[MaxLite] Call for Action

[Spencer Bolgard]

Team, as most of you know out first quarter sales and profitability results were not good.  One factor is the enormous amount of inventory we brought in to beat the tariff changes and to support the forecasted sales increase; neither of which happened.  To give you an idea of the magnitude of the problem, our on hand inventory has increased by ~75% since last year.  Most of the inventory increase arrived in December - February.  Combined with our very soft sales, -13% in Q1, we have an inventory CRISIS.  Here are just a few of the ramifications of having this much inventory:

  *   We have to pay a significant amount to store this inventory at external warehouses.
  *   There large fees associated with shipping between our warehouses and the external ones.
  *   Our line of credit is near the limit.  Thus we can't purchase more inventory for products we need to fill customer orders.
  *   We aren't able to spend money for other projects and initiatives that are vital to our Company's long-term success.
  *   There are many more.....

To address this problem we are creating an Excess Inventory Taskforce.  This Taskforce will be led by me.  Our first meeting will be tomorrow.  This taskforce and our entire Sales, Supply Chain and Customer Care teams' #1 priority for the next few months is to reduce our excess inventory via sales; and reduce the inbound inventory through careful evaluation of true and immediate customer needs.  More information will follow on the action items for our Taskforce and others.  For our Sales team, be ready to clear your calendars and embrace this all important initiative.

The good news, our MTD sales in April are fairly strong and on budget.  I along with the Leadership team remain positive on our short and long-term prospects.

Thank you in advance for your creative ideas and support.  We really need EVERYONE to make this their top priority,

Spencer

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