Wholesale giftware development and distribution. Revenue down 50% to $66 million. $15 million debt. 13k SKUs, $14 million inventory, 2x annual inventory turnover. 400k square foot warehouse.
- Third generation family ownership.
- Company losing $500k EBITDA annually.
- Increased competition from Internet merchants and mass retailers, the demise of the small retail shop and the loss of key distribution rights pushed sales from $120 million to $66 million.
- Inventory was at a bloated $14 million level.
- Excessive warehouse overhead contributed to annual losses.
- Ownership was planning to liquidate the company.
- Morris Anderson engaged as financial advisor.
- Morris Anderson determined that several business lines could be profitable, and worked toward maximizing the value of the lines while reducing unprofitable lines and cutting overhead.
- Total SKUs were reduced over 50% to 5k.
- Inventory was reduced by $7 million.
- Warehouse was relocated and costs dropped from $2.7 million to $800k.
- Customer reaction was positive, volume has increased to the point that additional warehouse is needed.
- EBITDA increased to $1.8 million.
- Roman was awarded both the Chicago Turnaround Management Association Medium Turnaround of the Year and the National Mid-Sized Turnaround of the year, Honorable Mention.