Effective January 23, 2008, Zale Corporation (the “Company”) hired Mr. Theo Killion as its Executive Vice President of Human Resources, Legal and Corporate Strategy.  Pursuant to the terms of an offer letter with Mr. Killion, Mr. Killion will receive (1) $550,000 in base compensation, (2) a signing bonus of $375,000, (3) options to purchase 100,000 shares of common stock at a purchase price of $15.69 per share, subject to four-year vesting, (4) 30,000 shares of restricted stock, subject to four-year vesting, (5) an annual incentive bonus based upon the Company’s performance, with a target level of 75% of base compensation and a maximum level of 175%, subject to a guarantee of a minimum of $206,000 for the remainder of the fiscal year ending July 31, 2008, (6) reimbursement of relocation expenses in accordance with the Company’s relocation policy, and (7) customary benefits including vacation.  In addition, the Company agreed to enter into an Employment Security Agreement for the benefit of Mr. Killion on terms generally consistent with existing employment security agreements with other senior executives.

Item 9.01               Financial Statements and Exhibits

10.1       Theo Killion Offer Letter as of January 23, 2008