RAPAPORT... Zale Corporation’s same-store sales were almost flat for the first quarter of its 2007 fiscal year. The company’s same-store sales advanced only 0.4 percent and total sales for the three months reached $432.5 million, up 1.1 percent, culminating in a net loss of $26.4 million for the quarter ended October 31, 2006. However, excluding the closed Bailey Banks & Biddle stores, which accounted for $9 million of the group’s overall sales in the same quarter a year ago, total revenue for the latest period was actually 3.3 percent higher. Also, excluding the noncash impairment charge of $5.3 million from the closure of Bailey Banks & Biddle locations, Zale incurred a net loss of $18.4 million.
In a statement announcing the results, Zale admitted comparable store sales were at the low end of market guidance, primarily due to clearance of the Zales brand. While the number of transactions increased, a lower average ticket offset this, the company added. “Our performance was consistent with our plan to move through as much nonprogram merchandise as possible in the first quarter to make way for fresh assortments and the selling of regular-priced goods in the all-important holiday season,” explained Betsy Burton, Zale’s president and chief executive officer.
Signet Sales SwellSignet Group’s same-store sales climbed 5.4 percent for the third quarter of its 2006 fiscal year (FY) ended October 28, 2006, and total revenue finished 9.5 percent higher at £328.3 million ($626.4 million). The same-store sales performance was helped by better results from the company’s H. Samuel stores, up 1.7 percent, and Ernest Jones unit, up 4.4 percent, after they had experienced several disappointing quarters.
Fiscal year-to-date, Signet’s same-store sales are 5.3 percent ahead of where they were at the end of the corresponding nine months of 2005 and total sales are 10.2 percent above what they were, based on the same year-on-year comparison, at £1.13 billion ($2.2 billion). Terry Burman, Signet’s chief executive officer, noted that the company’s United States division also continued to perform strongly with same-store sales rising 6.5 percent in the third quarter of the 2006 FY.
Signet has announced that it plans to switch to reporting its financial results in U.S. dollars from the start of the group’s 2007 FY, which is February 4th, 2007.
Blue Nile Sales GrowFor the third quarter of its 2006 fiscal year, online diamond retailer Blue Nile, Inc. achieved total sales of $53.2 million, which was 26.8 percent higher than results for the corresponding three months of 2005. However, the company’s profit for the quarter ended October 1, 2006, slipped 28 percent to $1.8 million.
Blue Nile attributed most of the earnings fall in the third quarter to the adoption of the new requirements of Statement of Financial Accounting Standards No. 123R (Revised 2004) this fiscal year. The “share-based payment” section relating to expensing stock-based compensation had the effect of reducing net income by $0.05 per diluted share.
Net cash generated by operating activities increased 21.7 percent to $30.3 million for the 12-month period ended October 1, 2006, while non-GAAP free cash flow increased 22.7 percent to $28.3 million for the same trailing twelve-month period.
Bulgari Sales BulgeSales at luxury jeweler and watch company Bulgari rose 9.6 percent to $306.5 million for the third quarter of its 2006 fiscal year (FY) and the company’s net profit for the three months climbed 29.4 percent to $43.7 million.
In terms of product categories, the jewelry segment is Bulgari’s core business unit. It continues to perform well, having registered 9.7 percent growth for the quarter and 10.2 percent growth for the first nine months of the FY, while the group’s watch division posted 14.8 percent growth in sales for the quarter and 17.3 percent for the first nine months of the FY. In addition, Bulgari’s perfume sales grew 19.3 percent and 15.1 percent for the third quarter and FY year-to-date periods, respectively.
Amazon Claims Jewelry, Watch Sales Double
Jewelry and watch sales at Amazon.com more than doubled during the third quarter of its 2006 fiscal year. The company — which does not disclose a break-down of sales figures for its various product segments to back up the growth rates — reported that sales of engagement rings and gemstones grew 108 percent and sales of watches by 122 percent. While overall sales rose 24 percent for the three months ended September 30, 2006, group profits plummeted by 37 percent to $19 million. Percentage comparisons are with the third quarter of 2005.
Federated Sales DroopThe third quarter of Federated Department Stores, Inc.’s 2006 fiscal year (FY) marked the first anniversary of its merger with former rival May Department Stores. But that did not translate into champagne-popping results. Overall group sales for the quarter ended October 28, 2006, sagged 13.8 percent to $5.88 billion, compared with the combined Federated/May sales for the corresponding period of 2005. The merger became effective August 30, 2005. In addition, Federated posted a loss of $3 million for the three months, down from a profit of $436 million based on the same quarter-on-quarter comparison. On a comparable store basis, Federated’s third quarter sales rose 5.9 percent.
Finlay’s Same-Store Sales ImproveFinlay Enterprises, Inc., an in-department store licensed jewelry retailer, has reported that its same-store sales increased by 4 percent in the third quarter of its 2006 fiscal year (FY), although total sales for the same three months declined 19 percent to $148.3 million. The latter was mainly due to the closure of stores in the first half of 2006.
Financial year-to-date, the group’s same-store sales rose 2.8 percent excluding counters Finlay no longer operates as a result of the merger between Federated Department Stores and May Department Stores. Including discontinued stores, same-store sales are 11.4 percent ahead of where they were at the same time last year. In addition, there has been a 1.3 percent lift in total sales for the first nine months of Finlay’s 2006 FY ended October 28, 2006, to $576.4 million. Its Carlyle division, acquired last year, has contributed $56.5 million so far in 2006. All comparisons are with the corresponding quarter or period in the 2005 FY.
Meantime, Finlay announced last month that it has entered into an agreement to buy Congress Jewelers, a privately-owned, Florida-based business comprised of five stores that have combined annual sales of approximately $23 million and a focus on the luxury market. Settlement of the deal is subject to various conditions and securing certain consents.
J.C. Penney Earnings ClimbJ.C. Penney Company, Inc. delivered a 22.6 percent gain in net income to $287 million for the third quarter of its 2006 fiscal year on the back of sales totaling $4.78 billion, up 6.7 percent. Revenue was well above initial market guidance, according to the department store, catalog, and e-commerce retailer, and grew across all divisions and regions of the country.
Saks Same-Store Sales Rise
Saks Incorporated’s same-store sales improved 8.8 percent and overall revenue rose 8 percent to $697 million in the third quarter of its 2006 fiscal year (FY). Even though the group’s cost of sales grew 6 percent to $404.6 million for the three months ended October 28, 2006, its profits leapt to $6.17 million versus $225,000 in the third quarter 2005.
Financial year-to-date, Saks sales are up 1.2 percent to $1.98 billion, compared with the corresponding period last year, sales costs are steady at $1.21 billion, and profits are 31 percent higher at $32.2 million thanks to after-tax gains from discontinued operations that have been sold.
Jewelry Stock Index| Company | 11/24/06 | 10/26/06 | % Change |
| Blue Nile | 36.24 | 39.52 | -8% |
| Finlay Enterprises | 7.80 | 7.05 | 11% |
| House of Taylor Jewelry | 2.38 | 2.00 | 19% |
| Lazare Kaplan Intl. | 8.33 | 8.87 | -6% |
| Signet Group | 23.27 | 23.20 | 0% |
| Tiffany & Company | 37.32 | 36.75 | 2% |
| Zale | 30.58 | 27.97 | 9% |
Article from the Rapaport Magazine - December 2006. To subscribe click here.