Businessweek

Zale Corporation, through its wholly owned subsidiaries, operates as a specialty retailer of fine jewelry in North America. The company operates specialty retail jewelry stores and kiosks primarily in shopping malls throughout the United States, Canada, and Puerto Rico. Segments The company operates through three business segments: Fine Jewelry, Kiosk Jewelry, and All Other. Fine Jewelry This segment includes five brands. Each brand specializes in fine jewelry and watches, with merchandise and marketing emphasis focused on diamond products. Zales Jewelers and Gordon's Jewelers: Zales Jewelers is the company’s national brand in the U.S. providing moderately priced jewelry to a range of guests. Gordon's Jewelers is a regional jeweler. Zales Jewelers operates 639 stores in 50 states and Puerto Rico with an average store size of 1,681 square feet. Gordon's Jewelers operates 147 stores in 27 states and Puerto Rico with an average store size of 1,534 square feet. Both brands operate as multi-channel retailers and serve Internet guests through the e-commerce sites, such as www.zales.com and www.gordonsjewelers.com. Peoples Jewellers and Mappins Jewellers: The company’s Canadian operations consist of two brands, including Peoples Jewellers and Mappins Jewellers. Peoples Jewellers is a Canada's primary fine jewelry retailer. Mappins Jewellers offers Canadian guests a selection of merchandise from engagement rings to fashionable and contemporary fine jewelry. In Canada, the company operates 206 stores in 9 provinces. Zales Outlet: Zales Outlet operates in outlet malls and neighborhood power centers, and capitalizes on Zales Jewelers' national advertising and brand recognition. The company operates 132 Zales Outlet stores in 35 states and Puerto Rico. The average store size is 2,362 square feet. Its stores feature items in every major jewelry category, including branded watches, gemstones, gold merchandise, and diamond fashion and solitaire products. Kiosk Jewelry This segment operates under the brand names, including Piercing Pagoda, Plumb Gold, and Silver and Gold Connection (collectively, ‘Piercing Pagoda’) through mall-based kiosks, and is focused on the opening price point jewelry guest. The company’s presence in Kiosk Jewelry has been expanded through the e-commerce site, www.pagoda.com. The company also offers its guests the option to purchase warranty coverage on certain products. It also offers repair services to guests who do not purchase warranty coverage. As of July 31, 2012, Piercing Pagoda operated 654 locations in 41 states and Puerto Rico. At the entry-level price point, Piercing Pagoda services fashion conscious guests of all ages. Piercing Pagoda offers a collection of bracelets, earrings, charms, rings, non-precious metal products, and 14 karat and 10 karat gold chains, as well as a selection of silver and diamond jewelry. In addition, trained associates perform ear-piercing services on site. Kiosks are generally located in high traffic areas that are accessible and visible within regional shopping malls. Kiosk locations average 188 square feet in size. All Other This segment provides insurance and reinsurance services for various types of insurance coverage, which are marketed primarily to the company’s private label credit card guests, through Zale Indemnity Company, Zale Life Insurance Company, and Jewel Re-Insurance Ltd. These three companies are the insurers (either through direct written or reinsurance contracts) of its guests' credit insurance coverage. In addition to providing merchandise replacement coverage for certain perils, credit insurance coverage provides protection to the creditor and cardholder for losses associated with the disability, involuntary unemployment, and leave of absence or death of the cardholder. Zale Life Insurance Company also provides group life insurance coverage for its eligible employees. Credit insurance operations are dependent on its retail sales through its private label credit cards. Seasonality The company’s business is seasonal in nature, with its second fiscal quarter (year ending December 2011), which includes the holiday months of November and December, accounting for a disproportionately greater percentage of annual sales and cash flow than the other three quarters. Other primary periods include Valentine's Day and Mother's Day. Regulation The providers of the company’s private label credit programs are subject to disclosure and other requirements under state and federal law, and are subject to review by the Federal Trade Commission and the state and federal banking regulators. History Zale Corporation was founded in 1989. The company was incorporated in Delaware in 1993.