Terry Burman, the former CEO of Signet Jewelers, has crossed over into enemy territory by becoming chairman of rival Zale Corp.
He replaces John Lowe, who served as chairman for the past five years and will remain on the board. Burman begins his term May 31.
Burman signed a two-year non-compete agreement after leaving Signet, which has now expired, says Zale spokesperson Roxane Barry. He will not have a day-to-day role in the business, or move to Dallas as part of his chairmanship, she adds.
Reached for a response, Signet spokesman David Bouffard said, “It is Signet policy not to comment on competitors’ activities.”
“Terry will be the chair and serve in that independent role,” said Zale CEO Theo Killion in a conference call following the release of the company’s financial results.
When asked if Burman might change Zale’s credit policy, Killion added, “We look forward to him adding to the dialogue at the board level … But as we sit here today, we are going to execute our [current] plan.”
Zale declined requests for an interview with Burman. He said in a statement: “I am delighted to assume the role of chairman of the board at Zale at such an important point in their turnaround program.”
Burman became president and CEO of Sterling Jewelers in 1995, after years at Barry’s Jewelers (now Samuels). He ascended to the head of parent company Signet in 2000. He retired at the end of 2010.
According to a filing with the SEC, Burman will receive $200,000 a year for his service as chairman (half in cash, half in stock); the standard board package of $75,000 with an $80,000 stock equity award; as well as a one-time award of 100,000 restricted shares.
Burman’s appointment comes as Zale announced its best set of financial results in a while—showing a $5 million profit for fiscal 2013’s third quarter, which last year recorded a $5 million loss. It is the company’s first profitable third quarter in seven years.
Comp store sales increased 1.4 percent, marking the tenth consecutive quarter of positive comps. Excluding the impact of having a Feb. 29 last year, and at constant exchange rates, the company’s comps are up 2.6 percent over last year.
For the year to date, Zale has earned $18 million, compared to an $8 million loss last year. The company has said it expects to post a profit this year.
Killion also announced that the company is expanding its store count for its Vera Wang LOVE collection as well as its Celebration Fire and Celebration Grand diamonds.
Zale is also pleased with the results of its candy-colored gemstone and diamond campaign, Killion said.
Another exclusive collection—Ava Nadri, aimed at female self-purchasers—has performed “very well,” Killion said.
The company also has appointed A.T. Kearney to review its supply chain and sourcing.
For the coming year, the company plans to close 60 fine jewelry stores and 20 kiosks. It closed 85 stores over the past year.
Killion said the company’s overall to-date comps for May are up 4 percent, with sales at Zales up 7 percent.
“There were some negative headwinds at the beginning of February, particularly with the payroll tax increase… and some of the weather issues,” Killion said. “We have seen strength continue until the early part of May.”
One cautionary note: The company has total debt of $466 million, compared to $446 million at the same point last year. Haubenstricker attributed this to an increase in inventory as well as transaction costs from its debt refinancing.
Other highlights of Zale’s financial results, for the third quarter of fiscal 2013 (ended April 30):
- Zales branded stores (Zales Jewelers and Zales Outlet) comp sales: Up 3 percent
- U.S. jewelry brands (Zales and Gordon’s) comp sales: Up 1.8 percent
- Canadian fine jewelry brands (Peoples Jewellers and Mappins Jewellers) comps: Down 0.9 percent
- Piercing Pagoda comp sales: Up 2.1 percent
Follow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine