Shares of Zales (NYSE:ZLC) tumbled more than 14% Wednesday morning after the jeweler said it swung to a fourth-quarter loss. However, same store sales climbed for the third consecutive quarter as shopper appetite for luxury items started to revive.
The Irving, Texas-based retailer of fine jewelry and watches posted a net loss of $33 million, or $1.02 a share, compared with a year-earlier loss of $29 million, or 89 cents a share.
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Analysts polled by Thomson Reuters were expecting a bleaker loss of $1.15.
Despite the headwinds imposed by volatility in commodity markets and the overall economy, our gross margin performance in the quarter and full year reflects the traction we are gaining in the marketplace, Zales chief financial officer Matt Appel said in a statement.
Earlier this year Zales was forced to admit that higher costs would ultimately hit the customer in the form of raised prices. Last quarter, Zales profit continued to fall under the weight of higher diamond, gold and silver costs.
Yet, revenue for the three-months ended July 31 was $377 million, up 9.4% from $345 million a year ago, trumping the Streets view of $360 million.
Sales at stores open more than a year were up 9.8% compared with a decrease of 2.1% in 2010, the third sequential increase in quarterly same-store sales.
The jeweler, which also faced a liquidation crisis in late 2009 that forced it to cancel orders with vendors just before the holiday season, is starting to see a rebound with the improvement in consumer sentiment.