RAPAPORT... The Zale Corporation reported that revenue slipped 0.6 percent year on year to $442.7 million for the third quarter that ended on April 30. However, Zale reduced its cost of sales 3.3 percent to $210 million and improved gross margin as a percentage of sales to 52.6 percent from 51.3 percent one year ago. Zale recorded a profit of $5.1 million, or 16 cents per share, compared with a loss of $4.5 million, or 14 cents per share, in the third quarter of fiscal 2012.
Zale stated that its comparable-store sales rose 1.4 percent with branded stores, consisting of Zales Jewelers and Zales Outlet, posting a same-store sales increase of 3 percent. U.S. fine jewelry brands, including Zales branded stores and Gordon’s Jewelers, posted a comparable-store sales increase of 1.8 percent. Canada-based fine jewelry brands such as Peoples Jewellers and Mappins Jewellers posted a comparable-store sales decrease of 0.9 percent; however, at constant exchange rates same-store sales rose 1 percent. Piercing Pagoda experienced a same-store sale increase of 2.1 percent.
Interest expense was $6 million in the quarter, down from $10 million one year earlier and the result of debt refinancing. Inventory levels rose to $828 million compared with $779 million on April 30, 2012.
Zale posted a slight increase in revenue for the first nine months of its fiscal year at $1.47 billion and comparable-store sales have risen 2.7 percent. Profit rose to $18 million, or 56 cents per share, compared with a loss of $7.6 million.
“We delivered strong results in March and April after a slow start to the quarter in February, which resulted in our tenth consecutive quarter of positive comps,” said Theo Killion, Zale's CEO. “These results reflect the recent investments we have made to improve the effectiveness of our guest-facing teams and the appeal of our product offerings.”