DiNicola Returns as Zale Chairman, CEO

Robert J. DiNicola, 53, the architect of Zale Corp.’s return to profitability and industry leadership in the 1990s, returned Feb. 21 as chairman and chief executive officer of the world’s largest jewelry retailer. Sources say he will probably stay in the posts he held from 1994 to 2000 for “the long term,” possibly up to three to five years.

He replaces Beryl B. Raff, his protégé and longtime colleague, who resigned as Zale’s chairman and CEO on Feb. 12, six months after her appointment to those posts in September 2000. Because of Raff’s resignation and DiNicola’s pending return, Zale Corp. delayed release of its official second-quarter earnings, originally set for Feb. 14, until March 7.

No other changes are expected for Zale Corp.’s other senior executives—Alan P. Shor, president and chief operating officer; Sue E. Grove, executive vice president and chief financial officer; and Mary L. Forté, executive vice president and chief administrative officer—all members, like Raff, of DiNicola’s management team.

Zale’s fortunes. Raff, 50, was the first woman to head Zale. She was one of the few top women executives in the retail jewelry industry and one of the few in charge of a publicly traded company. A Zale spokesperson said she left to “devote more time to her family and her own personal interests.” A company statement praised her “contributions to Zale’s success” and wished her “success in her future endeavors.”

Some financial and industry analysts speculated that her departure was also a result of dissatisfaction by Zale’s board of directors with the company’s recent performance. Zale’s double-digit growth in comparable store sales, for example, slowed a few months ago, when consumer spending slowed. Its comp store sales for November and December dropped 3.1% compared with a 16.3% gain for the same period in 1999 and fell 2.3% for the entire quarter (ended Jan. 31) compared with a 14.7% gain last year. Shortly after Christmas, Zale said second-quarter net income would be less than analysts expected, and last month it stated that earnings per share for the year (ending July 31) would rise less than the 20% previously predicted.

Chairman’s chores. However, other observers and sources note the jewelry industry as a whole had a tough Christmas and suggest Raff, a highly successful jewelry merchant, was less successful as a corporate chairman. “The two are not the same, and being successful at one doesn’t mean you’ll be successful at the other,” says one analyst. “A successful merchant pays attention to marketing details, while a chairman deals in long-range vision and strategies.” Others note that, as chairman, she had additional burdens she didn’t have before, including integration of Piercing Pagoda, a 900-outlet gold jewelry chain Zale acquired in August 2000; expansion of Zale’s e-commerce; and the slowdown in consumer spending.

The status of Zale’s e-commerce plans may have played a part in Raff’s resignation, some reports suggest. In Zale’s 2000 annual report, her first as chairman, she said Zale was “right on course” in its ” ‘e-volution’ into the world of electronic commerce” and development of “a complete family of Zale-brand dot-coms.” However, neither the re-launch of Zales Jewelers Web site (slated for significant enhancements) nor the introduction of the upscale Bailey Banks & Biddle Web site had taken place by the 2000 holiday season. In addition, planned sites for other Zale Corp. brands (i.e., Gordon’s, Peoples) were delayed. Philip Diehl, vice president of Zale.com and a senior vice president, resigned in early February, a week before Raff resigned. According to some reports, his resignation came at the board’s request. Diehl, formerly director of the U.S. Mint, had been hired by Raff in March 2000 to oversee Zale’s online subsidiary.

Raff joined Zale in late 1994 as president of Zales Jewelers, the company’s flagship chain, when DiNicola—a former Federated Department Stores executive hired to restore Zales’ fortunes after its bankruptcy reorganization—recruited her from R.H. Macy & Co. She had headed Macy’s eastern U.S. jewelry business for a 12-state region. She was made executive vice president and chief operating officer of Zale Corp. in July 1997 and became president and COO a year later. In September 1999, she became chief executive officer. Last Sept. 6, she was named board chairman, succeeding DiNicola, who retired but remained a member of Zale’s board of directors.