Client Profile
A publicly traded specialty apparel retailer operating approximately 185 locations throughout North America with annual revenue exceeding US$760 million. Rapid expansion during a low-interest-rate environment, combined with declining consumer demand and increased inventory carrying costs, left the company highly leveraged.
Key Challenges
The company faced multiple simultaneous challenges:
- Consecutive quarterly operating losses
- Share price decline exceeding 70%
- Inventory valued at nearly US$210 million
- Declining gross margins
- Significant lease obligations
- Debt maturities approaching within twelve months
- Reduced confidence from institutional investors
The Board sought an independent restructuring advisor to preserve enterprise value while minimizing disruption to operations.
Our Mandate
- Independent business review
- Liquidity assessment
- Operational restructuring
- Strategic alternatives review
- Stakeholder negotiations
- Capital structure optimization
- Investor communications support
Capital Structure
Working alongside lenders and institutional investors, we facilitated:
- Extension of senior debt maturities
- Refinancing of revolving credit facilities
- Equity investment by a strategic shareholder
- Sale of selected non-core assets
Results
- Successful refinancing of all senior debt
- Restoration of positive operating cash flow
- Significant improvement in analyst sentiment
- Share price increased approximately 165% from restructuring lows
- Re-established compliance with all lending covenants
- Preserved more than 3,500 jobs
- No insolvency proceedings required
Client Outcome
The restructuring restored investor confidence and repositioned Client for long-term growth. Following the successful turnaround, the company resumed investment in e-commerce capabilities, continued to modernize its supply chain, and returned to sustainable profitability. Three years after the engagement, the company had regained investment-grade credit metrics, delivered consistent positive free cash flow, and successfully executed a secondary equity offering to fund strategic acquisitions.
RCP engagements are tailored to the facts, stakeholders and objectives of each situation.
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