Zale 2nd Quarter Same Store Sales Down 0.6%


February 18, 2005

Zale 2nd Quarter Same Store Sales Down 0.6%

Zale Corp., Dallas, TX, North America's largest specialty retailer of fine jewelry, today announced net earnings of $99 million, or $1.91 per diluted share, for the company's second quarter ended Jan. 31, 2005. This represents an increase of 4.4% on a per share basis over the prior year.

Total revenues for the second quarter ended January 31, 2005 were $972 million, compared to $949 million for the same period last year, an increase of 2.5%. Comparable store sales decreased 0.6% for the same period.

Revenues for the year-to-date totaled $1.395 billion, compared to $1.366 billion for the same period last year, an increase of 2.2%. On a comparable store basis, year-to-date sales decreased 0.7%. Year-to-date net earnings totaled $88 million or $1.69 per diluted share. This represents a 3.7% increase on a per share basis for the year-to-date over last year.

"By maintaining tight disciplines in the business, we kept our inventory and expense structure in line with our plan," says Mary L. Forté, president and chief executive officer. "This minimized the impact of our revenue shortfall to plan and allowed us to deliver earnings per share growth over the prior year.

"We feel good about the strategy we have in place. We are focusing at the Zales brand on implementing direct product sourcing, refining the merchandise mix and improving store productivity," added Forté.

"The remaining brands all had positive comparable store sales increases for the quarter and are showing improvement from a number of our corporate initiatives. The early completion of our $50 million stock repurchase program signifies the confidence we have in our ability to continue executing the game plan as we enter the back half of our fiscal year."



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