A recent report by real estate investment firm Madison Marquette, which can be accessed here, rated retail chains on their risk of bankruptcy. Dillards, which carries jewelry, is on the “high risk” list. J.C. Penney and Nordstrom were “low risk.”

 

Interestingly, both Zale and Signet were classified as “medium risk.” That sounds pretty dire, but they are in good company (like Starbucks and the Gap) and the write-ups were actually pretty encouraging:

 

Here is the write-up on Zale:

 

EPS are down $0.73 – below Wall Street’s estimate. Lower sales drove the decline – comp stores down 20%, although more closely managed SG&A took some of the decline away. Longer-term, likely a turnaround, but still seeing headwinds in the recession.

 

And here is on Signet:

EPS slightly ahead of Wall Street estimates at $0.31. This improvement was driven by lower SG&A costs. Comps down 2.9% versus a decline in total sales of 7.3%. Management continues to push operating cost reductions ($100M in inventories for 2009 in the US) and 50% lower cap-ex. The goal is to be at $175-$225M in cash by year end to buy down debt. One upside is that the company appears to be a survivor and will benefit from the closures of competitors. One risk is that gold continues to escalate, driving the cost of goods sold higher.

 

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