Zale, whose brands include Gordon's Jewelers, Piercing Pagoda and Zales Jewelers, runs about 1,790 stores in the U.S., Canada and Puerto Rico.
DALLAS (AP) â¿¿ Jewelry chain Zale Corp.'s shares soared Wednesday after it got a new credit line, reworked other debt to save on interest and said sales are continuing to grow after the company struggled during the recession when shoppers pulled back on discretionary spending. The Dallas company announced late Tuesday that it has secured a $665 million credit facility and prepaid $60.5 million on a senior secured term loan. It also amended and extended a senior secured term loan with Golden Gate Capital for the $80 million left on it. Zale anticipates that these moves will result in about $17 million in annual savings, based on current interest rates lowering its overall average borrowing cost to approximately 4 percent from 8 percent. Its stock jumped 68 cents, or 26.5 percent, to $3.25 in morning trading. The shares have traded between $2.06 and $6.50 over the last year. Zale's revenue tumbled during the recession, hurt by tighter credit and high unemployment. It has closed hundreds of stores over the past several years and shuffled top management as part of its turnaround strategy. In its fiscal second quarter its profit climbed 6 percent, fueled by the holiday shopping season. But in the third quarter it posted a loss of $4.5 million. The chain appears to be turning a corner, with CEO Theo Killion saying in a conference call Wednesday that a key revenue metric has climbed for six straight quarters. Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes results from stores recently opened or closed. Chief Financial Officer Thomas Haubenstricker said the refinancing gives the company more flexibility and make it easier to carry out its future growth plans. Haubenstricker also said that Zale anticipates fourth-quarter revenue at stores open at least a year will rise about 8 percent, helped by a shift in the timing of Mother's Day. The chain foresees the figure climbing about 7 percent for the full year.