Early 2003 Retail Sales Weak, Future Looks Better

May 8, 2003

Early 2003 Retail Sales Weak, Future Looks Better

Two jewelry chains announced slow sales for the early part of the year, but general retail surveys point to a brighter future.

Zale Corp., Dallas, TX, reported its third quarter ended April 30, 2003, comparable store sales increased 0.3% compared to an increase of 4.6% for the same period last year. Total revenues for the period were $449.4 million compared to last year's total revenues of $449.2 million, an increase of 0.1%. For the year-to-date, total revenues increased 0.8% to $1.770 billion, compared to $1.756 billion for the same period last year. On a year-to-date basis, comparable store sales increased 0.6%.

"We are pleased with these sales results in a very challenging external environment," commented Mary L. Forté, president and CEO. "The geopolitical concerns did impact our business during the quarter. However, we continued to maximize our opportunities in the key gift-giving periods and maintained tight controls on our business." Zale is North America's largest specialty retailer of fine jewelry.

Whitehall Jewellers, Chicago, IL, announced comparable store sales for the first quarter ended April 30, 2003, decreased 8.7% during the quarter versus comparable store sales increase of 4.9% for the same period last year. Total sales were $69.1 million, a 7.4% decrease compared to $74.6 million for the first quarter of last year.

"The first quarter began with a very slight sales decrease for Valentine's Day. Unfortunately, it appears the last part of February and, in particular, all of March were significantly impacted by the war in Iraq," says Hugh M. Patinkin, chairman and CEO. "Indeed, sales in March were down by somewhat more than 20%. As the war ended sales improved and we were pleased with April sales which were down very slightly." Whitehall operates 385 stores in 38 states.

Two other general retail surveys released yesterday agree with Patinkin's assessment of a brightening retail picture. A weekly survey of major discount, department and chain stores by Bank of Tokyo-Mitsubishi and UBS Warburg says sales rose 2.1% in the week ended May 3, with the report highlighting jewelry and women's apparel as sales winners for Mother's Day. Rising chain store sales of 2.2% last week were also noted by Instinet Research in its weekly Redbook report. Instinet, which is owned by Reuters, also credited apparel and accessories for the better sales figures.

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