The retail industry’s post-holiday cleanup is continuing, with Zale Corp. closing over 60 stores, including a jewelry store at the Rotterdam Square mall.
Zale, the Irving, Texas, retail jewelry giant with 2,200 stores and eight brands in the United States, Canada and Puerto Rico, announced earlier this week a 9 percent decline in same-store sales during November and December. Total sales during the holidays fell 10.1 percent to $723 million.
The holiday sales report issued Tuesday at a consumer conference in New York made Zale the latest high-end retailer to be sideswiped by consumers’ pullback in spending amid a housing slump, higher energy costs and recession fears. Tiffany & Co., the world’s second-largest luxury retailer, last week posted a 2 percent decline in same-store sales during the holidays.
The lackluster holiday results prompted Zale to announce the closure of over 60 locations — half kiosks and half regular stores — during the first 90 days of 2008.
The Zales Jewelers in Rotterdam has already closed. Other New York Zale operations targeted for shutdown include Piercing Pagoda kiosks in Syracuse and on Long Island.
“These closings are concentrated in the three brands — Zales, Gordon’s and Piercing Pagoda — as part of the focus on return on capital. Leases were at the end of their maturity. We are not exiting any geographic markets and there is the potential that the people impacted get placed at other stores or other brands,” Zale Vice President and Treasurer David Sternblitz said in a statement.
At the Cowen & Co. Consumer Conference, according to a Web cast of the event, Zale Executive Vice President and Chief Financial Officer Rodney Carter said most of the 60 stores were “cash-flow positive,” but they showed no promise of operating efficiently enough to earn a return on capital. He said more closures might come by the end of Zale’s fiscal year in July.
Zale’s net loss deepened during its first quarter that ended Oct. 31 to $28.4 million from $26.4 million a year earlier. Total revenues during that period slipped 1.3 percent to $377 million.
The company, which opened its first store in Wichita Falls, Texas, in 1924, has recently undergone a series of shakeups.
In November, it sold its Baily Banks and Biddle brand to Finlay Fine Jeweler Corp. for $200 million. Last month, Zale installed a new president and chief executive, Neal Goldberg, a retail industry veteran who has worked for Macy’s, Victoria’s Secret and Gap. He succeeded Betsy Burton, who stepped down as CEO after less than two years.
The soft holiday sales were felt throughout the industry. The National Retail Federation earlier this week said industry sales in November and December rose 3 percent, compared with a year earlier. Those results made the 2007 holiday season the worst since 2002, when sales rose by 1.3 percent.
“The results were disappointing across all brands. Each brand experienced the same relative drop in pre-holiday trends,” Carter said.
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