MorrisAnderson Interim Management Makes $10 Million of Profit Improvements

Challenge

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Apparel and shoe manufacturer, industry leader in skateboarding and action sports industry. Company grew to a peak of $210 million in revenue but declined to $140 million. $30 million debt. At peak, company employed more than 400 employees and sold its products in approximately 55 different countries.

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• Multi-billion dollar sports apparel/shoe companies entered the action sports industry and put extreme pressure on smaller competitors.
• Company grew to a peak of $210 million in revenue with 400 employees and distribution to 55 countries
• Multi-billion dollar international sports apparel/shoe companies entered the action sports industry and put extreme pressure on smaller competitors
• Net Sales decreased to $140 million and were on pace for $120 million, margins had declined from 49% to 38%
• Operating income decreased from $16 million to a loss of $8 million
• Owner personally invested $8 million to fund operating losses and was looking at additional cash requirements

Solution

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• MorrisAnderson was engaged as interim COO and CFO
• As interim COO, MA created new marketing programs & strategies, managed sales teams and led sales efforts, including retail outlets, e-commerce, warehouse and logistics
• Interim CFO managed all administration, human resources, legal and finance activities, including communications with the Senior Lender and development of an enhanced 13-week rolling cash forecast capturing all profit improvement initiatives
• Led restructuring of entire Domestic and International senior management teams. Focused efforts on the three areas that threatened the company’s future: (1) Revenue Growth (2) Margin Expansion and (3) overall Cost Reduction

Results

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• Recommended Profit Improvement Initiatives $10 million to with additional $2 million pending:
• Reduction in Marketing Expense: cut professional rider sponsorships
• Reduction in Overhead: 10% cut in personnel, 20% cut in compensation for select managers
• Eliminate One Business Unit (Brand), rationalized SKUs, consolidated operations buildings
• Improved On-Time Delivery: cut air-freight expense, raised pricing, and instilled greater discipline on discount programs
• Exploring selling two buildings and domestically consolidating majority of staff into one building, one warehouse and small administrative annex space. Cash proceeds will reduce bank debt, lower occupancy costs, and fund better terms with suppliers and fund final cash burn next few months. Move company store. Give away “Training Facility”