(WHITEHALL JEWELLERS, INC. LOGO) NEWS RELEASE
================================================================================
For: Whitehall Jewellers, Inc.
Contact: John R. Desjardins
FOR IMMEDIATE RELEASE Executive Vice President
312-762-9751
WHITEHALL JEWELLERS, INC. REPORTS FIRST QUARTER RESULTS
Chicago, Illinois, May 28, 2003 -- Whitehall Jewellers, Inc. (NYSE:
JWL) today reported financial results for the first quarter ended April 30,
2003.
For the quarter ended April 30, 2003, Whitehall posted a net loss of
$2.7 million or $0.19 per share compared to net income of $0.4 million or $0.02
per diluted share for the same period a year ago.
Hugh M. Patinkin, Chairman and Chief Executive Officer, commented,
"First quarter results were significantly affected by the economy and, more
particularly, a dramatic sales drop off in late February and throughout March
which we believe related in large measure to the War in Iraq and the heightened
concerns about terrorism. The impact of this sales shortfall negatively impacted
quarterly results. In addition, the Company incurred certain expenses in the
first quarter in connection with the implementation of several new sales focused
programs, the opening of 16 new stores, as well as higher professional fees."
Mr. Patinkin continued, "In April we saw some improvement in our sales
performance. We are in the process of rolling out several sales initiatives,
including the addition of Movado watches to almost all of our stores, which we
believe will have a positive impact on sales later this year and beyond."
Today at 9:00 AM EDT, the Company will host a conference call to review
results for the quarter ended April 30, 2003. 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.
Whitehall Jewellers, Inc. is a leading national specialty retailer of
fine jewelry, currently operating 385 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. The Company opened
16 stores and closed one store during the first quarter. The Company plans to
open five additional stores during the balance of fiscal 2003.
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
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; (11) our ability to maintain
adequate information systems capacity and infrastructure; (12) our leverage 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) the extent and
results of our E-commerce strategies and those of others; (16) regulation
affecting the industry generally, including regulation of marketing practices;
(17) the successful integration of acquired locations and assets into our
existing operations; and (18) the risk factors identified from time to time in
our filings with the Securities and Exchange Commission.
# # #
- tables to follow -
Whitehall Jewellers, Inc.
Statements of Operations
For the three months ended April 30, 2003 and 2002
(unaudited)
(in thousands, except per share data)
<Table>
<Caption>
Three months ended
April 30, 2003 April 30, 2002
-------------- --------------
Net sales $ 69,149 $ 74,588
Cost of sales (including buying and occupancy
expenses) 46,052 47,376
------------- -------------
Gross profit 23,097 27,212
Selling, general and administrative expenses 26,692 25,627
------------- -------------
Income (loss) from operations (3,595) 1,585
Interest expense 908 1,012
------------- -------------
Income (loss) before income taxes (4,503) 573
Income tax expense (benefit) (1,755) 204
------------- -------------
Net income (loss) $ (2,748) $ 369
============= =============
Basic earnings per share:
Net income (loss) $ (0.19) $ 0.03
============= =============
Weighted average common share and common
share equivalents 14,206 14,667
============= =============
Diluted earnings per share:
Net income (loss)
$ (0.19) $ 0.02
============= =============
Weighted average common share and common
share equivalents 14,206 15,382
============= =============
</Table>
Whitehall Jewellers, Inc.
Balance Sheets
(unaudited, in thousands)
<Table>
<Caption>
April 30, 2003 January 31, 2003 April 30, 2002
--------------- ---------------- ---------------
ASSETS
Current Assets:
Cash $ 1,302 $ 2,048 $ 2,131
Accounts receivable, net 719 1,621 1,811
Merchandise inventories 206,276 197,859 175,882
Prepaid income tax 2,293 -- 438
Prepaid expenses 2,049 1,239 1,109
Deferred income taxes, net 2,158 2,172 2,370
Deferred financing costs 510 510 511
--------------- --------------- ---------------
Total current assets 215,307 205,449 184,252
Property and equipment, net 63,628 61,634 64,097
Goodwill 5,662 5,662 5,662
Deferred income tax, net -- -- --
Deferred financing costs 161 213 595
--------------- --------------- ---------------
Total assets $ 284,758 $ 272,958 $ 254,606
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loans $ 88,559 $ 94,490 $ 52,627
Current portion of long-term debt 3,000 4,500 5,500
Accounts payable 46,492 24,726 50,251
Customer deposits 3,635 3,454 4,077
Accrued payroll 4,583 3,282 4,313
Income taxes -- 3,261 --
Other accrued expenses 14,945 13,207 14,564
--------------- --------------- ---------------
Total current liabilities 161,214 146,920 131,332
Term loan -- -- 3,000
Subordinated debt 640 640 640
Deferred income tax 3,753 3,607 1,901
Other long-term liabilities 3,216 3,138 2,784
--------------- --------------- ---------------
Total liabilities 168,823 154,305 139,657
Commitments and contingencies
Stockholders' equity:
Common stock 18 18 17
Class B common stock -- -- --
Additional paid-in capital 105,755 105,795 104,653
Accumulated earnings 46,029 48,777 39,239
--------------- --------------- ---------------
151,802 154,590 143,909
Less: Treasury stock, at cost
(3,817,742, 3,822,637 and 3,199,628
shares, respectively) (35,867) (35,937) (28,960)
--------------- --------------- ---------------
Total stockholders' equity 115,935 118,653 114,949
--------------- --------------- ---------------
Total liabilities and stockholders'
equity $ 284,758 $ 272,958 $ 254,606
=============== =============== ===============
</Table>
# # #