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Wednesday, May 23, 2012

Zale Corp. Q3 Sales and Comps Up 8%


U. S. specialty jewelry retailer Zale Corp. reported a year-over-year revenue increase of 8.1 percent to $45 million for the third quarter of 2012, which includes $8.5 million resulting from a previously disclosed change in warranty revenue recognition.

Same store sales for the period rose 8 percent during the period, ended April 30. This increase follows a 15.2 percent rise in the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 8.3 percent for the quarter.

The Dallas-based company owns and operates the following jewelry retail brands: Zales, Zales Outlets, Gordon’s Jewelers, Peoples, Mappins and Piercing Pagoda. By market segment, the company reported the following for the third quarter:

* U.S. Fine Jewelry brands (70 percent of revenues), consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, had an increase in comparable store sales of 10.9 percent. This increase follows a 15.9 percent rise in the same period last year.

* Canadian Fine Jewelry brands (17 percent of revenues), consisting of Peoples Jewellers and Mappins Jewellers, had an increase in comparable store sales of 3.8 percent. This increase follows a 21.6 period rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands comparable store sales increased 6 percent following an increase of 15 period in the prior year period.

* Kiosk Jewelry (13 percent of revenues) comparable store sales decreased 1.1 percent. In the same period last year, Kiosk Jewelry comparable store sales rose 6.7 percent.

Gross margin on sales for the quarter was $228 million, or 51.3 percent, an increase of 10.5 percent, compared to $206 million, or 50.1 percent, in the same period last year. Selling, general and administrative expenses were $213 million, or 47.9 percent of revenues, for the period, compared to $202 million, or 49.1 percent of revenues, in the same period last year. Operating earnings for the quarter were $6 million, or 1.4 percent of revenues, compared to an operating loss of $5 million, or negative 1.3 period of revenues, in the prior year quarter.

For the quarter, income tax expense was $1 million, compared to a benefit of $4 million in the comparable quarter last year.

Net loss from continuing operations for the quarter was $4 million, or $0.14 per share, compared to a net loss from continuing operations of $10 million, or $0.31 per share, in the comparable quarter last year. The change in warranty revenue recognition improved the net loss per share from continuing operations for the third quarter of fiscal 2012 by $0.25.

Inventory at April 30, 2012 stood at $779 million, compared to $756 million in the same period last year.

“The six consecutive quarters of positive comps, coupled with continued momentum through the Mother’s Day selling period, demonstrates that the strategic initiatives we’ve undertaken are resonating with our guests,” said Theo Killion, Chief Executive Officer. “In addition, the improvement in operating earnings this quarter is another indication of the progress we are making as we accelerate towards bottom line profitability.”

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