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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended July 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ________________ to _______________________

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COMMISSION FILE NO. 0-21526

ZALE CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 75-0675400
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

901 W. WALNUT HILL LANE
IRVING, TEXAS 75038-1003
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (214) 580-4000

Securities registered pursuant to Section 12(b) of the Act:

NONE.

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK ($.01 PAR VALUE PER SHARE)
(Title of class)

WARRANTS TO PURCHASE COMMON STOCK, SERIES A
(Title of class)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

As of September 5, 1995, the aggregate market value of the
registrant's voting stock held by non-affiliates of the registrant was
approximately $430,719,380.

Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
--- ---

As of September 5, 1995, the registrant had outstanding 34,984,508
shares of its common stock, $.01 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE.

Part II of this report incorporates information from the registrant's
Annual Report to Stockholders for the year ended July 31, 1995. Part III of
this report incorporates information from the registrant's definitive Proxy
Statement relating to the registrant's annual meeting of stockholders to be
held November 2, 1995.

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2

PART I

ITEM 1. BUSINESS

GENERAL

Zale Corporation (the "Company"), founded in 1924, is the nation's
largest chain of specialty retail jewelry stores, operating 1,177 retail
locations at July 31, 1995. For the twelve months ended July 31, 1995, total
Company retail sales were approximately $1,036.1 million. The Company sells
jewelry and giftware throughout the United States, Puerto Rico and Guam through
its Zales, Gordon's, Guild and Diamond Park Divisions. The Company operates
stores primarily in regional shopping malls and leased departments in
department stores. Merchandise is sold for cash, on the Company's private
label credit cards and on bank and national credit and charge cards. The
Company also markets credit insurance to its private label credit card
customers.

The Company historically has purchased substantially all of its
merchandise in finished form from a network of established suppliers and
manufacturers located primarily in the United States, the Orient and Italy.
The Company is also centrally purchasing certain commodity items such as gold
chains direct from manufacturers or other primary sources. A portion of the
merchandise offered by the Company is procured from vendors under consignment
programs through which the Company is not obligated to pay for the merchandise
until it is sold to retail customers.

BUSINESS STRATEGY

The Company's goal in fiscal 1995 was to restore Zale Corporation as
the pre-eminent fine jewelry retailer in the nation. To accomplish this task,
the Company developed a three-phase plan, starting with getting back to the
basics of retailing. That meant understanding and satisfying customers' needs,
offering the right selection and quality of merchandise, and pursuing an
effective and efficient marketing strategy. It also entailed paying close
attention to the Company's store environment and operations, especially in
improving customer service.

A major element of the Company's three-phase plan was to strengthen
the merchandising in the stores. The Company developed a core group of items
which have been perennial best-sellers. These items include tennis bracelets,
diamond anniversary bands and diamond stud earrings. The Company made certain
that these key items were available in a variety of styles and began to fill
out the assortments with "good, better and best" price points. The Company has
been diligent about maintaining a depth of stock on these key items at all
times versus the traditional approach of having one or two pieces per store.
Inventory management systems have been structured so that key items would be
more consistently in stock and systems have been developed for prompt
replenishment of key items.

Consistent with the Company's new merchandising plan, the Company
began to make its marketing efforts more product-focused. Print, television
and radio advertising feature selected key items in a variety of price points.
The Company has broadened its advertising beyond the Christmas season, to tie
in with other gift-giving holidays such as Valentine's Day and Mother's Day.
In-store promotions have been synchronized to take advantage of high mall
traffic periods. These strategies have helped to position Zales and Gordon's
as gift-giving destinations.

After refining the merchandise mix and marketing, the Company worked
to improve the quality of service and the efficiency of the stores. The
Company focused initially on the top 300 stores in the Zales and Gordon's
Divisions, moving the most experienced and capable managers into these stores.
The Company also modified staff scheduling to put more sales personnel "on the
floor" during peak traffic periods and introduced more extensive training in
sales techniques and customer relationship building in all of its stores. The
"focus" group of stores also received an increased level of merchandise and
marketing support. As a result, the focus group stores outperformed the rest
of the chain.

A majority of the Company's stores are situated in prime, centercourt
mall locations or other high traffic areas of shopping malls. Beginning in
late fiscal 1994 and continuing into fiscal 1995, the Company set out to
establish separate identities for its Zales and Gordon's brand names.
Previously managed by a single team, the two divisions were placed under
separate management teams. New divisional management was brought in to the
Zales, Gordon's and Guild divisions to create and implement an individualized
merchandising approach. Different marketing techniques have been adopted,
targeted toward each division's specific demographic base. At the same time,
the Company is committed to enhancing the cost and efficiency benefits of
centralized support operations.

1
3

The Company offers credit through its own private label credit cards
to enable creditworthy customers to finance their purchases without using cash
or bank card lines of credit. The Company seeks to establish a relationship
with its customers through merchandise and credit card programs that encourages
repeat purchases of fashion and gift items as well as substantial purchases on
occasions such as engagements, anniversaries, Christmas, birthdays, graduations
and other gift-giving holidays. Through mailing lists available from the
Company's credit operations, the Company can mail promotional material directly
to customers to advertise special sales or unique items that are offered in its
stores. The Company encourages customers with major credit cards to apply for
a Company credit card even when no purchase is made. This enables the Company
to solicit new business from those customers by direct mailings. The Company
believes that this program enhances future sales to customers with a strong
credit history.

