QUOTE AND NEWS
DailyFinance  Feb 27  Comment 
NEW YORK, NY -- (Marketwired) -- 02/27/14 -- Levi & Korsinsky notifies investors of Zale Corporation ("Zale" or "the Company") (NYSE: ZLC) of claims of breaches of fiduciary duty and other violations of state law against the board of directors of...
SeekingAlpha  Feb 27  Comment 
Zale (ZLC) Q2 2014 Earnings Call February 27, 2014 9:00 am ET Executives Roxane Barry - Director of Investor Relations Theophlius Killion - Chief Executive Officer and Director Thomas A. Haubenstricker - Chief Financial Officer and...
Benzinga  Feb 27  Comment 
Mylan (NASDAQ: MYL) shares gained 6.30% to touch a new 52-week high of $54.66 after the company reported upbeat Q4 earnings. Kona Grill (NASDAQ: KONA) shares surged 5.22% to reach a new 52-week high of $19.73. Kona Grill shares have jumped...
Wall Street Journal  Feb 27  Comment 
Zale said its fiscal second-quarter earnings rose 23% on stronger margins that offset a modest decline in revenue.
StreetInsider.com  Feb 27  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Zale+Corp.+%28ZLC%29+Tops+Q2+EPS+by+9c%3B+Comps+Up+0.6%25/9223435.html for the full story.
DailyFinance  Feb 25  Comment 
The Law Offices of Vincent Wong are investigating potential claims against the Board of Directors of Zale Corporation (NYSE: ZLC) (“Zale”) in connection with the sale of the Company to Signet Jewelers Limited (NYSE: SIG). ...
Benzinga  Feb 24  Comment 
In a report published Monday, Nomura analyst Simeon Siegel reiterated a Buy rating on Signet Jewelers Ltd. (NYSE: SIG), and raised the price target from $85.00 to $115.00. In the report, Nomura noted, “SIG's acquisition of ZLC propels the...
Wall Street Journal  Feb 20  Comment 
Signet Jewelers agreed to buy smaller rival Zale in a deal valuing the company at $1 billion, expanding the jewelry retailer's presence in North America.
Wall Street Journal  Feb 19  Comment 
Signet Jewelers agreed to buy smaller rival Zale in a deal valuing the company at $1 billion, expanding the jewelry retailer's presence in North America.




 


Zale Corporation (NYSE: ZLC) is a mid-tier retailer of fine jewelry, operating approximately 1,900 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

Zales has a tenuous market position because it lacks the scale of mass discount retailers like Wal-Mart, and its reputation as a mid-tier jewelry seller makes it difficult for it to compete for wealthier clients that frequent high end stores like Tiffany. The company's focus on middle income and young adult customers also makes it more vulnerable to economic downturns than its higher end competitors, because these two groups tend to reduce their spending more drastically than higher income customers.


Trends and Forces

Zales is sandwiched between high end and discount retailers

Given the number of players and the commodity-like nature of the product being sold, the retail jewelry business is extremely competitive and fragmented. ZLC faces increased competition from the growth of mass merchant retailers like Wal-Mart, the largest jewelry retailer in the combined U.S. and Canadian markets[1]. Discount retailers like Wal-Mart have aggressively pursued and captured a large portion of the price-sensitive consumer jewelry market. At the upper end, Zales must compete with stores like Tiffany, a company who has more successfully associated its brand with high-end jewelry items. Moreover, Zales must also deal with increasing competition from internet vendors like Blue Nile, which ranks just behind Tiffany and ZLC in diamond ring sales after just a decade in the business. Internet retailers are often able to sell the same product for much lower prices thanks to lower overall costs.

Fluctuations in the prices of diamonds and other commodities will impact Zales’s business

The supply and prices of diamonds in the world markets are significantly influenced by a single organization, the Diamond Trading Company[2]. This company controls the marketing of a considerable bulk of the world’s supply of diamonds. It also sells rough diamonds to diamond cutters at prices determined solely at its own discretion.

Zales is more vulnerable to economic downturns than its high end competitors

Traditionally, discretionary purchases like fine jewelry are the first to ebb when the economy takes a downturn and consumer spending slows. Since a majority of the store brands under Zales's Fine Jewelry segment target the middle income consumer base, the company is also more vulnerable to economic downturns than higher end jewelry sellers.

Competition

The U.S. and Canadian retail jewelry industry accounted for approximately $63 billion of sales in 2008, according to publicly available data. Zale Corporation has a 3% market share in the combined U.S. and Canadian markets. The largest jewelry retailer in the combined U.S. and Canadian markets is believed to be Wal-Mart (WMT). Other significant segments of the fine jewelry industry include national chain department stores (such as J.C. Penney (JCP)), mass merchant discount stores (such as Wal-Mart (WMT)), other general merchandise stores, specialty retail jewelers (such as Signet Group (SIG)) and apparel and accessory stores. The remainder of the retail jewelry industry is comprised primarily of catalog and mail order houses, direct-selling establishments, TV shopping networks (such as QVC , Inc.) and online jewelers.

ZLC vs. Competitors (2010 TTM)
Company Revenue (millions USD) Revenue Growth (%) Net Income (millions USD) Net Income Growth (%) Net Margin
Zales Corporation $1,630 -13.3% -$163 -81.8% -10%
Signet[3] $3,160 -3.8% $181 -36.5% 5.7%
Tiffany[4] $2,710 -5.3% $265 20.4% 9.8%
Blue Nile[5] $314 9.2% $13.2 20.4% 4.2%



References

  1. ZLC 2007 10K, Item 1, pg.4
  2. ZLC 2007 10K, Item 1, pg.7
  3. Wikinvest Data Central: Signet
  4. Wikinvest Data Central: Tiffany
  5. Wikinvest Data Centra: Blue Nile
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