The Company is a $500+ million direct marketer/catalog distributor and retailer of light industrial and do-it-yourself tools and supplies.
The Company owns retail stores in the East and South that compete with big box retailers, including Home Depot and Lowes.The Company operates two warehouses.
The Company had incurred declining sales, margin erosion and losses. In addition, the Company added to its cost structure by opening a new 700,000 square foot distribution center (DC).
FDP was engaged to perform an operational review of the distributor, review the Company’s business plan, and assess its strategic alternatives.
–Performed a thorough analysis of the Company’s distribution channels and divisional profitability; and
–Addressed liquidity concerns to ensure that the Company’s capital needs were met by the existing bank group or alternative sources.
Working with management, FDP developed profit improvement tactics:
–Identified warehouse operation inefficiencies and improved profitability by changing to pick/pack/ship wave picking and sorting logic;
–Refined catalog circulation plans, changed prospecting habits and enhanced model specification by incorporating buyer behavior attributes into the plan;
–Developed a plan to consolidate two DCs into one;
–Measured net profitability between business and customer divisions and between catalog type;s
–Initiated a highly successful targeted price increase in both catalog and retail operations, that improved margin by over 4% on an annualized basis; and
–Developed an “in stock” program of the top 100 selling products for the Company’s retail stores.
Made significant revisions to the Company’s business plan leading to returned profitability and positive cash flow.
FDP was actively involved in implementing the identified tactics.
Fort Dearborn Partners. identified and implemented $20 million in strategic and tactical initiatives to restore profitability.
Fort Dearborn obtained a forbearance agreement and, eventually, an extension of the Company’s credit facility.