‘The Shaq’ Designs Men’s Jewelry Collection for Zale Corp. Stores

Shaquille O’Neal has found himself a new job as a jewelry designer for Zale Corp. The former NBA star has partnered with the specialty retail jeweler to create and market a branded collection of men’s jewelry.

The Shaquille O’Neal Collection consists of a variety of men’s pendants, rings and bracelets. The collection will be offered exclusively in select Zale Corp. stores in the U.S., Canada, Puerto Rico and online. Zale Corp. operates approximately 1,780 retail locations under the following brands: Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda

The partnership builds on the strengths of both brands as Shaquille O’Neal (known as “The Shaq”) is widely regarded as one of the most gregarious personalities in sports, and Zales, is one of the most recognized North American specialty jewelry brands.

“Since I was in college I have shopped at Zales because I knew I could buy a quality product at an affordable price,” O’Neal said.

“The product is an expression of Mr. O’Neal’s fun-loving personality and his unique sense of style,” said Theo Killion, Zale CEO.

The company made a promotional video of O’Neal working behind the counter at a Zale store in the Shops at Willow Bend, a mall in Plano, Texas. The video is below.



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Jessica Simpson, Zale to Launch Jewelry Collection

Jessica Simpson will launch a diamond fashion jewelry collection available at Zale Corp. branded stores beginning in October.

The Dallas-based jewelry retailer made the announcement Tuesday. The Jessica Simpson collection will feature rings, earrings, pendants and bracelets, available in a range of affordable price points, the company said. Simpson’s collection will be offered exclusively at Zales Jewelers, Zales Outlet and Peoples Jewellers stores in the U.S., Canada and Puerto Rico.

In addition to being an internationally known recording artist, actress and television personality, Jessica Simpson has established herself as a fashion designer. The Jessica Simpson Collection extends into 22 product categories including shoes, apparel, accessories and fragrances.

“I have always wanted to design fine jewelry and am very excited to launch a new collection exclusively at Zale,” Simpson said in a statement. “Jewelry is a very personal expression that celebrates who you are and this collection is very much a reflection of who I am.”

Zale Corp. is a leading specialty jewelry retailer in North America. Its brands include Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers and Mappins Jewellers and Piercing Pagoda.

Zale Corp Q4 Sales Up 9.4%, Comp Sales Up Nearly 10%; Losses Also Rise

A Zales jewelry store worker in San Bruno, Calif. examines watch inventory.  Photo credit: Paul Sakuma / AP

Jewelry retailer Zale Corp. said Wednesday that fourth quarter sales rose 9.4 percent year-over-year to $377 million. Same store sales for the period, ended July 31, increased 9.8 percent, compared to a decrease of 2.1 percent during the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, same store sales increased 8.4 percent for the quarter.

However, the Dallas-based company—whose brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda—reported a loss of $32.6 million, or $1.02 a share, compared with $28.5 million, or 89 cents a share, a year earlier. The company said the main culprit was higher prices for gold, silver and diamonds.

“This quarter represents the third consecutive quarter of positive same store sales,” said Matt Appel, Zale Corp. chief administrative officer and chief financial officer. “Despite the headwinds imposed by volatility in commodity markets and the overall economy, our gross margin performance in the quarter and full year reflects the traction we are gaining in the marketplace.”

The company, which has 1,830 retail locations in the U.S., Canada and Puerto Rico, said gross margin on sales increased 6.4 percent to $193 million for the fourth quarter. The company achieved gross margin on sales of 51.3 percent, compared to 52.7 percent in the comparable quarter last year. Excluding last-in, first-out inventory charges of $7.9 million and $2.9 million for the fourth quarter of 2011 and fourth quarter of 2010, respectively, gross margin would have been 53.4 percent and 53.5 percent for the 2011 and 2010 quarters, respectively. The $5 million increase in LIFO charges for the fourth quarter of 2011 was due to rising diamond, gold and silver commodity costs.

Selling, general and administrative expenses for the fourth quarter were $204 million, or 54.1 percent of revenues, compared to $197 million, or 57 percent of revenues, in the same period last year. The company's operating loss for the quarter was $24 million compared to an operating loss of $31 million in the prior year quarter. Operating margin improved 270 basis points, to negative 6.4 percent, for the fourth quarter, compared to negative 9.1 percent in the same period last year.

The company recorded an income tax benefit of $1 million, compared to a benefit of $6 million in the comparable quarter last year. The 2010 quarter included a $4 million tax benefit related to net operating loss carrybacks pursuant to the Business Assistance Act of 2009. The company said it does not foresee any further benefits from this Act.

