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Shares of Zale Corp. rose more than 20 percent in midday trading Wednesday after the Dallas-based jeweler named Terry Burman, former chief executive officer of Signet Jewelers Ltd., its new chairman.
Zale also said it swung to a third-quarter profit on improved product offerings and pricing.
Burman, who served as rival Signet’s ceo from 2000 to January 2011, will join Zale’s board on May 31. John Lowe Jr., who was chairman for five years, will remain on the retailer’s board.
“During the last three years, Zale has been focused on stabilizing the business and returning to profitability,” said Zale ceo Theo Killion on a conference call. “As we enter the next phase of our strategy, building profitable long-term growth and shareholder value, Terry is imminently qualified to provide guidance and leadership to help us achieve our goals.”
Chief financial officer Tom Haubenstricker added: “When we thought about the transition and Jack’s term ending, we really wanted someone who is a retired ceo. We wanted somebody who had a tremendous track record. And that he has jewelry business as part of his background is an enormous plus.”
In recent quarters, Zale has worked to alleviate its hefty debt load, in part by offering fresh product, raising prices and improving its customers’ shopping experience.
Zale, which operates its namesake chain and Gordon’s Jewelers, has made some headway there and Killion noted the firm “delivered strong results in March and April after a slow start to the quarter in February, which resulted in our 10th-consecutive quarter of positive [comparable-store sales].”
Third-quarter comps rose 1.4 percent, as Zale posted a profit of $5.1 million, or 13 cents a diluted share, for the period ended April 30. This compared with a year-ago loss of $4.5 million, or 14 cents a share.
Quarterly revenues slid 0.6 percent to $442.7 million from $445.2 million, a year earlier.
Wall Street anticipated a 2 cent loss on sales of $443.8 million.
Fewer markdowns pushed gross margins up to 52.6 percent from 51.3 percent a year earlier.
Killion reiterated Zale’s goal of achieving positive net earnings for fiscal 2013 on improved margins, but he also cautioned analysts and investors that “there’s still a lot of hard work ahead,” as the company continues to “drive sustainable profitable growth.”
At 1:20 p.m. on Wall Street, shares of Zale were up 22 percent to $6.59.