Zale posts first full-year profit since 2008, shares soar

By Phil Wahba

Wed Aug 28, 2013 11:18am EDT

n">(Reuters) - Zale Corp (ZLC.N) posted higher-than-expected fourth-quarter comparable sales on Wednesday, led by big gains at its flagship chain, and reported its first profitable fiscal year since the financial crisis in 2008.

Shares soared as much as 23.7 percent to $11.08, reaching their highest since November 2008, when the financial crisis decimated sales of mid-priced jewelry. The stock has nearly tripled since April.

For the new fiscal year, the company expects more revenue gains despite the expected closing of about 50 more stores as it continues to pare unprofitable locations. Zale has about 1,076 jewelry stores and operates Zales and Gordon's Jewelers among other chains.

Zale, which three years suffered a liquidity crunch after sales collapsed, said same-store sales, or sales at stores open at least a year, rose 5.6 percent overall. Sales increased 8.1 percent at its Zales stores, its biggest business by far.

Analysts expected a gain of 4 percent for the whole company, according to Thomson Reuters I/B/E/S.

That comes on top of an 8.3 percent companywide same-store sales increase in the year-earlier quarter.

Overall revenue rose 2.5 percent to $417.1 million in the quarter.

The company's turnaround began in 2010, when Zale got a $150 million lifeline from private equity firm Golden Gate Capital, and sales began improving.

Since then, Zale's business has gotten a lift from adding exclusive lines that offer higher margins. In 2012, Zale introduced Vera Wang Love, and this year it will expand its Celebration Fire collection to 600 stores from 220.

"This is an area for enormous growth in both margin and sales," Chief Executive Theo Killion told analysts on a conference call.

Last month, it signed a deal for branded credit cards with Alliance Data Systems Corp (ADS.N) that Zale said will offer it better terms than one with Citi. The program will begin no later than October 2015.

Zale has also been paying down debt, helping to lower interest expenses. Long-term debt fell to $410.1 million in the quarter from $452.9 million a year earlier.

The quarterly net loss narrowed to $8 million, or 25 cents per share, for the quarter ended July 31, from $19.7 million, or 61 cents per share, a year earlier. But Zale was still able to post a full-year profit.

In Canada, where Zale operates Peoples Jewellers and Mappins Jewellers, same-store sales rose 3.3 percent.

The stock was up $1.79, or 20 percent, to $10.75 in mid-morning trade.

(Reporting by Phil Wahba in New York; Editing by Jeffrey Benkoe)

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Review: First 8-inch Windows tablet is a device that shouldn’t exist

Enlarge / Photographs don't do justice to how bad this screen is.

My dissatisfaction with PC OEMs is something I have documented in the past. They offer a confusing array of products and tend to cut corners in the worst ways imaginable. The OEM response to Windows 8 has been to produce a wide range of machines sporting novel form factors to fit all sorts of niches, both real and imagined.

One niche that the OEMs haven't tried to fill, however, has been sub-10-inch tablets. That's not altogether surprising. Microsoft designed Windows 8 for screens of 10 inches or more, and initially the operating system's hardware requirements had a similar constraint.

That decision looked a little short-sighted after the success of tablets such as the Google Nexus 7 and the iPad mini. Accordingly, Microsoft changed the rules in March, opening the door to a range of smaller Windows tablets.

Specs at a glance: Acer Iconia W3OSWindows 8 Small Screen Touch with Office 2013 Home & StudentGPUIntel Graphics Media AcceleratorNetworking2.4GHz 802.11b/g/n, Bluetooth 4.0Battery6800 mAh, 2-cell Lithium PolymerPriceStarting at $379, $429 as reviewedOther perksFront and rear cameras, volume rocker

The Acer Iconia W3 is the first—and currently the only—8-inch Windows tablet. That attribute alone makes it in some sense noteworthy. Sadly, it's about the only thing that does.

