Hallstead Jewelers Essay

Hallstead Jewelers was one of the largest jewellery and founder stores in the United States for 83 grades. Customers came from throughout the region to buy from extensive collections in each department. Any gift from Hallsteads had an extra cache attached to it as they were known for having the best. Even though the principal sell shopping areas shifted two blocks west, Hallsteads reputation and selection still brought in customers. In 1999 however, sales became laze and profits were starting to slip. The owners (two sisters, Gretchen and Michaela) made several changes in an effort to revitalize the store back to its large glory. The largest decision they made was to move the stores location, expanding it by 50% more space and selling staff. This move resulted in a five-year lease as well as extensive and expensive renovations.They also made almost changes in product offerings and offered more sales potential at the cost of minor reductions in margins. During the year it took t o complete the Hallsteads renovation the industry started showing major changes toward internet based jewellery sales. Tiffany & Company, a railway line with an origin much like Hallstead Jewelers, grew into an international powerhouse. At the same time, a start-up internet seller, ghastly Nile, became the second largest diamond seller in the U.S. While Hallsteads was growing their fixed costs by doubling their rent payments, Tiffany and Blue Nile were increasing their revenue with virtual storefronts allowing them to increase sales with very fine increase in expense. In an effort to explore ideas in strategy that would return the business to profitability, the sisters compiled about questions for their accountant to analyze using some additional operating statistics.2.0 SIGNIFICANCE OF THE CASEInherited business tradition. changing in management style.Reduce in sales and profit from year 2003 2004.In 2004, moving stores location, expanding it by 50% more space and sellingstaf f. Greater loss in year 2006.Changing in market demand and growing of new competitors.3.0 CASE SOLUTIONS & ANALYSISQuestion 1 How has the breakeven smudge in number of sales tickets (number of customer orders written) and breakeven in sales dollars changed from 2003, to 2004, and to 2006? Haw has the margin of safety changed? What caused the changes? The heart and soul variable and fixed costs have been categorised in the following income statement of Hallstead Jewelers Hallstead Jewelers