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Zale Corporation Announces Holiday Results

Zale Corporation (NYSE: ZLC) today announced that comparable store sales increased 2.0 percent at constant exchange rates, or 0.7 percent on a U.S. dollar reported basis, for the combined months of November and December 2013. This increase follows a 1.6 percent increase at constant exchange rates, or a 2.3 percent increase on a U.S. dollar reported basis, in the prior year period.

Revenues for the two-month period were $556 million compared to $567 million in the same period last year. The decrease in revenues is primarily due to the net decrease of 91 stores compared to last year and a decline in the Canadian exchange rate, partially offset by the two percent constant currency comparable store sales growth.

“During the holiday period, we maintained our focus on increasing exclusive product penetration, driving gross margin improvement and building our core national brands,” commented Chief Executive Officer Theo Killion. “We executed a solid holiday season despite a challenging retail environment. Our holiday performance gives us confidence we can achieve our financial expectations for the fiscal year.”

Second Quarter Fiscal 2014 Outlook

For the quarter ending January 31, 2014, the company expects gross margin to be approximately 52.6 percent, or 200 basis points higher than the prior year quarter. This improvement is primarily the result of efficiencies gained from our merchandise sourcing program, discipline around promotional activities and a favorable commodity cost environment. Operating margin is expected to be approximately 8.6 percent, or 100 basis points higher than the prior year quarter.

Holiday Selling Period Comparable Store Sales Detail
  • Zales branded stores, consisting of Zales Jewelers and Zales Outlet, posted a comparable store sales increase of 4.4 percent, compared to an increase of 3.1 percent in the same period last year.
  • U.S. Fine Jewelry brands, consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, posted a comparable store sales increase of 3.5 percent. This increase follows a 2.2 percent rise in the same period last year.
  • Peoples branded stores posted a comparable store sales increase of 2.0 percent at constant exchange rates, following a 1.5 percent increase in the same period last year. On a U.S. dollar reported basis, comparable store sales decreased 4.5 percent, following a 5.1 percent increase in the same period last year.
  • Canadian Fine Jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 0.5 percent at constant exchange rates, following a decline of 0.7 percent in the same period last year. On a U.S. dollar reported basis, comparable store sales decreased 5.9 percent, following a 2.7 percent increase in the same period last year.
  • Piercing Pagoda, our Kiosk Jewelry business, posted a comparable store sales decline of 5.1 percent. In the same period last year, comparable store sales rose 1.7 percent.

All comparable store sales include the associated ecommerce businesses.

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