Jewelry retailer Shane Co. attributed its bankruptcy partly to a new inventory-management system that cost four times as much as expected and led it to overstock, according to documents filed by the Centennial-based company.
The company also said slow holiday sales added to its struggles. Shane Co. filed for Chapter 11 bankruptcy protection Monday.
In the filing, the 23-store company said chief executive and majority owner Tom Shane loaned the company $20 million in unsecured funds and that the retailer had eliminated 177 jobs since September 2007.
Another company owned by Tom Shane has agreed to provide financing for the Shane Co. during bankruptcy, according to the documents, which seek approval for the agreement.
The company said holiday sales usually account for 30 percent to 33 percent of overall sales. In 2008, holiday sales were down 32 percent. Annual sales declined from $275 million in 2007 to an estimated $207 million to $210 million in 2008.
The final blow to the company was a point-of-sale and inventory management system purchased from business-software giant SAP for $8 million to $10 million, which ended up costing $36 million and took three times as long to implement. In the meantime, because it did not work entirely, the system did not provide accurate inventory numbers and led to the chain being substantially overstocked in the fall of 2007.
SAP spokesman Saswato Das told Bloomberg News that the company is “assessing the situation” and couldn’t provide additional comment on the matter.
Shane Co. said in the filings that it sold the overstock inventory over time and has paid down some credit owed, restructured operations and reduced overhead, but it could not secure a new investor or lender to refinance.
Elizabeth Aguilera: 303-954-1372 or eaguilera@denverpost.com
