Case Study - Gemstone Retail Limited

Leading Discount Jewellery Chain

Background

The ‘HPJ’ and ‘Jewel Nation’ branded jewellery stores were purchased in February 2011 by retail specialist Gordon Brothers Europe.

Despite an intensive restructure that included store closures, stock clearance sales, significant operational improvements, and other cost saving measures, the businesses continued to experience financial difficulty with turnover 10% below budget. As a result a marketing campaign was immediately undertaken to sell the business and assets.

Unfortunately no offers were received at a level sufficient to avoid an insolvency process. As a result Moorfields were appointed administrators on 8th December 2011.

Moorfields Action

On appointment Moorfields immediately undertook a review of the company’s affairs taking into account the businesses ongoing commitments and anticipated cash flow. As a result of the review it was determined that a return to creditors would be maximised should the business continue to trade through the run up to Christmas, where historically the business generated 30% of its sales.

Result

Utilising our knowledge and experience of the retail sector, Moorfields determined that the optimal strategy was twofold, firstly to smelt a large proportion of the gold stock which generated significant cash without the operation costs and secondly to implement an aggressive sale strategy for the residual stock. In just over 2 weeks all stock had been sold and the 49 shops closed. Moorfields successfully avoided the 25th December quarter date and negotiated significant business rate agreements with landlords to reduce costs throughout the trading period.

The Gemstone case demonstrates how Moorfields retail expertise resulted in a greater realisation of assets in a very short timeframe for both the secured and unsecured creditors.

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