In Latest Quarter, Sterling Comp Sales Up 8.8%; Zale Down 0.1%

August 8, 2005

In Latest Quarter, Sterling Comp Sales Up 8.8%; Zale Down 0.1%

Zale Corp.'s fourth-quarter comparable-store sales were down 0.1% while the company also reported yearly sales were up only 0.3% for the fiscal year ending July 31. By contrast, Sterling Jewelers, the U.S. division of United Kingdom-based Signet Corp., reported its second-quarter comparable-store sales were up 8.8%, for the period ending July 30.

In a release, Zale said although it was pleased with the Mother's Day period and the response to its marketing, the balance of the quarter was negatively affected by a number of major initiatives underway at the Zales brand. Developing upgraded merchandise assortments in addition to tailoring merchandise distribution resulted in repositioning a substantial amount of product, said the company. These significant merchandise changes as well as the brand's implementation of direct sourcing strategies contributed to lower results for the quarter, it said.

"We are disappointed with these fourth quarter sales and earnings estimates," said Mary L. Forté, president and CEO. "While performance at Zales improved significantly during the spring season, our goal of having many of the new initiatives in place for the beginning of our fiscal year created more short-term disruption in the quarter than we anticipated. However, we have made significant progress towards repositioning the brand. We believe these merchandise and operational initiatives will position Zales to maximize the upcoming holiday season and to deliver a successful fiscal 2006."

Signet also reported its figures for the first half of its fiscal year. The Sterling division saw comparable store increases of 7.9%. The overall group's sales figures were much lower, due to challenging retail sales in Signet's U.K. division. "Our U.S. business performed particularly well, which compensated for very difficult trading conditions in the U.K.," said Terry Burman, group chief executive.

by Peggy Jo Donahue

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