* Q1 loss per share of $1.80 vs Street view loss $2.02
* Same-store sales down 6.8 pct, total sales off 9.6 pct
* CEO says less broad discounting this holiday season
* On-line sales up 17 percent
* Shares gain 36 cents, or 8 pct, to $4.86
(Adds CEO comments, Signet results, stock move)
By Phil Wahba
NEW YORK, Nov 24 Zale Corp ZLC.N reported a
narrower-than-expected quarterly loss as it saved money by
closing stores and online sales jumped, even as the recession
curtailed jewelry purchases, and its shares rose 8 percent.
The jeweler, which is being investigated by the U.S.
Securities and Exchange Commission over its accounting
practices, has been shutting stores and liquidating some
inventory in the past year to combat sharply weaker sales.
Like many other retailers, Zale has cut back on inventory
to avoid having to offer steep discounts on its merchandise.
In a statement, Chief Executive Neal Goldberg said the
stores would not offer "the same level of broad discounting
this holiday season" as they did last year.
Zale said it plans to spend about as much money on
advertising as last year but focus more of it on its e-commerce
business, where sales rose 17 percent during the quarter .
Zale plans to use outlets beyond television to advertise,
Goldberg said on a conference call.
Goldberg said Zale expects its online business to rise 20
percent to between $65 million and $70 million in 2010.
The company plans to use any available cash flow it
generates to pay down debt.
While Zale did not provide any holiday forecasts, Goldberg
said exclusive merchandise will make up about 25 percent of the
company's offerings this year, up from between 10 percent and
15 percent last year.
Separately, rival Signet Jewelers (SIG.N)SIG.L, whose
stores include Kay Jewelers, reported a narrower third-quarter
loss as stronger margins and cost reductions more than offset
weaker underlying sales. [ID:nGEE5AN1DF] Signet's CEO told
Reuters that he is seeing less discounting in the U.S. market
LOSS WIDENS, SALES FALL
Last month, Zale said the SEC was investigating accounting
issues that led the retailer to restate 2008 and 2009 earnings.
[ID:nN30416986] The investigation began after the company said
in September it would postpone fourth-quarter results for a
review of accounting.
The chain's loss widened to $57.6 million, or $1.80 per
share, in its fiscal first quarter, ended Oct. 31, from a loss
of $48.4 million, or $1.52 per share, a year earlier.
Analysts, on average, forecast a loss of $2.02 a share,
according to Thomson Reuters I/B/E/S.
Sales at stores open at least a year, a gauge known as
same-store sales, fell 6.8 percent during the quarter. Total
sales fell 9.6 percent to $329.2 million.
Inventory as of Oct. 31 was valued at $902 million, down
$100 million from a year earlier.
The company's outstanding debt rose to $466 million from
$369 million a year earlier.
Zale's shares rose 36 cents to $4.86 on the New York Stock
Exchange afternoon trading.
(Reporting by Phil Wahba; Editing by Derek Caney, Maureen
Bavdek and Steve Orlofsky)
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