This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Zale Reports Third Quarter Fiscal 2012 Results

For the quarter ended April 30, 2012, income tax expense was $1 million, compared to a benefit of $4 million in the comparable quarter last year. The benefit in the 2011 quarter, which represented $0.14 earnings per share, was related to net operating loss carrybacks recognized pursuant to the Business Assistance Act of 2009.

Net loss from continuing operations for the quarter ended April 30, 2012 was $4 million, or $0.14 per share, compared to a net loss from continuing operations of $10 million, or $0.31 per share, in the comparable quarter last year. The change in warranty revenue recognition improved the net loss per share from continuing operations for the third quarter of fiscal 2012 by $0.25.

Inventory at April 30, 2012 stood at $779 million, compared to $756 million in the same period last year.

“The six consecutive quarters of positive comps, coupled with continued momentum through the Mother’s Day selling period, demonstrates that the strategic initiatives we’ve undertaken are resonating with our guests,” commented Theo Killion, Chief Executive Officer. “In addition, the improvement in operating earnings this quarter is another indication of the progress we are making as we accelerate towards bottom line profitability.”

Conference Call

A conference call will be held today at 9:00 a.m. Eastern Time. Parties interested in participating should dial 877-545-6744 or 706-634-1959 (passcode: 75232974) five minutes prior to the scheduled start time. A live webcast and slide presentation, as well as a replay of the call, will be available on the Investor Relations section of the Company’s web site at www.zalecorp.com. For additional information, contact Investor Relations at 972-580-4391.

About Zale Corporation

Zale Corporation is a leading specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,790 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at www.zales.com, www.zalesoutlet.com, www.gordonsjewelers.com, www.peoplesjewellers.com and www.pagoda.com. Additional information on Zale Corporation and its brands is available at www.zalecorp.com.

This release and related presentations contain forward-looking statements, including statements regarding future sales, expenses, margins and profitability. Forward-looking statements are not guarantees of future performance and a variety of factors could cause the Company's actual results to differ materially from the results expressed in the forward-looking statements. These factors include, but are not limited to: if the general economy continues to perform poorly, discretionary spending on goods that are, or are perceived to be, “luxuries” may decrease; the concentration of a substantial portion of the Company’s sales in three, relatively brief selling seasons means that the Company’s performance is more susceptible to disruptions; most of the Company’s sales are of products that include diamonds, precious metals and other commodities, and fluctuations in the availability and pricing of commodities could impact the Company’s ability to obtain and produce products at favorable prices; the Company’s sales are dependent upon mall traffic; the Company operates in a highly competitive industry; the financing market remains difficult, and if we are unable to meet the financial commitments in our current financing arrangements it will be difficult to replace or restructure these arrangements; and changes in regulatory requirements may increase the cost or adversely affect the Company’s operations and its ability to provide consumer credit and write credit insurance. For other factors, see the Company's filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2012. The Company disclaims any obligation to update or revise publicly or otherwise any forward-looking statements to reflect subsequent events, new information or future circumstances, except as required by law.

 
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
             
 
Three Months Ended Nine Months Ended
April 30, April 30,
2012 2011 2012 2011
 
Revenues $ 445,170 $ 411,843 $ 1,459,915 $ 1,365,296
Cost of Sales   216,977     205,424     708,535     678,677  
Gross Margin 228,193 206,419 751,380 686,619
% of Revenue 51.3 % 50.1 % 51.5 % 50.3 %
Selling, General and Administrative 213,088 202,347 694,740 655,635
% of Revenue 47.9 % 49.1 % 47.6 % 48.0 %
Depreciation and Amortization 9,275 9,773 28,456 31,052
Other (Gains) Charges   (375 )   (265 )   1,274     3,715  
Operating Earnings (Loss) 6,205 (5,436 ) 26,910 (3,783 )
% of Revenue 1.4 % -1.3 % 1.8 % -0.3 %
Interest Expense   9,777     8,653     30,135     73,433  
Loss Before Income Taxes (3,572 ) (14,089 ) (3,225 ) (77,216 )
Income Tax Expense (Benefit)   868     (4,161 )   4,006     2,124  
Loss from Continuing Operations (4,440 ) (9,928 ) (7,231 ) (79,340 )
(Loss) Earnings from Discontinued Operations, Net of Taxes   (87 )   935     (332 )   (324 )
Net Loss $ (4,527 ) $ (8,993 ) $ (7,563 ) $ (79,664 )
 
Basic and Diluted Net Loss per Common Share:
Loss from Continuing Operations $ (0.14 ) $ (0.31 ) $ (0.22 ) $ (2.47 )
(Loss) Earnings from Discontinued Operations   -     0.03     (0.01 )   (0.01 )
Net Loss per Share $ (0.14 ) $ (0.28 ) $ (0.23 ) $ (2.48 )
 
Weighted Average Number of Common Shares Outstanding:
Basic 32,213 32,135 32,189 32,122
Diluted 32,213 32,135 32,189 32,122
 

 
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, in thousands)
     
 
April 30,
2012 2011
ASSETS
Current Assets:
Cash and cash equivalents $ 37,291 $ 36,875
Merchandise inventories 778,705 756,439
Other current assets   41,500     37,635  
Total current assets 857,496 830,949
 
Property and equipment 700,505 704,131
Less accumulated depreciation and amortization   (572,998 )   (555,046 )
Net property and equipment 127,507 149,085
 
Other assets   236,327     226,768  
Total Assets $ 1,221,330   $ 1,206,802  
 
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities $ 229,034 $ 238,655
Deferred revenue 87,798 96,136
Deferred tax liability   93,281     72,225  
Total current liabilities 410,113 407,016
 
Long-term debt 445,505 375,454
Deferred revenue — long-term 130,029 139,356
Other liabilities 33,547 38,941
 
Stockholders’ Investment   202,136     246,035  
 
Total liabilities and stockholders’ investment $ 1,221,330   $ 1,206,802  




2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,031.03 -67.42 -0.39%
S&P 500 1,997.46 -5.91 -0.30%
NASDAQ 4,583.1820 +2.9110 0.06%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs