Retail Bankruptcies Pile Up
By Rob Bates -- JCK Online, 3/1/2009 2:00:00 AM
The jewelry industry was hit with two noteworthy retail bankruptcies as 2009 began.
First, in January, was Shane Co., a Midwest retailer that operates 23 stores in 14 states, which filed for Chapter 11 in the middle of the month. The company, formerly known as Western Stone and Metal, was famed for its radio ads featuring family member Tom Shane, who calls himself “your friend in the diamond business.”
While many companies that filed Chapter 11 recently have liquidated, Shane says it's acquired interim use of cash collateral and planned to refinance and continue operating. In an audio press release, Shane vowed the chain would remain open.
That doesn't seem a likely fate for storied 20-store Northeast retailer Fortunoff, whose February Chapter 11 filing came almost exactly a year after its filing in 2008.
The first filing came right before the company was purchased by investment group NRDC for $110 million. But in January reports surfaced that it was up for sale. A spokeswoman said the company is talking to buyers, but according to Women's Wear Daily there are no takers, save for the Hilco Corporation, which invests in retailers but also handles liquidations.
In its filing, chief financial officer Christopher Sim said that, for the first nine months of 2008, the company incurred losses of $42 million on revenues of $260 million. He cited a “dismal” 2008 holiday season, tightened credit from vendors and banks, as well as the cost associated with the now-aborted plan to station Fortunoff boutiques in Lord & Taylor stores.
Dione Kenyon, president of Jewelers Board of Trade, noted that inquiries about retailers were up. “We are definitely seeing a redrawing of the landscape,” she said. “But a lot of people are going to get through this. There will certainly be fewer retailers, but we are hoping those that survive will be stronger.”
