Zale Q2 Net Earnings $88 Million, Appoints New President

Zale Corporation, North America's largest specialty retailer of fine jewelry, announced net earnings of $88 million on Friday for the company's second quarter ended January 31, 2006.

Total revenues for the second quarter, including the results of the 29 Bailey Banks & Biddle stores slated for closure, were $994 million compared to last year's revenues of $972 million for the period, an increase of 2.3 percent.

Excluding the store closures, total revenues were $979 million, compared to $952 million for the same period last year, an increase of 2.8 percent. Comparable store sales, which exclude the store closures, increased 1.4 percent for the same period.

The company also announced John A. Zimmermann as the new president of Zale North America. Zimmermann, formerly President of Zale Canada, will have responsibility for merchandising and store operations of Zales Jewelers, Peoples Jewellers and Mappins Jewellers. Paul Leonard, former President of Zales Jewelers, has resigned.

"Our earnings performance did not reach our expectations for the second quarter due primarily to a sales shortfall at Zales Jewelers," commented Betsy Burton, interim CEO. "Upon review of Zales' business, we concluded that the new strategy negatively impacted our brand positioning because it deemphasized the value component and key diamond categories of the brand's assortment."

"Even with the challenges at Zales and Piercing Pagoda, the strength of our other brands helped drive a 1.4 percent increase in comparable store sales for the quarter," Burton concluded.

The company announced that it expects flat to slightly positive third quarter comparable store sales.