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CASE STUDY

Unlocking $1 Billion in Enterprise Value for a Premium Athletic Apparel Brand

This fast-growing brand was facing two cost challenges. After nearly a decade of booming growth, the U.S. market for premium athletic apparel was beginning to soften, impacted by consumer malaise post-pandemic. At the same time, the brand was investing in strategic growth in Asia, where buying power and interest in high-end apparel was growing. 

Facing a cooling domestic market and ambitious international expansion plans, the brand was at a crossroads: How could they reduce costs domestically to fuel growth in international markets?

Our Objectives

  1. Cost Optimization: Understand the size and scope of opportunities for The Brand to increase operating effectiveness, thereby reducing costs and boosting earnings to meet ambitious management targets.
  2. Workforce Alignment: Ensure that investments in the workforce support the company’s financial goals, increase productivity, and stay within risk boundaries.
  3. Kill Data Silos: Integrate data across HR, finance, operations, and capital markets to create a holistic plan to meet management targets and shareholder expectations.

The Approach

The Chief People Officer defined the project around understanding their options to support growth and manage costs. If the company was going to face growth headwinds, the team needed to think more like business owners than a traditional HR function, diversify their solutions, and innovate.

The HR and Finance teams began working on the project collaboratively. They needed to build a shared understanding of the workforce and its ability to deliver management targets and meet shareholder expectations.
They also needed to combine internal workforce and finance data with management targets and external data on business performance and analyst expectations to understand the big picture.

The WDA platform empowered the project team to have intelligent, data-driven conversations and make rapid workforce decisions: what roles may be needed, which may be eliminated, and how these decisions can be made in a way that reflect important cultural values.

Defining Workforce Growth Guardrails

Many companies undergoing a transformational effort target a single number to define success (e.g. $100M or 500 FTEs).  Our experience shows that this is an ineffective approach.  At WDA, we believe that management teams need to understand the ranges of workforce investments to ensure they maintain efficiency while managing risk.  

We call them the Upper and Lower Workforce Growth Guardrails.

Multiple data sets inside and outside the enterprise help us to define the upper and lower limits of their workforce by answering two questions:

  1. What is the maximum workforce size that can meet financial performance expectations? (Above this level, the high margin and earnings targets set by management would be in jeopardy.)
  2. What is the minimum workforce size that can deliver expected revenue and growth? (Below this level, business operations may be compromised.)

The Upper Growth and Lower Workforce Growth Guardrails represent the range in which the company can choose to operate and better manage risk.

Predictive models were used to explore various scenarios, including the impacts automation, Generative AI, role decompression and work defragmentation could have on efficiency, performance, and Enterprise Value.

Workforce Growth Guardrails

Results

This collaboration between HR and Finance deepened an ongoing partnership supporting a sustainable, long-term strategic vision for growth: 

  • Identified potential cost savings exceeding $50M and options to grow Enterprise Value by $1B+.
  • Positioned the firm to achieve record profit margins over the next three years.
  • Created a stronger foundation for expansion in the Asian market, where consumer spending on luxury brands is expected to increase >10% annually over the next 5 years. 
  • Created a shared language for HR and Finance to negotiate and manage workforce investments via the Upper and Lower Workforce Growth Guardrails.
  • Created role-level options to ready The Brand for future states wherein they were exceeding, meeting, or missing performance expectations.

Grow Faster, Confidently

WDA delivered a faster, more cost-effective engagement with the brand compared to traditional Big 4 consulting firms, providing rapid insights and opportunities based on their specific questions. 

The brand is currently executing on the suggestions made by the WDA team. As they face continued challenges to their forward position, they are more aware of their options for managing costs and empowered to make rapid decisions based on their own data within the context of the market, management, and owner expectations.

Unlock Your Growth Potential with WDA

Schedule a complimentary strategy session to discover how data-driven workforce optimization can elevate your Enterprise Value.