Zale Q1 Loss Widens as Sales Decline

Zale said it will not offer the same level of broad discounting this holiday season as it did in 2008

Zale Corporation reported first quarter revenues of $329 million, a 9.6 percent decline compared to the first quarter of fiscal 2009. The retailer posted a net loss of $57.6 million compared with a $48.4 million loss in the prior year.

Comparable store sales fell 6.8 percent in the fiscal quarter that ended October 31, as shoppers were still purchasing with caution while the recession was waning. In the first quarter of 2009, comparable store sales decreased 3.7 percent. The company has closed 209 retail locations since October 31, 2008.

Zale achieved a gross margin on sales of 48.6 percent compared to 48.5 percent in the prior year. The company decreased its inventory by nearly 10 percent to $902 million.

“We are encouraged that both sales and margin strengthened as the quarter progressed,” said CEO Neal Goldberg, who noted that last year’s heavy discounts, partially due to a reduction in inventory levels, will not be seen this holiday season.

“Our merchandising initiatives have been tested, our stores are fully set and we have the inventory to deliver on our holiday plans. We will not offer the same level of broad discounting this holiday season as we did in 2008, which will help us expand our gross margin,” Goldberg added.