Inventory at July 31, stood at $721 million, compared to $703 million in the same period last year. The company had outstanding debt for the period was $395 million, compared to $296 million in the fourth quarter of the prior year.

2011 Fiscal Year Report After Jump

Revenues for Zale Corp.’s 2011 fiscal year, ended July 31, increased 7.8 percent to $1.74 billion. Same store sales for the year increased 8.1 percent, compared to a decrease of 6.6 percent for fiscal year 2010. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 7.1 percent for 2011.

However, for the fiscal year, the company incurred a net loss from continuing operations of $112 million, or $3.49 per share, compared to a net loss from continuing operations of $96 million, or $2.99 per share, in fiscal year 2010, primarily due to a charge of $46 million to interest expense, partially offset by a $26 million net decrease in store impairment and closure charges.

The company said margin on sales was $880 million, an increase of 8.1 percent compared to $814 million in the same period last year. The Company achieved gross margin on sales of 50.5 percent, compared to 50.4 percent in the prior fiscal year.

Selling, general and administrative expenses were $860 million, or 49.3 percent of revenues, in the 2011 fiscal year, compared to $846 million, or 52.4 percent of revenues, in fiscal year 2010. The company's operating loss for fiscal year 2011 improved by $87 million to $28 million, compared to an operating loss of $115 million in the prior fiscal year. Operating margin improved 550 basis points, to negative 1.6 percent for the fiscal year, compared to negative 7.1 percent for fiscal year 2010.

For the year, the company recorded income tax expense of $2 million, compared to a benefit of $29 million in fiscal year 2010. The fiscal year 2010 benefit is primarily a result of tax benefits related to net operating loss carrybacks pursuant to the Business Assistance Act of 2009.

“In fiscal 2011, we made substantial progress in the multi-year initiative to return to profitability,” commented Theo Killion, Zale Corp. CEO. “The strength of our assortment, marketing and field organization position us well to navigate through the current economic environment.”

Zale Q4 Comps Up 5.6%, Revenue Loss Narrows to $8 Million

Comps at Zales Jewelers (pictured) and Zales Outlet increased 8.1%.

Fine jewelry retailer Zale Corp. said Wednesday that year-over-year revenues for the fourth quarter increased 2.4 percent to $417 million. Comparable store sales for the period increased 5.6 percent. This increase follows an 8.3 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 5.8 percent.

Net loss in the fourth quarter for the company, which owns retail jewelry chains in the US, Canada and Puerto Rico, narrowed to $8 million, or 25 cents per share, compared to a net loss of $20 million, or 61 cents per share, in the fourth quarter of fiscal 2012.

Other fourth quarter highlights include:

* Zales branded stores, Zales Jewelers and Zales Outlet, posted a comparable store sales increase of 8.1 percent. This follows a 12.3 percent rise in the same period last year.

* U.S. fine jewelry brands, including Zales branded stores and regional brand, Gordon’s Jewelers, posted a comparable store sales increase of 7.2 percent. This follows an 11.2 percent rise in the same period last year.

* Peoples branded stores posted a comparable store sales increase of 5.6 percent. This follows a 4.7 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 7 percent in the fourth quarter of fiscal 2013, following an increase of 9.9 percent in the same period last year.

* Canadian fine jewelry brands, Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 3.3 percent. This follows a 2 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 4.7 percent in the fourth quarter of fiscal 2013, following an increase of 7.1 percent in the same period last year.

* Piercing Pagoda, Zale’s kiosk jewelry business, posted a comparable store sales increase of 0.3 percent. In the same period last year, comparable store sales rose 2.7 percent.

Gross margin on sales rose sharply to $222 million, or 53.1 percent, compared to $210 million, or 51.6 percent, in the fourth quarter of fiscal 2012. Operating margin increased 120 basis points.

Operating loss was $3 million, or 0.7 percent of revenues, compared to an operating loss of $8 million, or 1.9 percent of revenues, in the fourth quarter of the prior year.

For the 2013 fiscal year, the company reported a six-year high in net earnings of $10 million, or $0.24 diluted earnings per share, up $37 million, or $1.09 per share. The company said this is a six-year high.

Comparable store sales rose 3.3 percent for the year with Zales branded stores up 4.7 percent and Peoples branded stores up 4.8 percent at constant exchange rates. Gross margin was up 60 basis points to 52.1 percent and operating margin increased 90 basis points to 1.9 percent.

