MorrisAnderson Turnaround Stabilizes Company

Challenge

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International manufacturer and distributor of moderate-to-high-end women’s apparel (branded and private label). $150 million in revenues. $30 million debt.

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• Management issues developed when three siblings were vying for company control
• The Company operated three stand alone manufacturing and distribution facilities, each maximizing their individual profit at the expense of the whole
• Number of new styles and SKU’s were expanded dramatically often stealing market share from current styles with little attention paid to profitability and contribution margin
• New product design decisions made on fashion appeal only, margin considerations ignored

Solution

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• MorrisAnderson became Interim COO and implemented a new “Rules-of-Doing-Business” and Activity-Based Cost system to monitor margins at all stages of the product life cycle – design, production, introduction, maturity and phase out
• Re-structured organization around the most qualified sibling focusing on profit optimization and financial returns for current and future ownership
• Narrowed scope and focus of product line base; built new SKU introductions around the core of highly profitable product lines
• Established metric performance measurement holding key executives responsible for their respective functions of the business

Results

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• Management resolved control issues, refocused on core business issues
• Decreasing margin and profitability trends reversed; 10% profitability increase in the first year
• Rationalized product/style SKU’s; reduced number of offerings by 20% which minimized obsolescence write-offs by almost 75%
• New product cost systems and merchandising decision thresholds improved margins by 5%