Retailscope

Christian Bernard Files Bankruptcy

Christian Bernard Jewelers filed a Chapter 7 bankruptcy petition the day after Christmas with the U.S. Bankruptcy Court in the District of New Jersey. In the filing, the company explained that its collapse stemmed from a slump in sales and limited access to credit.

Christian Bernard’s assets are estimated between $10 million and $50 million, with liabilities in the same range, according to court documents. The jeweler operated 15 stores across the U.S., including in Pennsylvania, Connecticut, North Carolina, Virginia, New York, Washington D.C., Chicago and Missouri. 

On January 16, Judge Novalyn Winfield approved a plan for the complete liquidation of the retailer’s assets, as presented by attorney Charles Forman, the court-appointed trustee for Christian Bernard. Following the order, the jeweler reopened its stores for a liquidation sale on January 20. All Christian Bernard employees were paid back wages and Forman said the company rehired a number of associates to work through the liquidation sales.

Also on January 16, Bank of America filed a $3.6 million suit against Christian Bernard in connection with a loan granted in July 2003. Christian Bernard Diffusion, a Paris subsidiary of Christian Bernard, was granted the loan through LaSalle Retail Finance, which is now part of Bank of America.

Bank of America claimed that Christian Bernard defaulted on the loan agreement. The outcome of the lawsuit was still pending at press time.

Shane Co. Files for Bankruptcy

Colorado-based jewelry retailer Shane Co. has filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in Denver, but asked to be able to continue paying its 542 employees at stores in 14 states. A company statement said Shane Co. plans to continue doing business uninterrupted while it executes a restructuring plan.

Court filings show that the company has between $100 million to $500 million in estimated assets and liabilities. The company listed about 6,000 creditors, the largest being New York-based Dison Gems Inc., with about $4.7 million. The 20 largest unsecured claims total $26.2 million, according to court documents. Other creditors include Leo Schachter, Eurostar, Nelson Jewellery, Jewelx and Man Sang.

Reeds Closes Virginia Location

Reeds Jewelers closed its shop at the MacArthur Center in Norfolk, Virginia. Employees said the store would close on December 28, but did not explain why. Workers at Reeds’ three other area stores — Lynnhaven Mall in Virginia Beach and Greenbrier Mall and Chesapeake Square in Chesapeake — stated that those stores would remain open. Corporate representatives of Reeds, based in Wilmington, North Carolina, could not be reached for comment.*

More Job Cuts at Jewelry Television

Jewelry Television started a new round of layoffs due to poor holiday sales and the weak economy, the Knoxville News Sentinel reported. The company did not say how many employees would be laid off, but noted that every department at the home-shopping network would be affected. Spokesperson Kelly Fletcher told the newspaper that downsizing may continue until sales improve, but that the company is not filing for bankruptcy.

In May 2008, Jewelry Television announced that it had eliminated 200 jobs in an effort to remain competitive during the economic slump. The News Sentinel reported that the company has already streamlined its operations from 2,000 employees to its present staff of about 1,300.

Court Appoints Trustee for Fred Leighton Reorganization

The U.S. Bankruptcy Court for the Southern District of New York appointed a trustee to handle the ongoing reorganization of retailer Fred Leighton Holding. Thomas C. Shull of Meridian Ventures was appointed chief restructuring officer/plan facilitator and granted full control and plenary authority over all aspects of the debtors’ businesses.

In November, lawyers for Merrill Lynch requested that such a Chapter 11 trustee be appointed, alleging that owner Ralph Esmerian, “secretly and systematically misappropriated millions of dollars of Merrill Lynch’s cash and noncash collateral for his own personal benefit.” Shull has until February 15, 2009 to investigate and compile lists of the debtors’ assets and liabilities, as well as any liens or claims of ownership, and submit these reports to the court.

Novori Changes Name to Aeon Holdings

Online diamond jewelry retailer Novori Inc. changed its name to Aeon Holdings Inc. following its short-term merger with Aeon. A statement from the company explained that Novori created Aeon as a subsidiary in order to merge with it and enable the name change. The statement noted that the name change still needed to be reviewed by NASDAQ’s Over-the-Counter Bulletin Board (OTCBB). The merger and resulting name change did not require stockholder approval.

Neiman Marcus Eliminates Jobs

Luxury department store retailer Neiman Marcus Group Inc. reported that it is cutting approximately 375 jobs — nearly three percent of its workforce. Spokeswoman Ginger Reeder said in a telephone interview that the layoffs were made as the privately held company tries to deal with the challenging economic environment and looks for ways to ensure that it is operating efficiently.  

Retailers across the industry have suffered as consumers have cut back spending amid the economic recession, mounting job losses and prolonged housing slump. The cuts were across all divisions and at all job levels, according to Reeder. Neiman Marcus will be offering severance packages, but Reeder did not have further details about the packages or any potential charges related to the packages.

Moody’s Investors Service said it may lower Neiman Marcus’ credit ratings due to its December same-store sales decline. In January, the retailer reported that its same-store sales dropped 27.5 percent in December, as even high-end consumers pulled back sharply on holiday spending. A shift in the fiscal 2009 reporting periods also dragged down monthly results, according to the company.

  Same-store sales or sales at stores open at least one year are a key indicator of retailer performance since they measure growth at existing stores, excluding newly opened stores. Neiman Marcus runs 40 Neiman Marcus stores, two Bergdorf Goodman stores and 21 clearance centers. The company also operates both catalogue and online retail businesses.*

*Additional Reporting by Dialog NewsEdge.

Article from the Rapaport Magazine - February 2009. To subscribe click here.