Zale Corporation announced a net loss of $23.2 million for the third quarter ended April 30, 2009, compared to $17.4 million the year before.

Revenues for the third quarter of fiscal 2009 were $379 million, compared to $477 million for the prior period, a decrease of 20.5%. Comparable store sales decreased 20.0%, compared to an increase of 5.8% for the 2008 period. The prior year’s results were positively impacted by a clearance initiative that permanently reduced inventory by $100 million, the company said.

The company also announced that “it is in the process of implementing additional reductions in operating costs, including realigning its rent structure with sales trends, closing underperforming stores, renewing leases that offer the best returns and negotiating an efficient exit from its Bailey, Banks and Biddle contingent liability.”

As of April 30, 2009, Zale had outstanding debt of $333 million, a reduction of $57 million from the second quarter of fiscal 2009.

“Our key goals coming into the quarter were to strengthen and stabilize the foundation of the business while recapturing the gross margin we lost from our promotional stance during Holiday,” commented Neal Goldberg, chief executive officer. “We accomplished these goals as we generated positive free cash flow for the period with debt levels being reduced approximately $57 million from the second quarter and gross margins returning to above 50%.  While we have taken important steps to creating a more efficient business model, we are up against difficult same store sales comparisons due to the clearance initiative through September 2009.”

Zale also announced that Matthew Appel has been named executive vice president of the company.

Appel joins Zale from ExlService Holdings, where he served as vice president and CFO since 2007. He replaced Rodney Carter, who resigned in January.

JCK