Considering “diamonds are a girl’s best friend,” you would assume that a company that makes a profit selling fine jewelry would have at least a couple women in the boardroom.
In the case of Zale Corporation, you would be wrong-at least until now.
The addition of a woman to a previously all male board of directors coupled with a positive report of second quarter earnings are only two ways Zale Corp. is working to pull its profits out of the red.
Zale’s endeavors contrast a new path of change for the Dallas based company with strong second quarter results. Both support the effort to restore the company to profitability.
Seven men currently make up Zale’s board of directors. The addition of Beth Pritchard on March 9, 2012, will bring the total number to eight.
The addition of Pritchard is not simply to include a woman on the board, but to tap her extensive retail knowledge. Pritchard currently serves as the North American advisor for a global franchise company called M.H. Alshaya Company, which operates stores for brands like Starbucks, Victoria’s Secret, and American Eagle, primarily in the Middle East.
The company believes that her perspective on and experience with international retail brands will significantly benefit Zale.
“I also personally believe the addition of a woman to our board is a positive; she can bring a different perspective to the previous all-male board,” said Roxanne Barry, director of investor relations for Zale. “I believe her background in retail will be instrumental, even if it isn’t specifically in the jewelry area.”
While the addition of Pritchard to the board of directors may catch the public’s eye due to the fact that she is a woman, it is important to note that Zale has collected four other strong members for the board who bring broad retail and operating experience.
“Over the past year and a half, Zale has added retail strength to the board with the addition of Dave Dyer who is the chief executive officer of Chico’s; Ken Gilman who serves as the former chief financial officer and chief operating officer of Limited Brands; and Neale Attenborough and Josh Olshansky from Golden Gate Capital,” said Barry.
These additions have stemmed from Zale’s efforts to turn a profit-something the company has not managed to do for the past three consecutive years.
For a company that operates 1,163 fine jewelry stores and 666 kiosks located primarily in shopping malls throughout the United States, Canada and Puerto Rico, this is a trend to cease.
Since July 2011, Zale has made an effort to strengthen its weaker areas in hopes to return to being a profitable company. It has primarily focused on implementing a customer service-training program that is consistent throughout its stores, which will improve the customer experience, and by introducing partnerships with renowned brands such as Jessica Simpson and Vera Wang to increase sales.
Zale Corporation’s second quarter ending January 31, 2012 demonstrated a revenue increase of 6 percent to $664 million from $626 million in last year’s same period. This is largely attributed to increased sales due to the holiday season.
“Over the holiday season, meaning Christmas and Valentine’s Day, we did see a big rush come through our store,” said Michael Bass, who is a store manager for Zale. “It’s pretty typical that during the holiday season we do see a burst of traffic, so we were glad to see sales stay consistent.”
However, the company has decided to discontinue the Jessica Simpson line, as it did not meet its expectations. However, the Vera Wang partnership will remain intact. Vera Wang’s LOVE line is a crucial aspect of growing Zale’s wedding category.
These are signs of improvement. In the latest quarter, Zale posted comparable-store sales gains of 5.8 percent, the fifth consecutive quarter of growth.
“Because of the importance of the holiday selling period to our business, the positive same store sales we’ve achieved over the past two years is significant,” said Zale’s chief executive officer, Theo Killion during the earnings conference call. “Our consistent top line growth is a result of the work we’re doing to return the company to profitability.”
Looking forward Zale Corporation is looking to continue to increase its same store sales.
“Our focus is to continue growing same store sales through core and branded merchandise that resonates with the customer, effective marketing and further store personnel training,” said Barry.
“In our fiscal 2013 and beyond, we are looking at the potential for opening new stores.”
