Zale reports EPS loss

Zale Corporation, a leading specialty retailer of fine jewelry in North America, today reported a net loss from continuing operations for the third quarter of fiscal 2008 of $17.4 million, or $0.42 per share, compared to a loss of $5.0 million, or $0.10 per share for the third quarter of fiscal 2007.

In February, Zale launched a program to permanently reduce inventory levels in order to better clarify merchandise presentation, improve inventory efficiency and to help position the Company for the future. The Company’s goal was to achieve a $100 million reduction in inventory at an anticipated 500 basis point negative impact on gross margin in the second half of fiscal 2008. During the third quarter, the clearance strategy exceeded expectations, resulting in the liquidation of $55 million of inventory with a 460 basis point reduction in gross margin. Earnings per share for the quarter was negatively impacted compared to the prior year reflecting the gross margin compression related to the liquidation, the Company’s aggressive stock repurchases, and a change to the effective tax rate.

We are very pleased with our progress this quarter against our plan,said Neal Goldberg, President and Chief Executive Officer. We have a focused agenda to improve performance and the team has stayed locked-in on achieving our objectives. This includes focusing on our core customer by clarifying our merchandise offering, improving our value proposition and simplifying our marketing message that is led by product and supported by price. We are enhancing our operational effectiveness through the implementation of our efficiency program and the proper alignment of the organizational structure. Finally, we are maintaining financial rigor and discipline by executing on our inventory liquidation program, generating savings from the $65 plus million in identified expense reductions and returning value to shareholders through a significant stock repurchase program.

Source : http://www.zalecorp.com/

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