Whitehall Announces New CEO, Q2 Losses, and Store Closures
November 02, 05
Ailing U.S. retail chain Whitehall Jewellers announced the appointment of its latest CEO, delayed quarterly results and the closure of 77 unprofitable stores. The New CEO is Robert L. Baumgardner, and the net loss is $24.1 million over decreased quarterly sales of $68.4 million.
Whitehall has been struggling with legal and financial issues for well over a year and suffering from high top management turnover.
Net sales for the quarter ended July 31 decreased 5.4 percent to $68.4 million from $72.3 million in the second quarter last year. Comparable store sales decreased 6.2 percent in the second quarter compared to a decrease of 0.6 percent last year.
Quarterly losses of $24.1 million are a 750 percent leap from a net loss of $3.2 million or $0.23 per share for the same period a year ago.
The company's operating loss, excluding non-cash charges of $5.7 million for goodwill impairment and $3.1 million for long-lived asset impairment, totaled $8 million compared to an operating loss of $4.6 million for the same period last year. In addition, during the second quarter of fiscal year 2005, the company recorded a full valuation allowance of $13.5 million against all of its deferred tax assets.
Baumgardner, 59, will join Whitehall by November 14. He is President of Little Switzerland, a wholly owned subsidiary of Tiffany & Co. and formerly Senior Vice President of Bailey Banks and Biddle a division of Zale Corporation.
The jeweler also announced that it expects to close 77 unprofitable stores shortly after the upcoming holiday season. For past year these stores posted store operating losses of $5.1 million (i.e., revenues less direct merchandise cost, personnel, rent, utilities and other store operating expenses, but excluding corporate allocations other than for certain advertising and regional supervisory costs).
The company plans to run inventory liquidation sales at these stores to generate cash flow from the inventory. Such sales will require additional inventory valuation allowances, currently anticipated to be no less than $14 million.