Spec-wise, this is another Intel Clover Trail tablet, and its internals are basically the same as the devices that launched last year (such as its bigger brother, the Acer Iconia W510). This means 1.8 GHz, dual core, four thread Intel Atom Z2760 CPU, 2 GB RAM, 64 GB flash storage (which with Acer's default partitioning leaves a little over 29 GB usable), front and rear cameras, Bluetooth 4.0, and 802.11b/g/n (no 5 GHz support). There's a micro-HDMI and micro-USB port for external connectivity (a separate cable converts the micro USB port into a full-size one), along with an SD card slot. The tablet has a speaker adequate for notification sounds but little more.

Enlarge / Side view, including the annoying micro-USB port.

As a result, performance and battery life are similar to what we've seen before. The Iconia W3 comes equipped with full-blown Windows 8, unlike ARM tablets, so it can run any 32-bit Windows application—should you really want to. Clover Trail's GPU performance is such that games and other graphics-intensive programs won't run well, however.

Enlarge / Top view, showing the SD slot.

The new bits on this tablet are really the screen and the size.

Screens are important. We spend essentially all our time interacting with devices looking at screens. Cost-cutting on screens is unforgivable, as a bad screen will damage every single interaction you have with the device. This goes doubly so for tablets, where the screen works not only as an output device but also as the primary input device.

The Acer Iconia W3's screen is a standout—because it is worst-in-class. I hated every moment I used the Iconia W3, and I hated it because I hated the screen. Its color accuracy and viewing angles are both miserable (whites aren't white—they're weirdly colorful and speckled). The screen has a peculiar grainy appearance that makes it look permanently greasy. You can polish as much as you like; it will never go away. The whole effect is reminiscent in some ways of old resistive screens.

It's hard to overstate just how poor this screen is. At any reasonable tablet viewing distance, the color of the screen is uneven. The viewing angle is so narrow that at typical hand-held distances, the colors change across the width of the screen. At full arm's length the screen does finally look even, but the device is obviously unusable that way.

Acer has clearly skimped on the screen. I'm sure the panel in the W3 was quite cheap, and that may be somewhat reflected in the unit's retail price ($379 for a 32GB unit, $429 for this 64GB one—putting it at the same price as the 32GB iPad mini, which has a comparable amount of available disk space), but who cares? It doesn't matter how cheap something is if you don't want to use it at all.

This poor screen quality isn't a question of resolution, either. 1280×800 is not a tremendously high resolution, but text looks crisp enough. At 186 pixels per inch, 1280×800 feels more or less OK for this size of device.

The low resolution does, however, have one significant drawback: it disables Windows 8's side-by-side Metro multitasking, which requires a resolution of at least 1366×768. The W3's screen is 86 pixels too narrow, so the Metro environment is strictly one application at a time.

This is an unfortunate decision. The side-by-side multitasking is one of the Metro environment's most compelling features. Keeping Twitter or Messenger snapped to the side makes a lot of sense and works well. I've never used Windows 8 on a device that didn't support side-by-side Metro multitasking before, and I don't ever want to again.

Size-wise, the W3 may be small for a Windows tablet, but it's not exactly small. It's fat. The W3 is 11.4 mm thick. The iPad mini, in comparison, is 7.2 mm thick. The Iconia W3 is also heavy at 500 g; the iPad mini, in comparison, is 308 g. That makes the W3 more than 50 percent thicker and more than 50 percent heavier.

The thickness makes the lack of a full-sized USB port on the device more than a little confusing. There's certainly room for a full USB port, and a full port would be more convenient than the dongle. But for whatever reason, Acer didn't give us one.

The device itself feels solid enough, albeit plasticky. It doesn't exude quality, but it's a step or two up from the bargain basement.

The W3 also has a keyboard accessory. As is common for this kind of thing, the keyboard has no electrical connection to the tablet. It's a Bluetooth keyboard powered by a pair of AAA batteries. It has a groove along the top that can hold the tablet in both landscape and portrait orientations and a clip on the back that lets you use the keyboard as a kind of screen protector.

