Case Studies

Turnaround Restores Profitability for Distributor of Apparel, Home Furnishings & Home Goods

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Home·Turnaround Restores Profitability for Distributor of Apparel, Home Furnishings & Home Goods

The Situation

Distribution of apparel, home furnishings, and home goods through catalogs and standalone retail stores. Maintained a 250-person inbound and outbound call center. $180 million in annual revenues. $40 million debt. Three separate companies.

  • The company served the home decorating sector and women’s fashion marketplaces.
  • Net income losses were projected to exceed $5 million.
  • The most significant factor in the loss of profitability was a failed computer conversion.
  • Covenants on bank loans were not met.
  • Cash availability under existing collateral formulas had dropped to dangerous levels.
  • Vendors were overextended.
  • Projected net income losses of greater than $5 million.

How We Advised

Our team instituted weekly, detailed cash forecasting.

  • Reduced inventory dramatically, which improved cash availability, in all three companies.
  • Consolidated three warehouses into one.
  • Reverted to the prior, more reliable IT system.
  • Other changes included a new CFO, the termination of several middle managers, the sale of one building, the refinancing of a second, and the implementation of vendor management programs under new terms.
  • Reduced bank loans by $4 million by selling off excess inventory and rightsizing operations.
  • Our experts left the company with a projected net yearly income of $7.5 million.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

> Office of the CFO & Corporate Finance Support 
The financial function is a critical partner in value creation in most businesses. We provide unparalleled support to the Office of the CFO to shape organizational strategy and enhance long-term business value. As CFOs and finance leadership across sectors face increasing demands, understaffing, and unprecedented challenges, we deliver guidance regarding financial planning and operations improvement, risk mitigation, and strategic business intelligence. 

 

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

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