Exhibit 99.1
[WHITEHALL JEWELLERS LOGO] NEWS RELEASE
================================================================================
For: Whitehall Jewellers, Inc.
Contact: John R. Desjardins
Executive Vice President
FOR IMMEDIATE RELEASE 312.762.9751
WHITEHALL JEWELLERS, INC. REPORTS SECOND QUARTER FINANCIAL RESULTS
Chicago, Illinois, August 26, 2004 -- Whitehall Jewellers, Inc.
(NYSE:JWL) today reported financial results for the second quarter ended July
31, 2004.
The Company reported total second quarter sales of $72.3 million
compared to $72.7 million for the second quarter last year. Net loss for the
second fiscal quarter of 2004 was $3.2 million compared to net loss of $2.8
million for the same period a year ago. Net loss per share of $0.23 in the
second quarter compares to net loss per share of $0.20 for the second quarter of
last year.
As previously disclosed, the Company had recorded in the fourth quarter
of last year and the first quarter of the current fiscal year a total litigation
accrual of $8.9 million for the consolidated Capital Factors actions and related
investigations by the United States Attorney and Securities and Exchange
Commission. Since that time, the Company has engaged in additional settlement
discussions relating to these matters. In light of developments regarding the
foregoing, the Company has recorded an additional accrual in the quarter ended
July 31, 2004 in the amount of $310,000. In addition, professional fees
increased by approximately $370,000 over the second quarter last year. This
increase was incurred primarily in connection with the consolidated Capital
Factors actions and the related investigations by the United States Attorney and
Securities and Exchange Commission.
For the six-month period ended July 31, 2004, the Company reported
sales of $145.3 million 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. Net
loss per share for the six-
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
month period was $0.49 compared to net loss per share of $0.39 for the six-month
period last year. For this period, the litigation accruals plus the increase in
professional fees, incurred primarily in connection with the consolidated
Capital Factors actions and the related investigations by the United States
Attorney and Securities and Exchange Commission, amounted to approximately $2.9
million before income taxes.
Hugh M. Patinkin, Chairman and Chief Executive Officer, commented, "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. 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."
Mr. Patinkin continued, "We continue to cooperate with the United
States Attorney and the Securities and Exchange Commission in their
investigations related to the Capital Factors actions."
Today at 9:00 a.m. EDT, the Company will host a conference call to
review results for the quarter ended July 31, 2004. To participate in the call,
please dial 877-888-7019. This call will also be broadcast live on the Internet
at: http://www.whitehalljewellers.com.
ABOUT WHITEHALL JEWELLERS
Whitehall Jewellers, Inc. is a leading national specialty retailer of fine
jewelry, currently operating 386 stores in 38 states. The Company operates
stores in regional and superregional shopping malls under the names Whitehall
Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers.
SAFE HARBOR STATEMENT
This release contains certain forward-looking statements (as such term is
defined in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934) and information relating to the Company that
are based on the current beliefs of management of the Company as well as
assumptions made by and information currently available to management including
statements related to the markets for our products, general trends and trends in
our operations or financial results, plans, expectations, estimates and beliefs.
In addition, when used in this release, the words "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "predict" and similar expressions and
their variants, as they relate to the Company or our management, may identify
forward-looking statements. Such statements reflect our judgment as of the date
of this release with respect to future events, the outcome of which is subject
to certain risks, including the factors described below, which may have a
significant impact on our business, operating results or financial condition.
Investors are cautioned that these forward-looking statements are inherently
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
uncertain. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or outcomes may
vary materially from those described herein. Whitehall Jewellers undertakes no
obligation to update forward-looking statements. The following factors, among
others, may impact forward-looking statements contained in this release: (1) a
change in economic conditions or the financial markets which negatively impacts
the retail sales environment and reduces discretionary spending on goods such as
jewelry; (2) reduced levels of mall traffic caused by economic or other factors;
(3) our ability to execute our business strategy and the related effects on
comparable store sales and other results; (4) the extent and results of our
store expansion strategy and associated occupancy costs, and access to funds for
new store openings; (5) the high degree of fourth quarter seasonality of our
business; (6) the extent and success of our marketing and promotional programs;
(7) personnel costs and the extent to which we are able to retain and attract
key personnel; (8) the effects of competition; (9) the availability and cost of
consumer credit; (10) relationships with suppliers including the timely delivery
to the Company of appropriate merchandise on payment terms consistent with past
practice; (11) our ability to maintain adequate information systems capacity and
infrastructure; (12) our leverage, liquidity, and cost of funds and changes in
interest rates that may increase such costs; (13) our ability to maintain
adequate loss prevention measures; (14) fluctuations in raw material prices,
including diamond, gem and gold prices; (15) developments relating to the
consolidated Capital Factors actions and the related SEC and U.S. Attorney's
office investigations, and shareholder and other civil litigation including the
impact of such developments on our results of operations and financial condition
and relationship with our lenders or with our vendors; (16) regulation affecting
the industry generally, including regulation of marketing practices; and (17)
the risk factors identified from time to time in our filings with the SEC.
