The Wall Street Journal-20080119-Breeden Gets Board Seat at Zale- Aims to Restore Jeweler-s Luster
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Breeden Gets Board Seat at Zale, Aims to Restore Jeweler's Luster
Activist investor and former Securities and Exchange Commission Chairman Richard C. Breeden hopes to add some polish to tarnished jewelry chain Zale Corp., a day after raising his stake and claiming the largest share in the Irving, Texas, company.
Zale's board announced Friday it appointed Mr. Breeden, who now owns more than 18% of Zale, and James Cotter, a founding partner of Breeden Capital Management and senior managing director of Richard C. Breeden & Co., to take two seats on the board. A third will be filled by an independent director, putting board membership at nine.
The once-highflying chain began to stumble about three years ago when it decided to move its namesake Zale stores more upscale, alienating its customers and longtime vendors. As sales slipped precipitously, the board ousted Chief Executive Mary Forte, replacing her with board member Betsy Burton.
Several weeks ago, Zale named yet a new chief executive, Neal Goldberg, former president of apparel retailer Children's Place Retail Stores Inc. Zale recently sold its high-end Bailey Banks & Biddle stores. It also announced it will close 60 underperforming stores.
In the past four years, Zale's market cap has been halved, and its main competitor, United Kingdom-based Signet Group PLC's Kay Jewelers and Jared outlets, overtook it to become the largest jewelry seller in the U.S.
"We believe that there are major opportunities for Zale to strengthen its profitability and its market value. We are excited to join with the board and the Zale management team in pursuing those opportunities with vigor and immediacy," said Mr. Breeden.
A person close to the company said the board believes Mr. Breeden will push for a sale of the company. About a year and a half ago, the company investigated a possible sale to Signet.
Another person close to the situation said Mr. Breeden remains interested in Zale rectifying its multiple problems quickly, though not necessarily through a sale.
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Joann S. Lublin and John Flowers contributed to this article.
