Vernon Hills, Illinois
Giftware distributor for the fundraising industry. $60 million annual sales. $40 million highly seasonal revolving line of credit.
- The Company served the fundraising industry primarily the elementary and middle school areas, recognized as the clear industry leader for years it was extremely profitable.
- Fundraising as an industry was down 30% or more from previous levels.
- Ownership was reluctant to make changes to the cost structure.
- Over a five year period the company was breakeven, latest fiscal year showed a $4 million loss, the bank group was unwilling to go forward given the seasonality of the loan.
- 70% of inventory not in current sales line
- Morris Anderson was brought in to assess the viability of the business and to identify opportunities to reduce overhead costs.
- The initial analysis suggested upwards of $4 million of savings and working capital improvements.
- Acting on the recommendations, management implemented only $200,000 of the savings; Morris Anderson was immediately installed as CEO by the Board to implement the larger savings plans.
- Acting as CEO, MorrisAnderson was able to implement the structural changes necessary to obtain the $4 million in savings.
- Inventory was reduced from $14 million of which 70% was not in the current line to $4 million of which 80% was current season goods.
- The Company returned to profitability, making $2 million the first year.
- The seasonal line which had never gotten below $6 million was reduced to $2 million.