"Why Be Open Seven Days When Only Four Are Profitable?" A Case Study in Creative Crisis Management. Presented at 2011 NRF International Convention & Expo

1. “ Why Be Open Seven Days When Only Four Are Profitable?” A Case Study in Creative Crisis Management

3. honoring Lynn Becraft & John Whisler Co-Owners, Kitchen Kaboodle 5 Store Chain • Portland, Oregon

5. 5 Stores • Portland, Oregon

6. Northeast Portland

7. Northwest Portland

8. Southwest Portland

9. Clackamas Town Center

10. Orenco Station, Hillsboro

13. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 Oops! FYE 9/30/08 would be first loss ever

14. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 By October, 95% of Holiday merchandise has been received

15. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 Economic disaster strikes! Worldwide economic meltdown begins

16. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 U.S. Congress passes “bailout bill”; Confidence plummets!

17. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 Holiday Season 2008: Shoppers stay home! All retailers suffer. Media hypes free-fall.

18. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 By December 15, like most retailers in 2008... Kitchen Kaboodle’s sales were off drastically

19. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 Then, more disaster December 14 AND 21-22-23 Portland has record snowfall & ice storms City shuts down! “ Snowmygawd”

20. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 1Q Results: Grim! Sent to Bank, per their request, mid-January

22. July-Aug-Sept 2008 Oct-Nov-Dec 2008 Jan-Feb-Mar 2009 Apr-May-June 2009 February 3 Bank calls the loans! Wants $2.2 Million paid off by March 31

23. Feb. 5 Advised Bank of work on turnaround plan Feb. 4 Owners meet with bankruptcy attorneys Feb. 4 Owners meet with outside accountants Feb. 5 Owners meet with potential funding sources: landlords, private investors, others

24. Feb. 6 Owners confirm: respective homes are pledged to Bank Feb. 6 Owners discover that Chapter 7 – liquidation - would not only dissolve the company, but also would require all of their personal assets

25. “ We Need a ‘Plan B’...Now!” Liquidation Outcome: Everybody Loses ???

32. Get Cash Flow, OTB, P&L – All in One!

36. (a) Stay the course; Wait out the financial crisis Loss of ($855.0)...

37. Requires MORE money from the Bank! That won’t work

38. (b) Concessions from Landlords Cuts loss to ($495.0)...

39. Still need $2.4M from Bank. That won’t work either.

40. (c) Cut expenses, health benefits Loss now down to ($114.0)...

41. Still need $2.2M! Bank would say “No!”

42. 2 pm, Saturday Feb. 7 “We Still Need a ‘Plan B’!” Liquidation Outcome: Everybody Loses ???

43. 2 pm Saturday, Feb. 7 “What would thrill our customers?” A discount on 100% of our merchandise, every day!

44. How can we do that ?? Cut expenses dramatically, pass the savings on! How do we cut expenses that dramatically?

45. “ Why be open seven days when only four are profitable?” “ Are you out of your frigging mind?!?”

48. Made those changes to inputs

49. ...and for the OTB

50. ...and for the Cash Flow

51. Shows a PROFIT!

52. Slashes Line of Credit : $70K, $127K, $144K, $99K, etc Positive cash as of December “ Wow! This the Bank really might accept!”

53. 7:30 pm, Saturday Feb. 7 “We have 2 choices.” Liquidation Outcome: Everybody loses “ Four Days. For Savings. For You” Outcome: Survival

54. “ Four Days. For Savings. For You!” Effective Thursday, March 5 (less than 4 weeks away)

55. 25 days to make it happen!

56. 7:50 pm, Saturday Feb. 7 “ It’s been a long time since breakfast.” “ I’m having wine with my dinner.”

64. Press Coverage: Local & National

74. “ National Champions!!” United States winner, Global Innovation Award

75. What’s happening now?? Please welcome John Whisler Co-Owner, Kitchen Kaboodle 5 Store Chain • Portland, Oregon