Zale Kills Hope of Jewelry Recovery, Tanks

Diamonds are not a girl's best friend, at least not during a recession.

Indeed, investors' hopes for a turnaround in the jewelry sector were dashed on Wednesday, as Zale posted a larger-than-expected loss in the third quarter.

The news sent shares in the company tumbling 19% to $4.05 in morning trading.

During the quarter, Zale's loss widened to $23.2 million, or 73 cents per share, missing analysts' expectations of a 46 cent loss.

Investors had been banking on the hope of a Zale turnaround, after rival Signet Jewelers(SIG Quote), said its Kay Jewelers division improved in the quarter.

Sales fell 20.5% to $379.1 million, while same-store sales tanked 20%.

Separately, Zale named Matthew Appel as its chief financial officer to replace Rodney Carter, who left in January. Appel, it is safe to say, has his work cut out for him.