Littman Jewelers Company
The gold standard of the retail Jewelry industry for 100 years.
About Littman Jewelers
Founded in 1902, Littman Jewelers was the largest privately-held, semi-guild retail jewelry store chain in the U.S. and the fifth largest U.S. retail jeweler overall. With stores in affluent consumer markets from Florida to Connecticut, Littman Jewelers was well-known and respected throughout the jewelry industry for developing and introducing innovative store design concepts, for possessing unique merchandising skills and for providing industry leading customer service and support. Company management had long instilled a strong sense of camaraderie and collaborative spirit among its 1200 sales associates and support personnel at the same time that it maintained tight operating, financial and inventory controls over 153 stores spread over 1500 miles. The close, intergenerational connection that Littman Jewelers maintained with its expansive customer base was both unique, and legendary, in the retail jewelry industry.
Key Atmospherics at the Time of the Transaction
The retail jewelry industry was facing major challenges as a result of increased on-line and catalogue shopping, reduced mall traffic, years of debt fueled consolidation among jewelry retailers and weak retail and economic environments. To generate cash to pay interest and pay down debt, many leveraged retail jewelers were being forced to sell inventory below cost, putting significant downward pressure on sales and margins throughout the industry. Other retail jewelers were being forced to close their doors and liquidate inventories entirely. Littman Jewelers presented a vastly different profile. Littman was a proud company with a proud history, an outstanding reputation, solid financial performance, a top-notch management team and a loyal, growing customer base. But the time had come for the shareholders to sell the business in order to accomplish important, but long delayed, estate planning and asset diversification needs.
The Etkin & Company Strategy
The universe of prospective acquirers for Littman Jewelers was limited. Challenging market and industry dynamics made it very difficult for financial acquirers to raise the debt necessary to fund a retail jewelry acquisition. For those financial acquirers that could raise the debt, the amount of equity required to do so combined with minimum investment return thresholds made their offers unappealing. In Etkin & Company’s view, however, Littman Jewelers represented the most powerful acquisition opportunity in the retail jewelry industry because it would immediately provide the successful acquirer with a leadership position in key, retail jewelry markets along the U.S. east coast, an experienced and dedicated management team and a huge base of loyal customers. The key would be to identify and bring to the table a well-capitalized, forward thinking strategic acquirer that could be made to recognize the unique opportunity that Littman Jewelers represented, and the courage to act on it.
The $170+ million transaction Etkin & Company developed and concluded with Fred Meyer Jewelers, Inc., a wholly-owned subsidiary of Kroger, Inc., has enabled Fred Meyer to become the third largest U.S. retail jeweler, to complement and leverage its largely west coast retail jewelry presence with a well-established and respected east coast retail jewelry operator and to increase profits and gain efficiencies throughout the combined organization.