The
Client
A family enterprise, The Gordon Company had earlier assisted the Schubot family
implemeningt the company’s next generation succession plan through a highly successful
retirement sale in 2007. Subsequently, Schubot Jeweler’s filed Chapter 11 because
of the near collapse of the Wall Street investment banking industry and the immediate
onset of a national recession in the fall of 2008.
Founded in 1917 just after World War I, Jules R. Schubot Jeweler’s had been positioned
as a fine jeweler for Detroit’s automobile and business elite, specializing in
high quality, fine gold, diamond, and gemstone jewelry. Now with two of
Detroit’s Big Three automakers near bankruptcy and consumer spending in a double-digit
decline, the Schubot family agreed that the business assets must be liquidated
to mitigate the company’s continuing losses and settle the firm’s outstanding
financial obligations.
The Gordon Company Assignment
To assist the Schubot family to plan, implement, and manage a company closing
and inventory liquidation sale
The scope of The Gordon Company’s assignment included:
- Developing a specialized sales and marketing plan to
monetize the company’s inventory that would maximize
the cash recovery value of the inventory sold
- Creating a targeted pricing strategy to maximize the
cash recovery of the company’s inventory, taking into
consideration the local economic conditions and individual
competitor’s product discounts
- Preparing focused in-store signing, collateral material,
and as needed, other broadcast advertising material to
communicate the inventory liquidation sale
- Developing sales, markdown, margin rate, advertising,
and other expense budgets to benchmnark the liquidation
sales’ performance
- Managing and controlling the liquidation sale, daily,
weekly, and monthly in order to maximize cash recovery
- Consulting with the Schubot family, in collaboration
with legal counsel, to develop and gain court approval
of the company’s Chapter 11 petition and inventory liquidation
plan
Considerations
- The U.S. was in a severe recession that was growing
worse daily
- General Motors and Chrysler were planning prepackaged
bankruptcy filings; meaning further immediate declines
in luxury spending were inevitable by Michigan’s affluent
consumers
- The availability of consumer credit was declining as
banks were closing credit card accounts and reducing
both consumer and home equity lines of credit
- Consumer’s awareness of the Schubot Jewelers retirement
sale was still high
- Time was of the essence to maximize sales before the
end of the 2008 holiday selling season
The Gordon Company Solution and Accomplishments:
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1. |
Assisted the
company in successfully filing for Chapter 11 |
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2. |
Developed a sales and marketing
plans, budgets, and management controls that were satisfactory
to the court, leading to a favorable motion to immediately
proceed with the liquidation sale |
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3. |
Created a unique media mix
of print, broadcast, and public relations to maximize
consumer awareness of the liquidation sale |
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4. |
Exceeded sales projections
by 193% (173% greater than the earlier retirement sale),
while reducing planned markdowns |
| |
According to Brian Schubot,
This was a very sad situation for my family and
definitely took a 92-year old family business into
uncharted waters. We were fortunate to have the assistance
and experience provided by The Gordon Company team
to help us through the bankruptcy process.
The strong start and their deft management of discounts
during the entire sale ensured that we received the
highest possible return on the company’s assets.
All this was accomplished with a sense of dignity
appropriate to our family’s reputation in the community.
While I wouldn’t wish this situation on any jeweler,
having The Gordon Company to guide us was essential to
achieving a successful resolution of our financial crisis. |
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