Exhibit 99.1
Zale Corporation Announces First Quarter Earnings Results
DALLAS--(BUSINESS WIRE)--Nov. 18, 2003--Zale Corporation
(NYSE:ZLC), North America's largest specialty retailer of fine
jewelry, today announced a net loss of $9.2 million, or $0.34 per
diluted share, for the Company's first quarter ended October 31, 2003.
For the same period last year, the Company reported a net loss of $6.7
million, or $0.20 per diluted share. The Company's first quarter
earnings per share was negatively impacted by $0.07 from the prior
year as a result of the application of EITF Issue No. 02-16 regarding
the accounting for cooperative advertising programs. In addition, the
quarter was negatively impacted by $0.06 from a significant volume of
share repurchases made during the past year and $0.03 from the
write-down of the office and distribution space previously used by
Piercing Pagoda.
Total revenues for the quarter ended October 31, 2003 were $417
million compared to $412 million last year, an increase of 1.2%.
Comparable store sales for the first quarter increased 1.6%.
"We are pleased with these earnings results which reflect our
disciplined strategies and consistent approach in executing the
business," commented Mary L. Forte, President and Chief Executive
Officer. "With the first quarter complete, our focus now turns to the
execution of the Holiday season. We believe our merchandise and
marketing efforts have been appropriately targeted throughout each of
our brands to drive demand and meet the needs of our gift giving
customers."
As previously announced, a conference call will be held today at
9:00 a.m. Eastern Time. Parties interested in participating should
dial 706-643-7467 five minutes prior to the scheduled start time. A
webcast of the call, as well as a replay, will be available on the
Company's Web site at www.zalecorp.com. For additional information,
contact Investor Relations.
Zale Corporation is North America's largest specialty retailer of
fine jewelry operating approximately 2,235 retail locations throughout
the United States, Canada and Puerto Rico, as well as online. Zale
Corporation's brands include Zales Jewelers, Zales Outlet, Zale Direct
at www.zales.com, Gordon's Jewelers, Bailey Banks & Biddle Fine
Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.
Additional information on Zale Corporation and its brands is available
on the Internet at www.zalecorp.com.
This release contains forward-looking statements, including
statements regarding the Company's objectives and expectations
regarding its merchandising and marketing strategies and business
execution, which are based upon management's beliefs as well as on
assumptions made by and data currently available to management. These
forward-looking statements are not guarantees of future performance
and a variety of factors could cause the Company's actual results to
differ materially from the anticipated or expected results expressed
in these forward-looking statements. The following list, which is not
intended to be an all-encompassing list of risks and uncertainties
affecting the Company, summarizes several factors that could cause the
Company's actual results to differ materially from those anticipated
or expected in these forward-looking statements: that low or negative
growth in the economy or in the financial markets will occur and
reduce discretionary spending on goods that are, or are perceived to
be, "luxuries"; that levels of mall traffic may decline as a result of
economic or other factors; that warehousing and distribution
productivity and capacity can be further improved to support the
Company's distribution requirements; that strong competitive responses
may impact the Company's efforts to leverage its brand power with its
marketing, merchandising and promotional efforts; that seasonality of
the retail jewelry business or downturns in consumer spending during
the fourth calendar quarter may adversely affect the Company's
results; that the Company may not be able to continue to manage its
inventory and product supply effectively to respond to consumer
demand; that fluctuations in diamond prices may negatively affect the
business; that legal or governmental proceedings may have an adverse
effect on the financial results or reputation of the Company; that key
personnel who have been hired or retained by the Company may depart;
that any disruption in the Company's private label credit card
arrangement may adversely affect the Company's ability to provide
consumer credit; or that changes in government or regulatory
requirements may increase the cost of or adversely affect the
Company's operations. The Company disclaims any obligation to update
or revise publicly or otherwise any forward-looking statements to
reflect subsequent events, new information or future circumstances.
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(amounts in thousands, except per share amounts)
Three Months Ended
October 31,
---------------------------------
2003 2002
----------------- ---------------
Total Revenues $ 416,644 $ 412,116
Costs and Expenses:
Cost of Sales 205,690 204,349
Selling, General and Administrative
Expenses 207,789 200,102
Cost of Insurance Operations 1,616 2,234
Depreciation and Amortization Expense 13,882 14,216
----------- -----------
Operating Loss (12,333) (8,785)
Interest Expense, Net 2,335 1,888
----------- -----------
Loss Before Income Taxes (14,668) (10,673)
Income Taxes (5,424) (3,950)
----------- -----------
Net Loss $ (9,244) $ (6,723)
=========== ===========
Loss Per Common Share:
Basic $ (0.34) $ (0.20)
Diluted $ (0.34) $ (0.20)
Weighted Average Number of Common Shares
and Common Share Equivalents Outstanding:
Basic 26,887 32,962
Diluted 26,887 32,962
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
October 31, July 31, October 31,
2003 2003 2002
--------------- ---------- -----------
(unaudited) (unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 30,523 $ 35,273 $ 24,519
Merchandise Inventories 952,147 798,761 929,227
Other Current Assets 58,574 52,450 55,532
----------- ----------- -----------
Total Current Assets 1,041,244 886,484 1,009,278
Property and Equipment, Net 264,283 266,167 281,073
Goodwill, Net 86,055 82,199 212,812
Other Assets 38,773 38,133 35,123
Deferred Tax Asset, Net 20,733 21,123 42,978
----------- ----------- -----------
Total Assets $1,451,088 $1,294,106 $1,581,264
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Accounts Payable and Accrued
Liabilities $ 417,270 $ 307,775 $ 415,918
Deferred Tax Liability, Net 46,180 46,266 21,498
----------- ----------- -----------
Total Current Liabilities 463,450 354,041 437,416
Non-current Liabilities 101,658 103,342 106,864
Long-term Debt 320,601 184,400 147,547
Commitments and Contingencies
Stockholders' Investment:
Preferred Stock --- --- ---
Common Stock 420 415 407
Additional Paid-In Capital 583,473 566,689 549,895
Accumulated Other Comprehensive
Income (Loss) 15,881 6,834 (5,741)
Accumulated Earnings 579,878 589,122 623,044
Deferred Compensation --- --- (66)
----------- ----------- -----------
1,179,652 1,163,060 1,167,539
Treasury Stock $ (614,273) $ (510,737) $ (278,102)
----------- ----------- -----------
Total Stockholders' Investment 565,379 652,323 889,437
----------- ----------- -----------
Total Liabilities and Stockholders'
Investment $1,451,088 $1,294,106 $1,581,264
=========== =========== ===========
CONTACT: Zale Corporation
David H. Sternblitz, 972-580-5047
Senior Director, Investor and Public Relations