Stern Stewart Case: TexGroup – Breaking the crisis of a traditional textile company
TexGroup is a family-owned German heritage company, now in its third generation of leadership. Specializing in high-quality, Made-in-Germany textiles, the company operates across four distinct product segments: TexCasual, TexPremium, TexSport, and TexProfessional. TexGroup supplies its products to a diverse portfolio of fashion brands, with a strong focus on the European market.
In recent years, TexGroup has faced increasing financial pressure, with steadily declining profit margins. The recently concluded 2024 fiscal year closed with a historically low EBIT margin of just 0.6%, raising serious concerns among management about a continued downward spiral that could push the company into financial losses.
To stop this negative trend and secure long-term success, TexGroup is seeking an external consulting team to setup and implement a structured turnaround program. The primary target is to achieve 10% sustainable EBIT margin within two years.
Note: During our assessment day, candidates could receive a laptop and an Excel file to analyze data and perform calculations. While this case can be solved without the Excel file, downloading it allows for a more pragmatic experience. Download the file here.
Task 1: Identifying key drivers of profit decline (8 min)
Break down the problem into general possible drivers of TexGroup's declining profitability.
Format: Verbally / Whiteboard
Task 2: Analysis of TexGroup’s income statements (12 min)
Analyse TexGroup's income statements for 2024 and 2023 and formulate hypotheses on the main reasons for the negative financial development.
Format: Excel
Task 3: Benchmarking TexGroup’s income statement (12 min)
Benchmark TexGroup's income statement against its two main competitors and identify key improvement areas.
Format: Excel
Task 4: Structuring key improvement areas (3 min)
How would you summarize and structure the key improvement areas based on the analysis? Please draft a possible program organization.
Format: Whiteboard
Task 5A: Brainstorming cost reduction strategies (5 min)
[Choose 5A or 5B]
Brainstorm first measure ideas on how to increase revenues.
Format: Whiteboard
Task 5B: Brainstorming cost reduction strategies (5 min)
[Choose 5A or 5B]
Brainstorm first measure ideas on how to reduce raw material costs.
Format: Whiteboard