Zales reported a net loss of $4.5 million ($0.14 diluted eps) for the third quarter ended Apr 30, compared to a net loss of $9.0 million ($0.28 Diluted EPS) in the year-ago period. A change in warranty revenue recognition improved revenue by $8.5 million and the net loss per share from continuing operations by $0.25 for the quarter. Net revenues increased 8.1% to $445.2 million, while same-store sales rose 8.0% following a 15.2% gain last year, the 6th straight gain after 9 consecutive quarterly declines. Comps by segment were: U.S. Fine Jewelry brands +10.9%, Canadian Fine Jewelry +3.8% and Kiosks +6.7%. Gross margins improved by 120 bps to 51.3% of revenues. “The six consecutive quarters of positive comps, coupled with continued momentum through the Mother’s Day selling period, demonstrates that the strategic initiatives we’ve undertaken are resonating with our guests,” commented Theo Killion, Chief Executive Officer. “In addition, the improvement in operating earnings this quarter is another indication of the progress we are making as we accelerate towards bottom line profitability.”
