Whitehall Jewelers Holdings, Inc., reported that net sales were $85.3 million for the fiscal 2007 fourth quarter ended Feb. 2, compared with $102.3 million for the fourth quarter of fiscal 2006. Of the sales decrease, $600,000 was attributable to store closings and stores closed for remodeling for limited periods.
Same-store sales decreased 13.8 percent for the period, year-over-year, due to worsening economic conditions and less consumer spending on discretionary jewelry items, said the Chicago-based national specialty retailer of fine jewelry.
Gross profit for the fiscal 2007 fourth quarter was $29.4 million, or 34.5 percent of net sales, compared with $36.8 million, or 36 period of net sales, in the same period a year ago, the company said. The decrease in gross profit was primarily due to lower net sales partially offset by higher margins. The decrease in gross profit as a percent of sales is attributed to the de-leveraging effect of the sales decline on occupancy costs partially offset by an increase in net merchandise margins.
For the fiscal 2007 fourth quarter, net loss was $24.6 million, including $23 million of non-cash impairment charges, the company said. Excluding the write-off of certain goodwill and long-lived assets, the net loss would have been $1.6 million.
This compares with net income of $0.9 million in the fourth quarter ended Jan. 31, 2007. The $1.6 million net loss was primarily attributable to lower gross profit due to reduced sales partially offset by lower selling general and administrative and interest expenses.
“We are disappointed in our fourth quarter results, as the challenging macro economic environment led to a slowdown in full-price selling, lower average ticket price and decreased unit sales,” said Ed Dayoob, chairman of the board at Whitehall. “However, the current economic condition is creating opportunities for us to capitalize on our management expertise and infrastructure, demonstrated by our recent acquisition of certain assets of Friedman’s and Crescent Jewelers, including 78 retail locations. This is an important component of our strategic plan to grow both organically by improving our same store sales as well as through opportunistic acquisitions.”
Dayoob added, “Additionally, we closed 10 stores in the fourth quarter, bringing the total number of stores closed in fiscal 2007 to 18. We also opened one Whitehall store during the year. We closed 8 additional stores in the first quarter of fiscal 2008 and currently have 375 stores, including the 78 from our recent acquisition. In fiscal 2008, we will continue to evaluate our store base and close underperforming stores accordingly in an effort to position ourselves for long-term success.”
Net sales for fiscal 2007 were $242.9 million, down 8.8 percent from $266.2 million in fiscal 2006, due primarily to a decline in comparable stores sales of 7.5 percent as a result of a lower average price per item sold, as well as sales declines of $6.6 million and $1.8 million, due to store closings and stores closed for remodeling for limited periods, respectively. These declines were partially offset by $1.8 million in sales from two additional days in fiscal 2007 from the change to 4-5-4 reporting periods and $2.2 million in sales from new stores.
Gross profit for fiscal 2007 was $68.1, million, compared with $82.4 million in fiscal year 2006 as a result of overall lower sales and an initiative to reduce clearance inventory in the first half of the year. Gross profit as a percentage of was 28 percent in fiscal year 2007 compared to 31 percent in the prior year.
The net loss for fiscal 2007 was $74.1 million compared to a net loss of $45.9 million for fiscal 2006.
Whitehall Jewelers is a national specialty retailer of fine jewelry, operating approximately 375 stores in regional and super-regional malls and power centers in 39 states.