Cost Reductions Lead to Company Sale

Red Ball

Louisville, Kentucky

Challenge

Manufacturer and distributor of athletic, sport, casual and all-weather shoes and boots. $200 million sales. $40 million debt.


  • Well established design and manufacturing company for mass market athletic, sport, casual and all weather shoes and boots was experiencing revenue and margin declines
  • Equity ownership was concerned that the company niche was being threatened by off shore competition and that company’s long term visibility was being threatened
  • Company was losing market to increased off shore competition

Solution

  • Morris Anderson conducted a business viability assessment and concluded that the company’s business plan was sound, but that manufacturing and design controls were weak
  • Morris Anderson recommended and implemented tighter controls for cash management, productivity measurement and enforcement and scrap reduction
  • Outsourcing production to low cost producing regions was a mid term strategy required to lower unit costs and improve margins

Results

  • MorrisAnderson confirmed that cost reductions were achievable which stabilized profitability
  • Cash flow and availability projected to be sufficient to fund operations
  • Company was able to market itself successfully to new equity sponsor