Turning losses into profits for a major apparel retailer
Plummeting profits jeopardized a high-end apparel retailer’s ambitious growth strategy. Bain helped ApparelCo develop an aggressive turnaround plan that aligned branding and merchandising strategies across its retail channels, streamlined and improved inventory management and ensured that it designed and stocked popular products with high margins.
The new owners of ApparelCo, a clothing and accessory retailer known for its designs, hoped to accelerate growth by expanding into adjacent areas and extending its retail network, which included a catalog business. But with profits plummeting by 90 percent, ApparelCo recognized that to achieve its ambitious growth targets, it needed to strengthen branding and inventory management and reduce costs to achieve its ambitious growth strategy.
Working with ApparelCo’s CEO, we developed a comprehensive turnaround plan that included short-term profit gains and long-term initiatives for sustained growth. We aligned branding and merchandising strategies, focused product development on items with high profitability for both its retail and catalog outlets and ensured organizational support. We also redesigned ApparelCo’s inventory forecasting models to improve efficiency and better meet customer demand.
To achieve over $40 million in profit improvements, ApparelCo launched initiatives to increase overhead savings, boost its brand image, eliminate less profitable products and introduce a new “look.”
With improved inventory controls and product development, the retailer is able to stay ahead of trends, fueling faster growth.
The end result: our turnaround plan has reversed ApparelCo’s return on equity from a loss to a six-fold increase.
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