Whitehall Jewellers Changes Strategy – Heading Up-Market

Troubled U.S. jeweler Whitehall Jewellers is changing direction in an attempt to bag luxury customers and is getting rid of old stock at cost price as it expands the number of its stores that will feature the new goods.

The move follows the hiring in June of Debbie Nicodemus-Volker, a veteran of Donna Karan International, a division of Louis Vuitton Moet Hennessey, as Whitehall's executive vice president of merchandise.

Whitehall Chairman and CEO Hugh M. Patinkin said the jeweler will focus on the kind of jewelry "you'd see in fashion magazines today".

Whitehall’s shift up-market could be problematic, however, since a number of its stores are in shopping malls that attract bargain-hunters in blue-collar areas.

But Patinkin said the new strategy was possible since a review of the company's real estate showed that "we have a niche we can go after" because many of its jewelry stores are in upscale and upper-moderate malls.

Analysts believe Whitehall’s move could succeed since the economy is continuing to grow.

The strategy announcement coincided with Whitehall’s report last week that its net loss worsened in the second quarter to $3.2 million from $2.8 million in the same period a year ago. Sales during the second quartered slipped slightly to $72.3 million from $72.7 million in the same quarter last year.

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