I wanted to lay off my obsessive coverage of the Zale/Breeden saga, but today comes word that Richard Breeden has joined the Zale board, after making two big stock purchases in a week. (He now owns over 18% of its stock.) Joining him is James Cotter, also of Breeden Capital Management. So the Breeden axis now has two seats on the eight person board. The fireworks may just be beginning. (And Tiffany may face a similar situation.)
This article makes a pretty convincing case that Zale’s board is a big part of the company’s problems. They do seem to have a hair-trigger and lack a clear focus. (Betsy Burton, the last CEO, came from there.) Breeden also seems like the hair-trigger type, but I hope he understands that the board needs to bring stability and a clear direction to the company.
So now Zale has a new CEO and two board members who are likely to push for some change, possibly even a sale. Things seem pretty unsettled. At the company’s recent presentation at the Cowen and Company Consumer Confidence, the company’s chief administrative officer said they had done a “customer service pilot” and came to the conclusion that better-trained staff are actually better at selling jewelry. Hmm. Isn’t it strange that the people at Zale management are just learning that? What’s sad is better-informed sales associates are probably not something a bottom line-guy like Breeden worries about. But I hope someone there recognizes that a top-notch sales staff is essential to Zale’s future as a company.
One more thing: Every now and then I look at the Zale message board on yahoo but take it with a grain of salt. Lately people have been complaining about how one of the new CEO’s first acts is to have part of Zale’s main headquarters repainted purple. But then I heard from a vendor that, yes, in fact, it is being painted purple. It’s pretty minor in the scheme of things, and we all hope that Neal Goldberg will be a terrific CEO who will bring Zale out of its funk. But this is also a week when many Zale employees are worried about their jobs, after it announced the closing of 60 stores in the first quarter, and “dozens” more by the end of the year. In the words of one correspondent, it’s a “pretty strange message” to send.