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When a sports shoe retailer in Brazil was facing growing debts IXPA’s partner in Brazil, iManagementBrazil, was asked to step in to find an interim manager to support turnaround and restructuring.
The retailer had seen a stagnation in sales and financial results over a period of several years. Failure to respond to fast changing fashion trends and poor logistics and supply chain processes had led to heavy financial losses and a lack of investment.
IXPA’s partner identified a skilled and experienced interim manager with retail knowledge and a solid understanding of how to execute improvements in the value chain.
The company could have taken a knee-jerk approach and introduced cuts to increase cash flow and reduce debt. However, the interim manager suggested rethinking the entire value chain, relaunching the brand and developing, implementing and testing management tools that would secure the company’s future and growth potential.
The interim manager identified a number of problems including the fact that there was only one distribution centre in one of the largest urban metropolitan clusters of the world, the company had poor IT integration and the market included diverse social consumer groups.
Solutions included gaining a better understanding of consumer behaviour in the different distribution regions, hiring commercial and shop managers who would be well integrated in their communities and improving supply chain processes to suit the location. Stock control was digitalised to provide better information to customers and retailers about availability.
Turnover increased by 64% and net margin rocketed up from -1% to +11% in a 12 month period.
Despite a tough retail market in Brazil with falling consumption, the company saw sales increase and became the regional market leader.