Zale Corporation Reports First Quarter Fiscal 2013 Results

Zale Corporation (NYSE: ZLC) today reported its financial results for the first quarter ended October 31, 2012.

“We are pleased to report our eighth consecutive quarter of positive same store sales and continued progress towards our goal of returning Zale to profitability,” commented Theo Killion, Chief Executive Officer. “As we enter the holiday period, we are confident our foundation is in place for this important selling season.”

First Quarter Fiscal 2013 Results

Revenues were $357 million, an increase of $6.5 million, or 1.8 percent, compared to $351 million in the first quarter of fiscal 2012.

For the first quarter of fiscal 2013, comparable store sales increased 3.9 percent. This increase follows a 5.8 percent rise in the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 3.7 percent.
  • U.S. Fine Jewelry brands, consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, posted a comparable store sales increase of 3.9 percent. This increase follows a 7.0 percent rise in the same period last year.
  • Canadian Fine Jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 5.5 percent. This increase follows a 7.8 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 4.0 percent in the first quarter of fiscal 2013, following an increase of 4.7 percent in the same period last year.
  • Piercing Pagoda, our Kiosk Jewelry business, posted a comparable store sales increase of 2.0 percent. In the same period last year, comparable store sales declined 1.6 percent.

Gross margin on sales was $190 million, or 53.2 percent, an increase of $3 million compared to $188 million, or 53.5 percent, in the first quarter of fiscal 2012. Selling, general and administrative expenses were $206 million, or 57.7 percent of revenues compared to $200 million, or 56.9 percent of revenues, in the first quarter of fiscal 2012. The increase was primarily driven by growth initiatives and higher employee benefit costs. Operating loss was $23 million, or 6.4 percent of revenues, compared to an operating loss of $22 million, or 6.4 percent of revenues, in the prior year quarter.

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