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UpFront
By JCK Staff
This story appears in the September 1995 issue of JCK magazine
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GORDON'S PLANS 'REBIRTH' AS A FINE JEWELER

Gordon's Jewelers, the third-largest jewelry chain in the U.S., is marking its 90th year with a multimillion dollar program to reestablish itself as a fine jeweler. The plan includes a new design for all 335 stores, upgrading merchandise and image, and new marketing strategies.

"This is the rebirth of Gordon's," says President Mary Forte.

Gordon's lost its footing after Zale Corp. bought its 600 stores in 1989, says Forte. The two chains had been competitors, but Gordon's became a more promotional operation under Zale ownership, she says. The owners didn't invest enough in stores, personnel and inventory "to keep it at the level it should have been at," she says. Operations were further affected when Zale Corp. underwent an 18-month bankruptcy reorganization two years ago.

New looks: Gordon's renewal is part of a general makeover of Zale Corp., now under new management. Last year, Zale Corp. named Robert DiNicola chairman and Larry Pollock president, and they hired Forte to head the Gordon's division. One key component in the plan is a prototype store officially unveiled in June in Las Vegas, Nev. All Gordon's stores will be similarly redesigned within two years.

Forte has replaced what she calls "unfocused" advertising with a specific strategy of radio spots and newspaper inserts as primary ad vehicles. Gordon's will create more "handles" (its own events) starting with a 90th anniversary promotion and sale beginning Oct. 1 and plans semiannual diamond events.

Gordon's also is upgrading its jewelry styles and quality. Plans call for a greater emphasis on diamonds, more natural gemstones and fewer synthetics, 10k gold only at opening price points (all else is 14k) and styling that is "fresh so we can lead, not follow," Forte says. A major feature of the anniversary sale, for example, will be a limited edition of 500 specially designed 90-facet diamond rings retailing for about $7,000.

Gordon's plans to open an unspecified number of new stores next year. Forte also would like to take Gordon's back into Atlanta and enter the Chicago market at some time. "But I'm quality conscious, not quantity conscious," she says.

The upgrading and renewal of Gordon's will take three years, says Forte. She declines to give the cost of the program, but she notes that store renovations alone are "a major undertaking" at about $200,000 per store. That would put the cost of that part of the program alone at $67 million.

SIGNET GROUP POSTS $12.5 MILLION PROFIT

The Signet Group, the world's largest retail jeweler, posted a pretax profit of about $12.5 million for the fiscal year ended Jan. 28. It was the first profit in three years for the London-based retailer, parent company of Sterling Inc. of Akron, Ohio. It also was a significant turnaround from losses of $128 million in 1993 and $183 million in 1992.

Since then, the company has closed 440 stores, including the Ratners chain that launched the company; made substantial cuts in operating costs and inventory; upgraded merchandise and image; and cut the work force by 6,000 people.

Signet now has $1.4 billion in annual sales, 1,500 stores (600 in the United Kingdom, 900 in the U.S.) and 13,000 employees. However, it still carries some $514 million in debt. Dividends for U.S. preference shareholders have been suspended since 1992; they are owed nearly $150 million.

Sterling: Sterling, the second largest U.S. jeweler with 872 stores, provides 60% of Signet's revenue. Its fiscal 1995 operating profits totaled $46.8 million, down from $60.6 million. Same-store sales rose 4%.

Much of Sterling's growth occurred from February through April 1994. Sales weakened in May and competition intensified, according to Signet's annual report. As a result, Sterling didn't meet sales projections.

"Steps are being taken [to] strengthen the competitive position" of Sterling, says Signet Chairman James McAdam in the report. Those steps include a top-to-bottom review of operating, marketing and advertising expenses, says Richard Miller, executive vice president &endash; finance for Sterling. The firm reduced staff at its Akron, Ohio, headquarters by 100, cut overtime for store personnel, reduced the pace of expansion and closed weakly-performing stores. (The firm is now at its smallest since 1990.) Marketing and advertising expenses were "refined," with ad spending reduced in less productive months and boosted in strong months. Business systems are being upgraded, with attention to inventory allocation systems.

McAdam says Signet's directors believe Sterling "still has considerable growth potential." Investment and inventory in successful core mall businesses have been increased, says Miller. Plans call for opening "larger square-footage mall stores, of 1,500 to 2,000 sq. ft.," rather than several smaller ones.

One unresolved issue concerns appointment of a permanent CEO. In February, Signet accepted the resignation of Nathan Light as Sterling's chief executive. Laurence Cooklin, Signet's number two man and interim head of Sterling, continues to divide his time between London and Akron.

Home turf: Signet did well at home in fiscal '95, posting operating profits of $25.7 million, up from $3.5 million in '94. That occured despite prevalent discounting and relatively slow growth in British consumer spending. Christmas sales were strong. But Signet's sales in Britain were off 1.9% at the end of June 1995, and same store sales in the U.S. were up only 0.4% through June.

In other news, Signet signed an agreement with its lenders on June 28, extending its credit facilities for two years.

GOLBRO CLOSES FOR GOOD

Golbro Jewelers, Birmingham, Ala., closed its last stores in June. Ironically, this year also marked the company's 100th anniversary.

Golbro, which had 10 stores throughout Alabama at its peak, filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in 1994 after a bank terminated its line of credit.

Soon after, the company closed four of its seven remaining stores, instituted cost-cutting measures and developed a reorganization plan. But it still had some $6 million in liabilities and only $1.59 million in assets, according to The Birmingham News. In April, U.S. Bankruptcy Court authorized the sale of the remaining stores, with proceeds earmarked to repay creditors.

SHIFRIN JEWELERS CLOSES ALL STORES

Shifrin-Willens, a 25-store jewelry chain in the Midwest, was closed in July by its owner, Schottenstein Stores Corp. William Sherman, president of Shifrin, couldn't be reached for comment. But a Schottenstein official said competition from power strip shopping centers and Shifrin's failure to meet profit goals were involved.

Published reports said Schottenstein was looking for buyers for the stores, though the Schottenstein official wouldn't confirm it.

Shifrin-Willens was founded in 1926 in Detroit, Mich. It filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in 1984 and was purchased by Schottenstein in 1985. When it was closed in July, Shifrin had 21 stores in Michigan and four in Indiana.

Schottenstein, headquartered in Columbus, Ohio, has annual sales of $1.2 billion. Its other operations include 77 Value City off-price department stores, 62 health and beauty aid stores and 53 furniture stores in the Midwest and East.

OPENINGS

Atlantis, Paradise Island, a $250 million resort in the Bahamas, has completed work on a new shopping complex. Jewelry stores featured in the complex are Little Switzerland, Greenfire Emeralds, Birds of Paradise, Paradise Jewels and Gold 'N Nuggets. There is no sales tax in the Bahamas, and the Bahamian government has removed import duty on luxury goods. Atlantis, Paradise Island, also includes 1,147 hotel rooms, a casino, 12 restaurants, an aquarium, five swimming pools and other water recreation. It is operated by Sun International, 12501 N.E. Ninth Ave., North Miami, Fla. 33161; (800) 321-3000.

RELOCATION

Barton Clay Jewelers plans to move later this year from its store in Birmingham, Ala., to a new location under construction in nearby Mountain Brook. The new two-story English-style building is at Culver and Cahaba roads.

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