“For the year we achieved a significant milestone by delivering our highest net income in six years,” Theo Killion, Zale Corp. CEO, said in a statement.

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The Jewelry Industry is Better Prepared to Handle a Downturn

The opening day crowd during the 2011 JCK Las Vegas tradeshow held at Mandalay Bay. Photo credit: Anthony DeMarco

Not since 2009 has the global economy and the jewelry industry’s place in it been so unstable. This comes as the international jewelry industry descends on Las Vegas for a series of tradeshows beginning Monday (led by JCK Las Vegas at Mandalay Bay and The Couture Show at the Wynn Las Vegas) where retailers will purchase their inventory for the all-important holiday season. It’s one of the largest jewelry trade events on the global calendar and it will be a real test on whether the U.S. jewelry industry can withstand the latest onslaught of mixed economic news.

I think the jewelry industry will prevail. The industry itself has done little to exacerbate the fragile global economic situation. In fact, it has performed admirably during these difficult economic times—outside of the diamond industry with its mishandling of the Zimbabwe human rights issue and now diamond grading scandals at two labs. 

After the contraction of the U.S. jewelry industry in 2009, it has been posting mostly positive numbers and showing consistent, incremental growth. Unlike the banking industry, it has learned from its mistakes. The jewelry industry is not as leveraged as it was in 2008. It is doing better at using the Internet and social media instead of treating it as the enemy. Creativity has taken over as well. As the cost of materials increased, designers and manufacturers have created objects of adornment using more color, a variety of materials and high-quality craftsmanship. The jewelry industry as a whole is a smarter and more humble industry than it was prior to 2008.

However, it must get past an economic situation that is again rising to a boil led by two factors that just won’t go away: Wall Street’s reckless behavior and its defiant stance against any regulation; and the Euro crisis.

The Facebook IPO debacle managed by Morgan Stanley and JPMorgan Chase’s $2 billion-plus trading loss by taking large positions in credit default swaps show that Wall Street has learned nothing from the 2008 financial crisis that nearly took down the world economy.

Meanwhile, the end of the Euro or at least a serious contraction of the European Union now seems a possibility. Greece is on the brink of outright rejecting the monetary union and other countries are saddled with outrageous debt that member countries seem unable or unwilling to resolve. There are an endless number of theories as to what will happen if the Union disbands or shrinks, which tells me that no one really knows what will happen. But everyone in Europe seems to be scared.

The jewelry industry has its own challenges and victories, some of which were revealed this week. Among them:

* Tiffany & Co., the luxury retailer jeweler that has performed like a juggernaut throughout this recession, downgraded its outlook Thursday based on a softening of sales in the U.S. and abroad.

* Meanwhile, it’s the mid-market jewelers that are showing resiliency. Signet Jewelers, the largest specialty retail jeweler in the U.S. and U.K., whose brands include Kay and Jared, reported modest growth in the first quarter Thursday (sales up 1.4 and comps up 1.2 percent). Zale Corp., the long-struggling North American specialty retail jeweler, showed significant growth in its first quarter report Wednesday (8 percent increase in sales and comps).

* Online jewelry and diamond retailer, Blue Nile, reported a 3.6 percent first quarter increase in sales. However, lower markups led to a 9.7 percent decline in gross profits.

* The Swiss watch industry, which appeared invincible throughout the recession, is reporting that its phenomenal growth is slowing to just robust levels. Watch exports increased 9 percent in April, down from 16.1 percent for the first four months of the year, according to the Swiss Federal Customs Office.

* However, the large luxury conglomerates are still poised for strong growth throughout the world. For example, LVMH reported that its Watch & Jewellery division sales increased by 141 percent increase, year-over-year, to $826.6 million. This is misleading as LVMH acquired Italian luxury jewelry house, Bulgari, in March 2011. Excluding the Bulgari acquisition, sales increased 17 percent. Richemont, reported that jewelry and watch sales rose 32 percent for the year, with overall sales in the Americas up 26 percent.

Despite the uncertainty, I expect to see a positive environment and exciting new jewelry designs at the tradeshows. Most importantly, I anticipate business to be strong. Unlike 2008, the industry is better prepared today to meet these challenges.

Zale Corp. Sales Up, Losses Decline

Zale Corp. on Wednesday said year-over-year third quarter revenues increased 14.5 percent to $412 million. Same store sales for the period ended April 30, increased 15.2 percent, compared to a decrease of 2.2 percent during the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, same store sales increased 14.2 percent for the quarter.

