* To exit leased department store biz
* To cut some administrative jobs
* To focus solely on specialty jewelry stores
* To close 40 unprofitable specialty stores
By Mihir Dalal
BANGALORE, Feb 26 Jeweler Finlay Enterprises
FNLY.OB, hurt by liquidity woes, is shutting its department
store outlets over the near-term to concentrate on specialty
jewelry stores, 40 of which it also earmarked for closure.
"Given the decline in our department store business over
the past five years coupled with the strenuous economic
conditions... we view our strategic plan to exit this business
segment as a necessary measure," Chief Executive Arthur Reiner
Shares of the company rose 67 percent in afternoon trading
on over-the-counter bulletin board.
Finlay, which operates counters at department store chains
like Macy's Inc (M.N), said it will reduce its cost structure
to levels appropriate to support its specialty jewelry store
It plans to do this through job cuts in its administrative
functions, mainly at its New York headquarters, besides sales
positions at the affected locations.
The company had 674 locations at the end of January.
Finlay also amended its revolving credit facility to reduce
available credit to $300 million and changing the termination
date to Feb. 25, 2010.
In December, the company warned that the U.S. recession had
hurt its liquidity position and it might have to curtail its
operations or pursue other options if the situation did not
Adding to Finlay's worries, Macy's did not renew license
agreements that expired on Jan. 31 at 93 stores. Finlay
generated 52 percent of its total sales from the counters it
operates at that chain.
Lord & Taylor also did not renew license agreements with
Finlay beyond Jan. 31. after the department store chain's
owner, NRDC Equity Partners, acquired jewelry retailer
Fortunoff out of bankruptcy last year.
However, as consumer spending declined, Fortunoff sought
court approval to sell its assets earlier in February. This
week, a federal judge approved a sale of Fortunoff's assets to
a group of seven liquidators.
Jewelry retailers, including Zale Corp ZLC.N, Signet
Jewelers (SIG.N) and even upscale Tiffany & Co (TIF.N) have
fallen victim as cash-strapped consumers cut back spending on
(Reporting by Mihir Dalal in Bangalore; Editing by Anthony
Kurian, Jarshad Kakkrakandy)