Zale Corp.'s fiscal fourth-quarter profit fell 74% to $3 million, or 9 cents a share, exceeding reduced estimates, as the jewelry chain cut prices to get rid of lower-quality gems and gift items.
Sales in the quarter ended July 31 rose 9.9% to $417 million, but sales at stores open at least a year fell 9.7%.
Zale had warned this month that profit would be 5 cents to 10 cents a share, prompting analysts to reduce forecasts from 17 cents to 6 cents.
The company said it expects a loss for the first quarter, but profit for the full year could top analysts' estimates as sales pick up.
Robert DiNicola, who returned this year as chief executive, is revamping Zale to focus on higher-priced jewelry. Though Zale reduced prices to clear lower-quality diamonds and cheaper gift items, earnings this year will benefit from the move, the company said.
Zale's shares rose 74 cents to $32.30 on the New York Stock Exchange.