The reorganization of Macy’s Inc. will mean the loss of 94 Finlay jewelry departments.
Finlay Enterprises Inc. currently operates 316 Macy’s, Inc. locations. Finlay said Thursday that Macy’s told it will not renew the leases for 94 stores when upon expiration of the license agreements on Jan. 31, 2009. Macy’s has notified Finlay of its intent to renew the license agreements for the newly merged division of Macy’s Midwest and Macy’s South which consists of 222 doors.
Macy’s, Inc. announced Wednesday a new organizational structure of its department store chain into three divisional changes. It includes the consolidation of Macy’s North into Macy’s East, Macy’s Northwest into Macy’s West, and Macy’s Midwest into Macy’s South. The consolidation of Macy’s North as well as that of Macy’s Northwest, will result in the non-renewal of license agreements with Finlay and the loss of 57 doors and 37 doors, respectively.
In fiscal 2007, the Macy’s North and Macy’s Northwest locations generated approximately $120 million in combined revenue for Finlay. The total revenue generated from all of the Macy’s locations in fiscal 2007 was approximately $338 million. Finlay is currently evaluating the impact of the expected closings on its financial results for fiscal 2008 and beyond.
“While we are disappointed with the prospect of losing a portion of our Macy’s business in January 2009, we will retain 222 Macy’s locations and all of our Bloomingdales locations,” said Arthur E. Reiner, Finlay chairman and chief executive officer of Finlay Enterprises, Inc. “We have been able to diversify our business over the last three years by entering into the luxury free-standing specialty jewelry sector. The luxury market continues to be one of the most attractive segments of the jewelry industry despite ongoing challenges in the macro economy. We will continue to focus on expanding in this area, while concentrating on maximizing the return of our existing lease business.”
Finlay also reported that fourth quarter sales increased 24.1 percent to $383.4 million compared to $309 million in the comparable period of 2006. Meanwhile, same-store sales decreased 6.4 percent for the period.
The sales results are on a continuing operations basis, which excludes sales from discontinued Macy’s, Belk’s, and Parisian stores. Specialty jewelry stores consisting of Carlyle, Congress, and Bailey Banks & Biddle, which was acquired in November 2007, contributed sales of $146.1 million for the fourth quarter, as compared to $51.6 million for the same period last year.
For the year sales increased 13.1 percent to $836.2 million compared to $739 in fiscal 2006. Specialty jewelry stores contributed sales of $223.9 million in 2007 as compared to $108.1 million in 2006. Same-store sales in 2007 decreased 1.4 percent on a continuing operations basis. Including discontinued stores, same-store sales in 2007 fell 1 percent.
Finlay Enterprises, Inc., through its wholly owned subsidiary, Finlay Fine Jewelry Corp., is one of the leading retailers of fine jewelry operating luxury stand-alone specialty jewelry stores and licensed fine jewelry departments in department stores throughout the United States. The number of locations at the end of fiscal 2007 totaled 794, including 69 Bailey Banks & Biddle, 32 Carlyle and five Congress specialty jewelry stores.