With an expected net loss of $6.1 million in fiscal 2013, CCA Industries has partnered with The Emerson Group, Wayne, PA to outsource some sales and administrative functions. In addition, CCA said warehousing and shipping will be outsourced to and managed by OHL, one of the largest integrated global supply chain management companies in the US. The company's inventory will be moved to an OHL-managed facility in Indianapolis, IN. According to CCA, a key benefit of the outsourcing move is that it shifts a substantial portion of the company's current fixed costs into a variable cost structure moving forward which can ultimately help keep expenses in better alignment with any future revenue generated by its brands. The move could also potentially save CCA over $3.5 million in overhead expenses over the course of the first 12months based on performance of its brands in fiscal 2014.
"This outsourcing plan will permit our company to leverage the power of scale in all aspects of our sales, warehousing and logistics needs, resulting in significant operating efficiencies and expense reduction while continuing to direct all aspects of our business," said Richard Kornhauser, chief executive officer and president of CCA Industries. "Importantly, this restructuring will enable the company's management team to substantially beef up its efforts to enhance our key brands' connection to the consumer with extensive and cost-effective advertising and marketing strategies that emphasize the competitive strengths of our core products."
According to Kornhauser, The Emerson Group currently manages approximately $1.7 billion in consumer sales, and they can be a key catalyst in the company's plans to grow CCA into a major consumer products company. The move to Emerson and other restructuring efforts will result in a $300,000 charge in the first quarter, but CCA said it expects to return to profitability in the second quarter of fiscal 2014.
CCA will report fiscal 2013 results at the end of February.