DALLAS--(BUSINESS WIRE)--Feb. 18, 2005--Zale Corporation
(NYSE:ZLC), North America's largest specialty retailer of fine
jewelry, today announced net earnings of $99 million, or $1.91 per
diluted share, for the Company's second quarter ended January 31,
2005. For the same period last year, the Company reported net earnings
of $97 million, or $1.83 per diluted share. This represents an
increase of 4.4% on a per share basis over the prior year.
Total revenues for the second quarter ended January 31, 2005 were
$972 million, compared to $949 million for the same period last year,
an increase of 2.5%. Comparable store sales decreased 0.6% for the
same period.
Revenues for the year-to-date totaled $1.395 billion, compared to
$1.366 billion for the same period last year, an increase of 2.2%. On
a comparable store basis, year-to-date sales decreased 0.7%.
Year-to-date net earnings totaled $88 million or $1.69 per diluted
share. For the same period last year, net earnings were $88 million,
or $1.63 per diluted share. This represents a 3.7% increase on a per
share basis for the year-to-date over last year.
"By maintaining tight disciplines in the business, we kept our
inventory and expense structure in line with our plan," commented Mary
L. Forte, President and Chief Executive Officer. "This minimized the
impact of our revenue shortfall to plan and allowed us to deliver
earnings per share growth over the prior year."
Ms. Forte continued, "We feel good about the strategy we have in
place. We are focusing at the Zales brand on implementing direct
product sourcing, refining the merchandise mix and improving store
productivity. The remaining brands all had positive comparable store
sales increases for the quarter and are showing improvement from a
number of our corporate initiatives. The early completion of our $50
million stock repurchase program signifies the confidence we have in
our ability to continue executing the game plan as we enter the back
half of our fiscal year."
As previously announced, a conference call will be held today at
9:00 a.m. Eastern Time. Parties interested in participating should
dial 706-643-7467 five minutes prior to the scheduled start time. A
webcast of the call, as well as a replay, will be available on the
Company's Web site at www.zalecorp.com. For additional information,
contact Investor Relations.
Zale Corporation is North America's largest specialty retailer of
fine jewelry operating approximately 2,330 retail locations throughout
the United States, Canada and Puerto Rico, as well as online. Zale
Corporation's brands include Zales Jewelers, Zales Fine Jewelry
Outlet, Gordon's Jewelers, Bailey Banks & Biddle Fine Jewelers,
Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Through its
ZLC Direct organization, Zale also operates online at www.zales.com
and www.baileybanksandbiddle.com. Additional information on Zale
Corporation and its brands is available at www.zalecorp.com.
This release contains forward-looking statements, including
statements regarding the Company's sales and earnings estimates for
the second quarter ending January 31, 2005 which are based upon
management's beliefs as well as on assumptions made by and data
currently available to management. These forward-looking statements
are not guarantees of future performance and a variety of factors
could cause the Company's actual results to differ materially from the
anticipated or expected results expressed in these forward-looking
statements. The following list, which is not intended to be an
all-encompassing list of risks and uncertainties affecting the
Company, summarizes several factors that could cause the Company's
actual results to differ materially from those anticipated or expected
in these forward-looking statements: if the general economy performs
poorly, discretionary spending on goods that are, or are perceived to
be, "luxuries" may not grow and may even decrease; the concentration
of a substantial portion of the Company's sales in three, relatively
brief selling seasons means that the Company's performance is more
susceptible to disruptions; most of the Company's sales are of
products that include diamonds, precious metals and other commodities,
and fluctuations in the availability and pricing of commodities could
impact the Company's ability to obtain and produce products at
favorable prices; the Company's sales are dependent upon mall traffic;
the Company operates in a highly competitive industry; any failure by
the Company to manage its inventory effectively will negatively impact
sales and earnings; because of the Company's dependence upon a small
number of landlords for a substantial number of the Company's
locations, any significant erosion of the Company's relationships with
those landlords would negatively impact the Company's ability to
obtain and retain store locations; changes in regulatory requirements
relating to the extension of credit may increase the cost of or
adversely affect the Company's operations; any disruption in, or
changes to, the Company's private label credit card arrangement with
Citi may adversely affect the Company's ability to provide consumer
credit and write credit insurance; acquisitions involve special risks,
including the possibility that the Company may not be able to
integrate acquisitions into its existing operations; and certain other
factors described from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 2004. The
Company disclaims any obligation to update or revise publicly or
otherwise any forward-looking statements to reflect subsequent events,
new information or future circumstances.
