Robbins Brothers, a Los Angeles jewelry store chain that primarily focuses on the sale of engagement rings, recently filed for Chapter 11 Bankruptcy Protection in early March of 2009. But we're left wondering what exactly went wrong? According to court documents, the Azusa-based jeweler's financial situation deteriorated in 2007 and got worse in 2008 and ultimately led to their bankruptcy in early 2009. Robbins Brothers operated 16 stores in several states including Caliornia, Texas and Illinois. Robbins Brothers has formed a new corporation and intends to sell it's California stores to itself, and sell off their Texas and Illinois stores and assets.
The company's books showed assets of $66 million, but debts totalling more then $77 million. Among its top unsecured creditors, the chain lists in court documents some notable diamond and jewelry companies, including Leo Schachter Diamonds LLC based in New York (owed $2.71 million), Leo Schachter Ltd. in Ramat Gan, Israel (owed $1.82 million), Moshe and Namdar (USA) Inc. (owed $1.4 million), R and R Grosbard (owed $597,851) and Simon G. Jewelry Inc. (owed $554,455).
There were many contributing factors to their demise. The first and chief reason was their rapid expansion. Robbins Brothers was recapitalized in 2004 partly by the private investment firm Weston Presidio, and then went on to expand from 7 to 16 stores in only 4 years opening new markets both in Dallas, TX and Chicago, IL. Ultimately the goal was to have a 50-store chain. The rapid expansion was planned in part because they did not want competitors to steal their format of pitching "engagement ring stores" and wanted to entrench their brand as the premier "World's Largest Engagement Ring Store". While the plan may have been successful in better times, the rapid decline in the Southern California economy both with housing losses and jobs losses, and a very mixed welcome into the Chicago market made for tough times for the chain.
Also with the proliferation of sales of diamonds online, it has drastically cut into Robbins Brothers margins. How can one sell a 1 carat diamond for $8500 when the same exact diamond is being sold for $6500 online instead? When shopping at Robbins Brothers, you often aren't really told what you're getting right up to the point where they're ready to take the money out of your hands. Robbins Brothers also operates vastly large showrooms with dozens of employees. However when economic times are tough, these exorbitant stores can be sparsely filled with customers making for very high overhead expenses that are difficult to remain profitable.
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