Jeweler Zale (ZLC) is rallying today, as investors bank on a possible turnaround in the jewelry market. Signet Jewelers (SIG) - Get Report, parent of Kay Jewelers and Jared chains, said its Kay division greatly improved this quarter -- which could foreshadow similar news at Zale when that company reports earnings in the coming weeks, says Brian Tunick, analyst at J.P. Morgan.
Shares of Zale soared 28% to $3.89 in afternoon trading. "The stock has underperformed the past two week as investors are locking in sharp gains," Tunick says.
The financial stress of
Finlay Fine Jewelry
could also impact Zale. According to an SEC filing earlier in the month, there is "substantial doubt" about Finlay's ability to continue operations.
If the company is forced to close any of its 69 Bailey Banks and Biddle stores in 24 states, the action could have an adverse affect on Zale, which sold Finlay the chain in 2007, but as part of the deal, remains liable for the leases.
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