August 30, 2012, 4:04 PM

Zale rings up 16% web sales growth in fiscal 2012

The jeweler’s ship-to-store program accounted for 25% of web sales in the second half.

Lead Photo

The web drove shoppers to Zales stores in fiscal 2012.

Web sales are becoming an increasingly vital part of Zale Corp.’s business as online sales grew at more than twice the rate of comparable-store sales for the jewelry retailer in 2012.

For the fiscal year ended July 31, Zale, No. 190 in Internet Retailer’s 2012 Top 500, reported:

  • E-commerce sales are 5% of total revenue. Based on that figure, web sales totaled $93.5 million, up by 16% from $80.6 million in fiscal 2011.
  • Total sales reached about $1.87 billion, an increase of about 7% from $1.74 billion.
  • Comparable-store sales increased 6.9%.
  • Net loss of $27 million, compared with a net loss of $112 million in fiscal 2011.

“Revenue from e-commerce sales is now about 5% of total revenue, which doesn't adequately represent the true value of the e-commerce guest.” Zale CEO Theo Killion told analysts on the company’s year-end earnings call yesterday. “We believe that most guests initiate their shopping experience online, researching and comparing what's available before making their purchase in one of our traditional stores.”

Part of Zale’s multichannel strategy in 2012 was a free ship-to-store feature. The program enables customers to designate eligible products for shipping to an eligible store at checkout. Once the product has arrived at the designated store the customer receives an e-mail notice that it’s ready for pick-up.

 In the second half of fiscal 2012, the ship-to-store program represented about 25% of web sales, Killion told analysts. “This is important for several reasons,” he said. “It provides us with an opportunity to add warranty to the sale. It also provides a convenient delivery option for our guests, and it enhances the guest relationship model. Importantly, about 75% of our ship-to-store guests haven't shopped in our traditional stores for over a year.”

The ship-to-store program also gives in-store staff an opportunity for add-on sales, he said.

Also in fiscal 2012 Zale increased its social media presence through Facebook, Twitter and Pinterest. Facebook followers now number about 750,000, Killion said.

Zale doesn’t break out quarterly web sales, but for the fourth quarter of fiscal 2012 reported:

  • Total sales of $407 million, up by 7.9%, from $377 million in the fourth quarter of fiscal 2011.
  • Comparable-store sales increased 8.3%.
  • Net loss was $20 million, compared with a net loss of $33 million in the fourth quarter of fiscal 2011.
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