Zale Corporation Announces Q3 Net Loss of $3.1 Million

Specialty fine jewelry retailer Zale Corporation announced on Tuesday a net loss of $3.1 million or $0.06 per share for the third quarter ended April 30. Zale CEO Betsy Burton put the loss down to general retail weakness and higher gas prices that left "moderate customers" with reduced discretionary income. For the same period last year, the company reported net earnings of $16.8 million, or $0.35 per diluted share.

"Given these overall macro trends," said Burton, "we are lowering our sales projections and, while cautious, we are maintaining our current earnings guidance for fourth quarter.”

Revenues for the quarter were $511.9 million compared to $526.9 million last year, a decrease of 2.9 percent. Revenues recognized were $8.7 million or 1.7 percent less than prior year as a result of the change made in the method of amortizing jewelry protection plan sales. Comparable store sales for the third quarter decreased 3.4 percent.

Year-to-date revenues were flat at $1.95 billion, compared to the same period last year. Excluding revenues of $24.3 million related to Bailey Banks & Biddle store closures in the second quarter of last year, year-to-date revenues increased 1.3 percent. Year-to-date comparable store sales decreased 0.1 percent. Year-to-date earnings totaled $58.6 million or $1.20 per diluted share.

“While comp[arable] store sales decreased 3.4 percent, a focus on maximizing gross margin dollars and good expense control contributed to earnings in-line with expectations for the quarter,” commented Burton.

The company projects a fourth quarter comparable store sales decrease of 2 percent to 3 percent and GAAP earnings per share in the range of $0.11 to $0.15.