Majors
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Robbins Bros. files Chapter 11, sells stores
By null
March 04, 2009
Wilmington, Del.--California-based jewelry chain Robbins Bros. Corp. filed for Chapter 11 bankruptcy protection on Tuesday, making it the latest major jewelry retailer to fall prey to the economic crisis.
According to documents filed in U.S. Bankruptcy Court for the District of Delaware, the 16-store Azusa, Calif.-based chain, known as an engagement ring destination, will be broken up into two parts and sold.
Barring any higher bids coming in during the Chapter 11 process, Robbins Bros. Corp. will sell the California stores to Robbins Bros. Jewelry--essentially to itself, according to court papers, which also say that the latter can purchase the stores, "free and clear of all liens, claims and encumbrances pursuant to section 363 of the Bankruptcy code."
Meanwhile, Canadian jewelry manufacturer and retailer Spence Diamonds, which operates stores in the Canadian provinces of Ontario, British Columbia and Alberta, has entered into an agreement to purchase three Houston stores--Baybrook, Willowbrook and Houston Loop--and Illinois locations.
Robbins Bros., which expanded rapidly in the past few years, saw its financial condition begin to deteriorate in 2007, becoming progressively worse through 2008, court documents state.
According to its bankruptcy filing, Robbins Bros. felt the pinch of reduced spending by consumers, was riddled with debt from its expansion and had liquidity issues, making it difficult to stock up on merchandise and limiting the chain's ability to advertise, court documents state.
The chain saw sales decrease about 3 percent last year--from $106.9 million in 2007 to $103.7 million in 2008--while losses more than doubled, increasing from $2.8 million in 2007 to $6.4 million in 2008.
The company's books show assets of $66 million, but liabilities of $77 million, according to court documents.
Among its top unsecured creditors, the chain lists in court documents some notable diamond and jewelry companies, including Leo Schachter Diamonds LLC based in New York (owed $2.71 million), Leo Schachter Ltd. in Ramat Gan, Israel (owed $1.82 million), Moshe and Namdar (USA) Inc. (owed $1.4 million), R and R Grosbard (owed $597,851) and Simon G. Jewelry Inc. (owed $554,455).
Boston-based Consensus Advisors is serving as the financial advisor to the ad hoc unsecured creditors' committee.
According to the store's Web site, Robbins Bros. got its start in California in the mid 1950s. Chairman and Chief Executive Officer Steve Robbins and his brother Skip Robbins then took their three-generation, family-owned store into the shopping malls in the 1980s.
In 1995, however, court records show that the brothers chose to wind down their 14 mall stores and switch to a freestanding, bridal-only store in Fullerton, Calif.
By 2003, the chain's operations had grown to include seven similar freestanding stores in California.
After recapitalizing in 2004, the chain continued to grow, opening stores in Texas and Illinois, topping off at 16 stores in three states by early 2008. Billing itself as the "World's Biggest Engagement Ring Store," Robbins Bros. is noted for its splashy grand openings, such as the September 2006 bash that kick-started its Houston store.
Steve Robbins and his wife pulled up in a limousine to greet 200 guests at the red-carpet affair, while a fashion show featuring jewelry and designs by Chloe Dao, a Houston native and second-season winner of reality TV show Project Runway, took center stage.
At the time of its Chapter 11 filing, Robbins Bros. operated eight stores in California, three in Illinois and five in Texas, making it large enough to rank as one of North America's largest retail jewelry chains by store count, according to National Jeweler's 2008 Top 50 list.
The chain rang up a total of $125 million in jewelry and watch sales in 2007, and, at the time, ranked No. 39 on National Jeweler's 2008 list of $100 Million Supersellers.
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