Zale Comps Rise, But Superstorm Sandy Hits Sales

Zale Corp. reported rising sales and comps in the first quarter of 2012 but still posted a loss.

Overall comps rose 3.9 percent, marking the eighth consecutive quarter of rising comps. Sales rose to $357 million, a 1.8 percent improvement over the year before. Even so, the retailer still posted a net loss of $28 million for the quarter, an improvement over the $32 million loss last year for the same period.

On a conference call following the results’ release, chief financial officer Thomas Haubenstricker said the company’s best performers were its bridal business and Vera Wang LOVE collection.

Haubenstricker also estimated that Superstorm Sandy cost the company $1 million in revenue and forced it to temporarily close 375 of its stores, although none were damaged. Three days of the current quarter were affected by the storm.

“For the first half of November, sales have been slower than expected, due in part to the impact of the storm,” he added. “However, as the month has progressed, we have seen signs of recovery in the areas affected by the storm and in our business as a whole.”

CEO Theo Killion said the company had invested heavily in training for the holiday season.

“Our selling teams are better prepared than ever to deliver great guest experiences,” he said.

Killion also touted Zale’s Celebration Fire diamond—twice calling it “the most brilliant diamond in the world,” an assertion that is now the target of a lawsuit from Sterling Jewelers.

Highlights of Zale’s financial report for the first quarter of fiscal 2012 (ended Oct. 31):

  • Revenues: $357 million, up 1.8 percent
  • Comparable store sales: Up 3.9 percent
  • U.S. fine jewelry brands same-store sales: Up 3.9 percent
  • Canadian fine jewelry brands same-store sales: Up 5.5 percent
  • Piercing Pagoda same-store sales: Up 2.0 percent
  • Gross margin on sales: $190 million, or 53.2 percent
  • Operating loss: $23 million, or 6.4 percent of revenues
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