This must be part of a bankruptcy strategy in order to close non profitable stores, get out of bad leases or renegociate them with landlords. This will reduce the overhead subtancially. If this not the reason, then buying the good locations from Friedmans would make sense.

Vendors obviously have to ask themselves about the credibility and ethics of the executives at Whitehall. Rationalise it any way you want to but if Ed Dayoob and his cronies were trying to convince you to ship they were lying. It is high time we called these people liars and thieves to their faces, they have no issues with stealing from the suppliers that supported them. The industry must punish lying and deceitful executives and send a message that their behaviour will not be tolerated.

On the "overstored" issue, like it or not, jewelry is one of the last consumer goods to see widespread consolidation. From an economic standpoint, it's long overdue, and probably one of the reasons internet sales have hammered the trade so badly. I don't think we're headed for a Lowes/Home Depot chain future--people want more personal attention for jewelry than for a hammer--but as long as people shop on price the way many do, the pressure is going to be in that direction because of the economies of scale. There have been too many advances in marketing, shipping, and inventory management to stop it. Barnes & Noble put all those little bookstores out of business for a reason.

Whitehall coerced vendors into deals during the holiday season of 2005 using the threat of Chapt 11. ½ the amounts due were paid in 2006 the balance due summer of 2007. In 2007 Whitehall again reneged on the agreements and coerced vendors into postponing the debt until 2009. Whitehall is also holding consignment merchandise which they are not returning to suppliers who have made requests for returns over the last year. With 6 years of sales declines and loosing money it is obvious that the business model is not working given the current condition of the economy for the foreseeable future it is time to call it a day and liquidate this company. RIP Whitehall it was nice knowing you.

If long time vendors posting is correct than it was morally and ethically wrong for the management and directors of Whitehall to buy 78 Friedman’s stores. Liquidating the company is harsh punishment and maybe vengeful. Those responsible for the decision to buy 78 stores knowing the financial condition of the company (see 2007 earnings loss of $74.1 million) and its agreements should be shown the door. If the company is forced into liquidation then it will the employees and their families who will suffer the most, can they sue the directors and executives for a decision that caused them to loose their employment? The departure of director Daniel Platt after two months is suspicious. The quote from Whitehall “is not due to any disagreement with the company or any matter relating to the company's operations, policies or practices.” so why leave?

Here's a question I'd like to put out for debate among the commentators here: Why hasn't this industry consolidated yet? Why have independent hardware stores, book stores, appliance stores, even shoe stores, gone the way of the dodo bird but independent jewelers haven't? Even at a net loss of 800-1000 a year, it's still a good 20 years till we look like the book and hardware categories. Thoughts, all? Answer here or privately: hschupak@reedbusiness.com

Re: the previous comment ... the main reason the Barnes & Noble (and Borders) stores were able to swallow up all the independents (unlike in the jewelry industry) is twofold: first, book inventory is a lot less expensive than jewelry inventory. The second point, closely related to the first, is that these chain bookstores were able to (arguably) take the small independent bookseller formula and improve it. Yes, these were mass retail outlets, but they also had the comfy chairs, the coffee bar, the events and everything else you could find at your quaint indie retailer, plus a much bigger and cheaper inventory. Outside of a handful of well regarded independents, nobody had a chance. In the jewelry industry, chains like Friedman's and Whitehall can perhaps replicate the environment of an independent jeweler (or at least that of a less inventive example of this class), but unlike with the bookstore example, they can't--thanks to inventory costs, quality staffing issues and other factors--really improve on it. It isn't just a matter of consumers wanting to buy a higher end product like jewelry from "someone they know" (the usual explanation for the survival of the indies in our industry) -- it's a matter of jewelry chain stores being unable to truly one-up the independents in the way that other industries could.

Directed to Hedda Schupak's comment, there are two ways that I look at it. First, the successful jewelers are those who understand more about jewelry business and do not venture too deeply into managing it like the typical Lowes/Home Depot/Dillard’s chain store world. We have seen several times in the past years that an executive entering the industry as opposed to growing up in the industry is far more likely to do more damage than good. The second angle one could take is that in the US jewelry retail world the chains that do exist have developed on conservative and almost pensive ideals. This behavior is in exact contradiction to what it takes to consolidate the industry.