Zale Corporation (ZLC)
Q1 2010 Earnings Call Transcript
November 24, 2009 10:00 a.m. ET

Executives

David Sternblitz - Vice President and Treasurer
Neal L. Goldberg - Chief Executive Officer
Matthew W. Appel - Executive Vice President and Chief Financial Officer
Theophlius Killion - President
Gilbert P. Hollander - Executive Vice President, Chief Sourcing and Supply Chain Officer

Analysts

Lorraine Hutchinson - Banc of America/Merrill Lynch
William Armstrong - C L King & Associates
Jeffery Stein - Soleil Securities
David Mann - Johnson Rice and Company
Janet Kloppenburg - JJK Research
Richard Hayden - Euld Capital

Presentation

Operator

Good morning. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Zale Corporation first quarter fiscal 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key.

Thank you. I would now like to turn the conference over to David Sternblitz, Vice President and Treasurer. Please go ahead, sir.

David Sternblitz

Thank you, Stephanie. Good morning. And thank you for joining us for our first quarter 2010 conference call. As Stephanie said, I’m David Sternblitz, Vice President and Treasurer. On the call today are Neal Goldberg, Chief Executive Officer; Matt Appel, Chief Financial Officer; Theo Killion, President; and Gil Hollander, Chief Sourcing and Supply Chain Officer.

Before we begin, I would like to review the Safe Harbor. Our commentary and responses to your questions on this conference call will contain forward-looking statements including statements relating to our future goals, plans, and objectives.

These forward-looking statements are not guarantees of future performance and a variety of factors could cause our actual results to differ materially from the anticipated or expected result expressed in these forward-looking statements.

Information concerning some of the factors that could cause actual results to differ materially from those contained in the forward-looking statements is available in our annual report on Form 10-K for the year ended July 31, 2009.

I would now like to turn the call over to Neal.

Neal L. Goldberg

Thank you, David. Today I would like to review our first quarter performance, provide additional color on our merchandise and marketing plans for holiday, as well as, discuss some of the steps we have taken to improve execution.

First quarter comparable store sales were negative 6.8%, compared to a negative 21% in the preceding quarter. During the first quarter, each month reflected improvement over the prior month.

Also very encouraging was the performance was driven by improvement in several key markets that were hit hardest last year during the economic downturn. From a category perspective, bridal and diamond fashion were among our best performers, which is promising given the significance of these categories in the holiday quarter.

In addition, our e-commerce business showed particular strength with revenue growth of 17% during the quarter. These trends reinforced our cautious optimism for holiday. With the first quarter behind us, we are focusing on maintaining momentum and improving execution through holiday in the second half of fiscal 2010.