-Year Loans $0.00
10-Year Loans $6,500.00
Interest Payments on —————
Overdraft Loan $0.00
Bank Loans $3,276.00
Stock Repurchases $132,318.00
Income Tax Payments $40,010.00
Dividend Payments to Shareholders $3,006.00
Charitable Contributions $2,735.00
Total Cash Outlays $644,449.00
Net Cash Balance $132,566.00
8
Alright Shoes Employee’s
Our employees are our greatest asset to the company. When we take care out of
employee, they take care of our customers. We appreciate and recognize our
employees for their contribution, both big and small, because it drives us to work harder
and make an even greater impact in our jobs and in our communities.
GIVING RECOGNITION:
All Associates are encouraged to take the time to celebrate success and recognize
greatness across the organization when they see it, using our four pillars:
• Great Job … you made a difference today
• Great Dedication … for all you do, thank you
• Great Results … consistently delivers excellence
• Great Moments … it’s time to celebrate
We are committed to
recognizing greatness
at all levels of the
organization with a
balance of instant
recognition, general
appreciation, broader
achievements and
important personal life
events. We want to
empower our
employees frequently
and make sure they feel
appreciated,
recognized, and most
importantly cared for.
Put customers first Act with integrity
Build great teams Drive Results
Core Values
9
Diversity in Action
Here at Alight Shoe Company we made sure to incorporate a workforce diversity
program each year with our employees. Incorporating this program has helped us
achieve and maintain workforce diversity concerning sex, age, ethnicity, and other
aspects. Another program that we have at our company is ethics training and
enforcement. This helps us understand the code of ethics along with enforcing it. It
touches all areas of our company. We expect our employees, our advertising and in-
store presentations, and the companies with which we do business to mirror the diverse
multicultural marketplace we serve. We want everyone to understand each other and
work together.
ANNUAL ETHICS TRAINING We engage in annual training for employees on Ethical
Standards and Responsibilities. Annual ethics training is refreshed every year to include
emerging issues and topics for a more engaging learning experience while remaining
consistent with prior trainings. Industry research indicates there is a strong correlation
between engagement and an ethical culture. Our annual training is designed to drive
engagement, develop understanding and enhance our culture. Understanding our
responsibilities to ourselves, each other, our consumers, our investors, our business
partners and our communities is our foundation as we deliver great results.
ENGAGEMENT SURVEY Employees are the foundation of our business. The
employee Engagement Survey is a great way we gain feedback from employees across
the company on a variety of topics including engagement, communication,
development, recognition, involvement and more. This feedback not only provides
insight to shape a better employee work experience and environment, but, it helps us
understand better results across the company. As we move forward and focus on
building great teams, employee engagement remains a priority.
10
Community Relations
We believe in giving back to the communities that we serve. We focus on donating our
money, resources, talent and time. Through our community giving and volunteer
program, we support children, men and women. We help with education and
environmental initiatives nationwide. We see giving back as a way of looking forward to
the future. We want the next generation to have more opportunities and be healthy for
the future.
SHOE GIVING PROGRAM We have been dedicated to helping those in need around
the world. We had a vision for this program ever since we started. Since 2013, we
started to give a pair of shoes to those in need. For every shoe sold, a pair goes to
someone else who needs it desperately. We want to give back to those in need and we
believe this program will create a strong connection between our customers and those
who we donate too.
We have been committed to giving back to the community in a way that makes an
impact on others. We encourages our employees to show their community support by
participating in various volunteer activities. This would benefit everyone of all ages to
make an impact on someone’s life.
Since 2010, More than:
20,000 Events
235,000 Employee Volunteers
1.5 Million Hours Volunteered
$5 million in shoes donated
In 2015, more than:
28,000 Events
165,000 Employee Volunteers
400,000 Hours Volunteered
$8 million shoes donated
11
Health and Wellness Programs
When want our employees at their best, they are more likely to create a great
experience for our customers and contribute to strong business results. Our Wellness
Centers is provided to our employees to help them and their families maintain and
improve their health.
Our Wellness Centers are designed to treat patients’ total well-being. Employees and
their family members can visit the on-site wellness centers for everything from
preventive exams, treatment of routine illnesses, lab services and personalized weight-
management coaching to chronic condition management support.
Other services include:
• Pediatric care
• Physical therapy
• Immunizations and allergy care
• Health risk assessments
• Diagnostic X-ray services
• Health coaching
Our Wellness Centers are staffed by physicians, nurse practitioners, medical assistants,
physical therapists and registered nurses. We want our employees and their family
members to receive compassionate, individualized care for their specific needs in a
setting that’s warm and caring. We want our employees with us in the long run and for
us to provide these type of benefits help us reduce turnover rates.
10
4.6
6
2.53.5
5.8
4.5
20
2
4
6
8
10
12
2008 2009 2010 2011 2012 2013 2014 2015
Employee Turnover RatesNumber left /100
Turnover
12
Disaster Relief Program
When a major disaster occurs, we are committed to easing the suffering for our
employees and customers in the communities we serve. By making charitable
donations and we help deliver much-needed emergency assistance throughout affected
areas.
During 2013, we supported relief efforts for disasters in all different areas around the
world. In addition to financial contributions, we also encourage our employees to
volunteer in cleanup efforts. Our company contributed 2% of its operating profits to
charities such as American Red Cross. This involves us making pre-tax donations.
2,253
2,192
2,735
YEAR 16
YEAR 17
YEAR 18
Charity Donations
Donations Per Year
13
Recycle and Reuse
At Alright Shoes we like to continually innovate new ways to save money, time, and the
environment. One new idea that we have created is recycling your old Alright Shoes.
We have designated stores to take old shoes that people no long wear. We began this
program because we wanted to leave a smaller footprint. There has been a significant
amount of shoes ending up in a landfill and we want to reduce that amount.
More than 1.5 million pairs of worn-out shoes are collected for recycling each year in
addition to thousands of tons of pre-consumer manufacturing scrap material that is also
recycled. Since the program began, we've collected more than 28 million pairs of used
athletic shoes.
We take the old shoes that no one wants anymore and recycle them into something
new like tracks, playgrounds or materials for new Alright Shoes products. If your shoes
still have life in them, we want you to donate them.
With this new innovation we are excited to start a new trend among other company’s
and reduce the amount of waste that is put into landfills. Here at Alright Shoes we strive
to recycle anything and everything we can.
14
The Independent Auditor’s Report
To the Board of Governors of CFA Institute:
We have audited the accompanying financial statements of Alright Shoe Company which
comprise the consolidated statements of financial position, and the related consolidated
statements of activities and consolidated cash flows for the years then ended.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation these financial
statements in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on our judgment,
including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal
control relevant to the Company's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of CFA Institute and the results of their operations and their
cash flows for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
31 December 2018
Joseph P. Allen
15
Corporate Contact Information
Alright Shoes, Inc.
100 Huntington Ave STE 400
Boston, MA 02116
Phone: 617-867-7463
Email: www.alrightshoes.com