1990: Diamond Catalogue Showrooms May Revive Diamond Industry
Town & Country jewelry has announced that it will liquidate its assets and Service Merchandise Co. has been forced into Chapter 11 bankruptcy protection.
T&C had only been out of Chapter 11 for 7 months before falling back in the hole. In January, T&C filed for Chapter 11 bankruptcy protection and laid-off three-quarters of its employees. Sales for T&C dropped 46% for the 9 months ending November, 1997. For the 3 months ending February, 1998, after-tax earnings went to a negative $18,546,000. In a cash-raising move, T&C has sold two sample lines and molds to Michael Anthony Jewelers, but had refused buy-out offers from both Michael Anthony and OroAmerica.
OroAmerica will be the exclusive distributor of Town & Country jewelry, in Los Angeles through Kurgan & Cheviot.
As well, the discount jewelry retailer, Service Merchandise Co., says that five of its vendors have forced it into Chapter 11. The vendors, including Samsonite Corp. and Remington Products, say that they are owed in the millions. Although the Company is now protected by Chapter 11, it reported that 250 more jobs would be cut as well as 124 stores closed. The Company issued a statement saying that it will use the time under Chapter 11 to restructure.
The liquidation of T&C and the move into Chapter 11 for SMC come at a strange time. With the industry moving into a revitalized era – Tiffany’s report of a rise of 24%, the JA Annual Business Survey report of diamond sales rising by 10% and that retail jewelers achieved a growth of 9.3% in 1998 – how is it that these leviathan businesses can’t seem to make it work?
While the reasons for these difficulties may include management problems and expansion at too rapid a rate, one factor could be the rise of Internet sales and the slow movement of standard catalogue showrooms toward obsolescence. It is certainly not an industry wide situation as is illustrated by an announcement made by the Zale Corp.
In an interesting twist, Zale, itself out from under Chapter 11 only since July, 1993, announced that it will acquire People’s Jewellers in an all-cash deal at a cost of $115 million Canadian – U.S. $76 million. People’s is a Canadian chain of 175 stores and had, at one time, made a play to acquire Zale.