Samuels Jewelers Incorporated

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Samuels Jewelers Incorporated

2914 Montopolis Drive #200
Austin, Texas 78741
(512) 369-1400
Fax: (512) 369-1527
Web site:

Public Company
Founded: 1956 as Barrys Jewelers
Employees: 1,007
Sales: $81 million (1999)
Stock Exchanges: OTC
Ticker Symbol: SMJW
NAIC: 44831 Jewelry Stores

Samuels Jewelers Incorporated owns and operates one of the largest chains of jewelry stores in the country, with 116 stores located in malls from California to Texas. Known until 1998 as Barrys Jewelers, the company manages stores under five different names: A. Hirsh & Son, Hatfield Jewelers, Mission Jewelers, Schubach, and Samuels Jewelers. With stores primarily in the western part of the country, Samuels Jewelers offers customers a broad array of merchandise, with diamonds and gem-stones comprising the majority of the companys sales. Samuels Jewelers also specializes in watches and high-fashion gold jewelry, and competes directly with both high-end jewelry stores and discount chains. Samuels Jewelers has a troubled financial history, with the company filing for bankruptcy twice in five years; nonetheless, the company is committed to remaining a significant force within the jewelry industry.

Beginnings of a Regional Chain: 1956-Late 1970s

Samuels Jewelers was originally founded as Barrys Jewelers in 1956. Started by David Blum and Gerson Fox in Los Angeles, California, the company started out as a single store which within a few years grew into a small, regional chain. Barrys Jewelers continued to flourish throughout the next several years, with stores concentrated primarily in southern California. Blum and Fox focused on offering their customers good service with a high-quality inventory at prices competitive to other chains. At the time, chain jewelry stores were just beginning to make a mark within the industry, and Barrys Jewelers soon grew to regional prominence in the western area of the country, opening dozens of stores within two decades.

In 1977 a company called Unimax bought Barrys Jewelers from Blum and Fox. Unimax retained the two founders to continue overseeing the business, and within five years Barrys Jewelers had expanded to 54 stores, with locations in malls across the West. At the end of 1982 Blum and Fox bought back Barrys Jewelers from Unimax, and began an aggressive campaign of expansion which was to last almost ten years.

Rapid Growth: 1980s

Beginning in 1982 Barrys Jewelers began to take advantage of an economic climate of looser credit standards and consumers who were spending more freely. In part due to the rapid expansion of indoor shopping malls in the 1980s Barrys Jewelers became one of the fastest-growing jewelry chains in the country. The company opened several new stores of its own, and also acquired two other jewelry chains, Mission Jewelers and Samuels Jewelers. Barrys Jewelers bought Mission Jewelers from Zale Corporation, and in doing so added 60 new locations to the companys roster, as well as expanded the company geographically, with the Mission Jewelers stores being centered primarily in the Southwest. The acquisition of Samuels Jewelers, which was purchased by Barrys from the Canadian company Peoples Jewelers, was also a boon for the company, as Samuels was a well-respected, if small chain which had been in operation in the western regions of the country since 1891.

In 1986 Barrys Jewelers went public, and between that year and the next grew to 104 stores, becoming one of the fastest expanding jewelry chains in the country. Within a period of eight years the company had expanded from 54 to a total of 228 stores, the vast majority of which were located within malls, and had acquired a number of small but fiscally healthy chains. By 1990 Barrys Jewelers counted among its divisions not only Samuels Jewelers and Mission Jewelers, which were the companys two strongest acquisitions, but also the stores Gold Art Creations, Hatfield Jewelers, which operated out of Los Angeles, A. Hirsch & Son, Schubach, and Kingmaker. All the stores specialized primarily in precious gemstones, watches, and gold jewelry, but inventory also varied slightly from chain to chain, with certain stores focusing more on modern, fashion-conscious jewelry while others emphasized a more classic image. Barrys Jewelers divisions, in other words, were not operated as if a single entity, with a centralized system of control: each division had its own management, marketing, and accounting team, which helped the divisions maintain a unique identity. Having the companys divisions maintain such independence, however, proved to be disadvantageous to the company in the long run.