The specialty jewelry retailer with operates jewelry chains in the U.S., Canada and Puerto Rico reported a net loss from continuing operations of $10 million in the third quarter, compared to a net loss from continuing operations of $15 million in the comparable quarter last year.

For the quarter, gross margin on sales was $206 million, an increase of 13 percent compared to $183 million in the same period last year. The company achieved gross margin on sales of 50.1 percent, compared to 50.8 percent in the comparable quarter last year.

“We continue to make progress in our multi-year initiatives to return the company to profitability,” said Theo Killion, Zale Corp. CEO. “Our results validate that the work we’ve done to improve our marketing, our product and our guest experience is beginning to take hold.”

Zale Corp. operates approximately 1,845 retail locations throughout the U.S., Canada and Puerto Rico, as well as online. The company’s brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

Zale Corp. Q3 Sales and Comps Up 8%

U. S. specialty jewelry retailer Zale Corp. reported a year-over-year revenue increase of 8.1 percent to $45 million for the third quarter of 2012, which includes $8.5 million resulting from a previously disclosed change in warranty revenue recognition.

Same store sales for the period rose 8 percent during the period, ended April 30. This increase follows a 15.2 percent rise in the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 8.3 percent for the quarter.

The Dallas-based company owns and operates the following jewelry retail brands: Zales, Zales Outlets, Gordon’s Jewelers, Peoples, Mappins and Piercing Pagoda. By market segment, the company reported the following for the third quarter:

* U.S. Fine Jewelry brands (70 percent of revenues), consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, had an increase in comparable store sales of 10.9 percent. This increase follows a 15.9 percent rise in the same period last year.

* Canadian Fine Jewelry brands (17 percent of revenues), consisting of Peoples Jewellers and Mappins Jewellers, had an increase in comparable store sales of 3.8 percent. This increase follows a 21.6 period rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands comparable store sales increased 6 percent following an increase of 15 period in the prior year period.

* Kiosk Jewelry (13 percent of revenues) comparable store sales decreased 1.1 percent. In the same period last year, Kiosk Jewelry comparable store sales rose 6.7 percent.

Gross margin on sales for the quarter was $228 million, or 51.3 percent, an increase of 10.5 percent, compared to $206 million, or 50.1 percent, in the same period last year. Selling, general and administrative expenses were $213 million, or 47.9 percent of revenues, for the period, compared to $202 million, or 49.1 percent of revenues, in the same period last year. Operating earnings for the quarter were $6 million, or 1.4 percent of revenues, compared to an operating loss of $5 million, or negative 1.3 period of revenues, in the prior year quarter.

For the quarter, income tax expense was $1 million, compared to a benefit of $4 million in the comparable quarter last year.

Net loss from continuing operations for the quarter was $4 million, or $0.14 per share, compared to a net loss from continuing operations of $10 million, or $0.31 per share, in the comparable quarter last year. The change in warranty revenue recognition improved the net loss per share from continuing operations for the third quarter of fiscal 2012 by $0.25.

Inventory at April 30, 2012 stood at $779 million, compared to $756 million in the same period last year.

“The six consecutive quarters of positive comps, coupled with continued momentum through the Mother’s Day selling period, demonstrates that the strategic initiatives we’ve undertaken are resonating with our guests,” said Theo Killion, Chief Executive Officer. “In addition, the improvement in operating earnings this quarter is another indication of the progress we are making as we accelerate towards bottom line profitability.”

From Adversary to Partner, Terry Burman Named Chairman of Zale Corp.

Terry Burman

Zale Corp.on Wednesday made a surprise announcement that Terry Burman was named board chairman of the Dallas-based jeweler, whose retail brands include Zales Jewelers, Zales Outlet and Gordon's Jewelers. Burman was the highly successful chief executive officer of Signet Jewelers Ltd. from 2000 till 2011, Zale Corp.’s main rival.

Burman replaces John B. Lowe, Jr., who has served as chairman for the past five years. Lowe will remain on the board, the company said. The announcement overshadowed its third quarter earnings report.

Burman, a 30-year veteran of the jewelry industry, joined Signet in 1995 as the chairman and CEO of Sterling Jewelers, Inc., the U.S. division of Signet and Zale Corp.’s main rival. Sterling is the largest specialty retail jeweler in the United States with more than 1,300 stores located in 50 states, including national chains Kay Jewelers and Jared the Galleria of Jewelry. Signet also is the largest retail jeweler in the United Kingdom.

