The Client
Whitehall, founded in 1895, was a mid market, mall based jewelry company, operating
387 stores in 38 states. The company had embarked on a repositioning strategy
that had numerous effects, including 1) the accumulation of about $640 million
at retail value of unproductive, toxic inventory, and 2) 77 underperforming
stores that did not fit the new strategy.
The Gordon Company Assignment
To assist Whitehall management:
- Liquidate $640 million of inventory at retail
- Close 77 underperforming stores
The scope of The Gordon Company’s assignment included:
- Financing and organizing the orderly disposal of Whitehall’s unproductive inventory
- Developing a marketing and sales plan to liquidate
the inventory through the 77 Whitehall stores to be closed
- Preparing store closing and inventory liquidation
advertising plans targeting individual store closing
markets
- Developing individual store pricing strategy based
on local market conditions to maximize the cash value
from the jewelry liquidation sale
- Designing, producing, and delivering in-store communications
collateral, print, and where appropriate radio, and TV
created for local markets
- Preparing sales, media and staffing budgets along
with the requisite daily, weekly, and monthly financial
controls and objectives
- Managing and staffing the 77 closing stores during
the liquidation sale
- Managing and controlling the sale in order to react
to changes in local market conditions to optimize results
Considerations
- Jewelry market conditions were poor in 2005
- Mall traffic was a fraction of historical norms
- Management wanted to focus on directing the remaining
310 Whitehall and Lundstrom store brand stores
- Preservation
of Whitehall and Lundstrom brand values
The Gordon Company Solution and Accomplishments
| |
1. |
Organized a
consortium of capital partners to provide bridge financing
for the disposal of the Whitehall’s unproductive inventory |
| |
2. |
Guaranteed agreed financial
return to Whitehall, while assuming operational and
expense control for the 77 closing stores |
| |
3. |
Exploited local market conditions
to maximize cash flow by monitoring operating expense
to sales ratio’s, closing down unproductive stores
and shifting inventory to higher productive stores |
| |
4. |
Varied sale duration by
location to maximize returns, while minimizing expenses
by terminating sale activity to manage fixed-asset
and lease value recovery programs |
| |
5. |
Exceeded Whitehall management
sale, cash flow, and store closure objectives |
|
