Zale Corp is asking its suppliers to purchase some of its jewelry in its inventory for cash. In exchange for the purchase the company is providing a pledge of future orders.
However several retailers and merchants have already signaled their reluctance to agree to the proposal.
According to the Wall Street Journal, Zale’s Chief Merchandising Officer wrote to one supplier stating “We are looking to trade inventory (mostly diamond fashion), at our full cost, with an agreement to purchase 2x’s that amount over the next year,”
The long term debt of the company has risen by 21% to $465.5 million from a year earlier due to decline in sales.
In an attempt to preserve funds, the company canceled orders in December last year. The company is also cutting back on the advertising budget planned earlier for Valentine’s Day and Mother’s Day.
Many investors have indicated that they might be interested in buying the jewelry chair or part of it, but so far Zale executives have not shown any interest in selling. The company had posted losses in seven of the previous eight quarters.