Success Stories

Apparel Manufacturer

A third generation manufacturer that had historically been profitable had recently been reporting growing losses resulting in broken covenants on the company’s line of credit. Warren Averett was engaged to assist management in determining the cause of the losses and to assist in developing a plan.

Warren Averett prepared a product line profitability analysis and determined some products were being sold at negative margins. The company had recently outsourced the partial production of some of its product lines. While outsourcing was a viable alternative, management had not eliminated the fixed costs in the plant related to the items being outsourced. Further, management had decided to purchase components of its products rather than manufacturing them in the plant.

Warren Averett assisted management in determining there were virtually no incremental conversion costs of manufacturing the products in the plant. By determining which items should be outsourced and which items should be manufactured in-house, the overall contribution margin of the business was increased from 19% to 37%, which placed the company back on a track to profitability and helped re-establish credibility with the company’s creditors.

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