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Zale 4Q sales up 6 percent

August 28, 2008

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Dallas—Same-store sales at Zale Corp. increased 6.1 percent for the fourth quarter ended July 31, while revenues increased 6.1 percent to $456 million, compared with $430 million for the same period last year, the company announced on Thursday.

Zale Chief Executive Officer Neal Goldberg said the company exceeded its expectations for sales, earnings and inventory reduction in the fourth quarter, demonstrating its ability to continue to drive traffic and capture market share in a tough economic environment.

"We sustained the strong momentum we achieved in our third quarter as we made improvements to our core assortment and executed our clearance strategy, driving our second straight quarterly comp-store increase of approximately 6 percent," Goldberg said in a media release."

For the full year ended July 31, same-store sales decreased 0.7 percent, as did revenues, from $2.15 billion in 2007 to $2.14 billion this year.

During 2007, Zale extended the service period covered under its warranty program from two years to the lifetime of product ownership.

As a result, for the fourth quarter ended July 31, total warranty sales increased 6 percent to $26.2 million, compared with $24.7 million for the same period last year.

For the full year ended July 31, total warranty sales increased 12 percent to $120.8 million, compared with $107.9 million in 2007.

To improve performance over the current fiscal year and beyond, Goldberg said Zale is concentrating on improving customer focus, enhancing operational effectiveness and maintaining financial discipline.

"Specific actions we are taking to achieve these objectives include differentiating our product offering by simplifying and focusing our assortment, streamlining the organization to eliminate redundancies, realizing $65-plus million in ongoing annualized savings and permanently reducing $100 million in inventory," Goldberg said. "We believe, given the progress made against our initiatives, that we are well-positioned as we enter the new fiscal year."

Zale is a specialty retailer of fine jewelry in North America operating approximately 2,130 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at Zales.com and GordonsJewelers.com.

For additional information on Zale Corp., visit its Web site, ZaleCorp.com.
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