A Retail Inventory Case Study
The Company operates retail stores offering shoes, handbags, jewelry and accessories for men, women and children. The 60 year old company decided to open a second location in a new mall development just before the Great Recession. As the economic downturn worsened in mid-2008, many tenants considering opening stores in the new development backed out. Foot traffic was very low and the new store struggled. The developer did not want to lose its anchor tenant and supported the operation with deferred rent and direct cash infusions.
Accord provided an inventory based line of credit paying off the Company’s senior debt, providing the down payment on the restructured junior debt to the developer and condition A/P, including deferred rent and working capital.
Post-recession, the development is now nearly 80% leased and foot traffic is strong. This has resulted in sales growth and beginning a return to profitability for this location. Additionally, the company has been expanding its online sales channel. With improved bottom line, the Company and the developer came to an agreement to restructure the Company’s existing obligations providing an opportunity to refinance their junior debt at a substantial discount.