Zale posts wider 1Q loss but beats Street forecast

AP News
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Posted: Nov 24, 2009 12:35 PM

Zale Corp. reported a bigger fiscal first-quarter loss on Tuesday, hurt by a 10 percent drop in revenue as demand for jewelry remained soft in the weak economy, and a tax benefit helped results a year ago.

The jewelry chain lost $57.6 million, or $1.80 per share. That compares with a loss of $48.4 million, or a loss of $1.52 per share a year earlier.

Income tax expense for the quarter was $1 million, compared to a tax benefit of $19 million a year ago.

Analysts polled by Thomson Reuters expected a bigger loss of $2.02 per share.

Zale shares rose 18 cents, or 4 percent, to $4.68 in afternoon trading.

Revenue declined to $329.2 million from $364.1 million, with sales at stores open at least a year down 6.8 percent. Sales at stores open at least a year are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.

CEO Neal Goldberg said the company has enough inventory to deliver for the holidays and that it won't offer the same level of broad discounting this year compared to last year.

The company has closed 209 retail locations since Oct. 31, 2008, and reduced selling, general and administrative expenses by $24 million during the most recent quarter.