International Designer

Client Overview: $350 million brand name international designer, manufacturer and marketer of retail and contract furnishings with facilities located both domestically and internationally.

Opportunities/Challenges:

  • EBITDA had decreased from a run rate of $40M to annualized $17M
  • Overhead had increased three-fold
  • Layered, non-responsive corporate office had been established
  • Inventory levels and costs were out of control
  • Off-shore sourcing in constant state of disruption
  • Poor quality in company’s own facilities

Solutions:

  • Focus efforts on overhead and operating costs
  • Eliminate “corporate office” structure
  • Establish four distinct market-focused SBUs
  • Utilize China sourcing and logistics
  • Move more product to Mexico
  • Refocus SKU management and responsibilities
  • Reduce SKUs by over 40% in the “traditional” market channel
  • Establish detailed focus on cost
  • No “Silver Bullets;” enforce cost and quality discipline

Results:

  • EBITDA:
    • 2004: $17M
    • 2005: $27.5M
    • 2006: $33.5M
    • 2007: Low 50’s
  • Drove manufacturing cost efficiencies from operating margin in low 20s to mid-40s
  • Improved “big box” channel profitability by 30% – from an average of 14% to 18.3%
  • Each SBU became its own profit center
  • Re-gained leadership position “channel-by-channel” in product offering and design through disciplined product design and replacement process and procedures
  • Improved employee turnover at the same time by reducing employee costs with consumer-driven health insurance
Beretta

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