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Q1 2013 Earnings Call
November 20, 2012 5:00 pm ET
Roxane Barry - Director of Investor Relations
Theophlius Killion - Chief Executive Officer and Director
Thomas A. Haubenstricker - Chief Financial Officer and Senior Vice President
Matthew W. Appel - Chief Administrative Officer
Jeffrey S. Stein - Northcoast Research
Rick B. Patel - BofA Merrill Lynch, Research Division
Oliver Chen - Citigroup Inc, Research Division
David Wu - Telsey Advisory Group LLC
William R. Armstrong - CL King & Associates, Inc., Research Division
Previous Statements by ZLC
» Zale Management Discusses Q4 2012 Results - Earnings Call Transcript
» Zale Management Discusses Q3 2012 Results - Earnings Call Transcript
» Zale's CEO Discusses Q2 2012 Results - Earnings Call Transcript
Good afternoon, and thank you for joining us. Participating in today's call will be Theo Killion, Chief Executive Officer; Matt Appel, Chief Administrative Officer; and Tom Haubenstricker, Chief Financial Officer.
We have posted a slide presentation for today's call on the Investor Relations homepage of our website, zalecorp.com. Before we begin, I'll read our Safe Harbor statement. Our commentary and responses to your questions on this conference call will contain forward-looking statements, including statements relating to our sales, margins, commodity costs and other expenses, operating and net earnings and other goals, plans and objectives. These forward-looking statements are not guarantees of future performance, and a variety of factors could cause our actual results to differ materially from the anticipated or expected results expressed in these forward-looking statements. Additional information concerning other factors that could cause actual results to differ materially from those contained in the forward-looking statements is available in our annual report on Form 10-K for the fiscal year ended July 31, 2012. Also, please note that during this conference call, we may discuss certain non-GAAP financial measures as we review the company's performance. One of these non-GAAP measures is EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization. A second non-GAAP measure is adjusted EBITDA, which excludes charges related to store closures. We use these measurements as part of our evaluation of our performance of the company. In addition, we believe these measures provide useful information to investors. Please refer to the appendix within the Investor Relations presentation for a reconciliation of these non-GAAP measures to our most comparable GAAP financial measures.
I'll now turn the call over to Theo.
Thank you, Roxane, and good afternoon to everyone joining us on the call today as we report our fiscal quarter -- our fiscal first quarter for 2013. For those of you following along with the slides that we posted on our website, please direct your attention to Slide #3.
This quarter marks 8 straight quarters of positive comps. In the first quarter, comparable store sales were up 3.9%, which represents a 2-year comp of 10%. We improved our bottom line by $4 million as we continue our march toward profitability.
In the first quarter, we focus our efforts on setting the foundation for the important holiday selling season. First and foremost, we continue to improve our merchandise assortment. This includes fine-tuning our core products while expanding exclusive and proprietary collections in both Bridal and Fashion. I will talk in more detail about some of our proprietary product expansions and new exclusive collections as we turn to the next slide.
Our holiday television marketing campaign kicked off last week. In this campaign, we continue to build on the emotional affinity of the Diamond Store, supporting our proprietary and exclusive merchandise and embracing emerging Omni-Channel capabilities. I will expanded on our marketing plans a bit further in my comments.
To ensure that our stores will be ready for their busiest season, we made significant investments in product, technical and sales training. As I mentioned last quarter, to support the launch of our Celebration Diamond collection, we invested 20,000 hours of training during October so that every member of our selling team is well-versed on the features and benefits of the diamonds that make up that collection.
Our annual District Manager and Store Manager meetings also focused on product while emphasizing key guest services, such as warranty, repair and Ship-to-Store. Finally, we continue to increase the number of Diamond Council of America, or DCA, certified associates.
At the end of the first quarter, we had almost 70% of our full-time jewelry consultants trained, which is up from 15% in early 2010 and 65% at the end of last quarter. Our selling teams are better prepared than ever to deliver great guest experiences.
Because affordable financing options are so important to our guests, we continue to enhance our customer's credit options. Last week, we were pleased to announce the addition of Genesis Financial Solutions to our U.S. alternative financing program. Genesis will offer a revolving line of credit to select guests whose credit applications have been declined by our primary lender. This revolver provides guests with an affordable option and similar repayment terms to Citi when making Fine Jewelry purchases.
We will continue to manage our alternative financing program to maximize guest approvals while also minimizing our costs. By continuing to give our guests more credit options, we break down the barriers for them as they seek that perfect piece of jewelry to commemorate their special moments at one of our brands.
I mentioned Ship-to-Store earlier, and with the success of our Ship-to-Store capability in the United States, we expanded a program to our Peoples brand in Canada. To date, the Canadian rollout has exceeded our expectations. Importantly, about 75% of our Ship-to-Store guests haven't been in our traditional stores for over a year. When this guest chooses to ship an order to our stores, it provides us with an opportunity to not only show them our product offerings in order to add a selection to their purchase, but also offer a warranty with the sale.