Under Burman’s leadership Sterling and then Signet experienced robust growth during the high-growth economy of the 1990s and the early 2000s and even through the economic recession and sluggish economy since 2008. Meanwhile, Zale Corp., suffered during the economic downturn under several leadership and ownership changes closing more than 100 underperforming stores.

Before joining Signet, Burman held executive positions, including president and CEO of Barry’s Jewelers, Inc., which now does business as Samuels Jewelers. He serves on the boards of Yankee Candle Company, Inc. and Tuesday Morning Corp. He also serves on St. Jude Children’s Research Hospital Board of Governors. He has received numerous jewelry industry awards, including the American Gem Society Lifetime Achievement Award in 2010 and is the former chairman of Jewelers of America.

“Terry’s track record and industry knowledge make him uniquely qualified to contribute to Zale as we execute our plans for long term growth and shareholder value,” said Theo Killion, Zale Corp. CEO.

“I am delighted to assume the role of chairman of the board at Zale at such an important point in their turnaround program,” Burman said. “I am looking forward to working with Zale’s management and board to refine the company’s strategy and priorities to drive profitable growth and create shareholder value.”

Zale Corp. is a leading specialty retailer of diamond and other jewelry products in North America, operating approximately 1,710 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corp.'s brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at www.zales.com, www.zalesoutlet.com, www.gordonsjewelers.com, www.peoplesjewellers.com and www.pagoda.com. 

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Jewelry Websites Sparkled in December

Many Americans returned to making purchases of luxury goods this holiday season, sending an all-time high of 26.2 million unique visitors to Jewelry/Luxury Goods/Accessories sites during the month, according to December 2010 data from the comScore Media Metrix service.

BradfordExchange.com took the top stop in the category with 2.8 million unique visitors in December (up 15 percent), followed by Zale Corp. with 2.3 million visitors (up 26 percent), Coach.com with 2.1 million (up 14 percent), and Swarovski.com with 2.0 million (up 13 percent).

Overall the firm said December saw increased traffic among several content categories including E-cards, Shipping, Retail and Travel sites. As the fiscal year came to an end, many consumers and businesses turned to Tax and Financial Information/Advice sites to close their books for the year and prepare for the upcoming tax season.

“The Internet now plays a vital role for Americans during the holiday season, allowing them to do everything from finding online deals and researching future in-store purchases to tracking shipments, booking travel and sending e-cards, gifts and greetings,” said Jeff Hackett, executive vice president of comScore Media Metrix. “Each year we see more Americans using the Internet as a tool during the holidays, with more than 85 percent of Americans online visiting a retail site in December, up from 80 percent last year.”

ComScore Media Metrix provides Internet audience measurement services that report details of online media usage, visitor demographics and online buying power for the home, work and university audiences across local, U.S. and global markets.

Zale Corp. Profit Lauded as a ‘Turning Point’ for the Company

Zale Corp. said Wednesday that its year-over-year net income in the fiscal second quarter rose 400 percent to 27.2 million, compared with $6.7 million for the second quarter of the prior fiscal year.

Revenues for the quarter ended January 31, increased 7.6 percent to $626 million, the Dallas-based jewelry and diamond retailer. Same store sales for the period increased 7.9 percent, compared to a decrease of 11.2 percent during the comparable period in the prior year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, same store sales increased 7 percent for the quarter.

The company achieved gross margin on sales of 50.3 percent for the quarter, compared to 49.8 percent in the comparable quarter last year.

“Our financial performance for the critical second quarter reflects the collaborative efforts of our total organization focusing on one objective – delivering a successful holiday,” said Theo Killion, Zale Corp. CEO. “In doing so, we’ve taken an important step towards our goal of returning to profitability.”

“This quarter marked a turning point for the company as we returned to positive same store sales,” added Matt Appel, Zale Corp. CFO. “We are pleased with the results to date from our turnaround initiatives.”

Selling, general and administrative expenses were $258 million, or 41.2 percent of revenues, in the quarter, compared to $252 million, or 43.3 percent of revenues, in the same period last year. Its operating income for the quarter was $44 million compared to an operating loss of $3 million in the prior year quarter. Operating margin improved $46 million, or 750 basis points, to 7 percebt for the, compared to negative 0.5 period in the same period last year.

The company incurred income tax expense of $6 million for the period, compared to a benefit of $12 million in the comparable period in the prior year.

Inventory as of January 31, stood at $777 million, an increase of approximately $39 million from Jan. 31, 2010, in anticipation of the Valentine’s Day selling period. As of January 31, the company had outstanding debt of $385 million, compared to $368 million as of January 31, 2010.

