Zale Corporation Announces Holiday Results
- Comparable store sales up 2.3 percent; Zales branded stores up 3.1 percent
- Second quarter operating margin expected to be approximately 7.5 percent, or 100 basis points higher than the prior year quarter
DALLAS--Jan. 10, 2013-- Zale Corporation (NYSE: ZLC) today announced that comparable store sales increased 2.3 percent for the combined months of November and December 2012, encompassing the entire holiday selling period. This increase follows a 5.9 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 1.6 percent for the holiday selling period, compared to an increase of 6.2 percent in the prior year period.
Revenues for the two-month period were $567 million, an increase of $3 million compared to $564 million in the same period last year. The increase in revenues is primarily due to the comparable same store sales growth partially offset by revenues associated with the net decrease of 50 stores compared to last year.
"This holiday season, we focused on driving bottom line improvement," commented Theo Killion, Chief Executive Officer. "Our comp performance, combined with an expected 100 basis point operating margin improvement, brings us closer to our goal of achieving positive net income for the fiscal year."
Holiday selling period comparable store sales detail:
- Zales branded stores, consisting of Zales Jewelers and Zales Outlet, posted a comparable store sales increase of 3.1 percent, compared to an increase of 10.0 percent in the same period last year. U.S. Fine Jewelry brands including our regional brand, Gordon's Jewelers, posted a comparable store sales increase of 2.2 percent. In the same period last year, U.S. Fine Jewelry brands comparable store sales rose 9.0 percent.
- Canadian Fine Jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 2.7 percent. This increase follows a 0.2 percent rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands posted a comparable store sales decline of 0.7 percent, compared to an increase of 1.7 percent in the prior year period.
- Piercing Pagoda, our Kiosk Jewelry business, posted a comparable store sales increase of 1.7 percent. In the same period last year, comparable store sales declined 2.1 percent.
Fiscal Second Quarter Outlook
For the quarter ending January 31, 2013, the Company expects gross margin to be in line with the prior year quarter's gross margin of 50.5 percent. Operating margin is expected to be approximately 7.5 percent, or 100 basis points higher than the prior year quarter, primarily as a result of improved leverage on selling, general and administrative expenses.
Fiscal Year 2013 Outlook
As previously announced, the company expects to achieve positive net income for fiscal year 2013.
Zale Scheduled to Speak at ICR XChange Conference
Zale management is scheduled to speak at the 15th Annual ICR XChange Conference at the Fontainebleau in Miami Beach, Florida on Thursday, January 17, 2013 at 1:10 p.m. Eastern Time. A live audio webcast of the presentation, as well as a replay, will be available on the Company's website at www.zalecorp.com via the Investor Relations homepage.
Next Scheduled Earnings Announcement
The Company expects to report its second quarter fiscal 2013 results on Thursday, February 21, 2013, with a conference call at 9:00 a.m. Eastern Time that day.
About Zale Corporation
Zale Corporation is a leading specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,770 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at www.zales.com, www.zalesoutlet.com, www.gordonsjewelers.com, www.peoplesjewellers.com and www.pagoda.com. Additional information on Zale Corporation and its brands is available at www.zalecorp.com.
This release contains forward-looking statements, including statements regarding future sales, expected operating performance, expenses, margins, profitability, interest expense, and effective tax rate. Forward-looking statements are not guarantees of future performance and a variety of factors could cause the Company's actual results to differ materially from the results expressed in the forward-looking statements. These factors include, but are not limited to: if the general economy continues to perform poorly, discretionary spending on goods that are, or are perceived to be, "luxuries" may decrease; the concentration of a substantial portion of the Company's sales in three, relatively brief selling seasons means that the Company's performance is more susceptible to disruptions; most of the Company's sales are of products that include diamonds, precious metals and other commodities, and fluctuations in the availability and pricing of commodities could impact the Company's ability to obtain and produce products at favorable prices; the Company's sales are dependent upon mall traffic; the Company operates in a highly competitive industry; the financing market remains difficult, and if we are unable to meet the financial commitments in our current financing arrangements it will be difficult to replace or restructure these arrangements; and changes in regulatory requirements may increase the cost or adversely affect the Company's operations and its ability to provide consumer credit and write credit insurance. For other factors, see the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 31, 2012, and subsequent reports on Forms 10-Q and 8-K. The Company disclaims any obligation to update or revise publicly or otherwise any forward-looking statements to reflect subsequent events, new information or future circumstances, except as required by law.