Hallstead Jewelers Case
TEAM B
Michelle Dragoo, Michael Depaolis, Rashad Harrison, Amy Grammer, Kelly Graham
Florida Institute of Technology
Managerial Accounting – BUS 5431

RECOMMENDATION
The Company should eliminate the sales commissions paid to their sales clerks and replace it with an incentive program that ties the employees’ bonus to the company’s performance. Michaela’s suggestion on spending $200,000 more on advertising should be considered because the store has moved to the new place and advertising is necessary to inform the loyal customers and bring new clientele in. Hallstead Jewelers should strengthen their name by differentiating their products and start entering the World Wide Web retail business.

CONCLUSION
The rise of sales tickets reported in 2006 indicates that moving to the new location was a good decision. However, the rent has doubled and some of the fixed costs have gone up as well. The company needs to drive the sales up and differentiate themselves from their competitors. Effective advertising could help the company to break-even in 2007 and make a profit in years to come.

RESULTS
Significant points from the case:

• In a new building just renovated in 2005, with 50% more space and selling staff than ever before, the business had experienced a loss almost double the income of the last “normal” year
• The principal retail shopping areas shifted two blocks west of Washington St.
• Reputation and selection still brought customers to Lake Avenue for the selections at Hallstead
• Expansion was impossible without moving ad alterations
• In 2004 a large toy seller with more space abandoned the corner of Washington Street and Second Avenue
• Increasing advertising might bring in more customers or changing pricing formulas to fend off new Internet jewelry competitors

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