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
January 31, January 31,
------------------- -----------------------
2005 2004 2005 2004
--------- --------- ----------- -----------
Total Revenues $972,332 $949,023 $1,395,106 $1,365,667
Costs and Expenses:
Cost of Sales 480,229 469,936 685,509 675,626
Selling, General and
Administrative Expenses 315,937 307,122 532,968 514,911
Cost of Insurance
Operations 1,432 1,345 2,868 2,961
Depreciation and
Amortization Expense 15,027 14,143 29,231 28,025
--------- --------- ----------- -----------
Operating Earnings 159,707 156,477 144,530 144,144
Interest Expense, Net 2,257 2,046 4,432 4,382
--------- --------- ----------- -----------
Earnings Before Income
Taxes 157,450 154,431 140,098 139,762
Income Taxes 58,253 57,136 51,833 51,712
--------- --------- ----------- -----------
Net Earnings $99,197 $97,295 $88,265 $88,050
--------- --------- ----------- -----------
--------- --------- ----------- -----------
Earnings Per Common Share
-- Basic:
Net Earnings Per Share $1.94 $1.86 $1.71 $1.66
Earnings Per Common Share
-- Diluted:
Net Earnings Per Share $1.91 $1.83 $1.69 $1.63
Weighted Average Number of
Common Shares
Outstanding:
Basic 51,102 52,198 51,499 52,986
Diluted 51,885 53,156 52,221 53,910
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(amounts in thousands)
January 31, July 31, January 31,
2005 2004 2004
----------- ----------- -----------
ASSETS
Current Assets:
Cash and Cash Equivalents $55,541 $63,124 $55,643
Merchandise Inventories 956,956 826,824 872,007
Other Current Assets 55,611 63,956 48,257
----------- ----------- -----------
Total Current Assets 1,068,108 953,904 975,907
Property and Equipment, Net 280,300 266,688 261,730
Goodwill, Net 90,025 85,583 85,730
Other Assets 35,318 35,909 37,337
Deferred Tax Asset, Net --- --- 20,766
----------- ----------- -----------
Total Assets $1,473,751 $1,342,084 $1,381,470
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Accounts Payable and Accrued
Liabilities $464,668 $319,599 $417,453
Deferred Tax Liability, Net 51,313 51,417 46,187
----------- ----------- -----------
Total Current Liabilities 515,981 371,016 463,640
Non-current Liabilities 40,035 42,486 99,876
Deferred Tax Liability, Net 5,781 4,968
Long-term Debt 135,800 197,500 138,700
Commitments and Contingencies
Stockholders' Investment:
Preferred Stock --- --- ---
Common Stock 523 521 426
Additional Paid-In Capital 69,431 63,661 600,703
Accumulated Other Comprehensive
Income 21,175 13,470 15,236
Accumulated Earnings 736,727 648,462 677,172
Deferred Compensation (1,702) --- ---
----------- ----------- -----------
826,154 726,114 1,293,537
Treasury Stock (50,000) --- (614,283)
----------- ----------- -----------
Total Stockholders' Investment 776,154 726,114 679,254
----------- ----------- -----------
Total Liabilities and
Stockholders' Investment $1,473,751 $1,342,084 $1,381,470
----------- ----------- -----------
----------- ----------- -----------
CONTACT: Zale Corporation, Irving
David H. Sternblitz, 972-580-5047
Vice President and Treasurer
SOURCE: Zale Corporation
