Ratners jewellery chain has admitted for the first time that its business was decisively wounded when former chairman Gerald Ratner described one of its products as “total crap”.
Mr Ratner’s ill-judged comments accelerated a spiral of decline for Britain’s biggest jewellery group which plunged £122.3m into the red in the year to February and is to close 330 shops in Britain and the US.
The company, which now intends to move more upmarket, said the crash from profits a year earlier of £112.1 million was largely caused by the impact of recession, but a particularly poor performance from its 250-strong Ratners chain resulted from “adverse publicity” following Gerald Ratner’s infamous description of a decanter set sold by the group as “total crap”.
Some time after those remarks, which he claimed were taken out of context, he resigned as chairman, though he remains chief executive. The slur contributing to a dire sales performance over Christmas last year when the group’s sales slumped by 15 per cent at a time when jewellers traditionally expect to generate about 40 per cent of total revenues. A similar performance this Christmas could cast doubt on the group’s survival.
James McAdam, who took over as executive chairman at the start of this year, said Mr Ratner’s future with the company was not in doubt.
Many shoppers who objected to the comment would have avoided Ratners shops only to go into one of the group’s other stores.
The revamp of Ratners’ business over the next three years, following a refinancing package from its bankers, will mean the closure of 180 of the group’s 880 shops in Britain.
Another 150 stores are to close in America with the probable loss of more than 1,000 jobs. The reorganisation will cost the group almost £100 million. Shares in Ratners fell 1/2 p to 11 1/2 p, valuing the group at just 33.7 million pounds in contrast to its 1990 peak of £840 million when Mr Ratner’s pile-it-high, sell-it-cheap approach to jewellery retailing seemed unconquerable.
Mr McAdam was yesterday critical of this strategy which he said was inappropriate in difficult economic circumstances. He plans to drive the chain up-market, placing more emphasis on customer service, and making greater distinctions between the different outlets.
