NEW YORK — Friday was not such a good day for Zale Corp.
Alan P. Shor, president and chief operating officer, resigned, and profit projections for the chain’s fourth quarter, along with the stock price, went south.
But on the brighter side, Zale seemed prepared for Shor’s departure, quickly transferring his responsibilities to other executives, and analysts said the revised forecast resulted from the economy, and remained confident in Zale’s turnaround efforts through last spring, involving a year of reining in expenses, overstocks and inferior merchandise. Since around March, the company has said it is back on track.
Instead of picking a successor to Shor, the company doled out his responsibilities by elevating Sue E. Gove to executive vice president and chief operating officer. While she retains her title of chief financial officer, she adds responsibilities for distribution, real estate and management information systems.
The title of president was given to Mary Forte, thereby giving her the additional responsibilities for human resources and the legal department. As reported, Forte, currently executive vice president and chief merchandising officer, will become chief executive officer in August, succeeding Robert DiNicola.
The 43-year-old Shor joined Zale as senior vice president and general counsel in 1995 and became president and a board member in August 2000. "I have spent the last seven years working with a talented management team in executing a major retail turnaround," Shor said in a statement Friday. "These efforts have been exciting and successful, and I feel that the time is right for me to look to the next challenge in my career."
However, there was some speculation that as Shor’s responsibilities at Zale grew to include real estate, MIS, distribution, support operations and human resources, so did his expectations of becoming chief executive of the company. But last month Zale announced that Forte would succeed DiNicola later this year. Aside from helping to turn around the chain, Shor was instrumental in selling the company’s credit operations and lease operations and the acquisitions of Piercing Pagoda and Peoples Jewellers of Canada.
The management changes came as Zale revised downward its earnings estimates for the fourth quarter ending July 31, to land between 10 and 13 cents, including a special charge of 4 cents a share to cover severance and other benefit payments. Excluding the charge, Zale forecast 14 to 17 cents a share in earnings for the quarter versus analysts’ estimates which ranged from 22 to 25 cents a share and averaged 24 cents. Zale’s own estimate had been 23 cents a share. Zale earned 9 cents a share in the fourth quarter of 2001.The company blamed "the challenging recent trends in the external environment" for the modification of its earnings expectations and the reduction of its expected comparable-store sales increase for the fourth quarter to between 1 and 2 percent. Comps slid 9.7 percent during last year’s fourth quarter.
Investors exhibited little sympathy, sending Zale’s shares down $5.29, or 15.2 percent, to close at $29.50 in New York Stock Exchange trading. Similarly, Tiffany & Co., which, as reported, said last week that its earnings for the second quarter would come in at the low end of estimates, saw its share price erode 20.7 percent during the week as it closed at $27.30 on Friday.
David Sternblitz, Zale’s director of investor and public relations, said the stock drop was exacerbated by the fact that the management change and earnings revision coincided. "Also, our numbers have improved substantially in the past year, and expectations were running fairly high, even with our efforts to keep them realistic," he said. "This quarter’s improvement won’t be quite as marked, and that obviously disappointed the market."
Saying Zale’s earnings warning came as a surprise, William R. Armstrong, an analyst at C.L. King & Associates, said the problems at Zale had more to do with the economy not recovering as strongly as anticipated than with any particular problem with the company, noting Tiffany’s similar warning last week. "Sales are falling short as consumers hunker down a little bit for discretionary-type purchases," he said. "Zale is now seeing a slowdown through its various brands in all regions of the country compared to its good start earlier this year."
Zale, the nation’s largest fine jewelry chain, operates more than 2,300 stores in the U.S., Canada and Puerto Rico. The divisions are Zale’s Jewelers, Zale’s Outlet, Zale Direct at zale’s.com, Gordon’s Jewelers, Bailey Banks & Biddle Fine Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews