Focus Management Group

Retail Industry Experience

Grocery Store Chain

Industry:

Retail

Company:

Grocery Store Chain

Situation:

A thirty-four store grocery chain was experiencing negative EBITDA due to decreasing same store sales and relatively fixed expenses.

Focus Scope:

Pricing strategies initially implemented during the economic downturn had underscored the market’s perception of the business, and as a result, profitability was declining. The Company hired an investment banker to implement a sale of the business; however, purchase prices were below overall debt when real estate debt was also considered.

Tasks Performed:

  • Developed a cash flow forecast to determine the extent of cash flow needs during a turn around
  • Analyzed the performance of each store against the chain’s overall performance, the industry’s overall performance, and various industry specific benchmarks
  • Worked with management to develop a plan to improve operations, by combining a store closing strategy with improved store level performance
  • Met with the various lenders, including real estate lenders, to explain performance and cash flow
  • Results:

  • Focus worked with the Company to develop a forbearance agreement that allowed the Company to implement its restructuring plan.
  • Focus worked with the Company in restructuring the leasing arrangements with external parties.
  • Focus worked with the real estate lenders to develop a strategy to move forward with reduced rents from the operating entity to the real estate ownership entity.
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