 |
| 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
Posts
