THE METHODOLOGY

 

Based upon our 30 years of experience in the retail industry, and more than a decade of dealing with troubled retailers, Yake & Associates, Inc. has developed a methodology to identify retail companies headed for financial disaster. This method profiles retail companies according to critical risk factors, and when applied on a regular basis, it can effectively safeguard the assets of investors in a retail company. At the heart of our methodology is consistent, rigorous ongoing due diligence to protect shareholder value. Our method includes:

A DETAILED ANALYSIS OF THE MANAGEMENT TEAM TO:

  1. Profile executive performance in past positions
  2. Research past employment history of senior management to:
    • evaluate their prior treatment of shareholders
    • determine if there has been a pattern of condoning or participating in inventory manipulation
  3. Identify management styles that are contrary to the welfare of the shareholders (i.e. Are officers' salaries and perks contrary to the welfare of the shareholders? Are merchandising strategies for making a profit consistent with maintaining shareholder value? Has management hidden net operating losses from their shareholders by concealing those losses in shrinkage? Does management know if the company's inventory is being accurately measured?)
  4. Determine whether management has a strategic approach that is reasonable and conducive to maximizing shareholder value.
A DETAILED ANALYSIS OF THE ORGANIZATION TO:
  1. Evaluate shrinkage for signs of inventory manipulation.
  2. Determine whether the company's structure is designed to enhance or avoid accountability.
  3. Evaluate the relationship between members of the board of directors and senior management to identify relationships that are contrary to shareholder interests. (i.e. Is the board closely held, with friendlier ties to the management than to the shareholders?)
  4. Determine how the organization recruits and selects its employees.
  5. Assess whether the organization has goal-driven objectives that are likely to be successful and maximize shareholder value.