Whitehall Hit by Weak Economy as Sales Slide and Losses Grow

Whitehall Jewelers reported a decrease in sales and comparable sales, as well as a loss at the close of the fiscal year, affected primarily by “worsening economic conditions and less consumer spending on discretionary jewelry items,” the U.S. retailer said. Annual net losses were $74.1 million.

For the fourth quarter ended February 2, net loss was $24.6 million, including $23 million of non-cash impairment charges. Whitehall ended the fourth quarter the year before with a net income of $0.9 million.

Net sales were $85.3 million, sliding from $102.3 million in the fourth quarter of fiscal 2006, and comparable store sales decreased 13.8 percent.

Gross profit for the quarter was $29.4 million, or 34.5 percent of net sales, compared with $36.8 million, or 36.0 percent of net sales, in the same period a year ago.

“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 Chairman of the Board, Ed Dayoob.

Whitehall closed 10 stores in the fourth quarter, bringing the total number of stores closed in fiscal 2007 to 18. It currently has 375 stores, including the 78 Friedman’s and Crescent Jewelers retail locations recently acquired.

Net sales for fiscal 2007 were $242.9 million, down 8.8 percent, due primarily to a 7.5 percent decline in comparable stores sales. Whitehall also noted a lower average price per item sold.

Gross profit for the year was $68.1 million compared with $82.4 million in fiscal 2006. Gross profit as a percentage of sales declined from 31 percent to 28 percent.

The net loss for fiscal 2007 rose to $74.1 million from a net loss of $45.9 million in 2006.