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Zales Closing More Jewelry Stores to Total 105 in 2008

Reducing Headquarters Staff by 20% in Cost Cutting Initiative
February 29, 2008
By the end of this year, Dallas-based Zale Corporation (NYSE: ZLC) will have closed 50 kiosks and 55 full-size retail stores, leaving it with 2,145 retail locations in the U.S., Canada and Puerto Rico. The majority of the stores are underperforming and Zale said it is further minimizing impact by closing most of the stores when leases naturally expire.

The store closing decision is only one of the initiatives resulting from a strategic review of operations. Aside from employees affected by closure of retail stores, Zale is reducing its headquarters staff by 20% -- 225 (145 filled and 85 open) positions. In addition, the company is reducing its capital expenditure budget for 2009 from $85 million to $45 million and is cutting inventory by $100 million.

In its half-year financial report last week, Zale recorded a 5.1% decline in revenues, a 5.1% decline in comparable store sales and a nearly 50% decline in earnings per share, compared to the first six months of fiscal 2007. Analysts have repeatedly named the company as a possible buyout target.

This article appears in "CoStar's Retail News Roundup: Mar. 2 to Mar. 8, 2008," a weekly feature written by CoStar News Senior Editor Sasha M. Pardy. This week in the Retail Roundup, CoStar reports on expansion plans at Tiffany & Co., Big 5, Papa John's, Dollar Tree, Fresh & Easy; new retail developments in IL, TX, FL and NV; acquisition, merger or sale activity at Macerich, Mervyn's, Ponte Gadea, JP Morgan, Prudential, Applebee's, Donahue Schriber, BlackRock, The Goodman Company and Inland Western, Restoration Hardware, Sears and Catterton Partners, and Finish Line and Genesco; closings, cutbacks or bankruptcies at Zales, Gap, Whole Foods and Macy's; sustainability at Regency Centers and Wal-Mart; personnel announcements at NewMark Merrill, Hanley Investment Group; and more.
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