Zale Sees First Profitable Year Since 2008, Will Close 50–55 Stores

Zale Corp. turned a $10 million profit in fiscal 2013—its first year in the black since 2008.

The $10 million number is also Zale’s largest full-year profit since 2007.

And that wasn’t the only good news in the Dallas-based company’s recent financial results: Its comps for the fourth quarter (ended July 31) rose 5.6 percent, led by a big comp gain from its Zales division, where same-store sales rose 8.1 percent.

Also doing well was Gordon’s Jewelers, where comps rose 7.2 percent. The Canadian division posted a comparable store sales increase of 3.3 percent, with Peoples Jewellers producing a constant-currency jump of 7 percent. Kiosk division Piercing Pagoda posted a comp increase of only 0.3 percent. 

The company did post a fourth quarter loss of $3 million, but that’s an improvement over last year’s fourth quarter loss of $8 million. Revenues were $417 million, compared with $407 million in the fourth quarter of fiscal 2012.

In a conference call following the release of its results, the company said it plans to see net closures of 50 to 55 stores in the upcoming fiscal year. 

CFO Thomas A. Haubenstricker noted that most of the closures so far have been with the Gordon’s and Mappins brands, in malls where there is a successful Zales or Peoples store. He said he would expect further closures to follow a similar pattern. 

“We continue to take a conservative view of market conditions both in the U.S. and in Canada,” he added. 

CEO Theo Killion said the company was seeing good results from its Vera Wang LOVE collection, as well as from its Celebration Diamond collection. (He called the Celebration Fire “the most brilliant diamond in the world.”) He added that Zale is now offering Canadian-origin diamonds in its stores there, and has found that those diamonds “resonate” well with Canadian consumers.

He said the company’s goal is to grow comp sales “at a rate above our industry.”

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JCK News Director