Exhibit 99.1

Zale Corporation Reports Fourth Quarter and Fiscal Year 2010 Results

DALLAS--(BUSINESS WIRE)--September 27, 2010--Zale Corporation (NYSE: ZLC) today announced its financial results for the fourth quarter and full year ended July 31, 2010.

Fiscal Fourth Quarter 2010 Results

The Company incurred a net loss for the fourth quarter ended July 31, 2010 of $28.5 million, or $0.89 per share, compared to a net loss of $89.8 million, or $2.81 per share, in the comparable period in the prior year. Revenues for the quarter ended July 31, 2010 were $345 million, a decrease of 3.4% compared to $357 million during the comparable period in the prior year. Same store sales during the quarter ended July 31, 2010 decreased 2.1%, compared to a decrease of 21.2% during the comparable period in the prior year.

For the fourth quarter ended July 31, 2010, the Company achieved gross margin on sales of 52.7%, compared to 46.4% in the comparable period in the prior year. The 630 basis point improvement was primarily due to lower levels of merchandise discounts and higher warranty revenue recognition during the 2010 quarter and to a $13.5 million inventory impairment recorded in the fourth quarter of 2009.

The Company reduced selling, general and administrative expenses by $10 million, or 5%, to $197 million in the quarter ended July 31, 2010 compared to $207 million in the comparable period in the prior year. This reduction resulted primarily from the Company’s initiatives to reduce expenses including store closures. For the fourth quarter of 2010, operating margin was negative 9.1% compared to negative 31.6% in the same period in the prior year. Excluding special items (see attached table for reconciliation) operating margin was negative 7.7% for the fourth quarter 2010 compared to negative 11.9% in the same period in the prior year.

During the fourth quarter of 2010, the Company recognized a $6.6 million gain, net of issuance costs of $1.7 million, related to a decrease in the fair value of the warrants issued in connection with the Senior Secured Term Loan.

In the quarter ended July 31, 2010, the Company recorded an income tax benefit of $6 million, compared to a benefit of $25 million in the comparable period in the prior year. The income tax benefit for fourth quarter of 2010 was primarily attributable to net operating loss carrybacks identified and recognized pursuant to the Business Assistance Act of 2009.

Inventory at July 31, 2010 was $703 million, a decrease of $37 million from July 31, 2009, due principally to store closures. As of July 31, 2010, the Company had outstanding debt of $296 million net of a discount of $21 million associated with warrants issued in connection with the Senior Secured Term Loan in May 2010.


The following information was filed by Zale Corp (ZLC) on Monday, September 27, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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