NEW YORK — After showing some sparkle during the holiday season, jewelry specialty retailers are poised to continue to dazzle in 2003.

Reeds Jewelers, Friedman’s Inc. and Zale Corp. all posted increases in their comparable-store sales during the Christmas season. Lacking that level of sheen at the end of the year was Finlay Enterprises, which reported a decrease in its holiday comps.

Friedman’s, a Savannah, Ga.-based retailer with 662 stores, said for the first quarter ended Dec. 28, net incomerose 15.8 percent to $21.3 million, or $1.14 a diluted share, handily beating Wall Street’s consensus estimates of $1.10. Last year, the company reported earnings of $18.4 million, or $1.26. The drop in earnings per share is attributable to an increase in the number of outstanding shares. Net sales rose 9.2 percent to $198.1 million versus sales of $181.4 million in last year’s quarter. Same-store sales rose 6.9 percent on top of an increase of 3.1 percent in the prior year.

"Operating profit margins expanded as we continued to refine our product assortment to drive sales and improve the execution of our retailing model," Bradley J. Stinn, chief executive officer of Friedman’s, said in a statement. "At quarter end, our balance sheet was in excellent condition, with store-for-store inventories lower year-over-year by 2.5 percent and the currency of our receivable portfolio improved."

Joan L. Storms, an analyst at Wedbush Morgan Securities, said Friedman’s was able to outperform its peers because "the majority of its stores are in strip centers, and did not suffer from the lack of traffic" at large shopping malls. Instead, she noted, many of its stores are located near Wal-Mart units. In addition, she said Friedman’s benefited from new merchandising and marketing strategies as well as better execution at the store level, including increased focus on diamonds and bridal jewelry.

At Crescent, which is based in Oakland, Calif. and is an affiliate of Friedman’s, year-to-date net income before preferred dividends payable to Friedman’s nearly doubled, increasing 94.8 percent to $4.7 million, versus $2.4 million for the comparable period last year. Sales for the period, which ended Dec. 28, increased 2.1 percent to $73.3 million from $71.9 million, but were flat on a comp basis.Also reporting a decent holiday in the challenging retail environment, Reeds, a Wilmington, N.C.-based firm of 96 stores, said its December same-store sales increased 1.8 percent and were up 2.8 percent for the combined November-December period.

The company also announced that it missed a financial ratio December 31 required under its debt agreement. It said it expects to receive a waiver, amendment or both from its lender to remedy the violation.

Earlier this month, Dallas-based Zale Corp. said its comps rose 1.3 percent in constant currencies for the two-month holiday period and reiterated current consensus earnings estimates of $2.80 a share for the second quarter ending Jan. 31. Mary Forte, president and chief executive, said in a statement: "We maximized our opportunities during the period through solid marketing campaigns and kept expenses and inventories well controlled."

On the other hand, last week Finlay said comps fell 0.2 percent in November and December and said it now expects earnings for the fourth quarter ending Feb. 1 in the range of $2.58 to $2.68 and full-year earnings of $2.10 to $2.20 versus year-ago earnings of $1.80.

However, Finlay’s fiscal fate is tied closely to that of department stores, in which it operates more than 1,000 leased fine jewelry departments. Department stores generally had weaker comps than specialty and discount stores, and two of the largest department store groups, Federated Department Stores and The May Department Stores Co., registered same-store sales declines in both November and December.

"We are well positioned to fully capitalize on opportunities that develop in the new year," Arthur E. Reiner, chairman and chief executive, said in a statement, referring to the retailer’s focus on merchandising and marketing initiatives combined with tight operating and inventory management.

Noting the strong comp performance of the larger jewelry firms, Jeffrey S. Stein, an analyst with McDonald Investments, said jewelry was one of the better retailing sectors over the past holiday season. He expects the group to continue to excel in the second half of 2003 as the economy and consumer confidence improve.

"Jewelry is sentimental and has value in it," Stein said. "In tough times, and particularly after the terrorist attacks in 2001, consumers became more value oriented and jewelry is generally a good value proposition."As reported, Tiffany & Co. warned on Jan. 7 that earnings could come in below its previous expectations for the fourth quarter to between 57 and 62 cents in the three months ended Jan. 31, versus prior guidance that was 3 cents higher.

However, Wedbush Morgan’s Storms noted that lower-priced specialty stores were less affected than a better store like Tiffany by declines in the stock market and other economic variables.

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