Enlarge / The keyboard has a basically sensible layout and a so-so feel.

The keyboard has to be manually paired to the tablet. It's more or less full-size, with a reasonable key layout. It's a typical mediocre keyboard. The feel is a little on the squishy side, lacking the crispness of, for example Microsoft's Type Cover for its Surface tablets. It's better than any on-screen keyboard, and to that extent it does its job. But it's a long way from being an actually good keyboard.

Enlarge / If this looks ungainly, it's because it is. The keyboard doesn't hold the tablet upright enough for portrait orientation to be worthwhile.

The groove does hold the tablet up, and on a level surface the unit doesn't topple over, but it's not as satisfactory as some of the hinged keyboard/docks we've seen on other devices. Tilt the base while carrying it or using it on your lap and the tablet is liable to fall out.

Enlarge / Docking the tablet into the keyboard. It protects the screen, sure, but I worry I would lose keys.

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The first few hours with the Lumia 1020’s camera

Thanks to UPS shenanigans, I've only had our Lumia 1020 review unit for a few hours. I'll have a full review up in due course, but during these few hours, I've had a chance to do the thing the Lumia 1020 is really designed for: taking photographs.

I took some pictures this afternoon with the Lumia 1020, a Lumia 920, an iPhone 5, and a DSLR, my Canon 50D. For the most part, I used the default apps with the default settings (occasionally I suppressed the flash explicitly, but otherwise left it automatic). The DSLR was in programmed mode, where it picks the best combination of aperture and exposure time. It had the flash permanently disabled, as the built-in flash casts a shadow with the lens I had attached, and I didn't want the extra bulk of my external flash..

The Lumia 1020 was configured to generate two pictures each time: a full resolution image (coming out at around 33.5 MP with 16:9 framing), and a resampled 5MP image. Outdoor pictures were largely taken in the brutally harsh Houston sunlight.

I'm not entirely sure what this archaic device is for.

100 percent crops from the above:

In good light, the 1020 retains impressive detail even in its full resolution images. This lets you do two things: print billboard-sized images, and crop while still retaining a good-enough image quality. The digital zoom on the 1020 does this automatically; rather than interpolating (like the other cameras do), it just takes a 5MP crop from the full-size image. This has the repercussion that when using the digital zoom, the 5MP image and full resolution image differ—it captures the full uncropped image, rather than generate an interpolated version.

Demonstrating this, I took some pictures of a statue of Sam Houston. The conditions were pretty unpleasant: very bright sunshine, with a very dark statue. Exposing simultaneously for highlights and shadows challenged the cameras' dynamic ranges.

Digital zoom (rightfully) has its detractors, of course. It's not "real" zoom, and interpolated data is made up data. But this was a good example of why it's a useful feature nonetheless: the size of the statue meant that "zooming with my feet" wasn't possible: there simply wasn't any way to get a picture of the statue from a reasonable vantage point without using digital zoom.

Lumia 1020 full size. This shows how the image was framed, and gives a sense of what the camera cropped.

100% crops of these images show the difference in detail that the 1020 achieves, compared to the interpolated images generated by the other phones:

Like the Lumia 920 and its siblings, the Lumia 1020's lens has optical image stabilization. The system used to do this is new—it uses ball-bearings instead of springs—but the purpose is the same: hold the optical parts still, even while the rest of the camera moves around, so that the shutter can be open for longer. This lets more light in, which in turn means better low light photographs. Does it work? Does it ever.

The Houston Museum of Natural Science has some rather splendid crystals and gemstones. They're shown off in a darkened gallery.

The iPhone 5 just gave up here. It couldn't find the focus, and combined with the relatively long shutter time it picked (1/15 second), the result was a blurry mess.

The Lumias fared substantially better. The 920 picked a slightly longer exposure (1/4 second) than the 1020 (1/5 second), with the result that it had a larger blown-out highlight from the reflection of the light illuminating the exhibit. The long exposure was also too long even for the stabilized lens: the crystals have much softer edges.

