SUCCESS STORY: TURNAROUND OF U.S. BRIDAL COMPANY IN JUST SIX MONTHS

Company Profile:  Kirstie Kelly Disney Fairy Tale Weddings (KKDFTW), a privately owned company, holds the wedding license for the world’s largest media and entertainment corporation. Total company sales in 2008 totaled $2 million dollars. The company was founded in 2007, is well-funded and owns a valuable asset in the license.

Situation:  Despite growing, KKDFTW was still not profitable. The company was experiencing a high burn rate due to:

1. High cost of goods, averaging 85-90%
2. Large costs associated with exiting two Chinese manufacturing facilities
3. Minimums from Chinese manufacturers resulting in the company having to carry a high level of inventory in bridal gowns and bridesmaid’s dresses
4. Marketing and advertising costs were ten times the total company sales

Solution:  The Pao Principle focused on supply chain improvements by:

• Creating fully loaded cost sheets for every style
• Conducting a thorough analysis of Chinese and domestic manufacturers
• Moving production from China to the U.S.
• Instituting weekly tracking of projections versus actual orders to monitor sales and adjust sales targets accordingly

The Pao Principle also worked with the company’s CFO to create and implement a detailed action plan for 2009 by identifying:

• Additional costs savings
• Incremental revenue opportunities
• Methods for improving door productivity

Finally, the Pao Principle developed a five-year plan to ensure the company would continue to achieve its revenue and profitability targets.

Results:  After six months, the Pao Principle’s efforts:

• Reduced cost of bridesmaid’s dresses by 29% - a result of freight and duty savings achieved by moving production from China to the U.S. (Nashville, TN)
• Achieved incremental cost savings of 5% across the entire line by moving warehouse and shipping facilities in-house
• Created and implemented a detailed action plan enabling the company to double its sales and breakeven by the end of 2009

Copyright 2011