eBook: Corporate Trade - 5 Canadian Success

Succeeding
with
CORPORATE
TRADE
5 Canadian Business Success Stories
Contents
Introduction............................................................ 3
Case Study #1 ........................................................ 4
Working with subsidiaries............................................... 4
The issue..........................................................................4
The solution......................................................................4
The bottom line benefit.....................................................5
This deal will work for you if:.............................................5
Case Study #2......................................................... 6
Real Estate Optimization ................................................. 6
The issue..........................................................................6
The solution......................................................................6
The bottom line benefit.....................................................8
These deals will work for you if:........................................8
Case Study #3 ........................................................ 9
Product packaging change.............................................. 9
Case Study #4........................................................ 11
Obsolete capital equipment............................................. 11
The issue..........................................................................11
The solution......................................................................12
The bottom line benefit.....................................................12
This deal will work for you if:.............................................12
Case Study #5......................................................... 13
Evolving clothing trends................................................... 13
The issue..........................................................................13
The solution......................................................................14
The bottom line benefit.....................................................14
This deal will work for you if:.............................................14
What’s next?........................................................... 15
Active International Canada...............................................15
The issue..........................................................................9
The solution......................................................................9
The bottom line benefit.....................................................10
This deal will work for you if:.............................................10
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Succeeding with Corporate Trade: 5 Canadian Success Stories
Introduction
In this eBook we showcase a variety of case studies to demonstrate
the depth and breadth of how Canadian companies use Corporate
Trade in today’s competitive world.
You’ll see how a major food company traded its obsolete packaging
into a Corporate Trade deal with an incremental return of over
$750,000; learn how a leading Canadian manufacturer leveraged their
obsolete capital equipment to partially fund an advertising buy; hear
about a forward-thinking industrial apparel manufacturer who used
Trade Credits to partially fund freight costs.
The Active International
Canada team - meet us
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Regardless of your industry or the type of deal, these case studies are
real-life, successful, actionable examples of how Corporate Trade can
be applied to your business.
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Case Study 1
Working with
subsidiaries
#
The issue
Pinnacle Foods is a North American manufacturer and marketer of
leading food brands, including Duncan Hine’s, Vlasic Pickles and Aunt
Jemima. In the United States, Pinnacle had excess inventory of Vlasic
Pickles with a wholesale value of over $3MM that was worth a mere
$1MM if liquidated.
The solution
Active International US
purchased Pinnacle’s
inventory using Trade Credits
worth $3MM+, allowing
Pinnacle to avoid an expensive
write-off of over $2MM.
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The US company did not have the media budget to use all of its Trade
Credits. As a result, the Credits were transferred to Pinnacle in Canada.
Over the next few years, Active partnered with Pinnacle’s
Canadian advertising firm, Agency 59, to jointly execute its
digital and TV advertising efforts for Hungry Man, Vlasic and
a number of different brands. The agency has
easily adapted to a unique situation,
willing to fit into a client-centric
model of business
Agency 59 sets the media
strategy and plan while Active
International buys the media
using their trade relationships
with media providers. Agency 59
understands the value driven by
Pinnacle’s Trade Credits and works
collaboratively with Active International
in the best interest of their client to create a
win-win-win.
The bottom line benefit
In this example, Active International worked as a global organization
in sync with Pinnacle’s international reach, leveraging a relationship
outside the country where the Trade Credits originated. Pinnacle Canada
benefited by supplementing its marketing budgets with Trade Credits.
This deal will work for you if:
»» You are a global business
»» Subsidiaries have budget set aside for advertising, printing,
packaging and/or freight
»» You have a client-centric advertising agency
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Case Study 2
Real Estate
Optimization
#
The issue
In 2007, The Forzani Group Ltd. (now FLG Sports Ltd.), Canada’s largest
sports apparel and equipment retailer, faced a potential loss on inventory
that breached an exclusivity clause with a new footwear line. To prevent
breaching the clause, as well as minimizing the financial impact of a
write-off, FGL turned to Active International for assistance.
The solution
Active helped FGL by purchasing its inventory at wholesale value with
Trade Credits. The inventory was then re-sold into approved international
channels that met all re-sale and exclusivity restrictions.
FGL avoided a loss
of 70% of the inventory’s
value with this Corporate
Trade transaction.
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Following this success, a series of eight different inventory transactions
were successfully completed between 2007 and 2013 by Active
International for FGL Corporation Limited, its sister companies, Mark’s
Work Wearhouse Ltd., and its parent, Canadian Tire Corporation, Limited.
Most recently, FGL rebranded its Canadian retail banners including
Nevada Bob’s, Québec based Econo Sport, Fitness Source, Sports Mart
and Athletes World. These stores were either closed or rebranded as
Sport Chek. Throughout this exercise Active International moved excess
inventory from the closing banners, including golf and fitness equipment,
as well as winter apparel.