As part of the Company's business strategy, it has embarked on a store
remodeling and refurbishment program. This program will enable the Company to
enhance its stores in certain key markets relative to its competition.
Additionally, the Company plans on making expenditures of approximately $15.0
million on its management information systems to migrate to client server based
applications from mainframe applications over the next several years. The
Company anticipates spending approximately $50.0 million on capital
expenditures in fiscal 1996. Capital expenditures are typically scheduled for
the late spring through early fall in order to have new or renovated stores
ready for the Christmas selling season. During the year ended July 31, 1995,
the Company made approximately $42.3 million in capital expenditures
principally to open 18 new stores and enhance the appearance of 393 stores.
This included 153 relocations, complete remodelings or major refurbishments and
240 stores that were enhanced through addition of either or all of new carpet,
paint and new wall coverings and display elements. The Company intends to
continue its store upgrade program and open 250 new locations over the next
three years.

SELECTED DIVISIONAL DATA

The Company operates principally under four divisions as described
below. The following table presents net sales for the Zales, Gordon's, Guild
and Diamond Park Divisions of the Company.

Net Sales By Division
----------------------------------------------------
Pro Forma (1)
----------------------
Year Ended July 31, Year Ended July 31,
---------------------------- -----------------------
1995 1994 1993
---------- --------- ---------
(amounts in thousands except number of stores)

Net Sales:
Zales Division . . . . . . . . . $ 428,794 $374,849 $370,981
Gordon's Division . . . . . . . . 262,540 234,974 221,549
Guild Division . . . . . . . . . 197,267 182,278 213,219
Diamond Park Division . . . . . . 138,187 127,761 149,595
Other . . . . . . . . . . . 9,361(2) 445 1,103
---------- -------- --------
Total . . . . . . . . . . . $1,036,149 $920,307 $956,447
========== ======== ========
Number of stores (end of period) . . 1,177 1,231 1,265
===== ===== =====

(1) Amounts in this column represent historical income statement data for
the twelve months ended July 31, 1993 which includes the four month
period ended July 31, 1993 and the eight months ended March 31, 1993.

(2) Other net sales in fiscal 1995 includes sales from the Company's
Outlet stores which are being used to sell overstocked and other
merchandise no longer sold in the regular retail locations. Outlet
store sales and operating results in the prior years were not
significant and were classified in cost of sales.

Zales Division

At August 1, 1995, the Zales Division operated 534 stores, including 35
stores transferred from the Gordon's Division effective August 1, 1995, under
the name "Zales" in 48 states and Puerto Rico. The Zales Division is being
positioned as the leading national brand name in jewelry retailing in the
United States. Zales' customers represent a solid cross-section of mainstream
America, seeking good value in fine-quality merchandise. The average purchase
at a Zales location is $257. The Zales Division stores average approximately
1,400 square feet.

2
4

The following table sets forth the number of stores and average sales
per store for the Zales Division for the periods indicated:

Year Ended July 31,
--------------------------------------------------
1995 1994 1993
---------- ---------- ----------

Average sales per store . . . . . . $849,100 $716,700 $692,100
Stores opened during period . . . . 8 2 10
Stores closed during period . . . . 30 4 43
Total stores . . . . . . . . . . . 499 521 523

Gordon's Division

At August 1, 1995, the Gordon's Division operated 332 stores,
subsequent to the transfer of 35 stores to the Zales Division effective August
1, 1995. The division operates 318 stores under the name "Gordon's"(R) in 39
states and Puerto Rico and 14 stores operating under the name "Daniel's"(R) in
Arizona. The Company has positioned Gordon's as a dominant regional brand to
differentiate it from the national Zales brand. Its merchandise mix features
more contemporary and localized looks, and its average sale is $225. The
Gordon's Division stores average approximately 1,300 square feet.

The following table sets forth the number of stores and average sales
per store for the Gordon's Division for the periods indicated:

Year Ended July 31,
--------------------------------------------------
1995 1994 1993
---------- ----------- ----------

Average sales per store . . . . . . $711,500 $624,900 $580,000
Stores opened during period . . . . 5 4 5
Stores closed during period . . . . 13 6 14
Total stores . . . . . . . . . . . 367 375 377

Guild Division

At August 1, 1995, the Guild Division operated 123 upscale jewelry
stores in 26 states and Guam. The following table sets forth the Guild
Division's trade names and the number of stores operating under each of those
names as of August 1, 1995.

Trade Names Number of Stores Trade Names Number of Stores
----------- ---------------- ----------- ----------------

Bailey, Banks & Biddle(R) 87 Dobbins(R) . . . . . . . 2
Corrigan's(R) . . . . . 20 J. Herbert Hall(R). . . . 2
Sweeney's(R) . . . . . . 5 Linz(R) . . . . . . . . . 2
Stifft's(R) . . . . . . 3 Zell Bros.(R) . . . . . . 2

The Guild Division offers higher-end merchandise, more exclusive
designs and a prestigious shopping environment for the upscale customer. The
Guild Division has an average sale of $477. The Guild Division stores average
approximately 3,200 square feet.

The following table sets forth the number of stores and average sales
per store for the Guild Division for the periods indicated:

Year Ended July 31,
-----------------------------------------------------
1995 1994 1993
------------- ------------- -------------

Average sales per store . . . . . . $1,529,200 $1,391,400 $1,171,500
Stores opened during period . . . . 4 4 4
Stores closed during period . . . . 11 7 103
Total stores . . . . . . . . . . . 123 130 133

3
5

Diamond Park Division

At August 1, 1995, the Diamond Park Division operated 188 leased
locations in department stores including Dillard's(R) (66 locations),
Mercantile (59 locations), The Broadway(R) (41 locations), and Marshall
Field's(R) (22 locations) in 24 states. The Diamond Park Division offers a
service for retailers that wish to turn to an outside provider for specialized
management and marketing skills required to sell fine jewelry. The Diamond
Park Division creates leased jewelry departments at specified locations,
primarily major department stores, tailoring the merchandising concept to that
of the host company.

