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Case Study: Large Apparel Manufacturer/Retailer |
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Case Study: Large Apparel Manufacturer/Retailer
Operational Restructuring, Profit Enhancement
Company: $120 million apparel manufacturer with four retail divisions
Situation / Tasks Performed: The Company had experienced declining sales and margins and was unable to
meet current debt obligations. The reasons included but were not limited to:
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US textile industry challenges |
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Significant management changes over the past two years |
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Declining margins due to pricing pressures and growth strategy |
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Accounts Receivable collection problems |
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Inventory control problems |
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Acquisitions draining Company resources |
TRG was hired by a Bank Group to provide advice and consultation on the future of the business and recommend
balance sheet and operating restructuring in order to maximize loan recovery. TRG recommended that the Company
improve cash flow, A/R and inventory reporting and monitoring; concentrate sales efforts on large, higher margin
customers; reduce SG&A by at least $2 million (including shutting down one manufacturing facility, reducing the
customer service operation and rationalizing the management team); and evaluate the closing of both cut and sew
operations and sourcing all product overseas.
Results: Debt has been reduced by $2 million. Inventory levels have been reduced significantly. The sale of the business currently is being negotiated with the subordinated note holders. The Company has adopted most of the recommendations and has been able to survive in this difficult market in order to effect the restructuring.
Nature of Assignment:
Primary: Operational Restructuring
Secondary: Profit Enhancement
Industries: Apparel, Retail
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