APPAREL
In a typical turnaround situation, ESBA becomes involved in most of a company’s business functions. One example of our multi-faceted involvement was with a family-owned designer, manufacturer, marketer, and distributor of bridal and formal wear products. Several years before ESBA’s engagement, the company’s sales peaked in the $45,000,000 range when their styles were "hot" and there was no competition from imports. The company believed this was only the beginning of ever greater success, and expanded their facilities by adding a distribution center, renovating offices, buying computers and adding management and staff in all departments. Despite poor delivery, retailers continued to place orders, due to the line’s popularity. Fashions change, but the company did not. When their product line was no longer “hot”, retailers turned to cheaper and more fashionable imports.
When ESBA’s engagement began, sales had dropped into the high $20 million range, and losses were between $2 and $3 million dollars for each of the previous two years. Quality was poor and deliveries were abysmal. Sales rep turnover was high, and retail customers were being lost faster than they could be added.
Key Turnaround Steps
- Cut non-essential expenses in all areas of the company.
- Terminated excess staff and motivated those remaining to focus on the turnaround effort
- Consolidated facilities through significantly improved inventory control and increased use of outside sewing contractors. Improved the financial and operating information systems to accurately provide useful data to help guide management and measure progress.
- Restructured the organization in order to define and fix management responsibilities.
- Formalized the production planning and scheduling process to give “visibility” and stability to the entire production process, particularly for those products provided by outside contractors.
- Developed a profitable and stylish imported line of gowns.
- Expanded the Company’s product lines into the high-end bridal and formal wear markets.
- Improved quality control and vendor communication and cooperation to make "just-in-time" material and product deliveries possible reducing inventory levels.
- Paid special attention to finished goods closeouts and raw material obsolescence and control to further reduce inventory, improving cash flow.
- Increased awareness of marketplace needs and focused design efforts on fashion trends, resulting in more saleable products.
- Instituted restructured territories and a sales incentive plan as well as putting new sales management in place, enabling the company to increase sales in the first six months by twenty percent with a sales staff two-thirds its former size.
Results
With ESBA’s involvement to help restructure and refocus the company, it earned a modest profit the first year, and continued to earn solid profits thereafter. Sales continue to increase, quality and delivery are excellent and management is leaner, tougher and better prepared to deal with today’s increasingly fashion conscious consumers.
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