WRAPUP 1-Jewelers Zale, Finlay, Signet cut forecasts
NEW YORK, Jan 10 (Reuters) - U.S. jewelers Zale Corp (ZLC.N) and Finlay Enterprises Inc FNLY.O and Britain's Signet Group Plc reported dismal same-store sales for the key November and December holiday period on Thursday, prompting them to cut profit forecasts.
The data disappointed investors. Finlay's shares fell as much as 8 percent in morning trade and Zale as much as 8.7 percent before recovering toward midday.
Zale said sales at stores open at least a year fell 9 percent over the two-month period, hampered by weak consumer spending.
Total sales dropped 10 percent to $723 million.
"These results are disappointing across all brands," new Chief Executive Neal Goldberg said in a statement. The jeweler now expects to earn between $1.08 per share and $1.13 per share for its fiscal second quarter that ends Jan. 31. It forecast same-store sales would fall 8 percent to 9 percent in the period.
In November, Dallas-based Zale had forecast earnings of $1.60 to $1.65 per share and said same-store sales would be flat to down slightly for the period.
At that time, it warned that sales would remain challenging, as its core customer at mall-based stores remained cash-strapped in the face more expensive food and gasoline and a troubled housing market.
Its counterpart Finlay also blamed hesitant shoppers and a shaky retail environment for a 5.9 percent drop in same-store sales in the holiday shopping period.
Total sales at Finlay, which operates jewelry stores and counters at department stores, rose 26.9 percent to $349.1 million. Finlay recently bought the Bailey Banks & Biddle chain from Zale.
"I wasn't expecting strong results, but these were certainly weaker than I was looking for," CL King & Associates analyst William Armstrong said. "I think it is going to be difficult for them as we move into and through 2008."
Finlay said it now expects to earn in the range of $1.50 to $1.60 per share for its current fourth quarter. It previously had forecast per-share earnings of $2.15 to $2.30, based on an expected same-store sales increase of 1.5 percent to 2.5 percent.
For the year, it forecast a loss of 90 cents per share to $1.00 per share; previously, it had expected to lose 20 to 35 cents a share.
"Despite these challenges, we continue to conservatively manage our expense structure and our inventory," Chief Executive Officer Arthur Reiner said in a statement.
Meanwhile, Britain's Signet Group Plc (SIG.L) (SIG.N), which operates the Kay Jewelers stores in the United States that rival Zale's, said U.S. like-for-like sales fell 8.1 percent in the Christmas period. Continued...
