Zale Revenues Soar, Net Loss Drops



Zale Corp. reported that its revenues for the first quarter of 2012 were $351 million, a 7.3 percent increase from the same period last year. The company posted a net loss of $32 million, down from $97 million in the first quarter of 2011.

“Our performance this quarter demonstrates the progress we are making towards returning the company to profitability,” said Zale CEO Theo Killion in a statement. “We’ve now achieved top line growth in four consecutive quarters, and our efforts to expand operating margins are gaining traction.”

The company’s comparable store sales were up 5.8 percent, and its gross margin was $188 million, a 13.7 percent increase. Zale’s revenue and gross margin included a $6.3 million increase resulting from a change in warranty revenue recognition.

In a conference call following the company’s financial results, chief financial officer Thomas A. Haubenstricker said the increase in comparable store sales was driven by a 14 percent rise in the average price per unit sold, but there was a 6 percent decrease in pieces sold.

Killion said that the company had increased its TV advertising budget 12–15 percent this holiday, but was also increasingly investing in other channels, such as mobile. He noted the company currently has 40,000 Facebook fans.

“The power of being able to have people talk about your brand and opt in versus pushing the advertising messages at them we think is very, very important,” he said. “And so a lot of our investment is going there.”

Click here for a review of Zale’s holiday advertising.