Everything You Need To Know About Zales Jewelry

So far this year, jewelry revenues in the United States stand at $60 billion. Of course, a market this big attracts many players hungry for a piece of the pie. And there are plenty of them—from the prestigious behemoth Tiffany to independent operators like Vera Wang. Among all these well-known jewelry entrepreneurs is Zales Jewelry.

The peak revenue of Zales Jewelry in 2022 was $21 million. Currently, it ranks 3rd in the top five jewelry stores in the U.S. (see chart)

But getting there was a long, winding road with many pitfalls, like a takeover and bankruptcy. Yet it thrived to what it is today—a profitable jewelry business enterprise.

Here’s a peep into its colorful history…

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How it started

Zales Jewelry is owned by the Zale Corporation, the brainchild of Morris B. Zale, a Russian-born resident of Texas. In 1924, Zale opened his first store in Wichita Falls, Texas. Two years later, his boyhood friend and brother-in-law, Ben Lipshy, joined him.

In the beginning, Zale’s jewelry items could be paid in 12-monthly installments, even to its low-income customers. However, this scheme put pressure on the company in the 1930s when it operated three stores. It was the time of the Great Depression, and lease payments were high. Despite that, the company thrived and expanded through those financially trying times. In fact, in 1934, it opened its fourth store in Amarillo, Texas, and by the end of 1941, it had 12 with revenues of $2.73 million.

Zale added more outlets during the Second World War years, but its revenue growth remained stagnant. This was due to the scarcity of raw materials used in the war effort. But by war’s end, 1944, the company’s revenues doubled to over $5 million.

By the mid-1960s, Zale operated not only the largest U.S. retail jewelry store but of the entire world. Its 403 stores turned in revenues worth $81 million and a net income of $5 million. Diamonds contributed the largest
share, at $27 million. It operated manufacturing plants in New York, Tel Aviv, Israel, and Puerto Rico. It also had a wholesale division, selling to other jewelry retailers, and added watches into its portfolio under the Baylor label.

By 1963, Zale was awash with cash, prompting it to buy, in 1969, the Light of Peace Diamond for $1.4 million. While its core business was tied up in its jewelry business, the company started venturing into the first synthetic diamonds—at that time conceived to replace natural diamonds—and frightened retail diamond jewelry traders.

This development prompted Zale to diversify its product base. Its first move was the purchase of Texas-based drug store retail chain Skillern. Then it made forays into budget fashion apparel, sporting goods, shoes, furniture, and a chain of airport-based tobacco and newsstand concessions.

By 1974, Zale had 956 jewelry retail stores, 351 shoe stores, 83 pharmacies, 146 clothing stores, 25 sporting goods stores, 13 home furnishing stores, and 13 tobacco newsstand concessions. While these companies produced $600 million in revenues, half of the total revenues came from its jewelry operations.

Then trouble struck.

In the mid-1970s, the company’s CFO (chief financial officer) was charged with embezzlement of company funds. While he was eventually acquitted, it prompted the Internal Revenue Service and other government agencies to launch investigations into alleged misappropriation of funds, including avoidance of about $27 million in federal taxes.

These investigations culminated in the payment of a $78 million tax charge brought by the IRS against Zale in 1982 and the replacement of Ben Lipshy – the company president since 1957 and chairman of the board since 1971. He was replaced by Donald Zale, M.B. Zale’s son, in 1988. By then, Zale had about 1400 stores, including its international operations in the U.K., Switzerland, France, West Germany, Canada, and South Africa.

By the early 1980s, things turned south for Zale Corp. The economic recession early that year caused a slump in jewelry sales. It was made worse by the fluctuation of gold and diamond prices. These events caused the company’s revenues to fall to $939 million in 1981 drastically. Profits slipped from $33 million in 1981 to a loss of $6 million the following year. As if these were not enough, the company had to pay the IRS  $10.6 million as an offshoot of its tax problems in 1970.

The saying “when it rains, it pours,” was true for Zale Corp. By that time, the oil industry in the Southwest—where a bulk of its customers are situated—collapsed, exerting tremendous pressure on the company to maintain its position in the jewelry industry.

Then, competition set in. Where once the company had a monopoly on the diamond wedding ring niche, other retailers were sprouting everywhere, eating up a huge portion of its captive market. These small independent operators offered some tiny offers difficult to refuse. Aside from losing customers to competitors, it was also a time when marriages were declining.