The DSLR, with both optical image stabilization and a 1/15 second shutter time, managed the crispest image of all. However, its color accuracy was very poor; a not altogether unusual instance of auto white balance getting things wrong. The Lumias were much more accurate in that regard. This is fixable in software like Lightroom easily enough.

This is a piece titled Gentrification of the Inner City, by two Houston artists, Wiley Robertson and Bryan Cope. The people depicted are former residents of the area who have been displaced by gentrification. There's currently a planning application to turn the site into a coffee shop.

Cats are obligatory:

Unfortunately, my feline model was rather uncooperative.

Photographs of dinner are also obligatory:

The Lumia 1020 has a xenon flash, and I think it did a reasonable job here. The Lumia 920's effort is also competent. The iPhone 5 picture has poor color accuracy and has lost detail in its lettuce.

First impressions of the Lumia 1020's camera are that Nokia has done a great job. There are more photos to take and situations to test, but so far, it's clear that the sensor can pick up a phenomenal amount of detail—at least in good light—and that the stabilized lens really lets you make the most of even dim conditions. The camera is probably the best ever to be put in a smartphone. In that regard, at least, Nokia has set the standard by which all others are measured.

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US stocks head for first weekly loss in July

NEW YORK (AP) — Weak results from several U.S. companies helped drag the stock market lower Friday, putting major indexes on course for their first weekly loss this month.

Many traders are also looking ahead to a packed schedule of events next week, including a Federal Reserve meeting and the government's monthly employment report.

"There's just a deluge of market-moving events next week," said Jeffrey Kleintop, the chief market strategist for LPL Financial. "Traders seem to be erring on the side of caution today."

Expedia plunged 25 percent, the worst fall in the Standard & Poor's 500 index. The online travel agency reported earnings late Thursday that badly missed analysts' expectations. Higher costs were the main culprit. Expedia lost $16.07 to $48.93.

Shortly after noon, the Standard & Poor's 500 index was down seven points, or 0.4 percent, to 1,683. All 10 industry groups in the S&P 500 fell.

The Dow Jones industrial average dropped 95 points, or 0.6 percent, to 15,461. The Nasdaq composite fell six points, or 0.2 percent, to 3,598.

Before the market opened, Newmont Mining turned in a quarterly loss, largely a result of slumping prices for copper and gold. Analysts had predicted a slight profit. Newmont's stock fell 77 cents, or 2 percent, to $29.25.

Starbucks posted results late Thursday that beat analysts' estimates. Lower costs for coffee beans and better sales of salads and sandwiches helped. Starbucks jumped $4.44, or 7 percent, to $72.61.

It's nearly halftime in the second-quarter earnings season, and corporate profits are shaping up better than some had feared.

Analysts forecast that earnings for companies in the S&P 500 increased 4.5 percent over the same period in 2012, according to S&P Capital IQ. At the start of July, they predicted earnings would rise 2.8 percent. Nearly seven out of every 10 companies have surpassed Wall Street's profit targets.

The stock market hasn't ended the week with a loss since June 21, when speculation that the Federal Reserve would start easing off its support for the economy rattled financial markets.

Kleintop cautioned against reading too much into the drop on Friday or the weekly loss. The S&P 500 is still up 5 percent for the month and 18 percent for the year.

"It's just one week down after four up," he said. "If the market just goes higher and higher week after week, you would see a major swoon when it runs into some disappointing news."

In the market for U.S. government bonds, the yield on the 10-year Treasury note rose to 2.57 percent from 2.48 percent late Thursday.

Long-term interest rates have moved in a wide range since early May as traders tried to anticipate the Fed's next move. The yield hit a recent low of 1.63 percent on May 1, and went as high as 2.74 percent July 5.

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Cannabis Care: Signing the therapeutic marijuana law just the first step in a process that could take years

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