FAO Schwarz

Situation:

• Famous brand with failed results and new owners
• Serious losses for 6 years and negative comps for 4 years
• Marginal cash, 3.4 year inventory aging, 22 stores negative contribution
• Weak and ineffective systems and distribution system
• Flat, tired culture with no metrics or accountability
• 7 months remaining on profitable New York flagship store lease

Solution:

• Peter Harris named CEO – rebuilt team and implemented performance standards
• Implemented clarity of vision and redefined the culture
• Established customer targeting and built new brand awareness
• Developed and implemented systems and revamped the supply chain
• Reduced non-store costs percentage of sales by 20%, turned inventory
• Closed 18 unprofitable stores while opening 14 new sites, and expanded mall footprint in “anchor” leases
• Relocated New York’s flagship store and opened additional flagships
• Eliminated and then reintroduced catalog
• Created “value” merchandise assortment

Result:

• Profitable in 14 months
• Cash positive in 3 months
• Enterprise value growth and private cash sale to Dutch K.B.B with high return
• Brand dominance and attribute awareness high
• New York flagship store revenue grows from $7.8m to $54.0m
• Catalog profitability and growth
• Store growth to peak six urban locations and 55 stores
• Sustained profit and growth for subsequent eight years