Zale, Tiffany Post Quarterly Losses

August 31, 2006

Zale, Tiffany Post Quarterly Losses

Two of the United States' most well-known jewelers reported substantial losses for their latest quarters, the companies announced today.

Zale Corp., which owns more than 2,300 Zales Jeweler, Bailey Banks & Biddle and Piercing Pagoda stores and kiosks, said it lost $26.4 million during the period of May to July 2006. The retailer said the loss was due partly to the company writing down $16.8 million in inventory at Zale and Bailey Banks & Biddle stores, and $2.9 million to write down the value of test stores.

Zale said its same-store sales grew 3.5% during the quarter, and that its revenue grew 4% to $490.7 million, exceeding analysts' expectations. According to the Associated Press, the company reported it would have earned 2 cents per share for the quarter, but instead reported a loss of 55 cents per share.

The company also predicts it will lose 42 to 46 cents a share in the current quarter, and will see flat or slower sales growth.

Meanwhile, Tiffany & Co. reported its Q2 profits fell 19% compared to the same period a year ago. The company's 29-cents-per-share earnings lagged behind analysts' expectations of 32 cents.

The luxury retailer said that sales increased 9% to $574.9 million compared to 2005. Tiffany's U.S. retail sales climbed 8% while its international sales rose 10%. However, sales declined sharply in Japan during the period, one of the reasons for the overall fall.

Tiffany expects third-quarter earnings of 16 cents, in line with earnings a year ago.

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