The start of Rodan Enterprises
Rodan Enterprises, a Canadian-based clothing business, began when the founder, Robert Daniels, saw a gap in the Canadian clothing market. Daniels imported British clothing lines that weren’t yet available in Canada, focusing on high-end knitwear.
As the business grew, Daniels hired an agent to assist with selling his clothing inventory. This is when Doug Mutton joined the business and ended up ultimately purchasing Rodan Enterprises.
“I joined the company in 1981 and not too long after, I bought the business and began diversifying where we imported clothing from.”
As Doug began importing clothing from Germany and Italy in addition to the United Kingdom, his company started dealing in more than just Canadian dollars and pounds.
“The United Kingdom’s manufacturing process changed drastically and I started looking into purchasing clothing from Europe. I found that German and Italian companies were much more in touch with the fashion industry in Canada and it ended up being a good fit.”
Best-dressed business in need of a forex partner
While Doug found additional clothing sources for his company, he also began looking into foreign exchange (FX) partners that could empower his business to hedge against a variety of currency movements.
“I started working with a new company who I stayed with for 15 years but they had poor reliability and customer service. The final straw was when they sent €20,000 to a company Rodan didn’t do business with”
After dealing with this large mis-transfer, Doug decided that he needed a forex partner who would be reliable, easy to contact, and has the knowledge and expertise to support Rodan Enterprises’ risk management needs. That is when Doug learned about OFX’s standard for excellent customer service and connected with his current OFXpert, Jeff.
“Our OFXpert, Jeff is very proactive. He has our business’s best interests at heart and he is a pleasure to work with.”
The best part about working with OFX is they are extremely reliable with tremendous customer service.”
Hedging in the clothing industry
Once Doug and Jeff began working together, Rodan Enterprises found simpler transfers and easy-to-use products in addition to the hedging tools they needed to be competitive in the fashion industry.
“Because we have to buy so far in advance in the clothing industry, it is important to set up Forward Contracts* in advance too.”
Doug explained that the clothing industry operates on a seasonal schedule, which means buying clothing for a season happens two seasons in advance. For instance, if a business is looking to buy fall clothing pieces, they will place those orders in the January – March time frame of the same year.
Because of this preemptive buying schedule, Forward Contracts* and a clear hedging strategy became crucial to Doug’s business.
“Since we are buying the product months ahead of when we will be selling it, currency can change dramatically. If you have a jacket that has to sell CAD$500 wholesale in September, but I buy it in January and the Canadian dollar depreciates in that time, I’ve lost profit.”
Doug knew that the future of his business depended on the right hedging strategy long term. Luckily Jeff was able to supply Doug with all of the necessary information to find the right hedging approach for his business.
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Fashioning the right hedging strategy with OFX’s tools
Doug and Jeff worked together to understand how OFX’s risk management tools could help Rodan Enterprises hedge against market volatility.
“Jeff has been a great partner to help me understand how OFX’s tools can be used. I know when I need to book a Forward Contract and what orders I should use Spot Transfers on instead.”
Doug has crafted a robust hedging strategy for Rodan Enterprises that uses Forward Contracts for most of his known foreign exchange exposure.
“I used all Forward Contracts in 2023. For a single season, I would book Forward Contracts for around €100,000 and ₤50,000.”
This meant Rodan Enterprises could budget for the year ahead knowing exactly what their currency exchange rates would be and achieve a more even return on orders placed at different times throughout the year.
However, while Forward Contracts have been a great tool for Rodan Enterprises, it doesn’t mean they are the only OFX product Doug uses. He also uses Spot Transfers on small orders like clothing samples from a Switzerland-based clothing company.
“I still use Spot Transfers on small orders because they are immediate and easy.”
Doug also incorporates Spot Transfers as part of his hedging strategy in addition to Forward Contracts.
“I would book €150,000 in Forward Contracts over a four-month period, but if I need more euros and the rate is good I’ll buy euros through Spot Transfers.”
Understanding the balance in using risk management tools and basic Spot Transfers to create a cohesive hedging strategy helped Rodan Enterprises to save time and money.
Looking to use OFX’s risk management tools to help your business hedge against volatility? Speak to our OFXperts to get a great rate. Contact us.
The benefits of working with OFX are that I am able to lock in my cost and margins with Forward Contracts. It allows me to price my merchandise months ahead.”
Saving time and money with OFX
By creating this hedging plan for his business, Doug found savings in more than one way.
“OFX has saved us time and money because I don’t have to continuously call to get a hold of someone and I know I am always getting competitive rates on my exchange purchases.”
OFX’s pairing of real, live customer service and great rates on every transfer helped Rodan Enterprises bring fashionable clothing to North America year after year.
If your business is looking for a foreign exchange partner, give our OFXperts a call and get started today.
*If you book a Forward Contract, it may mean losing out if the market rate improves because you’re contracted to settle at the agreed rate. Read more.
IMPORTANT: The currency amounts used in this case study are examples and do not necessarily reflect the true amount the business has transferred.
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