New Fortunoff CEO: ‘We’ll Build on Our Strengths’

Charlie Chinni, the new chairman and chief executive officer of Fortunoff, has a big job ahead. He must not only revive the fabled jewelry and home-furnishings retailer, currently in Chapter 11, but also integrate Fortunoff boutiques into Lord & Taylor, owned by Fortunoff’s new parent, NRDC.

Chinni succeeds Arnold Orlick, who joined the company in 2006. Previously, Chinni was executive vice president for home and leisure, women’s accessories, and family footwear at J.C. Penney. Joining him is Don Watros, who was named vice chairman. He is also NRDC’s managing director of retail operations. Previously, he was chief administrative officer for Saks Fifth Avenue.

Chinni spoke candidly with JCK about the tasks ahead:

What are your plans for new Fortunoff jewelry boutiques in Lord & Taylor? How will they be different from the current Finlay-run boutiques?

These [boutiques] will be a very clear representation of Fortunoff. This will be the Fortunoff-branded experience in Lord & Taylor. They will be very broad, very substantial expanded departments. They will all be renovated over the next two to three years.

The Fortunoff jewelry brand and jewelry retail business are very strong—their dollars per foot, their approach to every stone being inspected, their quality control, their great fashion and bridal assortments. All of that will be a part of the Lord & Taylor experience. The only issue yet to be decided is whether the opening price point will be revised downward slightly. Lord & Taylor have also traded up their business in the last few years, so the two companies are very close to one another. This has been well researched. This is a very compatible relationship.

Will the departments be considered leased departments, as with Finlay?

We have a similar working relationship with Lord & Taylor [as Finlay did]. That just provides a framework in which we both will operate. But being in the same family, with the same owners, it’s much more synergistic and beneficial to both of us.

What did the previous owners of Fortunoff do wrong, and how do you expect to avoid that?

You have to stay true to your nature. You have to stay true to your brand. Where the previous owners went off base is, I think they went too low and too broad in some areas. I don’t think they created a reason for customers to drive past the competition and come to us. The four “big box” stores are in real need of a turnaround.

There is certainly a great team of people here at Fortunoff. The sales associates are among the best I’ve ever had a chance to observe. I like to say the business was broken but the franchise was stronger than ever. If you ever ask anyone what they think of Fortunoff, they all say: “I love Fortunoff.” We have certainly fallen on some tough times but we have the opportunity to build on our strengths, which are in the jewelry and home furnishing departments.

Are members of the Fortunoff family still involved in the business, and do they still own part of the business?

Several members of the family are still involved. But [unlike the previous deal] the family now has no ownership.

Why was it necessary to file Chapter 11?

It was a financially determined filing. There was no way to continue business as a growing concern and make payroll.

The new owners are talking about Fortunoff being a national brand. Is it known outside the Northeast?

You could make the case that the Fortunoff brand is one of the great successful retail brands that was never rolled out to its potential in the ’80s and ’90s. It clearly ended up being more vulnerable as a smaller company to competitors. I do think that rolling out big box retailers may not be the right thing to do right now.

The name is mostly known in the Northeast: New York, New Jersey, Connecticut, and Pennsylvania. This is something that we are going to face in Lord & Taylor. Twenty-five of their 47 stores are in already known Fortunoff markets. The other 22 stores are in new markets. We are going to watch those very carefully.

We believe the model holds up. I know the jewelry experience that is available. I think Fortunoff will be a very good alternative to what is being offered. The assortments and experience will be absolutely different from what is available in the mall. By the way, I ran Macy’s and Penney’s [departments] for a lot of years, and I have a lot of respect for what they do. This is not a head-to-head strategy. It is an alternative strategy.

Can you talk about your background and how you came to Fortunoff?

I’ve been in the business for over 40 years. I started my career at Macy’s and went through the ranks there. I was there for over 20 years, and I had almost every job within the company at that time. I ran all their private-label development for a while. I ran categories including jewelry and cosmetics. I ended my career as president of merchandising for Macy’s East. I left there in 1994 when Federated bought Macy’s.

From there I went to Kmart and then [California-based bed and bath retailer] Straud’s, and ran that for five years. I went to J.C. Penney as executive vice president for home and jewelry. I retired from there last year. I took a year off and then met with Richard [Baker, NRDC president]. I was a consultant on the Fortunoff acquisition through the due diligence.

I am happy to be here. It is really an exciting combination of turnaround and growth strategy. I grew up in New Jersey and worked at Macy’s. Fortunoff’s was among the top couple of retailers that I made sure my people visited on a regular basis to see what they were doing. They have really become such an iconic brand in the Northeast.