Zale Announces Agreement to Sell Bailey Banks & Biddle

Business Wire,  Sept 27, 2007  

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DALLAS -- Zale Corporation (NYSE:ZLC), a leading specialty retailer of fine jewelry in North America today announced that it has entered into a definitive agreement to sell its Bailey Banks & Biddle brand to Finlay Fine Jewelry Corporation for a purchase price of $200,000,000, subject to closing adjustments.

"Today's announcement is consistent with our strategy to focus on the core business and increasing returns on capital. It provides an opportunity to return a substantial amount of the proceeds to shareholders," commented Betsy Burton, Chief Executive Officer.

The transaction is subject to customary closing conditions and is expected to be completed pre-Holiday. The Company will provide information regarding the anticipated post-sale impact of this transaction on its future financial results at a later date. Goldman Sachs & Co. advised Zale on this transaction.

Zale Corporation is a leading specialty retailer of fine jewelry in North America operating approximately 2,250 retail locations throughout the United States, Canada and Puerto Rico. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Bailey Banks & Biddle Fine Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at www.zales.com, www.gordonsjewelers.com and www.baileybanksandbiddle.com. Additional information on Zale Corporation and its brands is available at www.zalecorp.com.

This release contains forward-looking statements, including statements regarding the proposed sale of Bailey Banks & Biddle and the anticipated impact on fiscal year 2008 results of operation. 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 performs poorly, discretionary spending on goods that are, or are perceived to be, "luxuries" may not grow and may even 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 of or adversely affect the Company's operations and its ability to provide consumer credit and write credit insurance; 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, 2006. 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.

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