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CEO of Zale Corp. Resigns

February 12, 2001

DALLAS (AP) _ Shares of Zale Corp., the nation’s largest specialty jewelry retailer, fell Monday on news that its top executive resigned and the company was delaying the release of its latest quarterly financial results.

Chairman and chief executive Beryl Raff, one of the few women to lead a major U.S. retailer, was replaced by former Zale boss Robert J. DiNicola.

In a statement, the company said Raff, 50, resigned to spend more time with her family and on personal interests. A spokeswoman said neither the company, Raff nor DiNicola, 53, would comment.

Zale shares fell more than 14 percent before rebounding in later trading on the New York Stock Exchange. On Monday, Zale shares were down $2.63, or 7.5 percent, to close at $32.67.

Irving-based Zale operates about 2,300 stores and kiosks in North America, including shopping center staples such as Zales; Bailey, Banks & Biddle Fine Jewelers, Gordon’s Jewelers, and Piercing Pagoda kiosks.

Sales at Zales chains soared during the economic boom of the late 1990s but cooled late last year. Last week, the company announced that same-store sales in the three months ended Jan. 31 fell 2.3 percent, compared to a 14.7 percent gain a year earlier.

For the past six months, the company said overall sales increased 15.4 percent to $1.22 billion, but same-store sales fell 0.6 percent.

Zale was due to release results Wednesday for its fiscal second quarter, which ended Jan. 31, but the company said Monday the report would be delayed until March 7.

Spokeswoman Mary Forte said the delayed earnings report would give DiNicola a chance to analyze the numbers. Asked whether there was a link between Raff’s resignation and the expected numbers, Forte said, ``Right now we’re not commenting.″

``It’s a little unsettling when a change of this magnitude occurs,″ said Lynn Detrick, an analyst in Houston for Sanders Morris Harris. ``But Bob DiNicola is certainly highly regarded.″

Detrick said Zale will have trouble matching its strong sales and earnings numbers from early 2000 but has a good mix of stores and a bright long-term outlook.

``Obviously it was a tough year all around,″ said Barry Rothberg, an analyst with ING Barings. ``Clearly there were some internal issues, including not meeting internal expectations.″

Many analysts had expected DiNicola to take a job at another retailer in need of turnaround help. Rothberg said DiNicola’s return offsets worries about turnover at the top.

Raff was the second top Zale official to leave within the last week. On Thursday, former U.S. Mint director Philip N. Diehl left his job leading the company’s Internet sales division. The company declined to comment on his departure.

Raff was named chief executive in September 1999 and added the title of chairman a year later. She joined Zale in 1994 after holding executive positions at department-store companies and was Zale’s president and chief operating officer for more than a year.

For the 12 months ending July 31, the company reported profits of $111.5 million on sales of $1.79 billion.

DiNicola’s return to the chief executive’s office will be effective Feb. 21, the company said. He had held the job from April 1994 through September 1999 and engineered a turnaround and expansion of the retailer that had sought bankruptcy protection in 1992.

Board member Richard Marcus will serve as interim chairman until DiNicola’s return, the company said.


On the Net:

Company site: http://www.zalecorp.com

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