Rogers Chocolates

Case Study

6.) How well is Rogers' Chocolates' strategy working in terms of the financial performance it is delivering? What is your assessment of its level of profitability, its degree of liquidity, and the extent of its leverage?

Rogers' Chocloates' strategy to sell their chocolates is to offer them for sale in several different settings.

• Retail accounts for 50% of the company's sales from their 11 retail stores. In these stores their chocolates were attractively displayed, set to a Victorian theme, and merchandised to fit the season. It is important to note that each store was wholly owned by the company and most were leased with a minimum of a ten year lease.

• Wholesale accounts for 30% of their sales. Within this category there were five subsectors which included: independent gift/souvenir stores, large retail chains, tourist retailers, airport or train station stores or hotel gift shops, corporate accounts, and specialty high end food stores.

• 10% of their sales came from a combination of online, phone, and mail orders. Important to note is that products ordered through the online and mail order segment of the business were given priority for inventory allocation and then could normally be shipped within one or two working days. (If there was a shortage the stock would be transferred back to the factory from the retail stores. The next priority was wholesale since the shipping was at the company's expense and many of their accounts would not accept back orders.) In terms of the company's profitability it is interesting to note that the margins on their wholesale sales were lover then the retail business and that their policy to prioritize the wholesale portion of the business sometimes meant that the higher margin retail sale would be foregone for the much lower margins that they earned selling wholesale.