The following table sets forth the number of departments and average
sales per department for the Diamond Park Division for the periods indicated:

Year Ended July 31,
--------------------------------------------------
1995 1994 1993
----------- ----------- -----------

Average sales per department . . . $701,500 $591,500 $577,600
Departments opened during period . 18 19 1
Departments closed during period . 35 46 94
Total departments . . . . . . . . . 188 205 232

BUSINESSES OF NON-RETAIL AFFILIATES

Zale Indemnity Company, Zale Life Insurance Company and Jewel
Re-Insurance Ltd. are providers of various types of insurance coverage, which
typically are marketed to the Company's private label credit card customers.
The three companies are the insurers (either through direct written or
reinsurance contracts) of the Company's customer credit insurance coverages.
In addition to providing replacement property coverage for certain perils, such
as theft, credit insurance coverage provides protection to the creditor and
cardholder for losses associated with the disability, involuntary unemployment
or death of the cardholder. Zale Life Insurance Company also provides group
life insurance coverage for eligible employees of the Company. Zale Indemnity
Company, in addition to writing direct credit insurance contracts, also has
certain discontinued businesses that it continues to run off. Credit insurance
operations are dependent on the Company's retail sales on its private label
credit cards and are not significant on a stand-alone basis.

PURCHASING AND INVENTORY

The Company purchases substantially all of its merchandise in finished
form from a network of established suppliers and manufacturers located
primarily in the United States, the Orient and Italy. The Company either
purchases merchandise from its vendors or acquires merchandise on consignment.
The Company had approximately $85.9 million and $111.4 million of consignment
inventory on hand at July 31, 1995 and 1994, respectively. The Company is
subject to the risk of fluctuation in prices of diamonds, precious stones and
gold. The Company historically has not engaged in any substantial amount of
hedging activities with respect to merchandise held in inventory, since the
Company has been able to adjust retail prices to reflect significant price
fluctuations in the commodities that are used in the merchandise it sells. No
assurances, however, can be given that the Company will be able to adjust
prices to reflect commodity price fluctuations in the future. The Company is
not subject to substantial currency fluctuations because most purchases are
dollar denominated. During the years ended July 31, 1995 and March 31, 1994,
the Company purchased approximately 29 percent and 38 percent, respectively, of
its merchandise from its top five vendors. Although the Company believes that
alternate sources of supply are available, the abrupt loss of any significant
supplier during the three months ended November 30 of any year, the period
leading up to the Christmas selling season, could result in a material adverse
effect on the Company's business.

4
6

COMPETITION

The jewelry retailing industry is highly competitive. The industry is
fragmented, and the Company competes with a large number of independent
regional and local jewelry retailers, as well as nationally recognized jewelry
chains. The Company's sales represent approximately 6% of national retail
jewelry store sales. The Company must also compete with other types of
retailers who sell jewelry and gift items, such as department stores, catalog
showrooms, discounters and home shopping programs. The Company believes that
it is also competing for consumers' discretionary spending dollars. The
Company must, therefore, also compete with retailers who offer merchandise
other than jewelry or giftware.

Notwithstanding the national or regional reputation of its
competition, the Company believes that it must compete on a mall-by-mall basis
with other retailers of jewelry as well as with retailers of other types of
discretionary items. Therefore, the Company competes primarily on the basis of
store location, reputation for high- quality, distinctive and value-priced
merchandise, personal service and its ability to offer private label credit
card programs to customers wishing to finance their purchases. The Company's
success is also dependent on its ability to react to and create customer demand
for specific product lines.

The Company also competes for desirable new store locations with other
jewelers and specialty retailers. Historically, the Company has generally been
able to lease locations in new or vacated mall space which the Company
considered desirable.

The Company holds no material patents, licenses (other than its
licenses to operate its Diamond Park leased locations), franchises or
concessions; however, the established tradenames for stores and products in the
Company's Zales, Gordon's and Guild Divisions are important to the Company in
maintaining its competitive position in the jewelry retailing industry.

CREDIT OPERATIONS

Jewelers Financial Services, Inc. ("JFS") has credit approval,
customer service and collection systems that management considers to be
sophisticated. The Company offers and grants credit to qualified customers.
See "Business Strategy". The credit programs help facilitate the sale of
merchandise to customers who wish to finance their purchases rather than use
cash or major credit cards. Credit extension, customer service and advanced
collections for all the accounts are performed by JFS at servicing centers
located in Tempe, Arizona; Clearwater Florida; San Juan, Puerto Rico; and Guam.
The Company has Point-of-Sale Instant Credit ("POSIC") which allows sales
associates to obtain new account credit approval generally within two minutes
for most qualified customers. This compares to the previous instant credit
turnaround time of approximately fifteen minutes. Flexible payment
arrangements, typically twenty-eight to thirty-four months, are extended to
credit customers. Early stage collection of accounts, collection agency
placement of charged- off accounts and collection of accounts under which the
related obligors are involved in bankruptcy proceedings are performed by JFS at
the Company's National Collections Center located in San Marcos, Texas. The
mailing of statements regarding the accounts and the processing of payments on
the accounts are performed by JFS at the Company's headquarters in Irving,
Texas. The Company's credit insurance affiliates provide coverage for credit
purchasers in the event of total disability, involuntary unemployment, death
and losses due to theft, burglary, fire and windstorm. See "Businesses of
Non-Retail Affiliates".

