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Zale Management Discusses Q3 2012 Results - Earnings Call Transcript

Stocks in this article: ZLC

One of the significant accomplishments in our business is when a jewelry consultant sells $1 million worth of jewelry in a fiscal year. This year, for the first time, we had 4 jewelry consultants exceed $1 million by the third quarter, a tribute to their selling skills and to the improvements we're making in our merchandise offerings. And finally, operating earnings of $6 million, an improvement of $12 million compared to the prior year. This is the first time in over 5 years that we delivered positive operating earnings in the third quarter.

As a result of the 4 metrics we highlighted in the press release, net loss per share improved by $0.17. The performance highlights that I just described were driven by executing the business strategy that I referred to earlier, the first element of which is constant vigilance on the core assortment. By achieving our 80% plus goal, it allows us to continuously edit slow turning SKUs, while we methodically introduce new items, test them and expand them once that margin in turn characteristics at or above category norms. Our inventory is much more efficient as we've eliminated unproductive merchandise and reduced our clearance penetration to under 6%.

Having done so, it allows us to test and launch proprietary product, product like Vera Wang LOVE. Growing our penetration of proprietary product is a strategy that will continue to have increasing importance in the future. On our last call, I talked about the work that we're doing to tap into the emerging world of Omni-Channel retailing and marketing. The guest is not standing still and as the guest moves, so too must the way we communicate with them.

Our integrated Mother's Day campaign is an illustration of our blending traditional and new media to communicate with the guest on their terms, another important strategic imperative. And of course, none of this happens without strong execution by our customer-facing teams.

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