Zale Corporation Announces Holiday Sales

Zale Corporation (NYSE: ZLC) today announced that comparable store sales increased 5.9% for the combined months of November and December 2011, encompassing the entire holiday selling period. This increase follows an 8.5% rise in the same period last year. Within this two-month period, comparable store sales increased 10.1% in November and 4.2% in December. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 6.2% for the holiday selling period, compared to an increase of 7.6% in the prior year period.

Revenues for the two-month period were $564 million compared to $533 million in the same period last year, an increase of 5.8%. Revenues include approximately $10 million resulting from the change in warranty revenue recognition.

Holiday selling period comparable store sales detail:
  • U.S. Fine Jewelry brands (~69% of annual revenues), consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, had an increase in comparable store sales of 9.0%. This increase follows a 7.5% rise in the same period last year.
  • Canadian Fine Jewelry brands (~17% of annual revenues), consisting of Peoples Jewellers and Mappins Jewellers, had an increase in comparable store sales of 0.2%. This increase follows a 15.6% rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands comparable store sales increased 1.7%, compared to an increase of 10.2% in the prior year period.
  • Kiosk Jewelry (~14% of annual revenues) comparable store sales decreased 2.1%. In the same period last year, Kiosk Jewelry comparable store sales rose 4.2%.

For the quarter ending January 31, 2012, the Company expects gross margin to be consistent with the prior year quarter’s gross margin of 50.3%. Operating margin is expected to be slightly below the prior year quarter’s operating margin of 7.0% due to higher selling, general and administrative expenses primarily driven by the holiday advertising campaign and marketing for the launch of proprietary products.

Next Scheduled Announcement

The Company expects to report its second quarter fiscal 2012 results on Wednesday, February 22, 2012 with a conference call at 9:00 a.m. Eastern Time that day.

About Zale Corporation

Zale Corporation is a leading specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,820 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,,, and Additional information on Zale Corporation and its brands is available at

This release contains forward-looking statements, including statements regarding future 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 October 31, 2011. 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.

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