Approximately 52 percent of the Company's retail sales during the year
ended July 31, 1995 through its Zales, Gordon's and Guild Divisions were
generated by credit sales on the private label credit cards. At July 31, 1995,
there were approximately 656,000 active customer charge accounts. The Company
also has an additional 473,000 promotable charge customers without an
outstanding balance and over 2.5 million customer names on file that are not
current charge customers.

5
7

The following table presents certain data concerning sales, credit
sales and accounts receivable for the past two fiscal years (1):

As at or for the
fiscal year ended July 31,
-------------------------------
1995 1994
---------- ----------

Net sales (thousands) $888,601 $792,101
Net credit sales (thousands) 458,664 413,305
Accounts receivable (thousands) 436,336 437,936
Credit sales as a percentage of net sales 51.6% 52.2%
Average number of active customer accounts
(thousands) 689.5 728.6
Average balance per customer account $668.0 $645.0
Average monthly collection percentage 9.1% 8.8%
Bad debt expense as a percentage of credit sales 9.1% 8.7%
Bad debt expenses as a percentage of net sales 4.7% 4.6%

(1) The table excludes the Diamond Park Division which does not have a
proprietary credit plan.

EMPLOYEES

As of July 31, 1995, the Company had approximately 9,000 employees, of
whom 23 are represented by unions. The Company considers its relations with
its employees to be good.

OTHER

On December 13, 1993, the Board of Directors of the Company authorized
the change in the Company's fiscal year end to July 31. Such change was
effective as of April 1, 1994. The Company's determination to change its
fiscal year was based on several considerations. By changing to a July 31
fiscal year end, the Company has established quarterly reporting periods that
are more consistent with other companies in the retail industry. Additionally,
a July 31 year end coincides with the Company's emergence from bankruptcy
proceedings, thereby providing for greater comparability of historical
financial data in the future, and, it makes the Company's planning process more
effective.

ITEM 2. PRINCIPAL PROPERTIES

The Company occupies a corporate headquarters facility, completed in
March 1984 with 430,000 square feet, under a lease extending through September
1997. The facility is located on a 17-acre tract in Las Colinas, a planned
business development in Irving, Texas, near the Dallas/Fort Worth International
Airport. The Company owns 33 acres of land surrounding the corporate
headquarters facility and a 120,000 square foot warehouse in Dallas, Texas.

The Company also leases four servicing centers located in Clearwater,
Florida (30,000 square feet), Tempe, Arizona (24,200 square feet), San Juan,
Puerto Rico (2,900 square feet) and Guam (556 square feet) and one national
collections center located in San Marcos, Texas (9,000 square feet).

The Company rents all of its retail spaces, other than the Diamond
Park Division leased locations, under leases with terms ranging from five to
fifteen years. Most of the store leases provide for the payment of base
rentals plus real estate taxes, insurance, common area maintenance fees and
merchants association dues, as well as percentage rents based on the stores'
gross sales.

6
8

The following table indicates the expiration dates of the current
terms of the Company's leases:

Diamond
Term Expires Zales Gordon's Guild Park Percentage
In Calendar Years Division Division Division Division Total of Total
----------------------- -------- -------- -------- --------- ----- ------------

1996 and prior 139 96 30 116 381 32%
1997 82 52 18 13 165 14%
1998 71 42 13 38 164 14%
1999 38 34 15 0 87 7%
2000 and thereafter 204 108 47 21 380 33%
--- --- --- ---- ----- ----
Total number of leases 534 332 123 188 1,177 100%
=== === === === ===== ====

The Company owns several parcels of developed and undeveloped real
estate formerly owned by Gordon, which the Company no longer uses in operations
and intends to sell.

ITEM 3. LEGAL PROCEEDINGS

JEWEL RECOVERY, L.P. Pursuant to the Plan of Reorganization, Zale
assigned certain claims and causes of action and advanced $3.0 million to Jewel
Recovery, L.P., a limited partnership ("Jewel Recovery") which was formed upon
Zale's emergence from bankruptcy. The sole purpose of Jewel Recovery is to
prosecute and settle such assigned claims and causes of action. The general
partner of Jewel Recovery is Jewel Recovery, Inc., a subsidiary of the Company.
Its limited partners are holders of various unsecured claims against Zale.

There is a possibility that the Company may recover the $3.0 million
advance made to Jewel Recovery as well as other amounts related to the
finalization of the Chapter 11 claims settlement process. It is likely that
these matters will be resolved by the end of the second quarter of fiscal 1996.
The Company does not expect these recoveries to be material to its financial
position or recurring operations.

In addition, the Company and ZDel have agreed to indemnify certain
parties to litigation settlements entered into by the Company in connection
with the Plan of Reorganization against cross-claims, similar third-party
claims or costs of defending such claims brought against such parties as a
result of litigation instigated by the Company, ZDel or Jewel Recovery. At
October 6, 1995, no material claims had been asserted against the Company or
ZDel for such indemnification.

OTHER. The Company is involved in certain other legal actions and
claims arising in the ordinary course of business. Management believes that
such litigation and claims will be resolved without material effect on the
Company's financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders of the Company
during the quarter ended July 31, 1995.

