Gross margin on sales was $961 million, or 51.5 percent, an increase of $81 million compared to $880 million, or 50.5 percent, in fiscal year 2011. Selling, general and administrative expenses were $902 million, or 48.3 percent of revenues compared to $860 million, or 49.3 percent of revenues, in fiscal year 2011. Operating earnings were $19 million, or 1.0 percent of revenues, compared to an operating loss of $28 million, or 1.6 percent of revenues, in the prior fiscal year.
Interest expense was $45 million, compared to $83 million in fiscal year 2011. Interest expense for fiscal year 2012 includes a charge of $5 million, or $0.15 per share, related to the previously announced debt refinancing transactions. Interest expense for fiscal year 2011 includes a charge of $46 million, or $1.43 per share, that resulted from a previous amendment to our Senior Secured Term Loan.
Net loss from continuing operations was $27 million, or $0.84 per share, compared to a net loss from continuing operations of $112 million, or $3.49 per share, in fiscal year 2011. The previously disclosed change in warranty revenue recognition improved the net loss per share from continuing operations for fiscal year 2012 by $1.00.
Fiscal Year 2013 OutlookBased on the current momentum of the business and the recent debt refinancing, the company expects to achieve positive net income for fiscal year 2013. Conference Call Zale management will host a conference call today at 8:30 a.m. ET to discuss fourth quarter and fiscal year 2012 results. The conference call will be broadcast live over the internet and can be accessed, along with a slide presentation, on the Investor Relations section of the company’s web site at www.zalecorp.com. In addition, you can listen to the call live by dialing 877-545-6744 (within the United States) or 706-634-1959 (for international callers), passcode 21104674. The webcast will be archived shortly after the conference call concludes and will be available on the company’s web site. 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 1,780 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 expected operating performance, interest expense, effective tax rate, 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 Form 10-K for fiscal 2011 and subsequent reports on Forms 10-Q and 8-K. 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||Twelve Months Ended|
|July 31,||July 31,|
|Cost of Sales||197,078||183,792||905,613||862,468|
|% of Revenue||51.6||%||51.3||%||51.5||%||50.5||%|
|Selling, General and Administrative||207,546||203,953||902,287||859,588|
|% of Revenue||51.0||%||54.1||%||48.3||%||49.3||%|
|Depreciation and Amortization||9,431||10,275||37,887||41,326|
|Operating (Loss) Earnings||(7,792||)||(24,085||)||19,118||(27,866||)|
|% of Revenue||(1.9||)%||(6.4||)%||1.0||%||(1.6||)%|
|Interest Expense (a)||14,514||9,185||44,649||82,619|
|Loss Before Income Taxes||(22,306||)||(33,270||)||(25,531||)||(110,485||)|
|Income Tax (Benefit) Expense||(2,641||)||(567||)||1,365||1,557|
|Loss from Continuing Operations||(19,665||)||(32,703||)||(26,896||)||(112,042||)|
|(Loss) Earnings from Discontinued Operations, Net of Taxes||(82||)||60||(414||)||(264||)|
|Basic and Diluted Net Loss per Common Share:|
|Loss from Continuing Operations||$||(0.61||)||$||(1.02||)||$||(0.84||)||$||(3.49||)|
|Loss from Discontinued Operations||-||-||(0.01||)||(0.01||)|
|Net Loss per Share||$||(0.61||)||$||(1.02||)||$||(0.85||)||$||(3.50||)|
|Weighted Average Number of Common Shares Outstanding:|
|ZALE CORPORATION AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEET|
|(Unaudited, in thousands)|
|Cash and cash equivalents||$||24,603||$||35,125|
|Other current assets||42,987||48,670|
|Total current assets||809,378||804,577|
|Property and equipment||696,485||704,813|
|Less accumulated depreciation and amortization||(574,361||)||(563,062||)|
|Net property and equipment||122,124||141,751|
|LIABILITIES AND STOCKHOLDERS’ INVESTMENT|
|Accounts payable and accrued liabilities||$||205,529||$||218,115|
|Deferred tax liability||92,512||92,721|
|Total current liabilities||383,755||405,024|
|Deferred revenue — long-term||122,802||137,992|
|Total liabilities and stockholders’ investment||$||1,171,038||$||1,188,758|
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