While all these events were caused by outside factors and outside of the company’s control, internal ones also hobbled Zale Corp—the old management style of heavy reliance on manufacturing instead of marketing. Not much effort was spent gaining inroads into retailers more responsive to trends and consumer demands. Upper management was still extremely loyal to M.B. Zale, and it would take years to change that. Eventually, it did; it shifted its focus and moved its headquarters to Irving, Texas, from expensive New York.

But the damage has already been done.

By 1986, the company had a net loss of $60 million, plus a restructuring charge of $80 million as it disposed of its European retail operations and the last of its non-jewelry divisions. It also wrote down $50 million of
old inventory.

As the company floundered in its financial woes, it attracted several vultures hungry for the kill. One of them was People’s Jewelers of Canada. Irving Gerstein, its CEO, was looking for ways to expand his business beyond the Canadian borders and thought Zale was the perfect vehicle to do that (it already owned 15% of the company). Zale, however, refused its initial overtures.

difficult to refuse. By the end of the year, People’s and Swarovski had a 50-50% share of Zale.

Once Zale Corp was in the hands of Gerstein, he immediately moved to settle some of the company’s debts. He started by selling some $700 million of the company’s junk bonds, leaving Zale in debt for about $900 million.

Then, he closed Zale’s New York and Puerto manufacturing operations and replaced them by turning to vendors to stock his stores and sold off the company’s diamond inventory. He also reduced the company’s advertising budget. All these efforts raised the net earnings to $80 million. With much disposal income at hand, the following year, the new Zale acquired Gordon Jewelry Corporation, the nation’s second-largest retail jewelry chain.

All these, however, did not help Zale much. By January 1992, it had no choice but to seek the help of the country’s bankruptcy laws to bring it back to life. It emerged a year later, with all debts settled, a smaller number of stores, and a new chairman and chief executive officer, Robert DiNicola, the former executive of Macy’s.

By 1995, Zales Jewelry was back in good health. It earned revenues to the tune of $1.04 billion, a 12.6% increase over the previous year.
Net income grew by 36%, to $31.5 million, while the company continued to shrink its total debt to $443 million.

But the overarching question remains…

Who owns Zales Jewelry now?

Since it regained its health in 1995, the company has embarked on many activities to strengthen its brand name. Among other things, it launched the Zales Outlet in 1998. Zales Outlets are retail stores that carry a unique selection of quality jewelry, including branded watches, certified diamond engagement rings, and on-trend fashion jewelry.

At the outset, Zales Outlets were set up in 13 locations in premier centers nationwide. Now, it has about 700 stores worldwide, 382 of them in the U.S. So if you are wondering “what Zales jewelry store is near me,” it is highly probable that you are near one of them. Besides, it has an online store where you can shop while enjoying the comfort of your home.

It also acquired other jewelry stores like People’s Jewelers of Canada (the same store that acquired it way back) and Piercing Pagoda. Then in 2012, it partnered with Vera Wang, resulting in the creation of Vera Wang Zales’s jewelry, also known as the Vera Wang Love Collection.

By 2013, Zales Jewelry returned to profitability, making it an attractive target for businesses higher up in the food chain. Hence, by the end of the following year, Zales Jewelry was purchased by Signet Jewelers, putting it under the same roof as Kay, Jared, Piercing Pagoda, Blue Nile, James Allen, Rocksbox, People’s Jeweller in Canada, H. Samuel, and Ernest Jones in the U.K.

Signet Jewelers is an old company – about a hundred years older than Zales Jewelry. It was started in 1862 by an enterprising woman, Harriet Samuel, as a mail-order business. Today, the company is worth roughly $ 3.25 billion.

Driven by its core values of appreciation, inclusion, and joy, Signet Jewelers is the world’s largest retailer. And with almost a dozen jewelry stores under its umbrella, a customer like you has unlimited jewelry items to choose from.

What is Zales Jewelry Known For

Zales was founded in 1924. Since then, it has over 700 stores across the U.S. and more overseas. For a retailer to exist that long and expand so far and wide, it must be doing things right.

This review, focused on engagement rings, will show what they are:

Zales offers about 9,386 engagement ring styles. Of that 7,748 are diamond engagement rings. This is a pretty huge number and can definitely provide a style that will suit a buyer like you.

Its diamond engagement rings come in a variety of metals, such as gold, silver, and platinum. The company also offers a wide range of diamond shapes not common elsewhere.

The company also offers a wide range of diamond shapes not common elsewhere. On top of that, they also have a good custom ring builder that allows you to choose the setting, metal, and diamond shape to tailor to your tastes.

To remove the chaff from the grain, here’s a quick takedown of the company.

Yes, it provides shopping convenience due to its multiple outlets, a huge number of styles to choose from, and a very good return policy. But you need to think twice before shopping from them because of these: