UPDATE 1-Zale taps rival's ex-CEO as new chairman, shares jump
By Phil Wahba
May 22 (Reuters) - Zale Corp said on Wednesday its new chairman would be the former chief executive of its biggest rival, and shares of the mid-tier jeweler jumped 30 percent.
Terry Burman, who was CEO of Kay Jewelers parent Signet Jewelers Ltd from 2000 to 2011 and oversaw large U.S. market share gains, will take up the chairmanship post next Friday, Zale said.
Zale, which faced a severe liquidity crisis three years ago, also posted stronger quarterly same-store sales and a much better-than-expected profit, the latest sign the company's turnaround is taking hold. Shares were up to $7.02 in morning trading, their highest level since November.
Burman was the architect of Signet's expansion of its Kay and higher-end Jared chains in the United States at a time when Zale and other jewelers saw sales go into a tailspin because of the 2008 financial crisis.
On a call with Wall Street analysts, Zale CEO Theo Killion said Burman was "eminently qualified to provide guidance and leadership" now that its business has stabilized and it looks to remaining profitable.
Zale reiterated its forecast that it would be profitable for the fiscal year ending in July. The company has not had a profitable year since 2008.
Zale reported that sales at stores open at least a year rose 1.4 percent in the quarter that ended April 30. It was the 10th straight quarter of same-store sales gains. The improvement came despite snowstorms and a delay in tax refunds that hurt sales early in the quarter, right before Valentine's Day, a key occasion for jewelers.
Overall revenue slid 0.6 percent to $442.7 million. The chain has been closing underperforming stores.
Same-store sales at its Zales and Zales Outlets stores, by far its biggest chains, rose 3 percent. In Canada, where it operates Peoples Jewellers, same-store sales were down 0.9 percent. Excluding the impact of currency, they rose 1 percent.
Zale also operates the mall-based Piercing Pagoda kiosks and Gordon's Jewelers.
Zale reported net income of $5.1 million, or 13 cents per share, compared with a loss of $4.5 million, or 14 cents per share a year earlier. That was far better than the 1 cent loss Wall Street was expecting, according to Thomson Reuters I/B/E/S.
Gross profit margin rose 1.3 points to 52.6 percent of sales, helped by rising sales and steady commodity costs.
Citi reiterated its buy recommendation, citing Zale's profit.
Signet Jewelers will report its quarterly results on Thursday.
- Putin dissolves state news agency, tightens grip on Russia media
- North Korea says Kim's powerful uncle dismissed for 'criminal acts'
- Thai PM calls snap election, protesters want power now |
- Record cold, ice grip U.S.; snow heads East
- Protesters fell Lenin statue, tell Ukraine's president 'you're next'