Shares of Zale Corporation(NYSE:ZLC) turned higher in the final hour and was recently up 0.80% to $3.19, off session low of $2.90.
Yesterday, the stock was up 59 cents, or 23%, to $3.16.
Who could predict that getting a new credit line and
reworking other debts to save interest could work wonders to this extent? That
is precisely what happened with jewelry chain Zale Corp. when their shares
climbed to astronomical heights. According to latest reports, sales are
increasing tremendously! The company faced dark days during recession when
shoppers had put a lid on discretionary spending. The main reasons for Zale’s
revenue coming down drastically were the higher rate of unemployment and
tighter credit during recession.
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Gordon's Jewelers, Piercing Pagoda and Zales Jewelers are
some of the brands that fall under Zale and it has about 1,790 stores in the
U.S., Canada and Puerto Rico. The Dallas-based firm declared on Tuesday that it
has secured a $665 million credit facility and prepaid $60.5 million on a
senior secured term loan. It rectified and extended a senior secured term loan
with Golden Gate Capital for the $80 million that remained on it.
It is anticipated that the aforementioned moves will amount
to around 17 million dollars in annual savings, when calculated according to
current interest rates. This lowers its total average borrowing cost to around
4% from 8%.
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Due to the recession, Zale had to shut down numerous stores
in the last few years and made changes in its top management as well. In its
fiscal second quarter, the company saw better days thanks to the holiday
shopping season, when their profits soared to 6%, but they incurred heavy
losses after that, which came up to 4.5 million.
CEO Theo Killion confirmed on Wednesday that a crucial
revenue parameter has consistently climbed for the last 6 quarters. Chief
Financial Officer Thomas Haubenstricker said that the refinancing will be a
boon for the firm granting it flexibility that will enable fourth-quarter
revenue at stores open for a year to go up to 8%. The figure will soar to 7%
for the full year according to them.
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