Exhibit 99.1
Zale Announces 27 Percent Increase in Third Quarter EPS
DALLAS--(BUSINESS WIRE)--May 17, 2005--Zale Corporation
(NYSE:ZLC), the largest specialty retailer of fine jewelry in North
America, announced today net earnings of $14.5 million, or $0.28 per
diluted share, for the Company's third quarter ended April 30, 2005.
This represents an increase of 27% on a per share basis over the same
period last year when the Company reported net earnings of $11.5
million, or $0.22 per diluted share.
Total revenues for the third quarter ended April 30, 2005 were
$516 million, compared to $483 million for the same period last year,
an increase of 6.7%. Comparable store sales increased 3.5% for the
same period.
Total revenues for the year-to-date totaled $1.911 billion
compared to $1.849 billion for the same period last year, an increase
of 3.3%. On a comparable store basis, year-to-date sales increased
0.4%. Year-to-date net earnings totaled $102.7 million or $1.98 per
diluted share. For the same period last year, net earnings were $99.6
million, or $1.85 per diluted share.
"We are very pleased with these earnings results as they reflect
the ongoing execution of our strategy," commented Mary L. Forte,
President and Chief Executive Officer. "Our brand management focus
along with the achievement of our growth objectives drove a solid
top-line improvement for the quarter. We combined this sales
performance with a 45 basis point increase in gross margins,
predominantly from our direct sourcing initiatives. During the period,
operating disciplines remained firmly in place as reflected in the 80
basis points of operating margin improvement over last year."
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 2,330 retail locations throughout
the United States, Canada and Puerto Rico, as well as online. Zale
Corporation's brands include Zales Jewelers, Zales 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 results of operations and
merchandising and marketing strategies. 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
results expressed in the forward-looking statements. These factors
include, but are not limited to: 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; changes in
regulatory requirements or in the Company's private label credit card
arrangement with Citi may increase the cost of or adversely affect the
Company's operations and its 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. For other factors, see the
Company's filings with the Securities and Exchange Commission,
including its 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 Nine months ended
April 30, April 30,
------------------- -----------------------
2005 2004 2005 2004
--------- --------- ----------- -----------
Total Revenues $515,618 $483,175 $1,910,723 $1,848,842
Costs and Expenses:
Cost of Sales 246,151 232,802 931,660 908,428
Selling, General and
Administrative Expenses 227,789 215,374 760,757 730,285
Cost of Insurance
Operations 1,674 1,435 4,542 4,396
Depreciation and
Amortization Expense 14,953 13,962 44,184 41,987
--------- --------- ----------- -----------
Operating Earnings 25,051 19,602 169,580 163,746
Interest Expense, Net 1,558 1,503 5,990 5,885
--------- --------- ----------- -----------
Earnings Before Income
Taxes 23,493 18,099 163,590 157,861
Income Taxes 9,037 6,571 60,869 58,283
--------- --------- ----------- -----------
Net Earnings $14,456 $11,528 $102,721 $99,578
========= ========= =========== ===========
Earnings Per Common Share -
Basic:
Net Earnings Per Share $0.28 $0.22 $2.00 $1.88
Earnings Per Common Share -
Diluted:
Net Earnings Per Share $0.28 $0.22 $1.98 $1.85
Weighted Average Number of
Common Shares Outstanding:
Basic 50,895 52,641 51,302 52,873
Diluted 51,513 53,537 51,989 53,795
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
April 30, July 31, April 30,
2005 2004 2004
----------- ----------- -----------
ASSETS
Current Assets:
Cash and Cash Equivalents $66,782 $63,124 $43,869
Merchandise Inventories 926,798 826,824 856,016
Other Current Assets 63,002 63,956 55,661
----------- ----------- -----------
Total Current Assets 1,056,582 953,904 955,546
Property and Equipment, Net 278,276 266,688 258,799
Goodwill, Net 89,130 85,583 83,728
Other Assets 33,961 35,909 36,628
Deferred Tax Asset, Net --- --- 20,970
----------- ----------- -----------
Total Assets $1,457,949 $1,342,084 $1,355,671
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Accounts Payable and Accrued
Liabilities $398,088 $319,599 $393,547
Deferred Tax Liability, Net 51,334 51,417 46,233
----------- ----------- -----------
Total Current Liabilities 449,422 371,016 439,780
Non-current Liabilities 39,075 42,486 98,803
Non-current Tax Liability, Net 5,616 4,968 ---
Long-term Debt 162,100 197,500 165,700
Commitments and Contingencies --- --- ---
Stockholders' Investment:
Common Stock 530 521 520
Additional Paid-In Capital 82,145 63,661 ---
Accumulated Other Comprehensive
Income 19,306 13,470 9,308
Accumulated Earnings 751,183 648,462 641,560
Deferred Compensation (1,428) --- ---
----------- ----------- -----------
851,736 726,114 651,388
Treasury Stock (50,000) --- ---
----------- ----------- -----------
Total Stockholders' Investment 801,736 726,114 651,388
----------- ----------- -----------
Total Liabilities and Stockholders'
Investment $1,457,949 $1,342,084 $1,355,671
=========== =========== ===========
CONTACT: Zale Corporation, Dallas
David H. Sternblitz, 972-580-5047
Vice President and Treasurer