Summary
Zale 3rd Quater sale fell by 20%. Gross Margina bit high but same store sales decline by 20%.
Analysis
Zale Inc. announce thier 3rd quater fiscal in which they have reported that sales fell by 20 percent to $379.1 million, and cost of sales dropped 24 percent to $189.1 million, giving the retailer a gross margin of 50.1 percent, up from 47.5 percent one year ago.
Same-store sales declined 20 percent. Zale reported a net loss of $23.2 million, widened from a loss of $16.8 million in the fiscal third quarter of 2008.
Earnings per share, which lost 73 cents, were negatively impacted by 17 cents per share that was related to a 10 million reduction in outstanding share count. Inventory was reduced 12 percent to $759 million, and total assets were down 16 percent to $866.2 million.
At the close of the fiscal third quarter on April 30, 2009, Zale had shrank its outstanding debt by $57 million from its second quarter, to $333 million, and, Zale company has name it "adequate liquidity" to meet its needs. "Our key goals coming into the quarter were to strengthen and stabilize the foundation of the business while recapturing the gross margin we lost from our promotional stance during [the Christmas] holiday,” .
"While we have taken important steps to creating a more efficient business model, we are up against difficult same-store sales comparisons due to the clearance initiative through September 2009,” Goldberg said. During Zale's financial results conference call before the opening bell today, the company reported that it plans to reduce inventory by another $70 million and is in the process of reviewing its entire portfolio of leases in order to negotiate lower rent where possible. Zale closed 31 stores and opened one during the quarter, and suggested that additional closures were on the table, but specific details were not provided.
By these means Zale can float in this situation otherwise its going to be very tough for them.
