Tough times at Whitehall Jewellers (NYSE:JWL) seem to be getting ever worse. That's a dubious accomplishment for a company that hasn't managed back-to-back profitable quarters in something like three years. Nevertheless, the stock dropped 65% yesterday and fell another 10% early this morning to depths never before seen.

Whitehall's stock has been gasping for some time, but what seems to have finally put a boot to its throat was the announcement yesterday that CEO-to-be Beryl Raff doesn't want the job anymore. Having formerly worked at J.C. Penney's (NYSE:JCP) jewelry operations and served as CEO of Zale (NYSE:ZLC), she apparently doesn't want this mess on her hands.

And judging by what else the company had to say yesterday, it does appear to be in quite a mess. The company announced that it won't file its 10-Q anytime soon, though it expects to report a loss if it does. Further, it apparently needs additional capital to stay in business and has slowed down its accounts-payable schedules while asking for extensions from its suppliers. At the risk of stating the obvious, when you can't pay your bills anymore, you've got a big problem.

Investors might recall some similarity here to Friedman's -- another troubled jeweler that ultimately went under. Whitehall was investigated for securities fraud last year, and its legal proceedings section in the 10-K runs about two pages -- not a good sign. Though the situations are different, the outcome may ultimately be the same.

No doubt, some investors will be looking to make a speculative play on a recovery. I wouldn't do it. Yes, Wet Seal (NASDAQ:WTSLA) managed to pull itself out of the imminent bankruptcy spiral, but the situation at Whitehall sounds worse. What's more, part of Wet Seal's problem was that it fell out of step with fashion and merchandising trends. Whitehall's biggest problem is that it simply hasn't been a well-run retailer for quite some time, and I think we're beyond the point where remerchandising can right the ship.

There are other ways to get into the jewelry market -- Tiffany (NYSE:TIF), Motley Fool Rule Breakers recommendation Blue Nile (NASDAQ:NILE), Zale, maybe even AberDiamond (NASDAQ:ABER) -- and plenty of other retailing (luxury or otherwise) concerns out there. I'm sure Whitehall's stock will spasm up and down as investors speculate over whether it will go under, but that's playing a dangerous game. If you want to take some of your casino money and play, go ahead -- but don't kid yourself into thinking you're investing.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).