Wow! Zale Cleans House!

The big news today is that Zale CEO Neal Goldberg and two other top executives have resigned, with current president Theo Killion appointed interim CEO.

Goldberg was an impressive guy, and he had to deal with a lot of things that weren’t his fault, like the cost of the Bailey’s leases and the poor economy. But the writing was probably on the wall when Zale announced that its holiday “comp” sales fell 12%, even as Sterling’s rose 7.6%. (And while its other main competitors have not released results, my sources say they were up as well.)

Zale chief financial officer Matthew Appel told me that the resignations were “somewhat” related to Christmas sales. “The board was not pleased with our outcome, especially relative to the competition,” he said. But he said the main reason “the board has taken these measures is to return us to profitability.”

Regarding sale rumors, he added: “The company is not for sale.”

Two of the other executives who resigned – chief merchandising officer Mary Kwan, and chief stores officer William Acevedo – were  brought in by Goldberg, though Appel noted that those resignations shouldn’t be looked at as Goldberg-related, since Killion, Appel and former De Beers exec Richard Lennox were also Goldberg hires and remain with the company. Kwon was a little controversial in the vendor community, particularly since she, like Goldberg and Acevedo, had no prior jewelry industry experience.  (Gil Hollander, one of the most jewelry-experienced executives at the company, was given Kwon’s position.)

What’s particularly unfortunate about this is it brings yet more instability to a company that already has a history of it.  Asked about this, Appel said: “[The instability] is unfortunately true, but that was no reason not to do this. Our goal is stability. Hopefully things will settle down from here.” Even so, Killion is now the company’s fourth CEO in the last four years.

JCK News Director