Zale Corp. is a leading specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,870 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corp.'s brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

Signet Jewelers To Acquire Zale Corp.

Mike Barnes, Signet CEO, will lead the combined companies.

In a surprise announcement two of the largest retailers in the US have agreed to become one company. 

Signet Jewelers Limited, the largest specialty retail jeweler in the US and the UK, and Zale Corporation, a leading specialty retailer of fine jewelry in North America, said Wednesday that they have entered into a definitive agreement for Signet to acquire all of the issued and outstanding stock of Zale for $21 per share in cash, or $690 million. Including debt, the deal values Zale at $1.4 billion. 

The transaction brings together two of today's leading jewelry retailers with six of the most recognizable brands across four countries. The combined company will have approximately 3,500 retail locations in the US, Canada, Puerto Rico and the UK with combined sales of $6.2 billion “and enhanced operating capabilities expected to generate approximately $100 million in annual synergies within three fiscal years,” the two companies said in a joint statement released Wednesday morning. 

Mike Barnes, Signet CEO  will hold the same position in the combined company, according to the statement. Theo Killion, Zale CEO, will continue to operate the Zale portion of the business and report to Barnes.

"This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise," Barnes said. "The addition of Zale to the Signet family is consistent with our long-term growth strategy and leverages our combined operating expertise to create better choices for our customers, new opportunities for our employees, and makes us a more attractive partner to our vendors. In addition, it allows us to better optimize our balance sheet, creating long-term value for our shareholders. We are excited about the prospects for the combined company and the many opportunities that this creates for our future.”

Killion added, "Having successfully completed our multi-year turnaround program to return to profitability, Signet's operating strengths will enable us to accelerate Zale's performance improvement for the benefit of our current and future guests."

Signet's offer represents a premium of 41 percent over Zale's closing price as of February 18, according to the statement. It represents 7.4 times the EBITDA value over a 12-month period. As part of the transaction, Signet has entered into a voting and support agreement with Golden Gate Capital, the beneficial owner of approximately 22 percent of Zale's common stock. The transaction is expected to be high single-digit percentage accretive to earnings in the first full fiscal year after the close of the transaction, excluding acquisition accounting adjustments and one-time transaction costs.

The acquisition is expected to be financed through bank debt, other debt financing and the securitization of a significant portion of Signet's accounts receivable portfolio.

Signet has 1,400 retail locations that operate under the brands Kay Jewelers, Jared The Galleria Of Jewelry and regional brands. Signet's UK division operates approximately 500 stores primarily under the brands of H.Samuel and Ernest Jones.

Zale Corp. has 1,680 retail locations in the US, Canada and Puerto Rico. Its brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

The transaction is subject to Zale stockholder approval, certain regulatory approvals and customary closing conditions.

J.P. Morgan Securities LLC acted as exclusive financial advisor and provided a fairness opinion to the board of directors of Signet and J.P. Morgan Chase Bank, N.A. committed to provide bridge financing for the transaction. Weil, Gotshal & Manges LLP acted as legal counsel to Signet in connection with the transaction. BofA Merrill Lynch acted as exclusive financial advisor and Cravath, Swaine & Moore LLP acted as legal counsel to Zale in connection with the transaction.

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Signet, Zale Post Strong Holiday Sales Gains

Kay, the largest specialty retail jewelry brand in the US based on sales, is owned by Signet Jewelers.

The two largest jewelry chains in the U.S. both posted year-over-year gains for the nine-week holiday season, ended January 1.

Signet Jewelers Ltd., the world’s largest specialty retail jeweler, said Tuesday that U.S. sales increased by 11.7 percent for the period. The Bermuda-based company also has jewelry retail chains in the U.K. and that part of the business posted a 4.2 percent decline for the period, due to the negative impact of adverse winter weather (originally reported as a 4.2 percent increase, we regret the error).

Total holiday sales increased 8.1 percent with same store sales for the period up by 11.7 percent, following a 7.5 percent rise during the 2009 holiday season.

Signet operates 1,874 specialty retail jewelry stores including 1,330 stores in the U.S., where it owns stores under the Kay Jewelers, Jared The Galleria Of Jewelry and a number of regional names. The company also operated 544 stores in the UK, where it operates as H.Samuel, Ernest Jones and Leslie Davis.

Meanwhile, Zale Corp. said Tuesday that same store sales increased 8.5 percent for the holiday period of November and December 2010. At constant exchange rates (which excludes the effect of translating Canadian currency denominated sales into U.S. dollars), same store sales increased 7.6 period for the holiday selling period. Total revenues for the two-month period increased 8 percent to $533.1.

