Whitehall Jewellers, Inc. Reports First Quarter Financial Results.

Business Editors

CHICAGO--(BUSINESS WIRE)--May 22, 2001

Whitehall Jewellers, Inc. (NYSE: JWL) today reported financial results for the first quarter ended April 30, 2001.

On sales of $68.9 million, the Company reported a loss of $1,622,000 compared to income before

Hugh M. Patinkin, Chairman and Chief Executive Officer, commented, "The slowing economy and weak retail sales environment had a negative impact on sales and, as a result, the Company lost $0.11 per share which was the First Call consensus estimate for the first quarter. While sales were down, gross merchandise margins improved by over 300 basis points compared to the fourth quarter gross merchandise margin rate and improved by approximately 130 basis points compared to the first quarter last year. We have also made significant progress in controlling key operating expenses, including personnel and credit expenses, and in reducing our average store inventory since the end of the first quarter of fiscal 2000.

Mr. Patinkin continued, "While we remain cautious about the current status of the economy, thanks to gross merchandise margin improvements and expense controls, we are optimistic that when the economy strengthens, we will be poised to produce strong financial returns.

Today at 11:00 a.m. EDT, the Company will host a conference call to review results for the quarter ended April 30, 2001. To participate in the call, please dial 800-982-3654 -- the passcode is "5162380". This call will also be broadcast live on the Internet at: http://www.streetevents.com

Whitehall Jewellers, Inc. is a leading national specialty retailer of fine jewelry, currently operating 361 stores in 37 states. The Company operates stores in regional and superregional shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers.

This release contains certain forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) and information relating to the Company that are based on the current beliefs of management of the Company as well as assumptions made by and information currently available to management including statements related to the markets for our products, general trends and trends in our operations or financial results, plans, expectations, estimates and beliefs. In addition, when used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "predict" and similar expressions and their variants, as they relate to the Company or our management, may identify forward-looking statements. Such statements reflect our judgement of the company as of the date of this report with respect to future events, the outcome of which is subject to certain risks, including the factors described below, which may have a significant impact on our business, operating results or financial condition. Investors are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. Whitehall Jewellers undertakes no obligation to update forward-looking statements. The following factors, among others, may impact forward looking statements contained in this report: (1) the extent and results of our store expansion strategy and associated occupancy costs, and access to funds for new store openings; (2) the seasonality of our business; (3) economic conditions, the retail sales environment and our ability to execute our business strategy and the related effects on comparable store sales and other results; (4) the extent and success of our marketing and promotional programs; (5) personnel costs and the extent to which we are able to retain and attract key personnel; (6) competition; (7) the availability and cost of consumer credit; (8) relationships with suppliers; (9) our ability to maintain adequate information systems capacity and infrastructure; (10) our leverage and cost of funds; (11) our ability to maintain adequate loss prevention measures; (12) fluctuations in raw material prices, including diamond, gem and gold prices; (13) the extent and results of our E-commerce strategies and those of others; (14) regulation affecting the industry generally, including regulation of marketing practices; (15) the successful integration of acquired locations and assets into our existing operations; and (16) the risk factors identified from time to time in our filings with the Securities and Exchange Commission.

                       Whitehall Jewellers, Inc.
                       Statements of Operations
          For the three months ended April 30, 2001 and 2000
                              (unaudited)
                 (in thousands, except per share data)

                                       Three months ended
                               April 30, 2001       April 30, 2000
                             ------------------   ------------------

Net sales                            $68,931              $73,635

Cost of sales (including
 buying and occupancy expenses)       43,317               44,404

                             ------------------   ------------------
   Gross profit                       25,614               29,231

Selling, general and
 administrative expenses              26,482               25,182
                             ------------------   ------------------
   Income from operations               (868)               4,049

Interest expense                       1,739                1,164
                             ------------------   ------------------
   (Loss) income before
     income taxes                     (2,607)               2,885

Income tax (benefit) expense            (985)               1,111
                             ------------------   ------------------

   (Loss) income before
    cumulative effect of
    accounting change                 (1,622)               1,774
   Cumulative effect of
    accounting change, net of taxes       --               (3,068)

                             ------------------   ------------------
   Net  loss                         $(1,622)             $(1,294)
                             ==================   ==================

Basic earnings per share:
   (Loss) income before cumulative
    effect of accounting change       $(0.11)               $0.11
                             ==================   ==================

   Cumulative effect of
    accounting change, net of taxes      ---              $ (0.19)
                             ==================   ==================

    Net  loss                         $(0.11)             $ (0.08)
                             ==================   ==================
   Weighted average common share
    and common share equivalents      14,574               15,871
                             ==================   ==================

Diluted earnings per share:
   (Loss) income before cumulative
     effect of accounting change      $(0.11)              $ 0.11
                             ==================   ==================
   Cumulative effect of
    accounting change, net of taxes      ---               $(0.19)
                             ==================   ==================

    Net  loss                         $(0.11)             $ (0.08)
                             ==================   ==================
   Weighted average common share
    and common share equivalents      14,574               16,680
                             ==================   ==================



                       Whitehall Jewellers, Inc.
                            Balance Sheets
                       (unaudited, in thousands)

                      April 30, 2001  January 31, 2001  April 30, 2000
                      --------------  ----------------  --------------
               ASSETS
Current Assets:
  Cash                       $   400          $    ---         $   ---
  Accounts receivable, net     2,294             1,406           3,647
  Merchandise inventories    186,698           178,053         174,696
  Prepaid income tax           1,674               ---             ---
  Prepaid expenses             1,302               688             828
  Deferred income taxes, net   2,817             2,817           2,566
  Deferred financing costs       498               402             362
                      --------------  ----------------  --------------
       Total current assets  195,683           183,366         182,099
Property and equipment, net   64,716            62,080          55,584
Goodwill                       5,859             5,924           6,121
Deferred income tax, net         527               527           2,053
Deferred financing costs       1,080               971             857
                      --------------  ----------------  --------------
       Total assets         $267,865         $ 252,868        $246,714
                      ==============  ================  ==============


                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Outstanding checks, net   $    ---          $ 17,778         $ 6,276
  Revolver loans              75,250            47,220          20,869
  Current portion of
   long-term debt              4,500             4,250           4,250
  Accounts payable            47,765            37,278          61,579
  Customer deposits            4,531             4,214           4,494
  Accrued payroll              3,677             5,170           2,965
  Income taxes                   ---             2,940           1,075
  Other accrued expenses      19,004            18,329          16,255
                      --------------  ----------------  --------------
       Total current
        liabilities          154,727           137,179         117,763

  Term loan                    8,500             9,750          13,000
  Subordinated debt              640               640             640
  Other long-term liabilities  2,250             2,128           1,764
                      --------------  ----------------  --------------
       Total liabilities     166,117           149,697         133,167

Commitments and contingencies

Stockholders' equity:
  Common stock                    17                17              15
  Class B common stock           ---               ---             ---
  Class C common stock           ---               ---             ---
  Class D common stock           ---               ---             ---
  Additional paid-in capital 103,541           103,341         103,339
  Accumulated earnings        27,167            28,790          20,190
                      --------------  ----------------  --------------

       SUBTOTAL              130,725           132,148         123,544
        Less: Treasury
         stock, at cost
        (3,200,876, 3,200,876
         and 883,376 shares,
         respectively)       (28,977)          (28,977)         (9,997)
                      --------------  ----------------  --------------

       Total stockholders'
        equity               101,748           103,171         113,547
                      --------------  ----------------  --------------

       Total liabilities
        and stockholders'
        equity             $ 267,865         $ 252,868        $246,714
                      ==============  ================  ==============