COUNSEL FOR CIRO'S CREDITORS SAYS RETAILER MAY NEED MAJOR OVERHAUL

Byline: Rich Wilner

NEW YORK--Ciro Inc., a specialty retailer of fashion jewelry, may have to drastically scale back it 132-store operation and implement major merchandising changes if it hopes to successfully reorganize under Chapter 11, according to the attorney representing the chain's creditors.
Michael J. Deutsch, counsel to Ciro's creditors' committee, said high levels of debt, expensive leases and relatively low sales call for major changes. Ciro operates stores under the Ciro, Ciro of Bond Street and Kenneth Jay Lane names. The Kenneth Jay Lane stores are operated under a license from the designer.
After several meetings with Ciro management following the company's July 19 Chapter 11 filing, Deutsch has decided to consult with apparel industry executives in hopes of coming up with a plan to remerchandise the stores.
"Perhaps we can convince Ciro's to add accessories or apparel to the mix," Deutsch said in a telephone interview last week. "Selling only jewelry does not seem to be working."
Despite its many stores, some in choice locations like its Ciro of Bond Street units in The Plaza and Waldorf-Astoria hotels here, and its Kenneth Jay Lane store at 677 Fifth Ave., between East 53rd and 54th Streets here, Cirorang up sales of just over $40 million last year, the lawyer said, a level too low to support such high market-rate rents. Deutsch said Ciro is weighing closing its lower Madison Avenue store, at 783 Madison Ave., between 67th and 68th Streets, as part of a retrenchment. Specific store closing decisions have not been made. Calls to Ciro's attorneys and executives were not returned.
Ciro has not yet signed a post-petition financing agreement, although certain trade creditors are considering making an investment in the firm, Deutsch added.
As reported, Ciro filed for Chapter 11 protection after expenses and debt associated with the recent expansion program outstripped the firm's sales and cash flow and Ciro was hit with numerous lawsuits from suppliers, partners and landlords seeking payment.
Ciro had been attempting an out-of-court reorganization since February, but was never able to secure the necessary financing.
--Fairchild News Service

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