Zale: Yep, They Did it Again!

Here are excerpts from my interview yesterday with David Sternblitz, Zale’s director of investor relations, about the latest executive change to hit the company, the resignation of company CEO “Betsy” Burton. She is being replaced by Neal Goldberg, former president of children’s clothing retailer, the Children’s Place:

This particular announcement wasn’t a surprise. It was pretty clear, at least internally, when Betsy took over, that her objective was to position the company for future success and to provide an orderly transition to a long-term leader.

Betsy and the board have been talking about a succession plan for some time.  Her family is on the West Coast and she would commute home once a month. Obviously this wasn’t going to be something long term. Betsy is staying on as a consultant, and there is no severance plan. This was a mutual decision …

I think the board is very interested in putting in a leader who could potentially be here for ten years.  [Neal Goldberg] is 48 years old and has over 25 years of experience. But he is still young enough that there is that hunger to prove something.

My thoughts:

This situation is a sad one; Zale is one of the best names in our industry, and they need to get themselves together. Goldberg won’t have an easy task: He is taking control of a company that’s suffered from almost-comical turnover in its executive suites, low morale and some strange internal issues. (According to the Wall Street Journal today, orders were being placed late again this year for Christmas.)  And of course, the overall demand for jewelry has not been strong this year, and Zale’s core customer – the low- to mid-market – is not in great shape. In addition, Goldberg has to cope with “activist investors” looking over his shoulder and a board with a seemingly short fuse. (When Burton was given the official nod about a year and a half ago, it didn’t seem like she was there on a temporary basis. But never mind …)

I think most of us would prefer someone with retail jewelry experience to head one of America’s largest jewelry chains, but let’s just wish Goldberg and his company the best.

For more on this, here is the Zale conference call announcing the change (no one asks questions.) There is a lot of gossip on Yahoo’s Zale message board, though I give the standard caveats about not believing everything you read on the Internet. And, I have to say, back in October, this guy called it.