Zale Posts Mixed Fourth Quarter, Fiscal Results

Quarterly gains and yearly losses marked US jewelry retailer Zale fourth quarter and fiscal results released today.

The retailer says quarterly net earnings rose over 31 percent to $6.7 million from $5.1 million during the fourth quarter last year as cost-saving measures made up for soft sales.

Fourth quarter net income of $2.9 million, after debt redemption, brought a fall of 20 percent compared with $3.7 million net income a year earlier.

Fiscal 2003 however looked grim as the company posted a net loss of $40.6 million from net income of $143.9 million in 2002. Revenue edged up 0.9 percent to $2.21 billion from $2.19 billion a year earlier.

“Strong business disciplines remained firmly in place as we kept inventories in line with sales trends and generated over $120 million in free operating cash flow,” says Mary L. Forte, President and CEO.

“We used our solid cash position and strong balance sheet to make changes to our capital structure that included repurchasing almost 20 percent of our outstanding common stock. This structure that includes a new $500 million bank credit facility provides the Company with the flexibility to take advantage of future opportunities to expand its market leadership.”

Per share earnings of $0.21 beat analysts’ average predictions of $0.20.

The jeweler’s 2004 outlook is “cautiously optimistic”, expecting comparable store sales increase of 1.5 percent to 2.5 percent and earnings per share growth of 10 percent on the FY03 base.