Zale Corp., a leading specialty retailer of fine jewelry in North America, reported Thursday that same-store sales increased 2.3 percent for the November and December 2006 holiday selling period. Total revenues for the two-month period were $905 million compared to $860 million during the prior year, an increase of 5.2 percent.

Last year’s total revenues exclude the results of the Bailey Banks & Biddle stores that were closed and managed by an independent liquidator during the second fiscal quarter of 2006. Including the store closures, last year’s total revenues for the two-month period were $873 million.

The Dallas-based company said that while the Zales brand gained sales momentum, margins were below expectation due to more aggressive pricing and increased promotional activity.

In addition, Gordon’s and Piercing Pagoda brands delivered comparable store sales decreases, which offset strong performances in Zale Canada, Zales Outlet, and ZLC Direct.

As a result, the company said that it expects comparable store sales increases for the second fiscal quarter ending Jan. 31, of approximately 2 percent.

“We are disappointed in not achieving our sales and profit goals for the holiday period,” said Betsy Burton, Zale Corp. chief executive officer. “We made progress on many fronts, especially in terms of attracting back our core customers with compelling product assortments and improved marketing at the Zales brand. We know what we need to do, and we will continue to make the necessary changes to our business for long-term sustainable growth in both sales and earnings.”

JCK