Project Chennai
Client Situation
Buy-side due diligence on a high-growth personal care products’ business, which was in the middle of a large scale, new product line introduction. The retail customer base was also rapidly expanding its footprint.
A significant growth over the previous five years was driving the valuation of the business - this was mainly driven by the launch of new products and by gaining new distribution channels.
The client wanted to understand the true run rate of the business, stripping out the impact of ‘channel fill’ from new product introductions and retail footprint expansion.
Approach
PwC Deals and industry expertise along with technology and analytical techniques were combined to address:
What was the impact and progression of the retail shelf space expansion?
- How would that carry into the forecast period?
- How did velocity and points of distribution compare across retailers and product lines?
The target provided monthly sell-in data, monthly sell-through data by store and SKU, and additional product information was web scraped to enrich the analysis being performed.
We disaggregated the components contributing to target growth to provide confidence in the run rate.
Value Impact
Our insights into like-for-like growth helped the client understand historical sales dynamics, which resulted in them walking away from the deal at an early stage, before making further investments.
Our targeted analytics focused on top retailers and looking at sell-in and self-through data confirmed that distribution was slowing down.
We identified underaccrual of promotion related expenses and its impact on earnings. This was achieved by web scraping product information and mapping to redacted products, which enabled the analysis of impact from seasonal promotions.
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