Clarifying last week’s article on JCKonline, Gitanjali USA president Nehal Modi just told me that the company is evaluating Whitehall Jewelers’ leases, not stores as going concerns.
That does still raise possibilities for continued employment for store personnel, Modi noted. But nothing will happen until after the store liquidations are through.
As of now, it looks like the only stores sold as “going concerns” will be the 17 stores that are likely to be sold to New Zealand retailer Michael Hill.
There are simple economics at work here. In today’s environment, liquidating a store makes more sense than buying a store as a “going concern.” Buying a going concern means you assume all the store’s losses. But once a store is liquidated, every last dollar has been squeezed out of it. So when you just buy the lease, it’s far cheaper.
Modi, whose company has purchased the Samuels and Rogers chains, notes, “The economy has impacted our industry more than any other. The industry is going to shrink at every level – at retail, at wholesale. It has to. All the signs are there.”
He does note, that since his company is vertically integrated, it has withstood some of the bad economic forces.