LOS ANGELES—Locally based Dan Scouler Sr. is chief executive of Scouler & Co.,a restructuring and turnaround management specialist. Prior to founding the firm, Dan held senior management positions at Ernst & Young, Deloitte & Touche, FTI Consulting and investment banks Meadowcroft Associates and Peers & Company.
GlobeSt.com recently caught up with him on the current retail environment, and how companies like Sears, Target, Best Buy, JCPenneys among others are under enormous pressure to keep their doors open in line with consumer needs. But he notes that stores such as these battle many challenges including online competition, poor management and data theft.
GlobeSt.com: How does a store look at and respond to poor store performance?
Scouler: In the current retail environment the profit contribution of all store locations, known as a 4-Wall Analysis, must be ruthlessly examined. This is no time to carry underperforming locations. And by underperforming, I don’t just mean stores that are negative or marginally profitable; I mean define what profitability it takes to justify keeping the location open.
GlobeSt.com: Do more retailers you are looking at respond to poor store performance right away?
Scouler: Most retailers do not respond quickly or aggressively enough to poor store performance. Typically, a 10% reduction in stores should really be 20% to 25%.
GlobeSt.com: How would the right store count help these retailers?
Scouler: The right store count helps enable cash to be deployed on keeping inventory fresh in the remaining stores. Having cash for fresh inventory is key. A deeper dive into the basic metrics, going beyond sale store sales into the granularity of gross margin and inventory turns on every stock keeping unit. Inventory has got be productive, or replaced.