Zale Posts 32% Leap In Quarterly EPS, But Losses Continue

Even with quarterly net earnings of $9.4 million and total revenues of  $449.4 million, Zale executives are cautious. While US economy in the past few months seemed shaky, Zale CEO Mary Forte feels they’re strategy served them well.

“We continued to improve our solitaire and wedding categories, driving traffic outside of the key gift-giving periods. This resulted in a strong earnings improvement for the quarter along with the strengthening of our balance sheet,” says Forte.

As net earnings jumped 32 percent over the same period last year, total revenues were almost flat – up a dismal 0.1 percent and comparable store sales increased 0.3 percent for the same period.

Total revenues for the year-to-date totaled $1.770 billion compared to $1.756 billion for the same period last year, an increase of 0.8 percent. On a comparable store basis, year-to-date sales increased 0.6 percent and year-to-date net earnings totaled $92.7 million, excluding a $136.3 million non-cash impairment charge from the company's annual review of goodwill.

The year-to-date net loss, including the impairment charge, totaled $43.6 million. For the same period last year, net earnings, including a gain from an unusual item of $2.2 million net of taxes and the effect of a change in accounting principle of $41.3 million.

"A key focus entering fiscal 2003 was to keep the business stable and on track in a volatile external environment. We continued to meet this goal with the successful execution of our strategy. This is demonstrated by the fact that even with relatively flat sales this quarter, we still achieved our earnings objectives,” adds Forte.