Finlay Dropping Department Store Business

Finlay Enterprises revealed on Thursday a radical shift in its business strategy in an effort to turn around its fortune. The company announced a strategic plan to exit its leased department store business and focus solely on its specialty jewelry stores business.

Just days after its suppliers were asked to accept delayed payments to help the retailer avert a bankruptcy filing, Finlay revealed that it reached “key agreements” with a majority of its third lien note holders and vendors.

“Given the decline in our department store business over the past five years coupled with the strenuous economic conditions under which we are currently operating, we view our strategic plan to exit this business segment as a necessary measure,” said Finlay Chairman and CEO Arthur E. Reiner.

Finlay, which operates 69 Bailey Banks & Biddle, 34 Carlyle and five Congress specialty jewelry stores, plans to close about 40 of the less profitable specialty store locations.

Reiner said that cost reduction measures include “reduce headcount,” mainly administrative, as well as sales associate positions at the closing locations.

The company entered into a limited consent and amendment to its fourth amended and restated credit agreement. The amendment, which reduces the available commitments to $300 million and amends the termination date to February 25, 2010, permits the company to change its business as part of its strategic plan.

Finlay added that it and a majority of its note holders entered into agreements with a majority of its trade vendors, “pursuant to which the Company granted such vendors a third priority lien on its and its subsidiaries' assets in accordance with the terms of the Senior Secured Third Lien Notes.”