Samuels Jewelers Inc., the eighth largest U.S. retail jewelry chain with 113 stores in 19 states, on Aug. 4 filed for bankruptcy protection while it reorganizes under Chapter 11 of federal bankruptcy law.
The Austin, Texas-based company will attempt to restructure about $78 million in debt incurred in the last five years and position Samuels for “renewed growth and profitability,” says Samuels’ statement. Chapter 11 allows a company to continue operating while it prepares a reorganization and debt-repayment plan for federal court approval.
This is the third time since 1991 that the company (formerly known as Barry’s Inc.) has reorganized under federal bankruptcy law.
The reorganization filing, says the company statement, is “the next step” in an ongoing turnaround effort begun in 2001, when it shed a fourth of its stores and millions of dollars in unproductive merchandise.
The debt restructuring is “a positive step that builds on the successful turnaround effort we began over two years ago,” said Randy McCullough, Samuels’ president and chief executive officer. “The debt burden has seriously limited Samuels’ ability to move forward to capture increased market share in our existing stores. When we emerge from these proceedings with a new capital structure, combined with the commitment of our management team and employees to execute our strategy, we believe we’ll finally be able to unlock Samuels’ tremendous potential.”
The company says it will continue to “conduct business as usual, providing services to all customers without interruption, [and] post-petition obligations to vendors, employees, and others will be honored and satisfied in the normal course of business.”
Samuels operates retail jewelry stores located in regional shopping malls, power centers, strip centers, and as stand-alone stores. It sells fine-jewelry items in a range of styles and prices, with primary emphasis on diamond and gemstone jewelry. Samuels also operates under the names C&H Rauch, Schubach, and Samuels Diamonds.
When Barry’s Jewelers Inc. emerged from the bankruptcy in 1998, it changed its name to Samuels, moved from California to Austin, Texas, and embarked on a buying spree that added four small regional chains—Musselman’s, C&H Rauch, Henry Silverman, and Harts. By 2000, it had 201 stores in 25 states. However, company officials later said, the retailer took on too much, too soon. A general economic slowdown, sagging profits, rising debt, and not having enough top-selling merchandise in many stores forced it in 2001 to begin a corporate and financial turnaround to stem losses. That included closing almost 40 stores and liquidating $11 million of unproductive inventory. However, say company officials, the successful turnaround has resulted in increased customer satisfaction and retention, increased associate productivity, and improved EBITDA performance. The debt restructuring is one more step in that process, they say.