Friedman’s posts estimated sales gains, announces store closings, and delays in filing financial reports

Friedman’s Inc., Savannah, comparable store sales increased an estimated of 5.6% for February 2004 over the same period in 2003, the company said in a statement. Comparable sales for the quarter to date ending Feb. 22, increased an estimated 4.7% over the same period in 2003.

“We are pleased with our strong results for the Valentine’s Day sales period,” Doug Anderson, president and chief operating officer, said in the statement. “The Valentine’s Day period has now produced two successive years of greater than 5% growth in comparable store sales.”

Friedman’s also announced it will close between 50 and 65 under-performing stores over the next six months.

“Like most retail chains, we continually review individual store performance,” Anderson said. “Although the vast majority of our 714 stores are performing well, a number are not meeting our financial expectations, and we have decided to close them in order to better position Friedman’s for continued success. We are committed to improving profitability across our store base and maximizing the return on investment of our inventory. We have already opened 24 new stores this fiscal year, and currently plan to open an additional 21 during the balance of the fiscal year.”

The Company also said that it will not meet its previously announced plan to file its annual report on Form 10-K for the fiscal year ended Sept. 27, 2003, by the end of February. Friedman’s attributed the delay to several factors, including: the extent of work involved in the preparation of restated historical financial statements for the fiscal years 2001 and 2002 and for the first three quarters of fiscal year 2003; completion of the audit of the financial statements by Ernst & Young LLP, independent auditor to the company; and the previously disclosed ongoing investigations by the Securities and Exchange Commission and the Department of Justice.

The company said it will file its restated financial statements with its annual report on Form 10-K “promptly upon completion of the audit.” The company will not be able to file its quarterly report on Form 10-Q for the quarter ended Dec. 27, 2003 until after filing the annual report on Form 10-K.

The company in its statement said the “principal reason” for the delay in filing is “concern over the accounting for the allowance for doubtful accounts, in the process of preparing the restatement the company has identified several other areas that will be adjusted including inventory, accounts payable and accrued liabilities.”

Friedman’s is facing SEC and Department of Justice investigations following a fraud lawsuit filed by Capital Factors against Cosmopolitan Gem that supplied jewelry to Friedman’s. Friedman’s is in the middle of a fraud investigation related to the Capital Factors lawsuit.

Friedman’s Board of Directors also announced progress in its search for a new CEO for the company. The Board indicated that it has identified several promising candidates and has begun the interview process.

Friedman’s Inc. is a leading specialty retailer of fine jewelry. The company is the leading operator of fine jewelry stores located in power strip centers. It operates 714 stores in 20 states, of which 488 are in power strip centers and 226 are in regional malls.