At a recent Cowen and Company analyst presentation, Zale
Zale, which sells jewelry under the Zale, Piercing Pagoda, and Bailey Banks & Biddle brand names, among others, has performed terribly over the past three years. Under its old management, Zale committed the ultimate retailing sin: neglecting its core audience in an attempt to go upscale. The result? Alienated customers and lackluster operations. In 2006, Zale lost its industry leadership position to Signet
Under a new management team, Zale has refocused on its core customers and begun to regain some of its luster. In the analyst presentation, management noted that Zale posted positive overall same-store sales comparisons over the holidays for the first time in the past three years. Diamond fashion was up 35%, and inventory in-stock performance reached a healthy 98% (meaning its stores have the merchandise customers are seeking).
Online traffic, where the company competes with Blue Nile
Going forward, management outlined three major initiatives: regaining market share through disciplined store growth, improving gross margins through direct sourcing and other procuring efficiencies, and increasing investment in its employees. Surprisingly, according to management, having a good store manager can make a whopping $300,000 difference in a store's sales. Management also targeted 50 basis points of operating margin improvement per year, with a total goal of 200 basis points in improvement.
After years of ill-advised marketing initiatives -- including its attempt to invade Tiffany's
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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates comments, concerns, and complaints. The Motley Fool has a disclosure policy.