2009 - Letter to our shareholders Dear Shareholder Over the last year and a half we have focused on a multi-year turnaround strategy aimed at

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30OCT200914471655 Letter to our shareholders Dear Shareholder, The end result was that despite the extremely disappointing performance of the business in fiscal Over the last year and a half, we have focused on a 2009, we reduced our debt, lowered our cost and multi-year turnaround strategy aimed at returning inventory levels and have a healthier real estate the Company to profitability. While fiscal 2009 has portfolio. While we still have more work to do, we been especially challenging and the financial results are confident the accomplishments of 2009 will very disappointing, we have taken substantial steps have a significant impact on the financial well being to stabilize the business and position it for future of the Company. growth. In the second half of fiscal 2008, we laid the foundation by making changes to our organiza- Separately, during our year-end financial close, there tional structure to increase effectiveness. In fiscal were items identified that impacted prior year 2009, we continued these efforts and executed key financial statements. We conducted a thorough actions designed to strengthen the business and review and have addressed the issues. We are improve performance. Based on the extreme taking the necessary steps to strengthen our economic challenges that occurred during the year, accounting processes and are putting measures in we acted with an even greater sense of urgency, place to prevent this from happening again. and as a result, we intensified our efforts following Holiday to manage expenses, liquidity and debt During 2009, we continued to focus on talent by levels. adding key individuals to the senior management team. Our financial focus was on 3 major drivers: SG&A, working capital and real estate. • Matt Appel, Chief Financial Officer. Matt’s straight-forward style and experience in balance During 2009, we identified an additional $65 million sheet management and turnaround situations, of expense savings, bringing the total two-year gives us confidence that we have a strong, program to $130 million. To date, we have achieved extremely focused financial partner; $88 million of expense reductions with the balance to be achieved in fiscal 2010. • Richard Lennox, Chief Marketing Officer. Richard brings an impressive 10-year track record of We also identified an incremental $75 million inven- diamond product innovation on campaigns for tory reduction, of which $54 million was achieved the DeBeers Group during his tenure at in 2009 with the balance expected to be accom- J. Walter Thompson. He has created powerful plished in fiscal 2010. In total, we will have ideas that have excited consumers and driven permanently reduced inventories $175 million since growth for the entire jewelry industry. He will the beginning of this initiative in February 2008. play a pivotal role as we evolve our marketing program and create a more aspirational feel for In real estate, we restructured our portfolio in our jewelry.
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This note was uploaded on 10/17/2011 for the course BUSI 3002 taught by Professor Marclyncheski during the Fall '11 term at Walden University.

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2009 - Letter to our shareholders Dear Shareholder Over the last year and a half we have focused on a multi-year turnaround strategy aimed at

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