Zale Puts up 12 Jewelry Stores lease for Sale

Zale Corporation has put up as many as 12 of its jewelry store’s leases up for sale in a bid to improve their finances.

The leases include the Zales stores in areas like Herald Square in Manhattan, two stores each in Bronx, Brooklyn and Queens according to the website of RCS( Real Estate Advisors).

The Zale’s treasurer refused to comment and the RCS agent who was conducting the sale didn’t return the calls either about when the leases had been put up for sale. It is not clear whether Zale is trying to reduce its lease obligations or considering to leave some of the store locations altogether.

RCS was hired by Zale about a year back for advice on how to restructure its portfolio and to reduce overall cost.

The Dallas based chain stated that it would identify the source of the capital which it needs to keep its finances in good condition and plan to get it by late May. Rumors are awash that the private equity firm Apollo Management might consider buying a stake in the firm.

The sharp drop in New York real estate prices might make the Zale leases attractive to investors while at the same time help generate cash without forcing Zale to leave these locations.

Mr. Michael O’Hara, chief executive of investment banking firm Consensus Advisory Services LLC in Boston, stated that though it was possible in theory for retailers to make money by selling leases and which was actually done by companies in 2005-2007. Although such a scenario was not feasible at present and the retailers were doing it to mainly reduce losses.

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One Response to “Zale Puts up 12 Jewelry Stores lease for Sale”

1. marcasite watch says:

   May 5, 2011 at 8:03 am

   My dad has been in the jewelry business for 25 years and told me he’s experiencing the same crunch Zales is going through. In fact he also said many of the top companies are going through some financial troubles one way or the other with the economic crisis.