Jewelry retailer Zale Corp. on Wednesday reported a smaller net loss in its fiscal third quarter, helped by a tax benefit and the company's efforts to cut costs and sell more items at full price.
Its shares rose 20 cents, or 7.5 percent, to $2.88 in morning trading.
Zale has seen its sales tumble during the recession, hurt by tighter credit and high unemployment. It has closed hundreds of stores over the past two years. Its CEO and other executives left in January following a tough holiday season.
The retailer has been working with adviser Peter J. Solomon Co. on ways to improve its cash situation, including a possible sale of all or part of the company.
Zale president and interim CEO Theo Killion said the company has completed the initial stages of its turnaround plan and it can now focus on "fixing the business in order to return it to profitability."
The company, based in Irving, Texas, reported a net loss of $12.1 million, or 38 cents per share, for the three months ended April 30. That compares with a year-ago loss of $19.5 million, or 61 cents per share.
Excluding a $12 million tax benefit and other items, net loss totaled 76 cents per share. Analysts polled by Thomson Reuters, on average, expected a larger loss of 95 cents per share.
Revenue fell 5 percent to $359.8 million from $379.1 million a year ago.
The company reduced costs by $16 million in the quarter and reduced inventory by $70 million from a year ago to end the quarter at $693 million, mainly due to store closings.
Earlier this month, Zale said it received a $150 million lifeline from private equity firm Golden Gate Capital and a new $650 million credit line that will bolster the jeweler's cash position, allowing it to restructure its retail locations and expand online sales.
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