U.S. Fine Jewelry brands (which operate as Zales Jewelers, Zales Outlet and Gordon's Jewelers) had an increase in same store sales of 7.5 percent.

Canadian Fine Jewelry brands (consisting of Peoples Jewellers and Mappins Jewellers) had an increase in same store sales of 15.6 percent (up 10.2 percent at constant exchange rates).

Kiosk jewelry same store sales from its Piercing Pagoda business increased 4.2 percent.

“The Holiday sales results represent progress as we continue to stabilize the business and return to profitability,” said Theo Killion, Zale Corp. CEO. “The investments we've made in our field teams, the clarity of our marketing message and our back to basics merchandising strategy were validated by our guests during the most critical selling period of the year.”

Zale Corp. Reports Strong Holiday Sales for Second Consecutive Year

Zale Corp. said Tuesday that comparable store sales increased 5.9 percent, year-over-year, for the November-December holiday sales period. This increase follows an 8.5 period rise in the same period in the prior year.

Within this two-month period, comparable store sales increased 10.1 percent in November and 4.2 percent in December. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 6.2 percent for the holiday selling period, compared to an increase of 7.6 period in the prior year period.

Revenues for the two-month period increased 5.8 percent, year-over-year, to $564 million. Revenues include approximately $10 million resulting from the change in warranty revenue recognition.

Zale Corp. operates approximately 1,820 retail locations in the United States, Canada and Puerto Rico and has online operations for most of its brands.

Sales by brand and country:

* U.S. Fine Jewelry brands (which account for about 69 percent of annual revenue for the company), consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, had an increase in comparable store sales of 9 percent for the holiday period. This increase follows a 7.5 period rise in the same period last year.

* Canadian Fine Jewelry brands (which account for about 17 percent of annual revenue for the company), consisting of Peoples Jewellers and Mappins Jewellers, had an increase in comparable store sales of 0.2 percent. This increase follows a 15.6 percent rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands comparable store sales increased 1.7 percent, compared to an increase of 10.2 percent in the prior year period.

* Kiosk Jewelry (which accounts for about 14 percent of annual revenue for the company) comparable store sales decreased 2.1 percent. In the same period last year, Kiosk Jewelry comparable store sales rose 4.2 percent.

In its outlook for the quarter ending January 31, Zale Corp. says it expects gross margin to be consistent with the prior year quarter’s gross margin of 50.3 percent. Operating margin is expected to be slightly below the prior year quarter’s operating margin of 7 percent due to higher selling, general and administrative expenses primarily driven by the holiday advertising campaign and marketing for the launch of proprietary products.

2013 Holiday Sales Mostly Positive at Tiffany, Signet, Zale Corp.

The three largest jewelry retailers performed well enough during what was described as a challenging holiday sales period. 

Signet Jewelers, Tiffany & Co. and Zale Corp. experienced a November-December sales period that saw more competition for fewer shoppers. However, each company employed strategies that allowed them to make the most of the holiday season. 


Signet Jewelers
The largest specialty retailer in the US and UK, said that its US sales increased 7.9 percent year-over-year for the eight-week period ended December 28 to $1.07 billion. Same store sales for the period rose by 4.9 percent. However, the company did note that “additional discounting was necessary” in a competitive environment.

Sales at Kay Jewelers and Jared The Galleria Of Jewelry, its largest retail chains, rose 8.9 percent to $674.8 and 11.6 percent to $312.5 million, respectively, while sales at its regional brands fell 9.2 percent to $85.4 million.

Same store sales at Kay and Jared both increased 5.6 percent, while its regional brand holdings fell 2.3 percent for the period. 

“The US holiday season was highlighted by a strong November and a strong finish to December,” said Mike Barnes, Signet CEO. “However, additional discounting was necessary in a highly promotional retail environment that included challenging customer traffic trends and lower than anticipated commodity cost savings. We believe these factors will result in lower than expected gross margins and profitability versus our original expectations.”

In Signet’s UK division, which accounts for 19 percent of the company’s total revenues, sales for the eight-week holiday period increased 6.6 percent to $203.6 million year-over-year. Same store sales in the UK were up 5.2 percent.

Overall sales for Signet Jewelers In the eight-week period ended December 28, increased 7.7 percent to $1.27 billion. Same store sales increased 5 percent “driven by balanced strength across a variety of brands and categories.” 

