Project for the reorganization and sale of the company
The project focused on the acquisition of an international group of companies/food discounters with stores in Spain, Portugal, Brazil and Argentina from a London-based investment firm. The deal also includes the network of former Schlecker stores in Spain and Portugal. The business was making losses and is not properly strategically positioned. The order included a refurbishment and sale of the business.
Background on the customer:
- International group of companies with approx. 7 billion in sales
- Industry: Food Discount
- Drugstore operator with 1200 stores
- Branch network in Spain and Portugal generates Eur. 285 million.
Initial situation/ challenge of the interim project:
The project is a hard redevelopment case
The Group has been making heavy losses for years. There were increased management changes, but did not lead to success. The main reason was that there was no differentiated sales concept in the stores, and there was also a lack of independent management capable of running the business on its own.
Challenging factors were the serious problems with supply/shortages and bottlenecks, and on the financial side the poor rating of the parent company – all in all, very difficult conditions. Thus, the decision was ultimately made to sell the company – with minimal investment.
Goals/Tasks of the project:
The primary objective was to divest
Already in 2019, an attempt at divestment had failed, resulting in a difficult starting point right at the beginning. It was therefore decided that the interim goal would be to implement a refurbishment and a test store concept at 20-50 stores. Here is the procedure in detail:
- The project objective was to optimize costs in the 16 production plants throughout Europe, with a focus on maintenance and overheads. A low single-digit million amount per year should be saved.
Measures and implementation steps:
REDEVELOPMENT TOTAL 3.0
The interim manager and reorganizer was given the full power and equipment to implement the reorganization under these tough circumstances. A complete refurbishment was implemented within 18 months. Here are the main steps in detail:
- Hiring of independent management- complete reorganization
- Closure of the national company in Portugal (70 stores)
- Closure of 350 stores in Spain
- Independent category management (reduction of missing articles and improvement of margin)
- Introduction of an omnichannel concept
- Externalization of logistics, resulting in savings of millions of euros
- Range improvement
- New branch concept
These are just a few of the main topics. Their implementation was planned in detail with clear action planning and management, and implementation was tracked.
Successes and results of interim management deployment:
THE PRICE OF HARD WORK
The refurbishment was successfully completed after 18 months to the customer’s satisfaction. The company or group was completely new and had developed into a successful subgroup, a few individual successes singled out:
- Increase in “like for like” sales by +30
- Breakeven reached in the second year
- Successful sale of the company in the following year
Thus, all the client’s goals were achieved, first the necessary hard restructuring of the group and then the successful sale.
A mid-single-digit million amount per year has been identified as potential savings. This represented a doubling of the project goal (!).