Zale Corp. said Thursday same-store sales increased 5.8 percent and revenues rose 6.3 percent for the third quarter ended April 30.
Total revenues for the period were $477 million compared to $449 million for the third quarter of the prior year.
Year-to-date revenues decreased 2.4 percent to $1.68 billion, compared to $1.72 billion for the same period last year. Year-to-date same-store sales decreased 2.3 percent, said the Dallas-based specialty retailer of fine jewelry.
Unrecognized revenues related to warranty sales increased $17 million for the third quarter. Year-to-date, unrecognized revenues increased $64 million. The company said the increase reflects the incremental cash collected and the future positive impact to earnings as a result of the previously announced change to the company’s lifetime jewelry protection plans.
“We have a focused agenda to improve execution, and these sales results reflect the early success of our plan,” said Neal Goldberg, Zale president and chief executive officer. “Sales were fueled primarily by an aggressive clearance strategy that exceeded our expectations with $55 million of inventory liquidated in the third quarter. This clearance strategy is critical for us to achieve our goal of becoming clearer in our product offering and more effective in differentiating the good, better, best value proposition. Going forward, we will remain aggressive with the promotional activity as we work toward permanently reducing inventory by $100 plus million. We are pleased with the early signs from our new merchandising initiatives, and the positive momentum from our inventory reduction creates additional flexibility in positioning the business for fiscal 2009.”
The company added that while the clearance strategy did drive sales in the third quarter, it had the expected corresponding impact on gross margins and the variable expense lines. As the company completes the inventory reduction, it expects promotional activity to intensify creating additional gross margin compression in the fourth quarter.
Zale Corp. will announce its third quarter 2008 earnings results on May 22.
Zale Corp. is a leading specialty retailer of fine jewelry in North America, operating 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. Zale also operates online at www.zales.com and www.gordonsjewelers.com.