- tables to follow -
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
Whitehall Jewellers, Inc.
Statements of Operations
For the three months and six months ended July 31, 2004 and 2003
(unaudited)
(in thousands, except per share data)
Three months ended Six months ended
July 31, 2004 July 31, 2003 July 31, 2004 July 31, 2003
------------- ------------- ------------- -------------
Net sales $ 72,284 $ 72,732 $ 145,312 $ 141,881
Cost of sales (including buying and occupancy
expenses) 48,220 48,540 96,971 94,578
--------- --------- --------- ---------
Gross profit 24,064 24,192 48,341 47,303
Selling, general and administrative expenses 26,972 26,509 54,007 52,644
Professional fees and other charges 1,644 714 4,298 1,349
--------- --------- --------- ---------
Loss from operations (4,552) (3,031) (9,964) (6,690)
Interest expense 1,094 1,564 2,000 2,472
--------- --------- --------- ---------
Loss before income taxes (5,646) (4,595) (11,964) (9,162)
Income tax benefit (2,463) (1,792) (5,085) (3,572)
--------- --------- --------- ---------
Net loss $ (3,183) $ (2,803) $ (6,879) $ (5,590)
========= ========= ========= =========
Basic earnings per share:
Net loss $ (0.23) $ (0.20) $ (0.49) $ (0.39)
========= ========= ========= =========
Weighted average common share and common share
equivalents 13,947 14,215 13,937 14,210
========= ========= ========= =========
Diluted earnings per share:
Net loss $ (0.23) $ (0.20) $ (0.49) $ (0.39)
========= ========= ========= =========
Weighted average common share and common share
equivalents 13,947 14,215 13,937 14,210
========= ========= ========= =========
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
Whitehall Jewellers, Inc.
Balance Sheets
(unaudited, in thousands)
July 31, 2004 January 31, 2004 July 31, 2003
------------- ---------------- -------------
ASSETS
Current Assets:
Cash $ 1,433 $ 1,901 $ 1,399
Accounts receivable, net 2,295 2,544 333
Merchandise inventories 199,241 206,146 204,926
Other current assets 797 875 2,127
Current income tax benefit 4,255 2,294 4,435
Deferred financing costs 301 261 261
Deferred income taxes, net 6,273 5,712 2,522
--------- --------- ---------
Total current assets 214,595 219,733 216,003
Property and equipment, net 57,750 60,948 63,709
Goodwill, net 5,662 5,662 5,662
Deferred financing costs 603 654 781
--------- --------- ---------
Total assets $ 278,610 $ 286,997 $ 286,155
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loan $ 97,496 $ 80,340 $ 86,375
Current portion of long-term debt 640 640 --
Accounts payable 42,559 60,538 61,078
Customer deposits 3,047 3,601 3,355
Accrued payroll 3,473 4,457 3,036
Other accrued expenses 25,829 24,479 12,023
--------- --------- ---------
Total current liabilities 173,044 174,055 165,867
Subordinated debt -- -- 640
Deferred income taxes, net 2,990 3,639 3,879
Other long-term liabilities 3,589 3,535 3,338
--------- --------- ---------
Total liabilities 179,623 181,229 173,724
Commitments and contingencies
Stockholders' equity:
Common stock 18 18 18
Class B common stock -- -- --
Additional paid-in capital 106,162 106,091 105,830
Retained earnings 32,432 39,311 42,435
Treasury stock, at cost (4,117,172; 4,134,143 and
3,815,900 shares, respectively) (39,625) (39,652) (35,852)
--------- --------- ---------
Total stockholders' equity, net 98,987 105,768 112,431
--------- --------- ---------
Total liabilities and stockholders' equity $ 278,610 $ 286,997 $ 286,155
========= ========= =========
# # #
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com