7
9

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The information required by this item is included in the registrant's
Annual Report to Stockholders for the year ended July 31, 1995 on page 32 under
the caption "Common Stock Information," and is incorporated herein by
reference.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is included in the registrant's
Annual Report to Stockholders for the year ended July 31, 1995 on page 13 under
the caption "Selected Financial Data," and is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The information required by this item is included in the registrant's
Annual Report to Stockholders for the year ended July 31, 1995 on pages 13
through 16 under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is included in the registrant's
Annual Report to Stockholders for the year ended July 31, 1995 on pages 17
through 31, and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

None.

8
10

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS

The following individuals serve as executive officers of the Company.
Officers are elected by the Board of Directors, each to serve until his
successor is elected and qualified, or until his earlier resignation, removal
from office or death.

ROBERT J. DINICOLA, Age 48.
Chairman of the Board, Chief Executive Officer and Director

Mr. DiNicola has served as Chairman of the Board, Chief Executive
Officer and a director of the Company since April 18, 1994. For the
three years prior to joining the Company, Mr. DiNicola was a senior
executive officer of The Bon Marche Division of Federated Department
Stores, Inc., having served as Chairman and Chief Executive Officer of
that Division from 1992 to 1994 and as its President and Chief
Operating Officer from 1991 to 1992. From 1989 to 1991, Mr. DiNicola
was a Senior Vice President of Rich's Department Store Division of
Federated. For seventeen years, prior to joining the Federated
organization, Mr. DiNicola was associated with Macy's, where he held
various executive, management and merchandising positions, except for
a one-year period while he held a division officer position with May
Co.

LARRY POLLOCK, Age 48.
President, Chief Operating Officer and Director

The Board of Directors elected Mr. Pollock President and Chief
Operating Officer of the Company on January 10, 1994 and appointed him
as a director on July 27, 1994. From January 1990 until joining the
Company, Mr. Pollock served as President and Chief Executive Officer
of Kartens Jewelers. From 1987 to 1990, Mr. Pollock was a consultant
in the retail jewelry industry. For eighteen years prior to 1987, Mr.
Pollock was associated with J.B. Robinson Jewelers, Inc. where he held
various executive positions including President and Chief Executive
Officer from 1981 through 1986. Mr. Pollock has an ownership interest
in two radio stations in the Cleveland area and also serves as a
director of New West Eyeworks.

MERRILL J. WERTHEIMER, Age 55.
Executive Vice President - Finance and Administration

Mr. Wertheimer was appointed Executive Vice President - Finance and
Administration on January 27, 1995. From June 1991 through January
1995, he served as Senior Vice President and Controller of the
Company. From February 1990 to May 1991, Mr. Wertheimer served as
President and Chief Executive Officer of Henry Silverman Jewelers.
Mr. Wertheimer served as Senior Vice President of the Company from
September 1987 to October 1989 and also served as Chief Financial
Officer of the Company from March 1987 to October 1989.

BERYL RAFF, Age 44.
Senior Vice President and President, Zales Division

Ms. Raff joined the Company on November 21, 1994 as President of the
Zales Division. From March 1991 through October 1994, Ms. Raff served
as Senior Vice President of Macy's East with responsibilities for its
jewelry business in a 12 - state region. From April 1988 to March
1991, Ms. Raff served as Group Vice President of Macy's
South/Bullocks. Prior to 1988, Ms. Raff has seventeen years of
retailing and merchandising experience with the Emporium and Macy's
department stores.

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11

MARY FORTE, Age 44
Senior Vice President and President, Gordon's Division

Ms. Forte joined the Company on July 18, 1994 as President of the
Gordon's Division. From January 1994 to July 1994, Ms. Forte served
as Senior Vice President of QVC - Home Shopping Network. From July
1991 through January 1994, Ms. Forte served as Senior Vice President
of the Bon Marche', Home Division. From July 1989 to July 1991, Ms.
Forte was Vice President of Rich's Department Store, Housewares
Division. In addition to the above, Ms. Forte has an additional
thirteen years of retailing and merchandising experience with Macy's,
The May Company and Federated Department stores.

PAUL LEONARD, Age 40.
Senior Vice President and President, Guild Division

Mr. Leonard was appointed President of the Company's Fine Jewelers
Guild Division on January 27, 1995. From October 1994 to January
1995, Mr. Leonard served as President of Corporate Merchandising for
the Company. For three years prior to joining the Company, Mr.
Leonard held positions as General Manager of Jewelry and then Senior
Vice President of Soft Lines for Ames Department Store. Prior to
that, Mr. Leonard was a Merchandise Vice President with The May
Company. Mr. Leonard has more than twenty years of retailing and
merchandising experience with an emphasis in jewelry.

MAX BROWN, Age 66.
Senior Vice President and President, Diamond Park Division

Mr. Brown has been President of the Company's Diamond Park Division
since January 11, 1993. From July 1989 to January 1993, Mr. Brown was
Vice President and General Manager of the Diamond Park Division.
Prior to 1989, he served as the Director of Stores for the Diamond
Park Division.

JO ANN CONNOLLY, Age 48.
Senior Vice President, Corporate Merchandising

Ms. Connolly was appointed Senior Vice President of Corporate
Merchandising in January 1995. From 1989 to January 1995, Ms.
Connolly served as Vice President and Merchandise Manager in the Zales
Division and from 1984 to 1989 as Vice President and Merchandise
Manager in the Guild Division.

