Zale Corporation announced that its sales continued to rise in its second quarter–although it is not yet profitable and is discontinuing its Jessica Simpson line.
“We are pleased with five consecutive quarters of positive comps,” said CEO Theo Killion in a conference call following the release of Zale's financial results. “But we realize we still have work to do when it comes to returning the business to profitability.”
On the positive side, the company announced that its same store sales increased 5.8 percent in the second quarter. The increase follows a 7.9 percent rise in the same period last year.
Killion said that categories like bridal, colored diamonds, and charm bracelets continue to perform very well. But he also announced that it will not continue with its much-touted Jessica Simpson line , as "it didn't meet our performance hurdles."
However, Killion later added that its Vera Wang LOVE line is still seen “as an important growth vehicle for our overall wedding category.”
The comp sale gain was highest in Zale’s fine jewelry brands—Zales, Zales Outlet, and Gordon’s—which saw same store sales rise 8.9 percent. However, its Canadian fine jewelry brands only saw sales move up 0.7 percent. And comparable store sales at its kiosk division jewelry decreased 3 percent.
Killion blamed the kiosk performance on rising gold and silver prices.
“That is probably the business within our portfolio that has the greatest sensitivity to the price increases,” Killion said. “We are in the process of testing new opening price point merchandise.”
Killion added that he was “extremely bullish” on the company’s Canadian business, noting the Canadian economy is projected to grow this year.
The company also reported that month-to-date sales for February, including Valentine’s Day, rose approximately 8 percent.
Overall, revenues for the second quarter were $664 million, a 6 percent increase from the same period last year. Operating earnings for the quarter were $43 million, compared to operating earnings of $44 million last year.
Finally, the company announced that Beth Pritchard, a retail industry veteran who has served as CEO of Bath & Body Works and Dean & DeLuca, will join the company’s board.