A vitally important part of Barrys Jewelers rapid growth was due in part not only to a retail economy conducive to the expansion of chain stores, but to the companys own willingness to extend in-house credit to customers who had little or no credit history. Flexible credit became an essential element to Barrys Jewelers customer service, and allowed a customer who would otherwise be unable to afford pieces in a certain price range to have access to that merchandise through credit. Such methods of purchase were of course a risk, both for the company and to the customers financial well-being, but the practice ensured the company a larger customer base and, perhaps most importantly for a store trying to survive within the highly competitive jewelry market, also virtually guaranteed loyal, repeat customers. By decades end, when Barrys Jewelers had reached its peak point of expansion, credit accounted for almost 72 percent of the companys sales in all its divisions.

Turn for the Worse: Early 1990s

After almost a decade of phenomenally successful growth and acquisitions, Barrys Jewelers in 1990 began to be troubled by financial threats on several fronts. The companys growth had stretched its overhead to the limit, and, with so much of the companys sales coming from consumer credit, Barrys Jewelers found itself in a vulnerable position, overly dependent on the fulfillment of debt from customers with shaky or nonexistent history. The company began to have increasing difficulty paying its many vendors and, with rumors circulating about the businesss instability, weakened investor confidence caused the companys stock to fall from a high of $9 a share to $1.50 a share.

As a brief recession set in at the beginning of the decade, many of Barrys Jewelers customers who had utilized the companys in-house credit were unable to pay back their debts, and had to default on their bills. Had the company not relied so heavily on credit, these defaults probably would not have made much more than a dent in the businesss financial well-being. Additionally, in 1991 Barrys Jewelers had a devastating holiday season, which was by far the most important selling period for a jewelry business, and the company fell far short of its targeted Christmas and Hanukkah revenue predictions. By the end of the year Barrys Jewelers had losses of over $29 million, bringing into question the companys future viability.

Besides facing bad consumer debt and increasingly poor sales, Barrys Jewelers had a new, unforeseen competitor in the early 1990s: home shopping networks. Home shopping networks were a threat to the more traditional retail industry for several reasons, the two most important of which were price and convenience. Because labels did not have to showcase their merchandise in actual retail space, overhead costs were much lower for home shopping merchants than other retailers, allowing the former to keep prices far lower than those of their competitors. In addition, with products being sold on television, the consumer did not have to plan a specific trip to make a purchase; it was all right there in the customers own home, making both impulse and planned purchasing easier.

In February 1992, after a further loss in overall sales, Barrys Jewelers began planning a financial restructuring caused, according to the company, by a depressed retail market and deterioration in its (the companys) financial condition. The company filed for Chapter 11 bankruptcy protection, and worked out a plan with its investors under which the businesss vendors would continue to be paid while the company plotted a new financial strategy. While most businesses remain under Chapter 11 for at least half a year, Barrys Jewelers was able to emerge after only four months, and by June was operating on its own again.

The restructuring resulted in several changes, with the companys bondholders receiving financial and managerial control of the business. The company was also able to obtain a $103 million line of credit which allowed continuing payments to vendors, thereby keeping inventory well stocked and up to date throughout the restructuring process.

Though Barrys Jewelers came out of Chapter 11 in a short period of time, the company was forced to downsize, and closed 68 of its poorest selling stores. The stores were sold to small regional chains and independent jewelers at a fraction of their actual worth, but the sales were necessary to both meet the companys debts and aid in the maintenance of Barrys Jewelers more lucrative locations.

Company Perspectives:

Our mission is to bring you quality jewelry at affordable prices, and to provide exemplary customer service before, during and after you make your purchase.

One of the more important alterations which came about as a result of Barrys Jewelers financial difficulties was not fiscal but structural: the company after 1992 made significant moves towards centralizing their financial and managerial operations, with the aim of making the companys divisions more unified and less heterogeneous in both presentation and style of management. The company changed its policies of allowing each of its divisions to autonomously handle its marketing and credit operations, creating several new managerial positions which operated directly from the companys headquarters in Monrovia, California. In addition, founder David Blums son-in-law, Terry Burman, who was a longtime employee of Barrys Jewelers, was named the companys new CEO. The new management team, which included people recruited from well-established businesses such as Gumps and Tiffany, was in charge of the marketing, merchandising, loss prevention techniques, and accounting for all the companys divisions, and had the aim of making Barrys Jewelers operations more cost-effective across the board.

