Zale Q2 Revenue Up 6% to $664 million

Comparable store sales increased 5.8 percent during the quarter. This increase follows a 7.9 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 6.1 percent.

Gross margin was $336 million, or 50.5 percent, an increase of 6.5 percent compared to $315 million, or 50.3 percent, in the same period last year.

The increase was primarily driven by the holiday advertising campaign, including marketing for the launch of proprietary products, according to the company.

Operating earnings for the quarter were $43 million, or 6.5 percent of revenues, compared to $44 million, or 7 percent of revenues, in the prior year quarter.

Earnings from continuing operations totaled $29 million, or $0.78 per diluted share, compared to earnings from continuing operations of $28 million, or $0.74 per diluted share, in the comparable quarter last year.

Inventory at January 31, 2012 stood at $815 million, compared to $777 million last year.

The company’s U.S. fine jewelry brands, consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers and which total about 69 percent of annual revenues, had an increase in comparable store sales of 8.9 percent. This increase follows a 7.6 percent rise in the same period last year.

Peoples Jewellers and Mappins Jewellers, the company’s Canadian fine jewelry brands, which total about 17 percent of annual revenues, had an increase in comparable store sales of 0.7 percent. This increase follows a 13.3 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 2.3 percent compared to an increase of 8 percent in the prior year period.

Comparable store sales of kiosk jewelry (about 14 percent of annual revenues) decreased 3 percent. In the same period last year, kiosk jewelry comparable store sales rose 2.7 percent.

“Because of the importance of the holiday selling period to our business, the positive same store sales we’ve achieved over the past two years is significant,” said CEO Theo Killion. “Our consistent top line growth is a result of the work we’re doing to return the Company to profitability.”

Zale operates approximately 1,810 retail locations throughout the U.S., Canada and Puerto Rico, as well as online.