Losses Grow, Zale Views ‘Improvement’

(IDEX Online News) - Zale Corporation posted disappointing first quarter results, including sales shrinking 0.7 percent to $327 million as comparable store sales decreased 1.1 percent. The company ended the October quarter with a growing loss of $97 million compared to a loss of $60 million in the prior year.

Gross margin of 50.5 percent increases 190 basis points from last year yet its operating margin improved $15 million, or 440 basis points.

“Since February 2010 when we began implementing our turnaround plan, each fiscal quarter has shown improvement,” CEO Theo Killion said about the results. “The second fiscal quarter will provide an important barometer of the progress we're making in our turnaround,” he added.

The company’s results do not bode well for it as it’s entering the important holiday season, and especially as it stands in contrast to the growth in sales by competitors, such as Signet. Signet saw U.S. sales increase by 8.8 percent in the last quarter. Other retailers that did well in the past quarter include Tiffany & Co. and Blue Nile.