Zale Losses Shrink in Third Quarter, Closed 149 Stores in the Past Year
May 26, 10
The North American jewelry retailer reported a small increase in gross margins to 50.8 percent, primarily the result of lower promotional activity, it said in a release. Supplying further testimony to the rough period it is experiencing, Zale reported that it closed 149 retail locations since April 30, 2009. Six of the stores were closed in the last quarter. The store closures resulted in an inventory reduction. By the end of the quarter, Zale had an inventory of $693 million, a decrease of about $70 million compared to last year. Other cost saving measures included a reduction in general and administrative expenses by $16 million during the quarter as well as decreased inventory. Zale had outstanding debt of $299 million at the end of the quarter, compared to $333 million as of April 30, 2009 and $368 million at January 31, 2010. On May 10, Zale received a $150 million senior secured term loan and an amended and extended revolving credit facility. The proceeds were used to pay down the revolving credit facility. Accordingly, total indebtedness and total available borrowing capacity were approximately $310 million and $250 million, respectively. “We have completed the initial stages of our turnaround plan," said President and Interim CEO Theo Killion. "With the additional liquidity that we announced earlier this month, all of our focus will be on fixing the business in order to return it to profitability."