PAUL KANNEMAN, Age 38.
Senior Vice President and Chief Information Officer

Mr. Kanneman joined the Company on November 14, 1994 as Chief
Information Officer. From July 1993 to November 1994, Mr. Kanneman
was an Associate Partner with Andersen Consulting LLP. Mr. Kanneman
was a Principal from August 1991 to July 1993, and a Senior Associate
from August 1989 to July 1991 with Booz, Allen & Hamilton, Inc.

HERSCHEL KRANITZ, Age 55.
Senior Vice President, Human Resources

Mr. Kranitz has been Senior Vice President -- Human Resources of the
Company since March 14, 1994. From May 1989 to March 1994, Mr.
Kranitz served as Vice President -- Human Resources of Raynet, Inc.

10
12

ALAN P. SHOR, Age 36.
Senior Vice President, General Counsel and Secretary

Mr. Shor joined the Company on June 5, 1995 as Senior Vice President,
General Counsel and Secretary. For two years prior to joining the
Company, Mr. Shor was the managing partner of the Washington, D.C.
office of the Troutman Sanders law firm, whose principal office is
based in Atlanta, Georgia. Mr. Shor, a member of Troutman Sanders
since 1983, was a partner of the firm from 1990 to 1995.

JOHN SKINNER, Age 57.
Senior Vice President and President, Jewelers Financial Services, Inc.

Mr. Skinner has been a Senior Vice President of the Company since
October 7, 1992. Mr. Skinner has served in various capacities with
the Company since September 1984, including President of Jewelers
Financial Services, Inc., and Vice President and General Credit
Manager of the Company.

THOMAS E. WHIDDON, Age 42.
Senior Vice President and Chief Financial Officer

Mr. Whiddon was appointed Senior Vice President and Chief Financial
Officer on August 28, 1995. From April 1994 through August 1995, he
served as Senior Vice President and Treasurer of the Company. From
September 1988 to April 1994, Mr. Whiddon served as Vice President and
Treasurer of Eckerd Corporation. Prior to becoming Treasurer, Mr.
Whiddon served as Vice President and Assistant Treasurer of Eckerd
Corporation from April 1986 to August 1988.

The information required by this item relating to directors and
Section 16(a) Reporting is included in the registrant's definitive Proxy
Statement relating to its annual meeting of stockholders to be held on November
2, 1995 under the captions "Proposal No. 1 -- Election of Directors," on pages
4 through 6, and "Section 16(a) Reporting," on pages 16 to 17, and is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is included in the registrant's
definitive Proxy Statement relating to its annual meeting of stockholders to be
held on November 2, 1995 under the caption "Executive and Director
Compensation," on pages 9 through 12, and, except as stated in the next
sentence, is incorporated herein by reference. The foregoing incorporation by
reference specifically excludes the discussion in such Proxy Statement under
the captions "Report of the Compensation Committee on Executive Compensation"
and "Stock Price Performance."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is included in the registrant's
definitive Proxy Statement relating to its annual meeting of stockholders to be
held on November 2, 1995 under the caption "Outstanding Voting Securities of
the Company and Principal Holders Thereof," on pages 2 to 3, and is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

11
13

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

The following documents are filed as part of this report.

(1) FINANCIAL STATEMENTS

See Item 8 on page 8.

(2) INDEX TO FINANCIAL STATEMENT SCHEDULES PAGE NUMBER
-----------

Report of Independent Public Accountants 16

Schedule II - Valuation and Qualifying Accounts 17

All other financial statements and financial statement
schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange
Commission are not required under the related instructions,
are not material or are not applicable and, therefore, have
been omitted or are included in the consolidated financial
statements or notes thereto.

(3) EXHIBITS

2.1 Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code with Respect to Plan of
Reorganization under Chapter 11 of the Bankruptcy Code for Zale Corporation and its Affiliated
Debtors, dated March 22, 1993 (Exhibit T3E-1). (1)

2.2 Motion to Approve Amendments to the Plan of Reorganization under Chapter 11 of the Bankruptcy
Code of Zale Corporation and its Affiliated Debtors, dated May 19, 1993 (Exhibit 2.6).
(2)

2.3 Order Approving Amendments to the Plan of Reorganization under Chapter 11 of the Bankruptcy
Code of Zale Corporation and its Affiliated Debtors, dated May 20, 1993 (Exhibit 2.7). (2)

4.1 Restated Certificate of Incorporation of Zale Corporation, dated July 30, 1993. (3)

4.2 Bylaws of Zale Corporation, dated July 30, 1993. (3)

4.3 Warrant Agreement, dated as of July 30, 1993, between Zale Corporation and The First National
Bank of Boston, as warrant agent, governing the Warrants to Purchase Common Stock, Series A.
(3)

4.4 Indenture, dated as of July 1, 1994, among Zale Funding Trust, as Issuer and Bankers Trust
Company, as Indenture Trustee. (6)

4.5 Purchase and Servicing Agreement, dated as of July 1, 1994, among Zale Funding Trust, Diamond
Funding Corp., Zale Delaware, Inc., and Jewelers Financial Services, Inc. (6)

12
14

4.6 Revolving Credit Agreement, dated as of August 11, 1995, among Zale Corporation, Zale Delaware,
Inc., the lending institutions set forth therein, and The First National Bank of Boston, as
Agent for such lenders. (6)

4.7 Amended and Restated Lender Security Agreement, dated as of August 11, 1995, among Zale
Delaware, Inc., Zale Corporation, and The First National Bank of Boston, as collateral
agent. (6)

