Whitehall Jewellers Reports Higher Q2 Losses

Whitehall Jewellers today reports second quarter sales of $72.3 million compared to $72.7 million for the second quarter last year and a net loss of $3.2 million compared to net loss of $2.8 million for the same period a year ago.

During the quarter, the company spent $310,000 on legal fees relating to the consolidated Capital Factors actions and related investigations by the United States Attorney and Securities and Exchange Commission, on top of the $8.9 million spent during the fourth quarter of last year and the first quarter of this year.

In addition, professional fees connected to the legal issues increased by approximately $370,000 over the second quarter last year.

“We continue to cooperate with the United States Attorney and the Securities and Exchange Commission in their investigations related to the Capital Factors actions,” was all that Hugh M. Patinkin, Whitehall’s Chairman and CEO, was willing to say on the issue in a statement released this morning.

The company is under criminal investigation by the US Attorney and SEC in connection to the Capital Factors lawsuit filed last August against 14 companies, including Whitehall Jewellers and Cosmopolitan Gem Corp.

The company had sales of $145.3 million during the first half of the fiscal year, compared to $141.9 million last year. Net loss was $6.9 million versus a net loss of $5.6 million for the same period a year ago.

“Led by Debbie Nicodemus-Volker, the company's new Executive Vice President of Merchandise, this quarter we began a review of the company’s merchandising and marketing positioning,” Patinkin commented.

“As a result of this review, in July the company began offering price reductions on certain items that will not be part of the company's merchandising assortments going forward. This will be a significant focus for the company during its third quarter. The company is also currently well advanced in its planning for the Christmas season."