Turnaround Restores Profitability

DistributionLitigation SupportTurnarounds & Restructuring

180M

Annual Sales

40M

in Debt

Knight Williams, Hazelwood Missouri

Challenge

Distribution of apparel, home furnishings and home goods through catalogs and standalone retail stores. Maintained a 250 person inbound and outbound call center. $180 million in annual revenues. $40 million debt. Three separate companies.

  • Company served the home decorating sector and women’s fashions marketplaces.
  • Net income losses were projected in excess of $5 million.
  • The most significant factor in the loss of profitability was a failed computer conversion.
  • Covenants on bank loans were not met.
  • Cash availability under existing collateral formulas had dropped to dangerous levels.
  • Vendors were overextended.
  • Net income losses projected at >$5 million.

Solution

  • The MorrisAnderson team instituted weekly detailed cash forecasting.
  • Reduced inventory dramatically, which improved cash availability, in all three companies.
  • Consolidated three warehouses into one.
  • Reverted to the prior, more reliable IT system.
  • Other changes included a new CFO, the termination of several middle managers, the sale of one building and refinancing of a second, and the implementation of renegotiated vendor management programs.

Results

  • Reduced bank loans by $4 million by selling off excess inventory and rightsizing operations.
  • The MorrisAnderson team left the company with projected net yearly income of $7.5 million.