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Zale Corp (NYSE:ZLC)
Gross Profit
$996 Mil (TTM As of Jan. 2014)

Zale Corp's gross profit for the three months ended in Jan. 2014 was $348 Mil. Zale Corp's gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $996 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Zale Corp's gross profit for the three months ended in Jan. 2014 was $348 Mil. Zale Corp's revenue for the three months ended in Jan. 2014 was $656 Mil. Therefore, Zale Corp's Gross Margin for the quarter that ended in Jan. 2014 was 52.95%.

Zale Corp had a gross margin of 52.95% for the quarter that ended in Jan. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Zale Corp was 52.14%. The lowest was 46.70%. And the median was 49.86%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Zale Corp's Gross Profit for the fiscal year that ended in Jul. 2013 is calculated as

Gross Profit (A: Jul. 2013 )=Revenue - Cost of Goods Sold
=1888.016 - 903.602
=984

Zale Corp's Gross Profit for the quarter that ended in Jan. 2014 is calculated as

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=656.449 - 308.83
=348

Zale Corp Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 232.847 (Apr. 2013 ) + 221.582 (Jul. 2013 ) + 193.788 (Oct. 2013 ) + 347.619 (Jan. 2014 ) = $996 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Zale Corp's Gross Margin for the quarter that ended in Jan. 2014 is calculated as

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=348 / 656.449
=52.95 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Zale Corp had a gross margin of 52.95% for the quarter that ended in Jan. 2014 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Zale Corp Annual Data

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
Gross_Profit 1,1761,2201,2231,2491,048831814880961984

Zale Corp Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 188336228210190340233222194348
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