Zale Corp Earnings Cheat Sheet: Streak of Two Straight Quarters of Shrinking Margins Broken

Zale Corporation’s (NYSE:ZLC) first quarter loss narrowed, beating estimates. Zale is a specialty retailer of fine jewelry. It operates specialty retail jewelry stores and kiosks located mainly in shopping malls throughout the United States, Canada and Puerto Rico.

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Zale Earnings Cheat Sheet for the First Quarter

Results: Loss narrowed to $31.9 million (loss of 99 cents per diluted share) from $97.9 million (loss of $3.05 per share) in the same quarter a year earlier.

Revenue: Rose 7.3% to $351 million from the year earlier quarter.

Actual vs. Wall St. Expectations: ZLC beat the mean analyst estimate of a loss of $1.42 per share. It beat the average revenue estimate of $338.6 million.

Quoting Management: “Our performance this quarter demonstrates the progress we are making towards returning the Company to profitability,” commented Theo Killion, Chief Executive Officer. “We’ve now achieved top line growth in four consecutive quarters, and our efforts to expand operating margins are gaining traction.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 9.4% to $377.3 million in the fourth quarter of the last fiscal year. The figure rose 14.5% in the third quarter of the last fiscal year from the year earlier and climbed 7.6% in the second quarter of the last fiscal year from the year-ago quarter.

The company has now topped analyst estimates for the last three quarters. It beat the mark by 10 cents in the fourth quarter of the last fiscal year and by 18 cents in the third quarter of the last fiscal year.

Margins rose in the fourth quarter of the last fiscal year after falling the quarter before. Gross margin rose three percentage points to 53.5% from the quarter earlier quarter. In the third quarter of the last fiscal year, the figure rose 1.4 percentage points to 51.3% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from $1.21 a share to $1.01 over the last sixty days. For the fiscal year, the average estimate has moved from a loss of $1.32 a share to a loss of $1.38 over the last thirty days.

Competitors to Watch: Blue Nile, Inc. (NASDAQ:NILE), DGSE Companies, Inc. (AMEX:DGSE), Coach, Inc. (NYSE:COH), Signet Jewelers (NYSE:SIG), Amazon.com (NASDAQ:AMZN), eBay (NASDAQ:EBAY), Nordstrom (NYSE:JWN) and Macy’s (NYSE:M).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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