Whitehall names CEO, plans to close 77 stores, reports quarterly losses

Whitehall Jewellers, Inc. said Tuesday that Robert L. Baumgardner has been named president and CEO of the national fine jewelry retailer. He plans to join the company by Nov. 14.

Baumgardner, 59, is president of Little Switzerland, a wholly owned subsidiary of Tiffany & Co. and was formerly a senior vice president of Bailey Banks and Biddle.

“Bob possesses the seasoned leadership, drive and experience … Whitehall needs to build on the strengths of our franchise, Daniel Levy, director and interim CEO of the Chicago-based company, said in a statement.

The company also said Tuesday that it expects to close 77 unprofitable stores in the near term. For the past 12 months ended July 31, these stores posted store operating losses of $5.1 million. The company, which currently operates 389 stores in 38 states in shopping malls, said it plans to run inventory liquidation sales at these stores to generate cash flow from the inventory and close the stores shortly after the holiday season.

“The steps the company has taken … will permit me to focus on building a robust operation with significant future opportunities,” Baumgardner said.

Whitehall also reported that net sales for the second quarter, ended July 31, decreased 5.4 percent to $68.4 million compared to $72.3 million in the second quarter last year. Comparable store sales fell 6.2 percent for the period. The company also posted a net loss of $24.1 million compared to a net loss of $3.2 million for the same period a year ago. Its second quarter 2005 operating loss, excluding non-cash charges of $5.7 million for goodwill impairment and $3.1 million for long-lived asset impairment, totaled $8 million compared to an operating loss of $4.6 million for the same period last year.

For the six-month period ended July 31, Whitehall reported net sales of $139.4 million compared to $145.3 million in the same period during the previous year. Comparable store sales fell 5 percent during the six-month period. Net loss was $29 million versus a net loss of $6.9 million for the same period a year ago. Operating loss for the six-month period, excluding non-cash charges of $5.7 million for goodwill impairment and $3.1 million for long-lived asset impairment, totaled $14.4 million compared to a $10 million loss for the same period last year.

As previously reported, last month the company reached a financing deal with Prentice Capital Management LP and Holtzman Opportunity Fund LP to allow it to buy inventory for the holiday season.

“While second quarter results were unsatisfactory, the company has addressed the critical issue of liquidity through the capital investment by Prentice Capital and Holtzman,” Levy said. “The company is appreciative of the strong support of the company’s banks and the trade vendor community. Thanks to their support the company is receiving timely delivery of our holiday merchandise needs.”

As previously reported, Whitehall shares were delisted from the New York Stock Exchange for failing to comply with NYSE listing standards. The company’s stock is currently being quoted on the OTC Pink Sheets under the jwlr.pk symbol.

As previously reported, Whitehall, received a $15.4 million takeover offer from Newcastle Partners L.P. In its statement on Tuesday, Whitehall said its advisors did not think the offer was superior to the financing pact it now has.