SB360 Case Study

The company saw a near-term opportunity with upcoming lease expirations timed to coincide in a matter of months. As the company had profitably self-liquidated underperforming stores in the past, they believed their efforts would produce the best results for all stakeholders. The company did not want to pursue a bankruptcy filing, and they would only entertain an out of court liquidation.

The Solution:

SB360 knew the company was a reputable regional player offering superior customer service and a premium athletic brand assortment. We collaborated in the structuring of a comprehensive solution to capitalize on the synergies of the company’s position in the marketplace, our resources, those of a related affiliate, and the relationships we have with other Professionals and retailers doing business in the same athletic footwear and apparel sector. This complex transaction integrated an acquisition-ready company, financing from our Second Avenue Capital Partners team, and a customized store closing plan designed to maximize recovery on the inventory and other assets in the store locations and facilities not being acquired. The SB360 store closing plan factored in: a sale term based on the amount of inventory and the need to exit the buildings by the lease termination date; an effective promotional cadence and marketing campaign to draw shoppers to the sale and keep them coming back; and, a sales multiple that achieved the guaranteed recovery margin. Our plan required aggressive in-store merchandising, employee incentive initiatives, high-impact signing, and strategic product transfers.

SB360 was able to rapidly deploy a solution to preserve brand value and carve out a go-forward footprint consisting of 75 stores. In less than 13 weeks, our expertise maximized the recovery value of more than $55 million of inventory in the closing stores, far exceeding expectations with same-store sales’ percentage of increase in the triple digits. We further enhanced the results by sourcing additional branded merchandise to round out the inventory mix and augment the company’s recovery. All FF&E was liquidated as the sale progressed, leaving empty boxes ready for return to the landlords.

Overall, our collaborative effort with the company allowed management to focus on its objectives and transition to the new owners without the distraction of store closures. Executives trusted that our sensitivity to brand integrity would retain value for the ongoing business.