X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

IRVING, TX-Falling revenues and a continued poor outlook on the macro level have prompted Zale Corp. to continue its focus on under-performing stores. A press release unveiling figures from its Q2 earnings ending January 31, 2009 said that 115 stores are being targeted for shut-down upon expiration of their leases.

A spokeswoman contacted by GlobeSt.com declined to state specifically which stores would be closed, only nothing the closures would begin in 2009 continue into 2010. During the company’s February 5 earnings conference call, company CFO Cindy Gordon said the closures would impact Zales and Gordon Jeweler’s inline stores, as opposed to kiosks. The move is anticipated to save $34 million in costs.

“These are either money-losing stores, or stores that are so marginal that they do not provide adequate return,” she said. She added that the store closures are anticipated to save approximately $34 million in selling, general and administrative expenses.

The financial results for Q2 2009 included a net loss from continuing operations of $23.6 million, revenues at $679 million (compared to $828 million from the year before) and net earnings from continuing operations at $19.1 million versus $72.6 million from the same time last year.

CEO Neal Goldberg said at the conference call he was disappointed with the 2008 holiday revenue, acknowledging that operating results were impacted by the macroeconomic environment. Not helping the situation, he added, was Zale’s decision to aggressively promote store-wide discounts during the holiday sales season, which he said decreased gross margins by about 500 basis points. A return to more emotion-based promoting helped steady sales in January and into Valentine’s Day, he added.

In the meantime, Zale is continuing to review what Goldberg classified a “very detailed real estate portfolio.” “We are aggressively challenging rents as leases renew and are proactively renegotiating the existing leases,” he said. “Clearly, the macroeconomic and retail climate we’re in right now puts is in a position in which we are going to be very aggressive in looking at our portfolio.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.