Zales
US jewellery chain selling leases
Posted March 09, 2010 |
American jewellery retail chain Zale Corp is looking to sell the leases on as many as 12 of its stores.
In a sign of the continuing impact of the global financial crisis, Zale Corp is reportedly looking to shore up its finances by selling the leases amid falling sales and crippling debt.
The leases include Zales stores in prime locations such as Manhattan’s Herald Square and along Fifth Avenue.
The company did not state whether it planned to leave these locations altogether, or whether it was solely trying to reduce some of its lease obligations.
The move is the latest in a series of cost-cutting measures from the company.
Last month Zale cancelled much of the advertising it planned for Valentine's Day and Mother's Day.
In 2009, the retailer closed 187 stores, leaving it with about 1,900.
According to Reuters, interim Chief Executive Theo Killion said he did not anticipate a "significant" number of store closings in 2010.
Last week Zale reported only its second profitable quarter in the past nine.
After two years of declining sales, the company has reportedly used up much of its cash reserves and drawn down its credit.
Two weeks ago, Zale said it hired Peter J. Solomon Co, a New York investment bank, to advise it on strategic options.
The Dallas-based chain said last week it expected to have identified the source of capital it needs to steady its finances and to have those funds by late May.
Citing an anonymous source, Reuters reported last month that private equity firm Apollo Management was considering taking a stake.
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