Will Zell Brothers Survive?

By Rob Bates -- JCK Online, 6/1/2009 2:00:00 AM

Zell Brothers, a 97-year-old institution in the Portland, Ore., jewelry market, may close, although a $5 million lawsuit has been launched to prevent that from happening.

Zell Brothers was purchased in 1973 by the Bailey Banks and Biddle chain, which was then owned by Zale. In 2005, Zale sold the Bailey chain to Finlay Enterprises. It is the only store in the chain not to carry the "Bailey" name.

Finlay earlier this year announced it was closing 40 stores. Local press reports say one of the stores on the list is Zell. But the company has repeatedly refused to say which 40 stores are closing or whether, as rumored, it may close more than 40.

Now Leonard Zell, the noted jewelry sales trainer and member of the founding family, is fighting to save the Zell store, which he claims is the only one in the chain to make its goals. "It still has an enormous following," he says.

Jordan Schnitzer, president of Harsch Investments in Portland, Zell's landlord, says his company has launched a $5 million lawsuit to have Finlay fulfill its obligation to move the store into new headquarters. (It's currently in a temporary location.) "They are currently a viable company with an obligation they need to fulfill," Schnitzer said.

Meanwhile, Zell says several buyers have expressed interest in buying Zell Brothers, but he rules out purchasing the store himself. "I would love to get into retail again, but it doesn't make sense for me at this stage of the game," he says.

Michael Hill Envisions 800 Stores

The recession has apparently not stopped some people from thinking big.

Mike Parsell, the CEO of Michael Hill, the New Zealand jeweler that bought 17 Midwest stores from Whitehall last year, told a local newspaper his company was looking for an 800-store U.S. chain, which would make it one of the largest jewelers in America.

Given all the problems chain jewelers face, many found his statement surprising. And, for the time being, he said Michael Hill, like all retailers, is finding things "hard."

Jewelry Labs Cost CEO His Job

When Collectors Universe shut down its gem and jewelry division, it lost more than the GCAL and AGL labs. It lost its CEO.

Michael Haynes [left], who had been a constant industry presence when promoting the labs, stepped down as CEO soon after the jewelry division closed.

Even some on the inside felt that Collectors Universe paid excessive amounts on marketing and for the labs, which have since been repurchased. They feel Haynes's jewelry gamble cost him his job.

But Haynes left Collectors with a generous severance package, which includes millions in cash payable over a year.

Blood Diamonds Seized (Not Really)

Customs called it a "blood diamond" seizure, but it probably wasn't.

When officers of the Bureau of Customs and Border Protection confiscated $800,000 in rough at John F. Kennedy International Airport, it was a sign of the perils of not obeying the 2003 Clean Diamond Act.

According to customs officials, two people, described as jewelers, declared the diamonds and said they came from Sierra Leone. They also told the officers the rough was accompanied by Kimberley Process certificates, but a search revealed no such documents. As a result, the stones were confiscated.

Since this wasn't a smuggling case, no criminal charges were filed (and the jewelers' names weren't released). But they will have to go through legal processes to get the diamonds back.

This is the second diamond-related bust at JFK airport in recent months. In December, officers stopped a man carrying $1.2 million in undeclared diamonds.