Zale Second Quarter Revenues $1.004 billion

Zale Corporation announced adjusted net earnings of $94.8 million for the second quarter ended January 31, 2007. Total revenues for the quarter were $1.004 billion compared to $979 million last year, an increase of 2.6 percent.

Last year's total revenues exclude the results of the Bailey Banks & Biddle stores that were closed during the second fiscal quarter of 2006. Including these store closures, total revenues this year increased 1.1 percent compared to last year's total revenues of $994 million. Comparable store sales for the second quarter increased 1.4 percent.

Year-to-date total revenues, excluding the store closures, increased 2.9 percent to $1.437 billion, compared to $1.397 billion for the same period last year. Year-to-date comparable store sales, which exclude the store closures, increased 1.1 percent. Net earnings in the first half of the year totaled $61.7 million.

“While not reaching our original expectations for the quarter, I'm pleased with the progress we've made,” CEO Betsy Burton said in a release. “At the Zales brand, we had our first comparable store increase in three years and our first increase in operating earnings in four years. Customers reacted favorably to our expanded assortment in our core diamond fashion and bridal categories.

“In the second half (of the fiscal year), we will continue maximizing gross profit dollars as well as focus on expense reduction, particularly those investments in payroll and marketing that did not generate sufficient sales gains to justify.”

Zale projects a third quarter comparable store sales decrease of 2 percent to 3 percent and earnings per diluted share in the range of $0.00 to $0.04 and for the fiscal fourth quarter comparable store sales of flat to slightly positive and earnings per diluted share in the range of ($0.05) to ($0.01).

The company expects full year fiscal 2007 diluted earnings per share in the range of $1.46 to $1.52.