Zale Corporation

Company Information

Company Information

Zale Corporation is a leading specialty retailer of fine jewelry in North America. At July 31, 2013, we operated 1,064 fine jewelry stores and 630 kiosks located primarily in shopping malls throughout the United States, Canada and Puerto Rico. We have significant brand name recognition as a result of each of our brands’ long-standing presence in the industry and our national and regional marketing campaigns.

During the fiscal year ended July 31, 2013, Zale Corporation generated $1.89 billion of revenues. Fine Jewelry is comprised of three core national brands, Zales Jewelers®, Zales Outlet® and Peoples Jewellers® and two regional brands, Gordon's Jewelers®, and Mappins Jewellers®. The Fine Jewelry segment generated $1.64 billion, or approximately 87 percent of total revenues. Piercing Pagoda®, our mall-based kiosk brand, generated revenues of $240 million, or 13 percent of total revenues. We also operate webstores at www.zales.com,www.zalesoutlet.com, www.gordonsjewelers.com, www.pagoda.com and www.peoplesjewellers.com.

Beginning in fiscal 2010, we launched a multi-year turnaround program designed to improve our profitability by creating a strong foundation on which we could build sustainable growth. Our strategy centered on rebuilding our core merchandise assortment, refining our marketing message, investing in our jewelry consultants and field leadership and improving store productivity. We upgraded our team at the executive, corporate and field levels and improved our training and credit programs. As a result of our successful turnaround, we have generated 11 consecutive quarters of comparable store sales growth and increased our operating earnings by $63 million to $35.1 million over the last three fiscal years.

In fiscal 2013, the company returned to profitability for the first time since fiscal 2008. We achieved $10 million in net earnings or $0.24 per diluted share, representing the highest net earnings for Zale since fiscal 2007. During the year, we also announced several key accomplishments that we believe will set the stage for significant business and financial improvement in fiscal 2014 and beyond. Our fiscal 2013 highlights include:

  • Delivered shareholder return of more than 200% during the fiscal year as our stock price (NYSE: ZLC) rose from $3.02 to $9.28.
  • Increased net earnings by $37 million, or $1.09 per diluted share, compared to the prior year.
  • Delivered a 3.3% increase in comparable store sales, following a 6.9% rise in fiscal 2012, marking our third consecutive fiscal year of positive comps. Our core national brands drove this result:
    • Zales branded stores delivered a 4.7% increase in comparable store sales, following a 10.8% rise in the prior year. This represents a two-year increase of 16.1%.
    • Peoples branded stores delivered a 4.8% increase in comparable store sales, at constant exchange rates, following a 5.9% rise in the prior year. This represents a two-year increase of 10.4%.
  • Expanded gross margin by 60 basis points to 52.1% and expanded operating margin by 90 basis points to 1.9%.
  • Grew the mix of exclusive, branded merchandise to 11% of fine jewelry revenues, up from 8% in the prior year.
  • Reduced our outstanding debt balance by $43 million.
  • Signed a multi-year agreement with Alliance Data Systems Corporation to provide private label credit card financing for our U.S. guests at significantly lower merchant fees, while also providing key marketing, analytical and technical services designed to generate sales and enhance brand affinity.
  • Launched a multi-year merchandise sourcing initiative that will contribute significantly to future gross margin improvement.
  • Enhanced our omnichannel business model to provide guests access to our brands wherever and whenever they choose through webstores, mobile devices, social media and traditional stores.
  • Welcomed Terry Burman, a prominent jewelry industry veteran, to our board as chairman.
  • Rejoined the Russell 3000® Index.

As we begin fiscal 2014, we are now focused on driving sales and delivering profitable growth. Our goals for this fiscal year are more ambitious as we raise our expectation for performance and focus on creating long-term shareholder value.



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Corporate Governance
ZLC (Common Stock)
ExchangeNYSE (US Dollar)
Price$21.02
Change (%) Stock is Down 0.14 (0.66%)
Volume9,929,000
Data as of 05/29/14 4:00 p.m. ET
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