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Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit Against Zale Corporation

Thursday, November 19, 2009

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SAN DIEGO--(BUSINESS WIRE)--Coughlin Stoia Geller Rudman & Robbins LLP (“Coughlin Stoia”) (http://www.csgrr.com/cases/zalecorporation/) today announced that a class action has been commenced in the United States District Court for the Northern District of Texas on behalf of purchasers of Zale Corporation (“Zale”) (NYSE:ZLC) publicly traded securities during the period between November 16, 2006 and October 29, 2009, inclusive (the “Class Period”).

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from November 9, 2009. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Darren Robbins of Coughlin Stoia at 800/449-4900 or 619/231-1058, or via e-mail at djr@csgrr.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.csgrr.com/cases/zalecorporation/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges Zale and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Zale is a specialty retailer of diamonds and other jewelry products.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s turnaround plans, financial results and compliance with Generally Accepted Accounting Principles. Specifically, the Company failed to properly account for its advertising costs, intercompany accounts receivable, depository bank accounts, federal income taxes and personal property taxes. As a result of defendants’ false and misleading statements, Zale stock traded at artificially inflated prices during the Class Period, reaching a high of $31.42 per share on December 5, 2006.

Then, on October 29, 2009, Zale issued its fourth quarter and full fiscal year-end 2009 financial results, reporting a net loss for the year ending July 31, 2009 of $189.5 million. Additionally, Zale provided restated financial information for fiscal year 2005 through the third quarter 2009 in the Company’s Annual Report on Form 10-K that was filed on October 29, 2009. As a result of the restatement, Zale dramatically reduced its reported earnings for the period by 23%, from $138.3 million on an aggregate basis to $112.7 million. Zale further reported a material weakness in its internal controls. Moreover, Zale announced that the SEC had initiated an investigation related to Zale’s restatement. On this news, Zale’s stock fell $1.66 per share to close at $4.73 per share on October 30, 2009, a one-day decline of nearly 26%, on volume of more than 2.7 million shares.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company had failed to properly account for its advertising costs, intercompany accounts receivable, depository bank accounts, federal income taxes and personal property taxes; (b) the Company had failed to maintain effective internal controls; (c) the Company’s turnaround plan, including its major initiatives to reengage its core customer and to enhance operational efficiency, was not working; and (d) given the turmoil in the economy and the Company’s inability to effectuate its turnaround plan, the Company had no reasonable basis to make projections about its fiscal year 2009 financial results.

Plaintiff seeks to recover damages on behalf of all purchasers of Zale publicly traded securities during the Class Period (the “Class”). The plaintiff is represented by Coughlin Stoia, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Coughlin Stoia, a 190-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. The Coughlin Stoia Web site (http://www.csgrr.com) has more information about the firm.

Source: BUSINESS WIRE