Zale Corp comparable store sales in holiday season rise just 2.3 percent

U.S. jewelry retailer Zale Corp said its comparable store sales for the November and December holiday season climbed 2.3 percent, compared with a 5.9-percent rise in the year-earlier period.

At constant exchange rates, comparable store sales increased 1.6 percent for the holiday selling period, compared to an increase of 6.2 percent in the prior year period.

Revenues for the two-month period were largely unchanged at $567 million, an increase of $3 million from last year.

The increase in revenues was mostly due to the comparable same store sales growth partially offset by revenues associated with the net decrease of 50 stores compared to last year.

“This holiday season, we focused on driving bottom line improvement,” says Zale's Chief Executive Officer, Theo Killion. “Our comp performance, combined with an expected 100 basis point operating margin improvement, brings us closer to our goal of achieving positive net income for the fiscal year.”

Zales branded stores, Zales Jewelers and Zales Outlet, posted a comparable store sales increase of 3.1 percent, compared to an increase of 10.0 percent in the same period last year.

U.S. fine jewelry brands including the regional brand, Gordon’s Jewelers, posted a comparable store sales increase of 2.2 percent. In the same period last year, U.S. fine jewelry brands comparable store sales rose 9.0 percent.

Canadian Fine Jewelry brands, Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 2.7 percent. This increase follows a 0.2 percent rise in the same period last year. At constant exchange rates, Canadian fine jewelry brands posted a comparable store sales decline of 0.7 percent, compared to an increase of 1.7 percent in the prior year period.

Piercing Pagoda, its kiosk jewelry business, posted a comparable store sales increase of 1.7 percent. In the same period last year, comparable store sales declined 2.1 percent.

Fiscal Second Quarter Outlook

For the quarter ending January 31, 2013, Zale Corp expects gross margin to be in line with the prior year quarter’s gross margin of 50.5 percent.

Operating margin is expected to be approximately 7.5 percent, or 100 basis points, higher than the prior year quarter, primarily as a result of improved leverage on selling, general and administrative expenses.