Ian Ritter is national online editor for GlobeSt.com/RETAIL.
SAVANNAH, GA-Discount jewelry chain Friedman's is closing up to 165 stores in 17 states as part of its Chapter 11 reorganization and will sell more than $25 million in inventory as part of the plan. The action will leave the company with roughly 480 units in 20 states.
"As Friedman's moves forward in its restructuring, this action will allow the company to focus its resources on those stores that have stronger prospects for future growth," says Sam Cusano, the company's president and CEO, in a statement. Age, location, physical condition and 2004 holiday performance were all factors in considering the closings, he said. The company will continue to operate the closing stores until all of its inventory is sold.
Friedman's filed for bankruptcy on Jan. 14. At the time, company officials said they were filing because of "limitations imposed on funding by the company's lenders, which decided not to agree to amended financial covenants in the company's credit facility."
The chain was also plagued by disappointing financial results after significant expansion in the mid-1990s. In December three states filed civil lawsuits against Friedman's claiming that, among other things, the company's customers were acquiring credit insurance with their purchases without their knowledge. At the time, company officials said they believed such occurrences had taken place years ago and that they had programs in place to monitor the situation.
The company has also been under investigation by the Securities and Exchange Commission since 2003 over whether or not it had issued false material or misleading disclosures under the Securities Act of 1933. Friedman's executives said they are "fully cooperating" with the SEC investigation.
Friedman's was founded here in 1920. The company's stores are mainly in power centers and regional malls.
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