Zale Q1 Sales Down 3.5% to $364 Million

Zale Corporation reported Tuesday a first quarter net loss of $45.3 million compared to a net loss of $26.7 million for the prior year period. Revenues declined 3.5 percent to $364 million, while comparable store sales decreased during the quarter 3.7% compared to the prior year.

During the first quarter, the company liquidated $47 million in excess inventory, bringing total inventory liquidations since inception of the strategy in February to $174 million. At October 31, merchandise inventories were down $21 million compared to the prior year period.

Total warranty sales were $21 million, excluding a $4 million decline in the value of the Canadian dollar. Warranty sales including the Canadian dollar decline were $17 million compared to $24 million in the prior period.

Adjusted for total warranty sales, the net loss from continuing operations was $42 million compared to a net loss of $17.9 million.

“Though the national economic environment is challenging, we have continued to deliver strong performance on both store operations and cost control,” said CEO Neal Goldberg.

However, the company said that in view of the uncertainties surrounding the national economy and consumer spending, the company “does not believe it can reliably gauge likely Holiday performance or sales in the balance of fiscal 2009 with any precision.”