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ZALE JEWELRY CORPORATION

ZALE JEWELRY CORPORATION. The Zale Jewelry Company, organized on March 17, 1924, began as a single store in Wichita Falls. Morris B. Zale, a Russian Jewish immigrant, founded the company and served as its first president. His brother William was vice president. The company's goal of selling the greatest amount of jewelry to the largest number of people at the lowest possible price introduced the concept of mass marketing to retail jewelry, a business that had previously catered exclusively to the wealthy. In order to attract a working-class clientele, Zale's offered interest-free credit with minimal down payments and low weekly installments. This was a radical departure for retail jewelers, who traditionally operated strictly on a cash-and-carry basis. Zale's also utilized extensive advertising to emphasize its quality merchandise, affordable prices, and no-interest credit. Although the company's immediate success enabled Zale's to open stores in Tulsa and Oklahoma City in the late 1920s, the Great Depression postponed further expansion. Hampered by low sales and mounting debts, the company struggled to survive during the 1930s. By the end of the decade, however, Zale's began to recover and by 1939 operated twelve stores in three states. A shortage of available merchandise during World War II limited company growth once again, but at the end of the war Zale's launched a massive expansion program. In 1946 the company moved its headquarters from Wichita Falls to Dallas. It not only expanded by starting new stores but also acquired several well-known jewelry stores and continued to operate them under their original names. Zale's purchased the first of such acquisitions, Corrigan's of Houston, in 1944; this store provided the foundation for the company's highly successful Guild Division. By 1956 Zale's was operating a total of sixty-three stores in ten states with gross annual sales exceeding $35 million.

In 1957 Morris Zale relinquished the company presidency to his brother-in-law, Ben Lipshy. Zale assumed the position of chairman of the board of directors and remained active in the company's operations. That same year Zale's went public with its stock to acquire more capital for expansion. A major step forward came in 1958, when Zale's began buying diamonds directly from the South African firm DeBeers. Since Zale's personnel purchased, cut, polished, mounted, and marketed diamonds, the company eliminated middlemen at each of those steps, thus reducing margins and increasing profits. This procedure also helped to maintain the uniform quality of merchandise that Zale's had long emphasized. In the mid-1960s Zale's diversified its holdings by acquiring the Skillern drugstore chain, Karotkin Furniture Stores, Levine Department Stores, Butler Shoe Company, Cullum and Boren Sporting Goods, O. G. Wilson Catalogue Stores, Optex, Incorporated, and Sugerman, Incorporated. By 1984, however, Zale's had divested itself of all those holdings except Wilson's and returned exclusively to retail jewelry. In 1984 Zale's employed 13,500 persons in its nine divisions and operated some 1,550 retail jewelry units. In addition to its Zale's stores, the company also operated Mission Jewelers and the leased jewelry departments in some of the country's leading department stores. The Guild Division included some of the nation's most prestigious jewelry stores, such as Bailey, Banks, and Biddle of Philadelphia. Besides its operations in the United States, Zale's also had holdings in France, Germany, India, the United Kingdom, Guam, Puerto Rico, Switzerland, Japan, and Israel. With gross sales annually surpassing $1 billion, Zale's ranked as the world's leading retail jeweler.

Though the Dallas-based corporation was the nation's largest jewelry retailer in 1991, the company was involuntarily thrust into bankruptcy in January 1992, when it filed for protection under Chapter 11 of the United States Bankruptcy Code. At the time equal shares of the company comprising 47.5 percent were owned by Peoples Jewellers Ltd. of Toronto and Swarovski International Holding of Zurich. In 1991 the firm's four separate retail chains-Zale's, Bailey, Banks, and Biddle, Gordon's, and Corrigan's-produced $1.2 billion in annual sales. Nonetheless, Zale's faced a $1.2 billion dollar debt from the 1986 takeover by Peoples Jewellers and declining sales blamed on a nationwide recession. The company reported its most recent profitable year in fiscal 1990. Facing Chapter 11, it planned to close 400 of its 2,000 stores and reduce its employees by 2,500, or 20 percent. After obtaining a loan from Chemical Bank, the company filed a reorganization plan with the United States bankruptcy court in July 1992 and replaced its top management. Plans called for closing many of the firm's duplicate stores in shopping malls.

BIBLIOGRAPHY: 

New York Times, January 24, 1992. San Francisco Chronicle, December 31, 1991, January 6, February 29, July 27, 1992. Tommy W. Stringer, The Zale Corporation (Ph.D. dissertation, North Texas State University, 1984).

Tommy W. Stringer

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Tommy W. Stringer, "ZALE JEWELRY CORPORATION," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/dhz01), accessed December 21, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.