Exhibit 99.1
Zale Corporation Announces First Quarter Earnings Results
DALLAS--(BUSINESS WIRE)--Nov. 16, 2004--Zale Corporation
(NYSE:ZLC), North America's largest specialty retailer of fine
jewelry, today announced a net loss of $10.9 million, or $0.21 per
diluted share, for the Company's first quarter ended October 31, 2004.
For the same period last year, the Company reported a net loss of $9.2
million, or $0.17 per diluted share.
Total revenues for the quarter ended October 31, 2004 were $423
million compared to $417 million last year, an increase of 1.4%.
Comparable store sales for the first quarter decreased 0.9%.
"We were satisfied with the performance of the business,
especially in light of the recent hurricanes which adversely affected
our results earlier in the quarter," commented Mary L. Forte,
President and Chief Executive Officer. "Operating disciplines remain
firmly in place and we are confident in our preparation for this
holiday season."
Ms. Forte continued, "During the quarter, we executed our plan
which included making investments to enhance the quality of our
selling organization through additional training and improving our
marketing effectiveness through more targeted communication. Our
growth plans remained on track with 23 stores, 14 Piercing Pagoda
kiosks and 53 Peoples II carts opened during the period. We believe
these strategic initiatives combined with our ongoing merchandising
innovations have each brand positioned to meet the expectations of our
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 2,315 retail locations throughout
the United States, Canada and Puerto Rico, as well as online. Zale
Corporation's brands include Zales Jewelers, Zales Fine Jewelry
Outlet, Gordon's Jewelers, Bailey Banks & Biddle Fine Jewelers,
Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Through its
ZLC Direct organization, Zale also operates online at www.zales.com
and www.baileybanksandbiddle.com. Additional information on Zale
Corporation and its brands is available at www.zalecorp.com.
This release contains forward-looking statements, including
statements regarding the Company's merchandising and marketing
strategies, growth plans and results of operations 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: if the general economy performs
poorly, discretionary spending on goods that are, or are perceived to
be, "luxuries" may not grow and may even decrease; the concentration
of a substantial portion of the Company's sales in three, relatively
brief selling seasons means that the Company's performance is more
susceptible to disruptions; most of the Company's sales are of
products that include diamonds, precious metals and other commodities,
and fluctuations in the availability and pricing of commodities could
impact the Company's ability to obtain and produce products at
favorable prices; the Company's sales are dependent upon mall traffic;
the Company operates in a highly competitive industry; any failure by
the Company to manage its inventory effectively will negatively impact
sales and earnings; because of the Company's dependence upon a small
number of landlords for a substantial number of the Company's
locations, any significant erosion of the Company's relationships with
those landlords would negatively impact the Company's ability to
obtain and retain store locations; changes in regulatory requirements
relating to the extension of credit may increase the cost of or
adversely affect the Company's operations; any disruption in, or
changes to, the Company's private label credit card arrangement with
Citi Commerce Solutions may adversely affect the Company's ability to
provide consumer credit and write credit insurance; acquisitions
involve special risks, including the possibility that the Company may
not be able to integrate acquisitions into its existing operations;
and certain other factors described from time to time in the Company's
filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the fiscal year ended July
31, 2004. 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
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended
October 31,
-----------------------------
2004 2003
--------------- -------------
Total Revenues $422,773 $416,644
Costs and Expenses:
Cost of Sales 205,280 205,690
Selling, General and Administrative
Expenses 217,031 207,789
Cost of Insurance Operations 1,436 1,616
Depreciation and Amortization Expense 14,204 13,882
--------------- -------------
Operating Loss (15,178) (12,333)
Interest Expense, Net 2,175 2,335
--------------- -------------
Loss Before Income Taxes (17,353) (14,668)
Income Taxes (6,420) (5,424)
--------------- -------------
Net Loss $(10,933) $(9,244)
--------------- -------------
--------------- -------------
Loss Per Common Share - Basic:
Net Loss Per Share $(0.21) $(0.17)
Loss Per Common Share - Diluted:
Net Loss Per Share $(0.21) $(0.17)
Weighted Average Number of Common Shares
Outstanding:
Basic 51,898 53,774
Diluted 51,898 53,774
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
October 31, July 31, October 31,
2004 2004 2003
-------------- ------------- -------------
ASSETS
Current Assets:
Cash and Cash Equivalents $41,953 $63,124 $30,523
Merchandise Inventories 1,041,179 826,824 952,147
Other Current Assets 63,215 63,956 58,574
-------------- ------------- -------------
Total Current Assets 1,146,347 953,904 1,041,244
Property and Equipment, Net 276,469 266,688 264,283
Goodwill, Net 91,034 85,583 86,055
Other Assets 35,143 35,909 38,773
Deferred Tax Asset, Net -- -- 20,733
-------------- ------------- -------------
Total Assets $1,548,993 $1,342,084 $1,451,088
-------------- ------------- -------------
-------------- ------------- -------------
LIABILITIES AND
STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Accounts Payable and
Accrued Liabilities $471,151 $319,599 $417,270
Deferred Tax Liability,
Net 51,289 51,417 46,180
-------------- ------------- -------------
Total Current Liabilities 522,440 371,016 463,450
Non-current Liabilities 40,552 42,486 101,658
Deferred Tax Liability, Net 5,965 4,968 --
Long-term Debt 271,000 197,500 320,601
Commitments and
Contingencies
Stockholders' Investment:
Preferred Stock -- -- --
Common Stock 522 521 420
Additional Paid-In
Capital 67,897 63,661 583,473
Accumulated Other
Comprehensive Income 22,218 13,470 15,881
Accumulated Earnings 637,530 648,462 579,878
Deferred Compensation (1,874) -- --
-------------- ------------- -------------
726,293 726,114 1,179,652
Treasury Stock (17,257) -- (614,273)
-------------- ------------- -------------
Total Stockholders'
Investment 709,036 726,114 565,379
-------------- ------------- -------------
Total Liabilities and
Stockholders' Investment $1,548,993 $1,342,084 $1,451,088
-------------- ------------- -------------
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CONTACT: Zale Corporation
David H. Sternblitz, 972-580-5047