President of Zale North America Resigns

In the latest in a series of management shuffles, John Zimmermann, president of Zale North America, which includes the flagship Zale division, recently left as a result of a company streamlining.

The news comes as Zale again reported mixed financial results. For fiscal year 2007, revenues were flat at $2.44 billion, while comparable store sales decreased 0.2 percent. Net earnings, however, were $59.3 million, up from last year’s $53.6 million.

In a conference call with analysts, Zale CEO Betsy Burton said that while sales at the Zale, Gordon’s, and Piercing Pagoda divisions declined in the low single digits, sales at Bailey Banks & Biddle, Zale’s Internet division, outlet stores, and Canadian division were all up strongly.

Zimmermann, who had a solid record as head of Zale’s Canadian subsidiary, became head of Zale North America shortly before then interim CEO Burton was appointed to the job full-time. Burton said at the time she had full confidence in Zimmermann.

His 17-month tenure heading Zale North America is slightly longer than the man he replaced, Paul E. Leonard, who lasted 13 months as the president of Zale Jewelers.

Burton told the analyst call that Zimmermann was removed because “his focus and management style was really not consistent with the culture we are trying to create.”

As part of the reorganization, Zale established a new centralized merchandising organization headed by Steve Lang, who was promoted to group senior vice president and chief merchandising officer. Buying for the midrange brands (Gordon’s, Peoples/Mappins, Zales, and Zales Outlet) will be consolidated under Lang.

Last year Zale moved to a centralized sourcing organization, led by Gil Hollander, group senior vice president and chief sourcing officer.

Zale engaged a firm to search for a chief operating officer, a newly created position. Beginning with its midrange brands, there will no longer be separate brand presidents, Zale said in its statement.

Asked in the analyst call why Zale has not merged with Sterling, as the two attempted last year, Burton said, “Everybody said [a merger] makes a lot of sense, but really it is far more structurally complicated than anybody fully understands. It is not easy to accomplish. It is something that … we have looked at, examined very closely, and do not feel there is an easy way to structure something that would return value to our shareholders.”

She also predicted the Diamond Trading Company–promoted Journey merchandise would be big sellers at retail this holiday but noted the macro environment remains challenging. “We think the moderate customer has been impacted by the high cost of gas and housing problems,” she said.

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