Long-time excellent stock picker Jim Garvin noticed this today and passed it along:
Hi Gene, This morning Goldman Sachs highlighted Zale as a "source of opportunity". They recommend that their clients short the stock, and put a target of $18. The reasoning: "...growing macro headwinds, management upheaval, and poor strategic positioning will likely pressure earnings." I've never shorted a stock in my life, but I found this interesting and wanted to pass it on.
I had noticed the downdraft in the stock, but hadn't seen the Goldman analyst report.
I've got a lot to say about this. The Zale board and CEO should have been gone long ago. Apparently they announced that they are looking for a COO. Well, they had an excellent COO - Sue Gove, who knew the business inside and out - and they threw her out about three years ago or so on accounting concerns - which proved to be completely unfounded. As far as I know, they never apologized to Sue after their review showed that there weren't any issues tied to her.
Zale has been up and down since the hostile takeover 20 years ago - when Jim and I worked there. It was one of the last hurrahs for Milken and Drexel Burnham - with tiny People's Jewelers acquiring Zale. At the time, Zale had a strong vertical integration, and leadership positions in Europe - all of which got unwound after the takeover. The company eventually went bankrupt under the failing leadership from Peoples - and languished for years in bankruptcy. It has been a revolving door of CEO's since - I would guess average tenures of less than four years - not long enough to learn the intricacies of a more complicated industry than apparent.
So, let me make a rescue proposal to anyone on the board paying attention: Don Zale, who's family name still adorns most of the doors, is still there in Dallas - bring him back as Chairman - and beg Sue Gove to come back and stop the bleeding...
Jim, Sue and Donald, you are all welcome to comment.
(In edit: Jim - I'm surprised you've never shorted - this is a great time to play on the dark side...)