NEW YORK — Solid merchandising, marketing and execution at Zale Corp. combined to deliver a strong performance across all brands during the second quarter, which allowed the jewelry retailer to reverse a year-ago loss and raise its financial...
NEW YORK — Solid merchandising, marketing and execution at Zale Corp. combined to deliver a strong performance across all brands during the second quarter, which allowed the jewelry retailer to reverse a year-ago loss and raise its financial outlook.
The Dallas-based company said for the quarter ended Jan. 31 net income reached $97.3 million, or $3.66 a diluted share, which compares with a loss of $46.2 million, or $1.44 a share, in the same period last year. Results in the prior year include a noncash impairment charge of $136.3 million from the company’s annual review of goodwill. Excluding the charge, the company reported earnings of $90.1 million, or $2.80. Earnings for the most recent quarter beat analysts’ consensus estimates, according to First Call.
On the top line, sales for the quarter rose 4.5 percent to $949 million from $908.4 million in the prior year, while same-store sales gained 4.3 percent.
“We again used our size and the strength of our brands to maximize our opportunities during the key gift-giving period,” said Mary Forte, president and chief executive, on a conference call to investors. “This momentum has continued on through Valentine’s Day, as trends have remained similar to what we saw at holiday.”
Forte said the diamond business was solid across all brands with diamond stud earnings, diamond heart pendants and three-stone jewelry particularly strong. In addition, she said white metals also performed well across all brands. She also noted the right-hand-ring introduction got off to a solid start. At the opening price points, Italian charms and body jewelry remained strong and helped to drive Piercing Pagoda’s business, while at Bailey Banks & Biddle, chandelier earnings and watches were top performers.
Forte said the focus for the back half of the year will be to continue to implement Zale’s long-term initiatives, which include direct product sourcing, an off-mall real estate strategy and a branding initiative, as well as the further development of its database marketing capabilities.
Based on positive business trends, management upped its earnings projections to a range of 36 cents to 39 cents from a range of 34 cents to 36 cents, which is based on a comparable-store increase of 3 to 4 percent. The company said guidance for the fourth quarter remains unchanged from its previous guidance of earnings in the range of 23 cents to 25 cents, and same-store sales falling in the range of a 1.5 to 2.5 percent increase.For the six-month period, Zale reported earnings of $88.1 million, or $3.27 a diluted share, compared with a loss of $52.9 million, or $1.63. Sales for the six months rose 3.4 percent to $1.37 billion from $1.32 billion, with same-store sales showing a gain of 3.4 percent.
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