* 10.1 Indemnification agreement, dated as of July 21, 1993, between Zale Corporation and certain
present and former directors thereof. (6)

10.2 Amended and Restated Agreement of Limited Partnership of Jewel Recovery, L.P., dated as of
July 30, 1993. (3)

* 10.3 Zale Corporation Stock Option Plan. (3)

10.4 Trust Agreement, dated as of November 24, 1993, among Zale Corporation, Zale Delaware, Inc. and
United States Trust Company of New York. (4)

10.5 Agreement for Systems Operations Services, dated as of February 1, 1993, between Zale
Corporation and Integrated Systems Solutions Corporation. (3)

10.5a Amendment #1 to Agreement for Systems Operations Services, dated as of August 1, 1994, between
Zale Corporation and Integrated Systems Solutions Corporation. (6)

* 10.6 Severance and Settlement Agreement, dated as of December 3, 1993, between Zale Corporation and
E. Peter Healey. (4)

* 10.7 Severance and Settlement Agreement, dated as of May 15, 1995, between Zale Corporation and
Dolph B. Simon. (6)

* 10.8 The Executive Severance Plan for Zale Corporation and Its Affiliates, as amended and restated
as of February 10, 1994. (4)

* 10.9 Employment Agreement, dated as of December 22, 1993, between Zale Corporation and Larry
Pollock. (4)

* 10.10 Employment Agreement, dated as of March 14, 1994, between Zale Corporation and Robert DiNicola.
(5)

11 Statement re computation of per share earnings. (6)

13 Incorporated Portions of the Annual Report to Stockholders for the year ended July 31,
1995. (6)

21 Subsidiaries of the registrant. (6)

23 Consent of Independent Public Accountants. (6)

27 Financial data schedule. (6)

13
15

____________________________________________

(1) Incorporated by reference from the exhibit shown in
parenthesis to the registrant's Form T-3 (No.
22-24-68) filed with the Commission on April 2, 1993.

(2) Incorporated by reference from the exhibit shown in
parenthesis to the registrant's Form 8-A/A (No.
02-21526) filed with the Commission on July 16, 1993.

(3) Previously filed as an exhibit to the registrant's
Form 10-Q (No. 1-4129) for the quarterly period ended
September 30, 1993, and incorporated herein by
reference.

(4) Incorporated by reference to the corresponding
exhibit to the registrant's Registration Statement
on Form S-1 (No. 33-73310) filed with the Commissions
on December 23, 1993, as amended.

(5) Previously filed as an exhibit to the registrant's
Form 10-K (No. 0-21526) for the fiscal year ended
March 31, 1994, and incorporated herein by reference.

(6) Filed herewith.

* Management Contracts and Compensatory Plans.

(4) REPORTS ON FORM 8-K

None.

14
16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, as of the 16 day
of October, 1995.
ZALE CORPORATION

By: /s/ ROBERT J. DINICOLA
-----------------------------------------
Robert J. DiNicola
Chairman of the Board and Chief
Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ ROBERT J. DINICOLA Chairman of the Board and Chief Executive October 16, 1995
------------------------------------ Officer (principal executive officer of
Robert J. DiNicola the registrant)

/s/ LARRY POLLOCK President and Chief Operating Officer October 16, 1995
------------------------------------
Larry Pollock

/s/ MERRILL J. WERTHEIMER Executive Vice President - Finance and October 16, 1995
------------------------------------ Administration
Merrill J. Wertheimer

/s/ THOMAS E. WHIDDON Senior Vice President and Chief Financial October 16, 1995
------------------------------------ Officer (principal financial officer of
Thomas E. Whiddon the registrant)

/s/ MARK R. LENZ Vice President and Controller (principal October 16, 1995
------------------------------------ accounting officer of the registrant)
Mark R. Lenz

/s/ GLEN ADAMS Director October 16, 1995
------------------------------------
Glen Adams

/s/ PETER P. COPSES Director October 16, 1995
------------------------------------
Peter P. Copses

/s/ MARK DICKSTEIN Director October 16, 1995
------------------------------------
Mark Dickstein

/s/ FRANK E. GRZELECKI Director October 16, 1995
------------------------------------
Frank E. Grzelecki

/s/ RICHARD C. MARCUS Director October 16, 1995
------------------------------------
Richard C. Marcus

/s/ ANDREW H. TISCH Director October 16, 1995
------------------------------------
Andrew H. Tisch

15
17

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Zale Corporation:

We have audited in accordance with generally accepted auditing standards, the
financial statements included in Zale Corporation (a Delaware corporation) and
subsidiaries' Annual Report to Stockholders incorporated by reference in this
Form 10-K, and have issued our reports thereon dated September 12, 1995. Our
report on the financial statements for the four months ended July 31, 1993, and
for the year ended March 31, 1993, includes an explanatory paragraph with
respect to changes in methods of accounting for postretirement benefits other
than pensions and accounting for income taxes as discussed in the Notes to
Consolidated Financial Statements. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole.
Schedule II is the responsibility of the Company's management and is presented
for the purpose of complying with the Securities and Exchange Commission's
rules and is not part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Dallas, Texas,
September 12, 1995

16
18

SCHEDULE II

ZALE CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

Balance At Additions Balance At
Beginning Charged to End
of Period Earnings Deductions of Period
------------ ----------- ----------- -----------
(amounts in thousands)

Fiscal year ended July 31, 1995
Allowance for doubtful accounts $ 42,708 $ 41,696 $ 41,808 (1) $ 42,596

Fiscal year ended July 31, 1994
Allowance for doubtful accounts 54,353 36,163 47,808 (1) 42,708

Four months ended July 31, 1993
Allowance for doubtful accounts 57,141 12,627 15,415 (1) 54,353

Fiscal year ended March 31, 1993
Allowance for doubtful accounts 50,841 66,692 (2) 60,392 (1) 57,141

(1) Accounts written off, less recoveries and other adjustments.

