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Off Price Clothing Chain
A leading asset-based retail lender
contacted ARG to analyze a major
problem, an underperforming chain of off-price women's clothing stores, whose assets were shrinking daily. The lender was close to being under collateralized
in a failing business.
Before ARG was contacted, both the lender and borrower had approached
several different traditional liquidation companies, soliciting cash bids for the inventory. The bids came back lower
than expected, thus putting the lender and owner in a losing situation. Both felt there was more value in assets than the bids reflected. The lender did not want to take a loss and the owner, who had put up personal guaranties, needed help.
ARG met with the owner on a Monday and Tuesday had taken the direct operational control of all stores and the central warehouse. ARG quickly put together an operation and expense plan with a goal of getting the lender out whole and the owner released from his personal guaranties. ARG'S strategic plan called for a fast track market-specific program that included strategic store closings, transfers of merchandise, closing the
central warehouse, and the immediate downsizing of the home office staff.
The inventory, stores and other assets were quickly analyzed to project a recovery. Some stores were targeted for closing sales while other were targeted for "pack and moves" and immediate closing to take advantage of both the sale capacity in better producing
locations and to save expenses.
The central warehouse inventory was transferred to stores based on historic sales capacity and sales trends during the first few weeks of the store closing sales. The warehouse was then quickly closed down and assets sold.
ARG put together a cost-effective program that yielded the best net recovery possible. ARG was able to work with and through the retailer's district and regional staff to supervise the store closing while directly supervising the CFO and other home office staff needed to wind-down the company. ARG closely supervised the day-to-day store-closing sale while directly managing the company's central warehouse, cash flow, information systems, advertising, vendor relations and landlord mitigation.
The results were clear: the lender was paid in full, including fees, the owner released from personal guaranties and the landlords satisfied.
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