their over-dependence on low prices and promotional activity. Gross
margins were to be pushed up and the marketing strategy would be more
tightly focused, placing more emphasis on customer service and making
greater distinctions between the different outlets. H. Samuel would be
aimed at the middle market, the ‘powerhouse’ moving clearly above
Ratners, whilst Ernest Jones and Leslie Davies would move upmarket to
take sales from the independent jewellers. Gerald Ratner would spend
time visiting stores to build morale and re-build bridges with the increas-
ingly nervous suppliers. ‘Suppliers are one of the most important ele-
ments, especially now that we are not selling on price,’ he said.
Excalibur Group, the jewellery manufacturer and engineer, announced^29
that it was happy to supply Ratners ‘now that banking support is in place’.
Suppliers had been wary of selling to Ratners, fearing bad debts. About 13
per cent of Excalibur’s jewellery sales went to Ratners, a proportion that
had declined from more than 20 per cent. But Mr Griffiths, the managing
director, said that he would now consider doing more business with
Ratners if asked. Other suppliers continued to be nervous.^30 Abbeycrest,
which refused to comment on customers’ business, was known to be a
leading supplier to Ratners who took nearly 60 per cent of their turnover
in 1989. However, the group had since built up its sales to other customers
and said their largest customer would account for only around 15 per cent
of that year’s turnover. They would not confirm that this was Ratners.
Ratners was fined £1000 and ordered to pay £350 costs after stud ear-
rings, priced at £3.50, described as opal when bought in May 1991,^31 were
found to be plastic and melted when tested. The company pleaded guilty
and said it was an administrative error from which no profit had been
made. To counter the negative publicity Ratners announced^32 a few
months later that it now employed a trading standards officer. Gary
Cullimore, formerly a government trading standards inspector, was
responsible for due diligence at Ratners to ensure that £325 ‘diamond’
rings were what they purported to be.
Despite higher operating margins, described by some analysts as
‘amazing in the circumstances’, pre-tax losses declared for the first half of
1992 rose to £30.6 million. Operating profits had risen slightly, but UK
results were hit by sales down (on a comparable basis) by 24 per cent at
Ratners, 18 per cent at H. Samuel’s and 9 per cent at Ernest Jones. The
experiment of renaming some Ratners stores as James Walker had ‘failed
materially to improve trading’ and had been halted. At the meeting to
announce the results, Gerald Ratner and his salary came in for heavy crit-
icism, particularly from representatives of the American preference share-
holders, and some analysts considered the results represented an
‘appalling indictment of past management practices’.
On the night of 25 November 1992, Gerald Ratner resigned as chief exec-
utive. He was quoted^33 as saying:
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