Off the Rack

Your client is Donatella Versace, who owns a well-known apparel store in India. The store’s profits have fallen during the Covid-19 period, and she is considering opening a makeup outlet inside it. She wants to know whether this is a wise way to increase profits.

Establish the sales thresholds at which the makeup outlet would cover its setup cost and the profit foregone from apparel space, then recommend whether to proceed given the available demand evidence.