Finlay Enterprises — probably the biggest fine-jewelry retailer you never heard of — is confronted with liquidity problems and offered shareholders no assurance it won't significantly curtail operations or "seek other options" after the Christmas holidays.
The New York company owns 778 stores including the jewelry departments in 333 Macy's in other parts of the country and high-end Bailey Banks & Biddle, Carlyle, Park Promenade and Congress Jewelers in Florida. It has seen same-store sales plummet 15 percent. Its stock shriveled to 2.5 cents a share Thursday, and Wall Street now values the company at $279,000, less than some of the flashier necklaces lent to Hollywood starlets.
Finlay has plenty of company. Jewelry chains are some of the biggest retail victims of Americans' switch to practical penny pinching in the middle of a two-month season that provides jewelers about 40 percent of their annual revenue and almost all the profits.
"The fine jewelers are just getting massacred," said Howard Davidowitz, a New York investment banker who specializes in retailing. "We're in one of the biggest tradedowns in U.S. retailing history, and jewelers are the ultimate in discretionary spending."
Earlier this year, Whitehall Jewelers and Friedman's went out of business. Fortunoff did too, before being resurrected by the new owners of Lord & Taylor.
While International Diamond Exchange Research in New York forecasts a 1 percent sales decline for the industry this holiday season, sales in mall jewelry chains are expected to decline 4.8 percent as shoppers trade down to discount chains, off-mall stores and places like Beall's or Kohl's. Unit sales are to drop 8 percent as jewelry as a fashion statement gives way to minimalism.
Business turned glum for the big publicly traded jewelry chains in the quarter ended Oct. 31. Tiffany Corp. lost $12-million as U.S. same-store sales dropped 14 percent. At British-owned Signet Jewelers, which runs Jared, Marks & Morgan, Kay and Belden, U.S. operations lost $6.2-million, and same-store sales were down 8 percent. Zale Corp., which had been a turnaround story, lost $12-million as same-store sales slid 4 percent.
The downturn hit Finlay in the middle of a transformation from jewelry counter operator in department stores to a chain that operates from storefronts.
Mark Albright can be reached at email@example.com or (727) 893-8252.