Zale Corp. Reports Strong Holiday Sales for Second Consecutive Year

Zale Corp. said Tuesday that comparable store sales increased 5.9 percent, year-over-year, for the November-December holiday sales period. This increase follows an 8.5 period rise in the same period in the prior year.

Within this two-month period, comparable store sales increased 10.1 percent in November and 4.2 percent in December. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 6.2 percent for the holiday selling period, compared to an increase of 7.6 period in the prior year period.

Revenues for the two-month period increased 5.8 percent, year-over-year, to $564 million. Revenues include approximately $10 million resulting from the change in warranty revenue recognition.

Zale Corp. operates approximately 1,820 retail locations in the United States, Canada and Puerto Rico and has online operations for most of its brands.

Sales by brand and country:

* U.S. Fine Jewelry brands (which account for about 69 percent of annual revenue for the company), consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, had an increase in comparable store sales of 9 percent for the holiday period. This increase follows a 7.5 period rise in the same period last year.

* Canadian Fine Jewelry brands (which account for about 17 percent of annual revenue for the company), consisting of Peoples Jewellers and Mappins Jewellers, had an increase in comparable store sales of 0.2 percent. This increase follows a 15.6 percent rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands comparable store sales increased 1.7 percent, compared to an increase of 10.2 percent in the prior year period.

* Kiosk Jewelry (which accounts for about 14 percent of annual revenue for the company) comparable store sales decreased 2.1 percent. In the same period last year, Kiosk Jewelry comparable store sales rose 4.2 percent.

In its outlook for the quarter ending January 31, Zale Corp. says it expects gross margin to be consistent with the prior year quarter’s gross margin of 50.3 percent. Operating margin is expected to be slightly below the prior year quarter’s operating margin of 7 percent due to higher selling, general and administrative expenses primarily driven by the holiday advertising campaign and marketing for the launch of proprietary products.