Finlay Enterprises, Inc., New York, a retailer of fine jewelry and the largest operator of leased fine jewelry departments in department stores in the United States said Tuesday that Federated Department Stores, Inc. will not renew Finlay’s lease in the Burdines department store division due to the planned consolidation of the Burdines and Macy’s stores in 2004, the company said in a statement.
In addition, Federated confirmed its intention to renew its Bloomingdale’s, Rich’s/Lazarus, and The Bon Marchi leases with Finlay.
The termination of the lease, which expires January 31, 2004, will result in the closure of 46 Finlay departments in the Burdines division. In fiscal 2002, Finlay generated approximately $50 million of revenue from the Burdines departments. Upon closure of the Burdines departments, and including the four departments planned to open this fall in Bloomingdale’s and The Bon Marche, Finlay will operate 117 departments with Federated.
The company said estimates an impact on fiscal 2003 earnings of approximately $1.5 million.
The company also previously reported its second quarter and first-half fiscal-year results.
Comparable department store sales for the 13-week period ended Aug. 2, increased 2.6% in the second quarter. Total sales were $192.8 million compared to $187.1 million for the same period a year earlier.
Income from operations, before depreciation and amortization expenses (EBITDA), was $9.4 million compared to $9.3 million in the prior year period. The company also reported operating income of $5.1 million, compared to $4.8 million the previous year.
The company also reported a net loss of $0.6 million. This result compares to a net loss of $0.7 million a year ago period.
Comparable department store sales for the six months ended August 2 increased 1%. Finlay’s total sales were $379 million compared to $374.5 million for the same period a year earlier.
The company reported EBITDA for the six-month period of $17.2 million compared to $19.3 million last year. Operating income totaled $8.5 million compared to $10.6 million for the prior year.
For the six months ended August 2 the company reported a net loss of $2.0 million compared to a loss before cumulative effect of accounting change of $800,000 in the prior year. Including the charge associated with the cumulative effect of accounting change, the net loss for the prior year six-month period was $18.
Finlay Enterprises, Inc., through its wholly owned subsidiary, Finlay Fine Jewelry Corp., reported sales of $931 million in fiscal 2002. The number of locations at the end of the second quarter of fiscal 2003 totaled 1,003.
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