Specialty jewelry retailer Zale Corp. (ZLC), Wednesday reported a swing to profit in the third quarter, on improved margins that offset a slight decline in sales. Earnings for the quarter came in ahead of Wall Street estimates.
The company reiterated expectations of positive net earnings for fiscal year 2013, and announced the appointment of Terry Burman as chairman of the board, effective May 31.
Zale shares gained 25 percent in afternoon trade on the New York Stock Exchange.
Zale posted quarterly net income of $5 million or $0.13 per share, compared with a net loss of $4.5 million or $0.14 per share last year. On average, six analysts polled by Thomson Reuters expected a loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter slid modestly to $442.7 million from $445 million a year ago. Analysts had a consensus revenue estimate of $443.83 million for the quarter.
On a same-store basis, sales were up 1.4 percent.
Results for the third quarter were helped by gross margin that improved 130 basis points to 52.6 percent, and operating margin climbed to 2.2 percent from 1.4 percent.
Interest expense for the quarter was lower at $5.7 million, compared with $9.8 million a year ago.
Terry Burman, a jewelry industry veteran, has been appointed director and chairman of the board. John Lowe, Jr., who has served as chairman for the past five years, will remain on the board.
Burman was the CEO of Signet Jewelers Limited from 2000 to January 2011. Before joining Signet Burman held executive positions with Barry's Jewelers Inc.
Zale stock is trading at $6.75, up $1.35 or 25.00%.
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