Winning Brands Corporation (WNBD)

[just_an_ant]

From Eric - Velocity of Product Turnover

From: Eric Lehner [mailto:[e-mail]]
Sent: Tuesday, August 31, 2010 12:23 PM
To: Paul Knopick ([e-mail])
Subject: WNBD: Increasing Winning Colours Velocity: Case Study

For the Moderators:

Several shareholders have wondered whether there are specific examples to discuss about how the current velocity of product turnover in retailers can be increased now that Winning Colours has been picked-up by a number of great stores. This question is important because it is at the core of the Winning Brands business plan that sales of the product per store reach a minimum of one bottle per day on average, for the purpose of projections.

Our Training Director, Lorne Kelly, is responsible for education of retailers at the store level. When retailers understand what they have in Winning Colours, then things happen. Below, you will see a case in point. The following extract from a field report by Lorne, yesterday, illustrates the potential of locations to convert from lacklustre performance to performance that even exceeds the business plan, simply through enhanced awareness. This example describes a Toronto area Canadian Tire store – a nationally known general merchandise retailer, with stores coast-to-coast. During field audits, Lorne identified that a number of these stores were far below business plan target. He therefore organized in-store training, with a display rack. The result is clear and is typical of what happens when we project more product knowledge and first-hand experience to retail staff, where it is permitted. This will be an important source of growth for the brand.

“I arrived at CTC store number 192, located on Sheppard Avenue E. to find the new floorstand located up front in the power aisle and positioned nicely to be seen easily. The rack was sparsely stocked and in need of inventory. I met then with X, a department manager, and he shared with me that the rack was placed with product on the floor on August 18th and to date, they have sold 22 units from the rack. That is equal to their entire sales last year. This translates into a per day sales number of 1.8 units, comparable with the CTC store in _________. Furthermore, the store GM and the Manager of Inventory were present and they both indicated that they loved the rack and the sales were impressive and that they looked forward to even better turn-over in time. The Inventory Manager had only just changed the internal system to re-order Winning Colours at a threshold now of 30 bottles per order instead of the former 5 units which is a positive outcome too. I thanked them on behalf of Winning Brands and asked if I could refer to the store as an example in discussions with others. The GM indicated that he would be pleased to be a catalyst to future developments.”

If this “corrected” performance to 1.8 large bottles per day were the standard performance level across the existing retailers, then even without any growth in the number of stores Winning Brands would be more than self-sufficient with annual sales of several million dollars. There are no significant factors in this example that make it unique - it as a harbinger of things to come through diligent field work.



Eric Lehner
CEO
Winning Brands Corporation