Signet operates more than 1,400 stores in the US and 500 stores in the UK.

In addition, consolidated eCommerce sales increased 27.2 percent for the period, with a 24.8 percent increase in the US and a 37.5 percent increase in the UK.


Tiffany & Co.
The international luxury retail jeweler said Friday that total sales in the Americas region (which largely reflects US sales) rose 6 percent to $550 million for the holiday period ended December 31. On a constant-exchange-rate basis, total sales increased 7 percent while same store sales rose 7 percent due to what the company describes as “broad-based sales growth across most of the region.” The company operates 121 stores in the Americas.

The company reported that worldwide net sales for the period rose 4 percent to $1.03 billion. On a constant-exchange-rate basis worldwide net sales increased 8 percent due to growth in all regions. Same store sales increased 6 percent. 

“Tiffany enjoyed a good holiday season with overall sales results in line with our expectation, and we were pleased to see growth across our fine and statement, engagement and fashion jewelry categories,” said Michael J. Kowalski, Tiffany chairman and CEO.


Zale Corp.
Meanwhile, Zale Corp. reported same store sales for the holiday period increased 2 percent at constant exchange rates, or 0.7 percent on a US dollar reported basis led by a 3.5 percent rise in US same-store sales. 

Overall, the specialty retailer reported a 2 percent drop in holiday sales to $556 million, saying it is due to a closing of 91 stores during the year and a decline in the Canadian exchange rate. 

The Dallas-based company currently operates 1,064 fine jewelry stores and 630 kiosks in the United States, Canada and Puerto Rico, with the US being, by far, its largest market. 

The company’s US fine jewelry brands, consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, posted a same store sales increase of 3.5 percent. This increase follows a 2.2 percent rise in the same period last year.

Canadian fine jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a same store sales increase of 0.5 percent at constant exchange rates, following a decline of 0.7 percent in the same period last year. On a US dollar reported basis, same store sales decreased 5.9 percent, following a 2.7 percent increase in the same period last year.

Piercing Pagoda, Zale Corp.’s kiosk jewelry business, posted a same store sales decline of 5.1 percent. In the same period last year, same store sales rose 1.7 percent.

“During the holiday period, we maintained our focus on increasing exclusive product penetration, driving gross margin improvement and building our core national brands,” said Theo Killion, Zale Corp. CEO. “We executed a solid holiday season despite a challenging retail environment.”

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Zale Corp. Holiday Comps Up 2.3%; Holiday Sales Total $567 Million

Jewelry and diamond retailer, Zale Corp., said Thursday that same store sales increased 2.3 percent for the combined months of November and December 2012, encompassing the entire holiday selling period. This increase falls short of the 5.9 percent rise in same store sales for the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 1.6 percent for the holiday selling period, compared to an increase of 6.2 percent in the prior year period.

Revenues for the two-month period were $567 million, an increase of $3 million compared to $564 million in the same period last year. The increase in revenues is primarily due to the same store sales growth partially offset by revenues associated with the net decrease of 50 stores compared to last year.

“This holiday season, we focused on driving bottom line improvement,” said Theo Killion, Zale Corp. CEO. “Our comp performance, combined with an expected 100 basis point operating margin improvement, brings us closer to our goal of achieving positive net income for the fiscal year.”

Holiday selling period same store sales details are as follows:

* Zales branded stores, consisting of Zales Jewelers and Zales Outlet, posted an increase of 3.1 percent, compared to an increase of 10 percent in the same period last year. U.S. fine jewelry brands including regional brand, Gordon’s Jewelers, posted an increase of 2.2 percent. In the same period last year. U.S. fine jewelry brands same store sales rose 9 percent for the 2011 holiday season.

* Canadian Fine Jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a same store sales increase of 2.7 percent. This increase follows a 0.2 percent rise in the same period last year. At constant exchange rates, Canadian Fine Jewelry brands posted a comparable store sales decline of 0.7 percent, compared to an increase of 1.7 percent in the prior year period.

* Piercing Pagoda, Zale Corp.’s kiosk Jewelry business, posted a same store sales increase of 1.7 percent, compared to a declined 2.1 percent for the 2011 holiday season.

In its outlook for the quarter ending January 31, Zale Corp. said it expects gross margin to be in line with the prior year quarter’s gross margin of 50.5 percent. Operating margin is expected to be approximately 7.5 percent, or 100 basis points higher than the prior year quarter, primarily as a result of improved leverage on selling, general and administrative expenses.

As previously announced, the company expects to achieve positive net income for fiscal year 2013.

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