International Case Study from SMW: CFO for a fashion retailer based in Germany
The client was a well-respected family-owned French retailer that is very active in the fashion industry, with distribution in 35 countries with over 800 points of sale and 6000 employees. The company had decided to close down their German hub, which covered both Germany and Austria, in order to reduce the ongoing losses in the region. The sales volumes had decreased about 10%, partly due to higher competitive pressure associated with local management weaknesses and turnover.
The company was looking for a French CFO who was not only fluent in German, but also able to manage the specifics of German and Austrian accounting and legal requirements. This manager would need to be on-site and have a strong operational background and be able to be local in the affiliate for some months without compromising with the international French reporting and mentality of the company which remained very strict on internal reporting. One of the key priorities was to finalize the redundancy plan (10 FTE) of the subsidiary and closing the remaining outlets while keeping alive the finance and accounting department.
A qualified manager was identified in a few days and presented to the client to bring them on. The manager was a “binational.” able to travel every week and to spend one day in the French headquarters and the rest of the week in Frankfurt and Wien. The chosen manager was a Certified CPA and an expert in retail and downsizing issues, with a strong knowledge of financial flows within Europe. To ensure successes the interim focused on very tight cash management and stock turn issues.
The planned downsizing went well and was accomplished on the desired 18-month time frame. Ultimately, the company decided to keep a small team and some of the local point of sale location in the German market. The manager also recruited the new local CFO in order to pursue a reduced activity which is now profitable.
Because the company’s CEO left the group 2 weeks after the interim began assignment working directly with the HR and financial headquarters of the group. After this assignment, the Interim Manager went on with the group for another assignment in order to perform the same task for the Russian market.
The company was very pleased with the overall results. The German market is now break even mode. Several major KPI have been improved: Stock turn up 120%, forecast accuracy up 100%, costs down 60%, rental costs down 138%.