Provided critical intervention to a store on the verge of bankruptcy and turned a potential disaster into a success.

Client:

Challenge:

The retailer had been operating in a small town in Ontario for over 15 years and sales had been steadily declining. The owner was told by the bank that his line of credit would be terminated and his assets liquidated in 30 days.

Solution:

Dionco identified immediate steps that could be taken to improve sales and profitability. We prepared a critical path plan on the spot and arranged a meeting with the bank manager. The critical path plan was presented to the bank manager who agreed to a 30 day extension on the foreclosure.

The plan was put into effect the same day.

Plan Overview:

• Immediately reset the store with women’s on the right side and men’s on the left (the original configuration had men’s at the back of the store and it was not visible from the front that the store also had men’s clothing)
• Created a new cash flow plan
• Prepared an aged inventory report and identified candidates for clearance
• Planned a huge clearance sale and identified advertising media to use
• Sent letters to all creditors with explanations of the current situation and post dated checks for payment of outstanding invoices
• Identified key staff who would be responsible for each component of the plan
• Prepared a category balance of sale report and prioritized new product purchases
• Established a six month merchandise plan that tied to the cash flow budget
• Built a six month advertising plan by category and media
• Taught the owner how to plan open to buy and budget inventory levels
• Suggested a new POS system to track inventory and customer purchases

Results:

• Within 30 days sales had increased by over 30%
• The bank withdrew its threat to foreclose
• All creditors were paid within 5 months and new purchases were negotiated at net 60 to improve cash flow
• The business became profitable again after 120 days