Retail and wholesale supplier of educational and school supplies. $19 million sales. $3 million debt. 33 locations in five states. Approximately 300 employees. 28k SKUs. ESOP Ownership structure.
- EBITDA decline from $744k to $271k over 2 years.
- Over several years the Company experienced an erosion of most business fundamentals.
- This deterioration directly impacted the company’s future viability within the marketplace.
- Revenues contracted from $22.6 million to $18.9 million over 2 years, and EBITDA declined from $744k to $271k.
- MorrisAnderson (MA) served as interim management and lead a detailed set of restructuring initiatives, which included:
- Augmented the management team
- Improved employee morale
- Analyzed, identified, and liquid slow moving inventory
- Improvements in purchasing and merchandising processes
- Aggressive customer profiling and sales promotion/marketing programs, and targeted reductions in SG&A
- The plan called for improvements to cash management, the full payment of the term loan with Bank, and for the Company to operate using only cash flow from operations, without a senior lender. Additionally, MA closed 11 of 33 negative cash flow retail stores, negotiated payment plans with approximately 287 vendors, and negotiated rent concessions from all retail store landlords.
- As a result of MA’s efforts, the Company was able to address the root causes of its key issues, achieve positive cash flow during its slow season on a self-funded basis without a senior lender, pay-off 100% of its term loan and avoid forced liquidation/bankruptcy by its lender.
- Despite the highly distressed condition of the business and a tumultuous economy, MA was able to successfully manage cash forsix months, engineer an option to prepare for another back-to-school season, and keep the company alive for an additional year in one of the top economically declining metropolitan regions in the U.S.