Some updates on Zale …
– From its latest 10Q, Zale’s latest take on the Finlay/Bailey Banks and Biddle lease situation …
In May 2009, we began negotiations with the landlords to release us as the guarantor of the leases for specified payments. These payments would eliminate any future contingent liability associated with the Bailey Banks & Biddle leases.
Executives said something similar at its recent conference call. The language is interesting here … They don’t want to fulfill their obligations, they want to be released from them. Hey, wouldn’t we all? But spokesman David Sternblitz says they are working towards that goal.
“As a part of our real estate reviews and discussion, this is one of the things that is being discussed,” he says. “We would like to remove that contractual liability. That’s part of a much broader discussion [with landlords.]”
Are retail landlords in such dire straits they may be willing to make a deal? We shall see .. (I should stress here that Finlay is still a regularly operating company, so the only leases Zale could be on the hook for now are from the Bailey’s stores they are closing.)
– A while ago we mentioned Zale was having issues with its credit card provider Citibank, but those appear to be settled, according to the 10Q.
– In Las Vegas, I spoke briefly with CEO Neal Golberg, who talked about the new prototype store the company opened in North Park, Texas. That location was chosen because they had to move a store, and decided to experiment. This new prototype is different from the “Pace-Setter” stores and Goldberg says they are somewhat similar to the Apple retail stores. They have lower retail counters and the customers and sales associates stand on the same side of the counter, in an attempt to remove the “intimidation” factor from jewelry buying. So far, results have been encouraging, Goldberg said, and they may bring the concept to other stores.
- Sternbiltz also dismissed the rumors, which I have heard quite a bit, that Warren Buffett is going to buy Zale, and then combine it with Helzberg’s, under the leadership of (former head of Zale and current head of Helzberg’s) Beryl Raff. That one didn’t make much sense to me …
Ken Gassman’s take on Zale was just published here.
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