Hit hard by both the slump in jewelry and consolidation at retail, Finlay Enterprises Inc. is exiting its shrinking leased department store business over the “near term” to focus solely on its freestanding jewelry stores, 40 of which are slated for closure.
At the end of January, leased departments accounted for 566 of Finlay’s 674 locations, with the other 108 divided among its Bailey Banks & Biddle, Carlyle and Congress nameplates. However, 140 of the licensed points of sale — 93 in what had been the North and Northwest divisions of Macy’s prior to its recent nationalization and 47 at NRDC Equity Partners’ Lord & Taylor unit — were scheduled to close last month. The license for 34 Bloomingdale’s shops was to expire next January and for 216 Macy’s Central stores in January 2011.
Finlay reportedly had negotiated to extend the relationship with L&T after NRDC put Fortunoff up for sale in January. However, Fortunoff, which was to replace Finlay as the operator of fine jewelry departments at L&T, filed for Chapter 11 bankruptcy protection last month and is now being liquidated.
In the just concluded fiscal year, specialty stores generated sales of $309.7 million, 38.4 percent above the prior year and 35.9 percent of total revenues from continuing operations. In the prior year, licensed departments in Macy’s stores accounted for 52 percent of Finlay sales, or $438.6 million.
The company declined to comment on a precise timetable for the exit from its remaining leased shops in department stores or to identify the specialty stores being closed.
Finlay said it will reduce its cost structure to levels “appropriate” to support its specialty jewelry store business through job cuts in administrative and sales associate positions in its New York headquarters and select specialty store locations.
Finlay also said it amended its revolving credit facility to reduce available commitments to $300 million and change the termination date to Feb. 25, 2010.