Zale Reports Q2 Net Loss

Dallas Zale Corp. said Wednesday that it had a net loss of $23.6 million for the second quarter of fiscal year 2009, ended Jan. 31 a factor it blames on a sluggish economy and deep discounts during the holiday season.

Revenues for the quarter dipped to $679.4 million, a 17.9% decrease from $828 million for the same time frame last year. Same-store sales also decreased 18.1% compared to the second quarter of 2008.

“Our operating results were negatively impacted by the extremely weak macro-economic environment. In response, we aggressively promoted store-wide discounts during our holiday sales season,” said Neal Goldberg, Zale’s CEO. “We believe these discounts decreased gross margin by approximately 500 basis points.”

The company will put a stronger focus on cost cutting to bounce back in the year ahead. This includes keeping lower inventory levels on hand, which will free up more capital. At the end of the second quarter for example, the company’s inventory level was approximately $100 million lower than the same time frame last year.