The company also placed a new emphasis on employee training: with home shopping networks taking an increasing number of customers away from traditional retailers, good, reliable customer service became one of the most important ways in which to attract and retain a solid consumer base. The companys new training program included workshops, weekly meetings, and video instruction for each of the companys divisions, giving Barrys Jewelers employees a thorough and up-to-date knowledge of the products they were selling.

By the middle of the decade Barrys Jewelers was again making a profit, pulling in a revenue of $114 million in 1994, and by 1995 the company was operating 162 relatively profitable stores in 16 states. At this time the company began focusing on a new phenomenon which was sweeping through the retail industry: the increasing popularity of the superstore. Instead of opening new stores, the traditional method of expansion for chain retailers, Barrys Jewelers concentrated on converting some of its more successful locations into superstores. A superstore carried 50 to 60 percent more inventory than a typical jewelry boutique, and offered the customer a broader selection of high fashion jewelry. Superstores also competed directly with discount chains and home shopping networks, emphasizing value and quantity as well as customer service.

Continuing Struggle: 199599

Though Barrys Jewelers by 1995 had constructed ambitious plans for growth and increased profitability, with intentions to open 21 new stores and convert more of their existing boutiques into lucrative, competitive superstores, the company was again ailing by the end of 1996. Even with a new $100 million line of credit from the Bank of Boston, the company found the competition from discount chains and other stores too intense, and, after another poor holiday season, had lost $6.8 million by 1997. Such a loss caused the company to default on some of its bank agreements as well as close 11 more stores.

In May 1997 Barrys Jewelers again filed for Chapter 11 protection, listing liabilities of over $134 million. Restructuring, both financial and organizational, was again in order: Randy McCullough, the former president of Silvermans Jewelers, became the companys new CEO and, after Barrys Jewelers emerged from bankruptcy later that year, board members made the decision to change the companys name to Samuels Jewelers.

The new name arose from the fact that Samuels Jewelers was the businesss most successful and, to the consumer, easily recognizable division. Not only was the company name changed: plans were laid to change all the companys divisions to Samuels Jewelers, which would further condense operations at the ailing chain. After the company reestablished itself for the second time, it moved its headquarters from California to Austin, Texas, where many of Samuels Jewelers stores were located. The companys divisions now included, besides Samuels Jewelers, Hatfield Jewelers, Schubach, A. Hirsch & Son, and Mission Jewelers, making a total of 115 stores across the West.

In 1999 things began to look up for Samuels Jewelers. The company had a better than expected Christmas season and also made its first acquisition since emerging from Chapter 11 in 1997. That year, Samuels bought the small but successful Silvermans Jewelers, of which McCullough used to be the president. Silvermans Jewelers operated 17 stores in nine states, and by acquiring the company Samuels Jewelers once again proved itself to be competitive within the jewelry industry.

Principal Divisions

Hatfield Jewelers; Mission Jewelers; Schubach; A. Hirsch & Son.

Further Reading

Barrys Jewelers Inc. Announces Distribution of Plan and Disclosure Statement and Intent to Change its Name to Samuels Jewelers Inc., Business Wire, July 20, 1998, p. 07200328.

Barrys Uses Chapter 11 to Finalize Restructuring, Jewelers Circular Keystone, April 1992, p. 18.

Glover, Kara, Barrys Jewelers Shines After Price Cuts, Revamp of Retail Operations, Los Angeles Business Journal, October 17, 1994, p. 15.

Samuels Jewelers Inc. Announces Merger with Barrys Jewelers Inc., Business Wire, October 5, 1998, p. 1314.

Samuels Jewelers Inc. Announces the Acquisition of Silvermans Jewelers Inc., Business Wire, July 23, 1999, p. 0233.

Shuster, William George, Barrys Closes 70 Stores in Major Restructuring, Jewelers Circular Keystone, June 1991, p. 9.

______, Helzberg, Barrys Aim for Growth, Jewelers Circular Keystone, April 1996, p. 140.

______, Three Who Came Back, Jewelers Circular Keystone, June 1995, p. 298.

Rachel H. Martin