May 16, 2002
Tiffany, Zale Report Profit Increases
Tiffany & Co. and Zale Corp. reported gains in quarterly profits, attributing the positive news to sales of more lower-priced rings, earrings and bracelets that carry higher margins.
Tiffany & Co., New York City, posted a 6% gain in first-quarter earnings, boosted by improved profit margins despite a slender rise in total sales.
Tiffany said while the number of customer transactions climbed, the amount of the average transaction fell, a sign shoppers shifted toward buying less-expensive items like silver. Store officials speculated even higher-end shoppers could be trading down.
Though it is introducing new jewelry designs to keep customers buying, Tiffany said it sees the U.S. economic environment challenging in the near-term, with conditions improving in the second half of the year.
Zale Corp., Dallas, TX, caters to a lower-income customer than does Tiffany, and reported fiscal third-quarter earnings surged 60%. Zale, the No. 1 jewelry chain in the U.S., rang up higher sales of moderate-priced jewelry and recaptured market share.
Zale, which in March announced the re-retirement of Robert DiNicola, chairman and CEO, said it was "cautious" about its outlook for next year. But it stood by forecasts for fourth-quarter sales at stores open at least a year or same-store sales to be up in a mid-single-digit percentage range.
Zale has refocused on its core bridal business under DiNicola, whom the company coaxed out of retirement last February after a series of missteps put the business in jeopardy. The CEO's decision to step down yet again came sooner than expected.