Armadio da Sorella: Subscribing to My Sister's Closet

Akina Janeway, the CEO and co-founder of Armadio da Sorella (AdS), was dumbfounded when she saw the company’s first-quarter financial reports. After a period of stagnant profit and customer churn toward the end of the previous year, the introduction of a subscription option had improved revenue during the first quarter of the current year. However, profitability was significantly worse than it had been in previous quarters. Janeway scheduled an emergency meeting with Kat Black, the company’s co-founder and CMO, and Ini Sato, vice president of operations, to understand what was driving the weak financial performance.