Zale Corporation Announces 19.6% Comparable Sales Decrease for the Holiday Selling Season

DALLAS--(BUSINESS WIRE)--Zale Corporation (NYSE: ZLC), a leading specialty retailer of fine jewelry in North America, today reported that comparable store sales decreased 19.6% for the combined months of November and December 2008, encompassing the entire holiday selling period. Total revenues for the two-month period were $582 million compared to $723 million last year, a decrease of 19.5%.

Within this two month period, November comparable same store sales declined 13% and December same store sales declined 22%. November sales were boosted by improvement during the Thanksgiving weekend. December sales improved during the week leading up to Christmas, and the general post-Christmas trend has been good as well. At December 31, 2008, inventory levels were approximately $115 million less than the prior year, and the overall assortment is much more current than last year.

Neal Goldberg, Zale Chief Executive Officer, said, “This holiday period was the most difficult in memory due to the overall macroeconomic situation. This environment dictated a very aggressive promotional stance with a focus on cash flow and inventory levels. While we suffered along with all retailers, we nonetheless believe that a number of the improvements in merchandise and management we have made over the past year helped our performance. We believe that we are in a strong position to benefit from the winnowing of competitors that we have already seen, and we intend to continue driving improvements in product and efficiency. We are determined to maintain our solid financial position and will take whatever actions are necessary to adjust expense levels and inventory spend to sales trends during 2009.”

About Zale Corporation

Zale Corporation is a leading specialty retailer of diamonds and other jewelry products in North America, operating approximately 2,120 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at www.zales.com and www.gordonsjewelers.com. Additional information on Zale Corporation and its brands is available at www.zalecorp.com.

This release contains forward-looking statements, including statements regarding financial condition and the strategies being implemented by the Company and their future success. Forward-looking statements are not guarantees of future performance and a variety of factors could cause the Company's actual results to differ materially from the results expressed in the forward-looking statements. These factors include, but are not limited to: if the general economy continues to perform poorly, discretionary spending on goods that are, or are perceived to be, “luxuries” may decrease; the concentration of a substantial portion of the Company’s sales in three, relatively brief selling seasons means that the Company’s performance is more susceptible to disruptions; most of the Company’s sales are of products that include diamonds, precious metals and other commodities, and fluctuations in the availability and pricing of commodities could impact the Company’s ability to obtain and produce products at favorable prices; the Company’s sales are dependent upon mall traffic; the Company operates in a highly competitive industry; changes in regulatory requirements or in the Company’s private label credit card arrangement with Citi may increase the cost or adversely affect the Company’s operations and its ability to provide consumer credit and write credit insurance; the Company’s contingent liability with respect to lease obligations for Bailey Banks & Biddle stores sold by the Company in November 2007 and acquisitions involve special risks, including the possibility that the Company may not be able to integrate acquisitions into its existing operations. For other factors, see the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 31, 2008. The Company disclaims any obligation to update or revise publicly or otherwise any forward-looking statements to reflect subsequent events, new information or future circumstances.