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ou won’t see “Bennett Footwear Group” on any shoeboxes in your closet, but you may own
some of its shoe brands, which include Franco Sarto and Danelle. Bennett designs, imports,
and distributes women and children’s footwear and also markets its footwear through private-
label programs with many key customers. Founded in 1961 as Bennett Importing, the company
merged in 1998 with two other footwear companies, positioning the combined enterprise to serve
a wide range of footwear markets. The company imports shoes from Italy, Brazil, China, and Por-
tugal. Today Bennett’s customers include value-oriented retailers such as Payless ShoeSource
and Wal-Mart, as well as major department stores such as Nordstrom, Filene’s, and Macy.
Although the merger created economies of scale and better market penetration, it also
brought Bennett a complex financial structure with much debt. Bennett also needed funds to
“grow its business” quickly in three areas: to take advantage of the increasing popularity of the
Franco Sarto brand, to branch out into men’s shoes and accessories, and to expand its private-
label products for mass merchandisers.
Bennett and CIT Commercial Services, a leading lender to apparel and footwear compa-
nies, worked together to develop a sound program to restructure the company’s debt, provide
growth capital, and improve liquidity. CIT’s industry knowledge and its experience lending to simi-
lar companies helped it arrive at a fair value for the inventory and accounts receivable that would
serve as loan collateral (security). CIT provided Bennett with a $20-million secured revolving line
of credit and a $6-million, 3-year term loan. With these short- and intermediate-term credit facili-
ties, Bennett Footwear was able to refinance a portion of its outstanding debt and pay off most of
its subordinated notes while continuing to expand its Franco Sarto lines.
Short-term bank financing is just one current liabilities management strategy that firms use
to fund the buildup of inventory and accounts receivable until they can turn them back into cash.
Other methods include spontaneous sources of short-term financing—accounts payable and
accruals—and commercial paper. In this chapter, we’ll explain how to use these strategies to the
firm’s advantage.
BENNETT
FOOTWEAR
GROUP
BENNETTSTEPS
TOWARDGROWTH