By David Benoit Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Following the comparatively bullish outlook offered by competitor Signet Jewelers Ltd. (SIG), shares of jewelry dealer Zale Corp. (ZLC) jumped Wednesday on the hopes it could be seeing a similar plateau in 2009.

Jewelry sales have tumbled in the past year, dragging down the companies and their shares, but on Wednesday Signet, the operator of Kay Jewelers and Jared the Galleria of Jewelry, said in its fiscal fourth-quarter earnings release that the market may be stabilizing.

That outlook sent shares jumping. Zale rose 26% at one point to a high of $2.07, the first time the stock has traded above $2 in more than a month. Shares have given back some of the gains, but remain up 19% to $1.95 in recent trading. That price is still a far cry from the 52-week high of $42.23 it set in September, but also soundly above the low of 89 cents it tumbled to earlier this month.

Shares of Signet were up 11% to $12.50 in recent trading Wednesday, just shy of an intraday high of $12.61.

Signet Chief Executive Terry Burman said U.S. same-store sales in the first seven weeks of the current quarter were down 2.7% from a year ago, with Valentine’s Day sales stronger. That would show a significant improvement from the 9.7% fall in U.S. same-store sales the U.K. company recorded in the fourth quarter.

Signet also said gross margin was “meaningfully” up, reflecting the impact of price increases and product-mix changes, which “more than offset” the increase in the cost of gold. Gross margin had slumped to 33.7% from 38.7% in the fourth quarter.

Irving, Texas-based Zale reported its fiscal second-quarter results at the end of February, posting a loss on a 18% drop in revenue and same-store sales. The company said at the time it had deeply discounted around the holiday season to draw in traffic, but margins suffered.

Zale did add at the time that it was redrawing its marketing strategy so that it “emphasized emotion” and had seen margins stabilize through Valentine’s Day.

-By David Benoit, Dow Jones Newswires; 201-938-2472; david.benoit@dowjones.com

Source: http://online.wsj.com/article/BT-CO-20090325-709995.html

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