One-time Inventory Case Study–Returned Product

May 15, 2017 by sherwood 0 comments

Situation

A cosmetic company was approaching the end of their fiscal year and needed to clear their warehouse which was filled with product that was returned by customers. The best offers they were receiving from tertiary sellers for this product was pennies on the dollar. This inventory was costing the company $10MM on their books and they were only going to be able to sell it off for $2MM.

Solution

The cosmetic company agreed to a contract where Sherwood would purchase the inventory for $10MM in trade credits, allowing the company to avoid an $8MM loss while clearing their warehouse. Sherwood moved the product into their warehouse within just a few days of the client signing the contract.

Result

By conducting this one-time transaction, the cosmetic company realized the potential efficiencies of partnering with Sherwood and is awaiting the right opportunity to utilize their newly acquired trade credits.