‘Disappointing’ Sales for Sterling, Zale

The nation’s two largest retail jewelry chain operators—Sterling Jewelers Inc. and Zale Corp., with 3,600 stores between them—posted what their chief executives each called “disappointing” sales results for the 2007 holiday sale season. Each cited “challenging” retail market conditions.
Zale Corp., in its post-holiday statement Jan. 10, said that same-store sales decreased nine percent for November and December 2007, encompassing the entire holiday selling period.
Total revenues for the two-month period were $723 million, compared to $804 million last year, a decrease of 10.1 percent.
(The sale of Bailey Banks & Biddle, completed on Nov. 9, was excluded from the results.)
Neal Goldberg, whom Zale Corp. appointed president and chief executive officer Dec. 20, replacing Betsy Burton, said the results were “disappointing across all brands.” However, he continued, “This further validates the commitment underway to focus on the core mall business, maximize gross margins, and emphasize return on capital. It is clear that retail is facing a number of challenges currently, but I do believe this focus on the key drivers will generate long-term value for shareholders.”
Zale operates approximately 2,200 retail locations throughout the United States, Canada, and Puerto Rico, as well as online. Its brands include Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Online, it operates www.zales.com and www.gordonsjewelers.com.
Sterling Jewelers Inc. on Jan. 10 said same-store sales dropped 8.1 percent year-over-year for the eight weeks ended Dec. 29, 2007, reported by its parent firm, London-based Signet Group plc.
The average selling price marginally increased in both its U.S. Jared and mall brand stores. “Pricing discipline was generally maintained,” said the company statement, “although promotional activity within the Journey product category—in response to competition—had some adverse impact on gross margin. Overall, the decline in gross margin, including the impact of commodity cost increases, is likely to be in line with expectations.”
Comp sales for the eight-week holiday period for Signet Group’s United Kingdom stores dropped 3.1 percent and for the Group as a whole, down 6.8 percent.
Terry Burman, Signet Group’s chief executive cited the “very challenging consumer environment on both sides of the Atlantic.”
In the United States, he continued, “the like for like sales performance over the holiday season was clearly disappointing. We remain focused on implementing our proven strategy and on gaining profitable market share.”
Burman also noted that “The consistent growth in the holding of U.S. beneficial shareholders has meaningfully accelerated in recent weeks. As a result, Signet may soon become a domestic issuer for Security Exchange Commission purposes.
“The Signet Board has kept under close review the most appropriate domicile and stock market listing for its shareholders as a whole,” he said. “In light of recent changes in the shareholder base of the company, the Board will further consider these matters, including seeking the views of its shareholders.”
Signet operated approximately 1,971 specialty retail jewelry stores. They include Sterling’s 1,402 stores (the U.S. division), which trade as Kay Jewelers, Jared The Galleria Of Jewelry, and several regional names. Signet also operates 569 stores in the United Kingdom, under the names H. Samuel, Ernest Jones, and Leslie Davis.