Zale to Close 105 Stores, Cut 225 Positions
By Rob Bates -- JCK-Jewelers Circular Keystone, 4/1/2008
Zale will close 105 stores—more than previously announced—and cut 225 staff positions, the company announced recently. By the end of fiscal year 2008, it will have approximately 2,145 retail locations.
The closings will result in $65 million in savings, the company said.
Ninety-five of the affected stores are underperforming, the company said. The closings include 50 kiosks, with the rest split evenly between Gordon's and Zales stores. Since most of the closings will take place when leases mature, the company said it expects to incur minimal exit costs.
Most staff cuts are at the company's Dallas headquarters. The company has eliminated 140 filled and 85 open positions, approximately 20 percent of its headquarters staff. The company also says it will reduce capital expenditures through more-effective spending on store remodeling, slower store growth in the near term, and a deceleration of information technology initiatives.
The company also plans to put $100 million of inventory on clearance in the next few months, says spokesman David Sternblitz. “The majority of our brands, including the e-commerce site, will be moving through this clearance,” he says. “We are permanently reducing $100 million in inventory. [New CEO Neal Goldberg] feels like we are over-assorted, and we need to better define 'good, better, best.' This is an assortment business, and we need to be clearer in how we present that assortment.”
In a conference call with investors, Goldberg said the company needs to be more “nimble” and “efficient.” He said its marketing was “at best fair” and its merchandise mix was “confusing.”
He also said the company needs to “listen to our stores” and wants to offer a “more emotional experience” for customers.
