February 25, 2009

Zales to close 115 stores, reduce staff

U.S. jewelry retailer Zale Corp. said Wednesday it would close 115 under-performing stores to reduce costs during a sales slump.

Revenues declined 17.9 percent in the fiscal second quarter of 2009, coming in at $679 million compared to $828 million in the previous quarter. Revenues fell 18.1 percent lower than the second fiscal quarter of 2008, the company said in a statement.

Zale Chief Executive Officer Neal Goldberg said the corporation was negatively impacted by the extremely weak macro-economic environment.

Additionally "¦ we aggressively promoted store-wide discounts during our holiday sales season, he said. The discounts, he said, decreased gross margin by approximately 500 basis points.

Zale said the store closings, to go into effect as leases expire, would save about $34 million in operating costs In February, the retailer cut 245 jobs -- partly by not filling 75 open positions -- in a move that saved $21 million, the company said.