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Zale Corporation posted second-quarter fiscal 2013 earnings of $1.02 per share that missed the Zacks Consensus Estimate by a couple of cents but jumped 32.5% year over year reflecting strong sales in exclusive, branded collections.

This Zacks Rank #3 (Hold) stock, which competes with Tiffany & Co. (TIF - Analyst Report) and Movado Group Inc. (MOV - Snapshot Report), registered a 1.1% increase in total revenue to $671 million, surpassing the Zacks Consensus Estimate of $666 million. Comparable-store sales (comps) increased 2.8% during the reported quarter.

Zale’s branded stores, including Zales Jewelers and Zales Outlet, marked 3.6% growth in comps compared with 10.% growth registered in the comparable year-ago quarter. Comps increased 2.8% at U.S. Fine Jewelry brands compared with an 8.9% rise in the prior-year quarter.

The company’s Canadian Fine Jewelry brands, including Mappins Jewellers and Peoples Jewellers, registered 3.8% growth in comps (up 0.5% in constant currency) compared with a 0.7% increase (up 2.3% in constant currency) in the prior-year quarter.

Zale’s Kiosk Jewelry business – Piercing Pagoda, marked an increase of 1% in comps compared with a 3% decline witnessed in the year-ago quarter.  

The company’s gross profit inched up 1.2% year over year to $340 million, while gross margin expanded 10 basis points to 50.6% during the quarter. Operating profit jumped 18.6% year over year to $51 million, whereas operating margin expanded 110 basis points to 7.6%, reflecting a 90 basis points decline in SG&A as a percentage of sales.

Other financial Details

The company ended the quarter with cash and cash equivalents of $18.5 million, long-term debt of $474 million and shareholders’ equity of $193.9 million.

Other Stock to Consider

Until any further upward revision in Zale’s Zacks Rank, Signet Jewelers Limited (SIG - Snapshot Report) holding a favorable Zacks Rank #2 (Buy), is another jewelry retailer worth considering.

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