Case Study: Ready-to-Assemble Furniture
Company: $90 Million designer, importer and distributor
of Ready-to-Assemble furniture and accent products (RTA). Initial customers
included jewelry and department stores and most recently broadened to
include independent furniture dealers, mass merchandisers, mail order
house and warehouse clubs.
Situation/ Tasks Performed: TRG was hired by the
senior bank syndicate to assess the operating challenges and deficiencies
within the business. These included a poorly-executed warehouse consolidation
plan that increased breakeven levels, falling margins associated with
increase mass merchandiser sales, increased product obsolescence/aged
inventory as well as slow reactions to exigent business circumstances
(dock strike, customer bankruptcies). TRG performed a business and operating
plan review and recommended to the bank group that the current management
team appeared unable to implement structural changes to lower the fixed
costs and breakeven. In addition, TRG required additional control reporting
be implemented that would provide early warning signs for increasing asset
levels and decreasing liquidity. Overall revenues remained well below
historic highs (levels for which the current fixed costs were structured)
and would not likely return due to competitive and margin pressures. TRG
also recommended that management would require outside assistance to bring
the cost structure under control.
Results: A Chief Restructuring Officer was hired,
and soon thereafter, the bank group exited the credit.
Nature of Assignment:
Primary: Financial
Advisory
Secondary: Business
Plan Review & Assessment
Industry: Distribution
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