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The bottom line benefit
These deals will work for you if:
For the last seven years Active International has worked with FGL,
Mark’s Work Wearhouse and Canadian Tire on eight different inventory
transactions, helping them avoid writing off inventory worth just $3.09
MM if liquidated – a third of its wholesale value.
»» You’re a retailer streamlining its operations with a rebranding
initiative
»» Changing plan-o-grams or suppliers are disrupting your marketing
and merchandising programs
»» Efficiencies are needed in your supply chain’s return on total
capital
In return, Active International gave the companies close to $9.3MM in
Trade Credits that helped them offset expenditures for television, radio
and out-of-home media campaigns, as well as for retail merchandising
and printing.
More than 100 radio
and 66 television
campaigns were executed
using Trade Credits.
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Case Study #3
Product packaging
change
The issue
One of North America’s leading food companies faced a loss on
packaging that carried an expired promotion. The company’s goal was
to maximize profitability on this remnant inventory prior to their fiscal
year end. In addition, the marketing team was looking to stretch their
advertising budgets for the following year. The value of the obsolete
inventory, if liquidated, was $300,000.
The solution
Active International in Canada purchased the inventory from the
company and sold it through client-approved channels. In exchange,
Active gave them $1.1MM in Trade Credits that the company combined
with cash to stretch their TV, radio, print and digital advertising budgets.
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The bottom line benefit
This deal will work for you if:
By using Active International,
the company unlocked an
additional $770,000 in value
from its obsolete inventory
that was then reinvested in
their business.
»» Your company may take a loss on an inventory problem
»» There’s a need to find alternative distribution channels
»» Budget is dedicated to media, printing and/or freight
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Case Study #4
Obsolete capital
equipment
The issue
After 20 years of using a large piece of machinery called a corrugator,
one of Canada’s major producer of tissue, publication papers, lumber,
and wood products, decided to replace it with new, updated equipment.
A consultant was hired who worked unsuccessfully for two years to
find a buyer. The equipment could not be sold in North America due to
competitive reasons. Compounding the challenge was the fact that the
shipping costs to send it overseas was far greater than the value to any
buyer.
The corrugator was on the books for $400,000 and the company
realized it was going to be nearly impossible to generate any money
for it.
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The solution
The bottom line benefit
Active International Canada purchased the equipment for $400,000
using Trade Credits. They then sold it to a nearby metal smelter in TroisRivières, Québec. The Company was able to visit the smelter to verify
the equipment was properly smelted and not diverted to another buyer
The Company generated
$400,000 cash for a piece
of equipment that held very
little value — without having
to sacrifice advertising
budgets or the quality of
their agency-planned media
buy. Now that’s smart.
They transferred the Trade Credits they received for the corrugator to
a sister division that used the Credits as partial payment for a $2.2MM
television campaign.
This deal will work for you if:
»» Your company has idle equipment, fixtures or other assets that are
not returning any value to your company
»» There is a budget set aside for advertising, printing, packaging and/
or freight
»» Additional cash is needed to fund unbudgeted company initiatives
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Case Study 5
Evolving clothing
trends
#
The issue
A successful Canadian industrial apparel company was looking for
innovative ways to move excess inventory of older boots. As is common
in the apparel industry, fashions change, and room is needed for newer
product lines. If forced to liquidate, the boots had a market value of
$226,000, a small fraction of its original wholesale worth.
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The solution
This deal will work for you if:
Active International Canada purchased the footwear for its full wholesale
value of $1.2MM in Trade Credits, then sold the product into a preapproved channel that eliminated any competitive or brand threat.
The company then used the Trade Credits as partial payment towards
already committed freight costs.
»» Your company is faced with a write-off on slow-moving assets
such as last year’s outdated, branded apparel
»» There is a budget set aside for purchasing freight, travel, event
space and other services your business needs to thrive
»» You are seeking new ways to reduce cost on freight and logistics
expenses
The bottom line benefit
By working with Active,
they avoided an
inventory write-off of
just under $1million.
Instead, they realized the full value by spending its $1.2MM Trade
Credits on freight expenses. This positive experience lead to a long-term
relationship where Active International Canada now handles all of the
company’s Canadian and US trucking freight requirements. They not
only avoid painful write offs, but reduce costly freight expenses at the
same time.
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What’s next?
Schedule a no obligation assessment
with one of our experts
Do you have more questions about Corporate Trade?
Or are you ready to get started?
Active International Canada
4100 Yonge Street, S-406
Toronto, ON
M2P 2B5
Canada
P: 416.226.8650
[email protected]
www.activeinternational.ca
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