WELLS FARGO SELLS ITS BARRY’S STOCK
The Wells Fargo Bank of San Francisco in May sold its 1.5 million shares of Barry’s common stock (about 37.5% of shares outstanding) to a group of private investors. The largest investor in the group with 24% is Gildea Management Co. of Greenwich, Conn., headed by John Gildea, who invests in companies with big growth potential. The investor group was gathered by First Albany Corp. and the Gordian Group, L.P.
Barry’s officials say that Gildea won’t be involved in the chain’s operations. “He looks at this as an investment opportunity that will grow in value,” says Robert W. Bridel, president of Barry’s.
Three years ago when it restructured, Barry’s converted debt to 49% of its equity, which was acquired by Wells Fargo and Fidelity Investment Group. Under law, a bank can hold such stock for only three years before selling it.
Thomas S. Liston, Barry’s vice chairman and chief financial officer, says the transaction is “a very positive one for Barry’s, which will benefit the company both now and in the future.” He adds that Wells Fargo’s ownership of so much stock had kept its value down; when such a major institution “sits on the stock, nothing happens,” he says.
Bridel says the sale will provide a general stability which will be beneficial because “it will enable us to actively pursue our expansion program.”
Barry’s has 161 stores in 17 states. Bridel says it plans to add 26 new superstores this year (not 16, as it previously announced) to the 15 it already has. More are planned over the next three years. The company is converting existing Barry’s into superstores, but won’t convert the entire chain, he says.
FRIEDMAN’S ADDS STOCK, PLANS RAPID EXPANSION
Fast-growing Friedman’s Inc., now the third largest U.S. retail jeweler, expects to raise $47.4 million from the sale of 2.2 million shares of stock. The public offering, released in May, is Friedman’s third in 32 months.
As with earlier offerings, most of the proceeds will go to pay off debt, interest and outstanding amounts on its lines of credit (about $36.1 million). The rest will fund the rapid expansion of the Savannah, Ga.-based firm, and finance general corporate purposes, including working capital.
Friedman’s had 265 stores in 15 states in mid-May, more than 200 of them opened since 1992. It plans to continue to “expand significantly” over the next several years, says its stock prospectus. It aims to open 60 to 80 stores by Christmas. Although the firm’s operations have been primarily in the Southeast, it will expand this year in the Midwest (where it already has a few stores in Ohio, Indiana and Missouri) and the Southwest (where it has six stores in Texas).
Friedman’s, which positions itself as The Value Leader®#-82#, targets low- to middle-income consumers, ages 18 to 45. It focuses primarily on opening stores in power strip centers in small cities and towns, which Friedman’s officials believe offer “substantial growth opportunities.”
TIFFANY EARNINGS UP 135%; STOCK SPLITS
Tiffany & Co. announced a two-for-one stock split and reported substantial gains in its fiscal first-quarter sales and earnings. In the three months ending April 30, net sales were $189.7 million, up 20% from $150.1 million in the same period of fiscal 1995. Net earnings rose 135% to $5.1 million or 30¢#-94# per share, compared to $2.2 million or 14¢#-94# a share in the prior year.
Sales growth was geographically broad based and included strong comparable store sales gains of 20% in the U.S. and 15% (in local currency) in Japan, Tiffany’s two largest markets.
Specifically, in Tiffany’s three channels of distribution in the first quarter:
U.S. retail sales rose 30% to $80.4 million. This “reflected strength in Tiffany’s flagship New York store and in its branch stores,” said a company statement. Successful first-year results in new U.S. stores also contributed to sales growth.
Direct marketing sales increased 1% to $18.9 million. Strong catalog sales growth offset continued softness in corporate division sales.
International retail sales rose 17% to $81.4 million, reflecting growth in most of Tiffany’s foreign markets.
Stock split: Tiffany’s board of directors declared a two-for-one common stock split and a 43% increase in the quarterly dividend at Tiffany’s annual stockholders’ meeting, held May 16 in New York City. Shareholders of record as of June 28 will receive their additional shares on July 23.
The board also declared a quarterly cash dividend of 10¢#-94# per share on “pre-split” shares, to be paid on July 23. Future dividends are expected to be paid at a rate of 5¢#-94# per share on all “post-split” shares. (Tiffany’s current quarterly dividend rate is 7¢#-94# on pre-split shares, which is equivalent to 3.5¢#-94# on post-split shares.)
In addition, the board set June 24 as the redemption date for its $50 million principle amount 63/8% convertible subordinated debentures, due 2001.
The stock split and redemption “reflect Tiffany’s strong financial results and stock price performance,” says Chairman William R. Chaney. “Tiffany’s sales and earnings rose to record levels in 1995, and the first quarter results indicate continued strength.”
Hopman Jewelers of Elkhart, Ind., relocated in May to a 9,000-sq.-ft. store that is three times larger than the old store. Founded in 1959 by Joseph Hopman, the business is now owned and operated by his son, Patrick.
Artisans of the Sea, a South Seas pearl showroom, opened recently in Fremantle, Australia. The showroom features jewelry designed by a team led by Glenice Lesley Matthews. Much of the 18k gold and platinum jewelry features Australian pearls, diamonds and colored gemstones. Artisans of the Sea is a division of MG Kailis Group, which also operates Broome Pearls, the second largest pearl farmer in Australia.
The announcement on page 211 of the April issue of JCK listed the incorrect state for the new William Carlie Fine Jewelry store. The store is in Gibsonville, N.C.