One retail client of ours had a small boutique business unit (selling upscale French clothing) that was a real puzzler. They were seeing great profitability in their New York boutique, significant losses from their Los Angeles boutique, and moderate profitability just down the street in Orange County. They were not sure how to move forward.
The business had three choices:
- Stay the course: Renew their leases on their three boutiques and maintain the relationship with their French supplier
- Expand nationwide: Add several boutiques throughout the country and invest heavily to grow the operation
- Shut down entirely: Close the three boutiques, sublet the stores (at a significant loss) and terminate the relationship with their French supplier
Profits in New York and Orange County were largely offset by the losses in LA, so all three options were legitimately on the table. They asked us to dig into the operation and help them make the right decision.