February 4, 2009

(BN) Fortunoff Closes Flagship Manhattan Store, Said Talking With Liquidators

Fortunoff Shuts Manhattan Store Amid Liquidator Talks

Feb. 3 (Bloomberg -- Fortunoff Fine Jewelry & Silverware LLC closed its Manhattan store and is in talks with companies to liquidate most of its merchandise, according to people with knowledge of the matter.

The jewelry-store chain, started in 1922 in Brooklyn, New York, may file for bankruptcy protection soon, said the people, who declined to be identified because the discussions are private. Lori Rhodes, a spokeswoman for Fortunoff owner NRDC Equity Partners LLC, declined to comment.

Liquidation would come one year after Fortunoff last sought bankruptcy protection and was purchased by NRDC, owner of the Lord & Taylor department-store chain. Retailers such as J.C. Penney Co. have cited jewelry among their worst-performing products as consumers abandon discretionary purchases to contend with rising joblessness and plunging home values.

Jewelry chains have also had to compete with department stores discounting at a "phenomenally high level," said Patricia Edwards, a retail analyst and founder of Storehouse Partners LLC in Seattle.

When NRDC purchased Fortunoff in March 2008 the investor said that it planned to double the number of Fortunoff stores and incorporate Fortunoff jewelry and bridal registry units into existing Lord & Taylor stores.

Expired Lease

The lease on the company's store at 57th Street and Fifth Avenue expired Jan. 31, said David Mark at Kasowitz Benson Torres & Friedman LLP, a law firm representing the landlord.

The Fortunoff store is next to Bergdorf Goodman and near Prada, Tiffany & Co. and Louis Vuitton. The interior is now empty except for dollies, ladders and a fake tree branch. A holiday sale sign lies on the carpet in the foyer.

Fortunoff had planned to close the 57th Street store and move its merchandise into Lord & Taylor after the department-store chain's contract with competitor Finlay Fine Jewelry Corp. expired, Arlene Putterman, a Fortunoff spokeswoman, said today in a telephone interview. Lord & Taylor no longer plans to sell the Fortunoff jewelry, she said.

Circuit City Stores Inc. and Linens 'n Things Inc. are among companies that have liquidated during the deepest financial crisis since the Great Depression. Total bankruptcy filings for companies rose 50 percent last year to 64,318, according to data compiled by Automated Access to Court Electronic Records, a service of Jupiter ESources LLC in Oklahoma City.

Remaining Stores

NRDC, based in Purchase, New York, bought Fortunoff for $110 million, including $80 million in cash in March 2008. The firm is a venture between Robert C. Baker and Richard A. Baker, principals of National Realty & Development Corp., and William Mack and Lee Neibart, partners of Apollo Real Estate Advisors LP.

Fortunoff was started as a neighborhood housewares store by Max and Clara Fortunoff, and later started selling fine jewelry and watches. The company's Web site lists 20 remaining stores, including four carrying a full collection of jewelry, gifts and home goods, and 14 selling outdoor furniture.

To contact the reporters on this story: Carlyn Kolker in New York t ckolker@bloomberg.net Lauren Coleman-Lochner in New York at llochner@bloomberg.net Jonathan Keehner in New York jkeehner@bloomberg.net .

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