Mixed Results for Holiday 2004; Online Sales Up

January 6, 2005

Mixed Results for Holiday 2004; Online Sales Up

While many luxury and niche retailers reported healthy sales this holiday season, most chain jewelry retailers saw small gains, flat results or even slight downturns at the end of 2004.

Sales at Zale Corp., the nation's largest specialty retailer of fine jewelry, were likewise mixed. The chain reported Jan. 6 that sales in comparable store dropped 0.7% for the combined months of November and December. However, total Zale revenues increased, up 2.1% for the two-month period, rising from $843 million in 2003 to $861 million during the same period in 2004.

"While we are disappointed with our overall holiday sales results, they are not reflective of the performance at most of our brands," said Mary L. Forté, president and CEO.

"Our largest brand, Zales Jewelers, underperformed and thus had a significant impact on our consolidated results. Our remaining brands all had positive comparable store sale increases and performed at or close to our original guidance expectations for the quarter," she said in a statement. (Zale also announced it appointed the president of its Piercing Pagoda brand, Paul G. Leonard, as president of Zales.)

Whitehall Jewellers Inc., Chicago, IL, announced sales for the last two months of 2004 were $110.8 million, compared to $120.9 million for the same period in 2003. Comparable store sales fell 9% for the two-month period versus a 6.4% increase for November and December 2003.

Year-to-date sales through Dec. 31, 2004, decreased 2.9% to $319.5 million from $329 million for the 11-month period in 2003. Comparable store sales for the period decreased 3.6% compared to a 0.7% decrease for the 11-month period ended Dec. 31, 2003.

Austin-based Samuels Jewelers, with 101 stores, yesterday said its December comparable store sales totaled $24.6 million, up 6%, from $23.2 million in 2003, for the 99 stores open in both 2003 and 2004. The company filed for Chapter 11 bankruptcy reorganization in August 2003.

The National Retail Federation estimated that overall retail sales for the holiday increased 4.5% to $220 billion this year after 5.1% growth in 2003. Gift cards and online jewelry purchases were notably greater this year. A survey by Goldman Sachs & Co., Harris Interactive Inc. and Nielsen//NetRatings, showed jewelry sales online jumped 113% for 2004 over 2003, totaling $1.9 billion.

by Michael Thompson

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