Jewelry retailer Zale Corporation (ZLC) said its November comparable-store sales fell 18.6%. As a result, the company, which has been grappling with sliding sales, canceled some of its orders from suppliers and delayed payments in a tough holiday season.
According to a report, Zale refused to accept the inventory worth millions. However, the company responded by saying that management has been evaluating which merchandise should be kept for the holiday season, and which ones should be returned, hinting that this has resulted in the delay in payment to suppliers.
Zale notified that it has sufficient cash to pay suppliers and enough merchandise to meet consumer demand in this holiday shopping season.
The jewelry market has been hit hard by the global meltdown, as consumers affected by lower discretionary income have been prioritizing their purchases. This has led Zale and many other retailers to shut down stores or wind up operations.
The elimination of stiff competition had helped big players such as Tiffany & Company (TIF), which holds a significant position in the world jewelry market and is poised to benefit from its increased geographic reach once the economy rebounds. To weather the downturn, it has been concentrating more on smaller size store formats that offer selected collections of lower priced higher-margin products.
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