Futura Fashions, Inc., is a hypothetical 100-store chain that caters to a teenage market. The stores carry male and female clothing and accessories. Sales at Futura Fashions have declined in recent months, and its stock price has dropped 30 percent. An analyst who follows the stock believes that the decline is due to a loss of talent in buying and merchandising. As a result, Futura Fashions has lost market share to its competitors. Competitors, such as American Eagle® and Aeropostale®, have had increases in sales of 14 percent and 27 percent, respectively. A recent report in Women’s Wear Daily, a trade pub-lication, indicates that a clothing manufacturer is considering opening its own retail stores that will target teens. The teenage clothing market is difficult to evaluate. Trends are important. Either you catch them or your business suffers. So, Futura Fashions has recently hired an experienced fashion buyer and merchandise manager. The economy is strong. Consumer confidence is up and so is consumer spending. Recent reports indicate a decrease in jobless claims and an increase in employment. However, inflation is increasing slowly, so the Federal Reserve has increased interest rates a quarter of one percent, which could make consumers less inclined to spend.
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