Zale Q1 Loss Narrows, Results Beat View

(RTTNews) - Zale Corp. (ZLC), a specialty retailer of diamond and other jewelry, on Tuesday reported a loss for the first quarter that narrowed from last year on higher comparable store sales and margins. Loss per share for the quarter was narrower than analysts' expectations, while revenues beat their estimates.

Theo Killion, Chief Executive Officer of Zale Corp. said, "Importantly, our core national brands drove our sales performance in the first quarter with a 7.5 percent comp in Zales and an 8.4 percent comp in Peoples. For Holiday, we have expanded our exclusive, branded product offerings, launched a new marketing campaign and improved the store environment to enrich the guest experience."

Zale's net loss for the first quarter narrowed to $27.31 million or $0.83 per share from $28.27 million or $0.88 per share in the year-ago period. The prior-year quarter's results included a gain of $1.9 million or $0.06 per share related to the settlement of a lawsuit.

On average, six analysts polled by Thomson Reuters expected the company to report a loss of $0.86 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter rose 1 percent to $362.62 million from $357.47 million in the same period last year. Analysts had a consensus revenue estimate of $362.42 million.

Comparable store sales for the quarter grew 4.4 percent, following a 3.9 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 5.4 percent, following a 3.7 percent increase in the same period last year.

Gross margin for the quarter increased 20 basis points from the year-ago period to 53.4 percent.

Depreciation and amortization expenses for the quarter were $7.66 million, down from $8.65 million in the year-ago quarter. Interest expense declined to $5.61 million from $5.84 million in the prior-year period.

At Zales branded stores, consisting of Zales Jewelers and Zales Outlet, comparable sales increased 7.5 percent.

U.S. Fine Jewelry brands, consisting of Zales Jewelers, Zales Outlet and Gordon's Jewelers, posted a comparable store sales increase of 6.3 percent. Peoples branded stores posted a comparable-store sales increase of 3.1 percent, or 8.4 percent at constant exchange rates.

Canadian Fine Jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 2.0 percent. Meanwhile, Piercing Pagoda posted a comparable store sales decrease of 1.8 percent.

ZLC closed Tuesday's trading at $14.83, up $0.55 or 3.85 percent on a volume of 1.20 million shares.