(2) Amount includes a provision for excess customer receivable chargeoffs of
closed store accounts of $8,230 and a provision for valuation of customer
receivables of $12,500.

17
19
INDEX TO EXHIBITS

Exhibit
Number Exhibit
- ------------- -------------

2.1 Disclosure Statement Pursuant to Section 1125 of the Bankruptcy
Code with Respect to Plan of Reorganization under Chapter 11 of
the Bankruptcy Code for Zale Corporation and its Affiliated
Debtors, dated March 22, 1993 (Exhibit T3E-1). (1)

2.2 Motion to Approve Amendments to the Plan of Reorganization
under Chapter 11 of the Bankruptcy Code of Zale Corporation
and its Affiliated Debtors, dated May 19, 1993 (Exhibit 2.6).
(2)

2.3 Order Approving Amendments to the Plan of Reorganization under
Chapter 11 of the Bankruptcy Code of Zale Corporation and its
Affiliated Debtors, dated May 20, 1993 (Exhibit 2.7). (2)

4.1 Restated Certificate of Incorporation of Zale Corporation,
dated July 30, 1993. (3)

4.2 Bylaws of Zale Corporation, dated July 30, 1993. (3)

4.3 Warrant Agreement, dated as of July 30, 1993, between Zale
Corporation and The First National Bank of Boston, as warrant
agent, governing the Warrants to Purchase Common Stock, Series
A. (3)

4.4 Indenture, dated as of July 1, 1994, among Zale Funding Trust,
as Issuer and Bankers Trust Company, as Indenture Trustee. (6)

4.5 Purchase and Servicing Agreement, dated as of July 1, 1994,
among Zale Funding Trust, Diamond Funding Corp., Zale Delaware,
Inc., and Jewelers Financial Services, Inc. (6)

4.6 Revolving Credit Agreement, dated as of August 11, 1995, among
Zale Corporation, Zale Delaware, Inc., the lending institutions
set forth therein, and The First National Bank of Boston, as
Agent for such lenders. (6)

4.7 Amended and Restated Lender Security Agreement, dated as of
August 11, 1995, among Zale Delaware, Inc., Zale Corporation,
and The First National Bank of Boston, as collateral agent. (6)

* 10.1 Indemnification agreement, dated as of July 21, 1993, between
Zale Corporation and certain present and former directors
thereof. (6)

10.2 Amended and Restated Agreement of Limited Partnership of Jewel
Recovery, L.P., dated as of July 30, 1993. (3)

* 10.3 Zale Corporation Stock Option Plan. (3)

10.4 Trust Agreement, dated as of November 24, 1993, among Zale
Corporation, Zale Delaware, Inc. and United States Trust
Company of New York. (4)

20
INDEX TO EXHIBITS

Exhibit
Number Exhibit
- ------------- -------------

10.5 Agreement for Systems Operations Services, dated as of February 1,
1993, between Zale Corporation and Integrated Systems Solutions
Corporation. (3)

10.5a Amendment #1 to Agreement for Systems Operations Services, dated
as of August 1, 1994, between Zale Corporation and Integrated
Systems Solutions Corporation. (6)

* 10.6 Severance and Settlement Agreement, dated as of December 3, 1993,
between Zale Corporation and E. Peter Healey. (4)

* 10.7 Severance and Settlement Agreement, dated as of May 15, 1995,
between Zale Corporation and Dolph B. Simon. (6)

* 10.8 The Executive Severance Plan for Zale Corporation and Its
Affiliates, as amended and restated as of February 10, 1994. (4)

* 10.9 Employment Agreement, dated as of December 22, 1993, between Zale
Corporation and Larry Pollock. (4)

* 10.10 Employment Agreement, dated as of March 14, 1994, between Zale
Corporation and Robert DiNicola. (5)

11 Statement re computation of per share earnings. (6)

13 Incorporated Portions of the Annual Report to Stockholders for the
year ended July 31, 1995. (6)

21 Subsidiaries of the registrant. (6)

23 Consent of Independent Public Accountants. (6)

27 Financial data schedule. (6)

- ---------------------
(1) Incorporated by reference from the exhibit shown in
parenthesis to the registrant's Form T-3 (No. 22-24-68) filed
with the Commission on April 2, 1993.

(2) Incorporated by reference from the exhibit shown in
parenthesis to the registrant's Form 8-A/A (No. 02-21526)
filed with the Commission on July 16, 1993.

(3) Previously filed as an exhibit to the registrant's Form 10-Q
(No. 1-4129) for the quarterly period ended September 30,
1993, and incorporated herein by reference.
21
INDEX TO EXHIBITS

(4) Incorporated by reference to the corresponding exhibit to
the registrant's Registration Statement on Form S-1 (No.
33-73310) filed with the Commissions on December 23, 1993,
as amended.

(5) Previously filed as an exhibit to the registrant's Form 10-K
(No. 0-21526) for the fiscal year ended March 31, 1994, and
incorporated herein by reference.

(6) Filed herewith.

* Management Contracts and Compensatory Plans.