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Exhibit 99.1

ZALE CORPORATION
AUDIT COMMITTEE CHARTER
(As of July 2003)

Purposes

The primary purposes of the Audit Committee are to assist the Board in its
oversight of (1) the integrity of the Companys financial statements, (2) the
Companys compliance with legal and regulatory requirements, (3) the
independent auditors qualifications and independence and (4) the performance
of the Companys internal audit function and independent auditors. Its
responsibilities in that regard include:



| |  |  | Reviewing the financial reports and other
financial information provided by the Company to any
governmental or other regulatory body and monitoring any
public distribution or other uses thereof;
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|
| |  |  | Reviewing the annual independent audit of the
Companys financial statements;                                                                                                                     
|
| |  |  | Reviewing the Companys systems of internal
accounting and financial controls; and                                                                                                                
|
| |  |  | Reviewing and monitoring the internal audit
process and internal audit results.                                                                                                                   

In discharging this oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all Company
books, records, facilities, personnel, legal counsel and independent auditors,
along with the power to retain, at the Companys expense, outside counsel,
auditors or other experts for this purpose. Any independent auditor retained
by the Company shall report directly to the Committee and is ultimately
accountable to the Committee.

The Committee shall review the adequacy of this charter on an annual basis
and recommend any appropriate changes to the Board for consideration.

Membership

Appointment and Removal. The Committee shall be appointed by the Board
and shall serve at the pleasure of the Board for such term as the Board may
decide or, with respect to an individual Committee member, until such Committee
member is no longer a Board member. The Board shall designate the chair of the
Committee.

Number and Meetings. The Committee shall be comprised of not less than
three members of the Board. The Committee shall meet as often as necessary to
fulfill its responsibilities.

Independence.The Committee members will meet the independence
requirements of the New York Stock Exchange and the Securities Exchange Act of
1934. These requirements are attached hereto as Annex A. Accordingly, the
members of the Committee will be directors





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who the Board affirmatively concludes have no material relationship to the
Company, as determined by the Board, either directly or as a partner,
shareholder or officer of any organization that has a relationship with the
Company.

The failure of the Committee to satisfy the independence requirements set
forth above or the financial literacy requirements set forth below shall not
invalidate any actions taken by the Committee.

Financial Literacy. The Committee members will meet the experience
requirements of the New York Stock Exchange and the Securities Exchange Act of
1934. Each Committee member will be financially literate or will become
financially literate within a reasonable period of time after his or her
appointment to the Committee. In addition, at least one member of the
Committee will have accounting or related financial management expertise and
that member or another member of the Committee must be an audit committee
financial expert (as such term is defined by the rules and regulations of the
Securities Exchange Act of 1934). The designation or identification of a
person as an audit committee financial expert shall not (a) impose on such
person any duties, obligations or liability greater than the duties,
obligations and liability imposed on such person as a member of the Committee
and the Board in the absence of such designation or identification or (b)
affect the duties, obligations or liability of any other member of the
Committee or the Board.

Responsibilities

The Companys management is responsible for preparing the Companys
financial statements, and the independent auditors are responsible for auditing
those financial statements. Additionally, the Board recognizes that the
Companys financial management, as well as the independent auditors, have more
time, knowledge and detailed information regarding the Company than do
Committee members. As a result, in carrying out its oversight
responsibilities, the Committees role is not to provide expert or special
assurance as to the Companys financial statements or any professional
certification as to the independent auditors work. As used in this charter,
the term independent auditor means any independent auditor, including one
constituting a registered public accounting firm (as defined in Section
2(a)(12) of the Sarbanes-Oxley Act of 2002), engaged for the purpose of
preparing or issuing an audit report or performing other audit review or attest
services for the Company.

The following functions shall be the common, recurring activities of the
Committee in carrying out its duties.

1.          Retention of Independent Auditors. The Committee shall be directly
responsible for the retention and termination of the independent auditors. The
Committee shall have the ultimate authority and responsibility to select the
independent auditor (including approval of all engagement fees and terms and
resolution of disagreements between management and the independent auditors),
evaluate the independent auditors (including its qualifications, performance
and independence) and, where appropriate, replace the independent auditors.

2.          Independence of Auditors. In connection with the retention of the
Companys independent auditors, the Committee shall, at least annually, review
and discuss the information provided by management and the auditors relating to
the independence of the audit firm, including, among other things, information
related to the non-audit services provided and expected to be provided by the
auditors. The Committee shall be responsible for (a) ensuring that the
independent auditors submit at least annually to the Committee a formal written

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statement delineating all relationships between the auditors and the Company
consistent with applicable independence standards, (b) actively engaging in a
dialogue with the auditors with respect to any disclosed relationship or
service that may impact the objectivity and independence of the auditors and
(c) taking appropriate action in response to the auditors report to satisfy
itself of the auditors independence.

3.          Pre-Approval of Audit and Non-Audit Services. The Committee shall
pre-approve all audit, review or attest services and all permissible non-audit
services. The Committee may delegate to one or more of its members the
authority to pre-approve audit services and non-audit services pursuant to any
pre-approval policies and procedures established by the Committee and
satisfying the requirements set forth in the Securities Exchange Act of 1934;
provided, however, that all pre-approved services must be disclosed by such
delegate to the full Committee at each of its scheduled meetings.

4.          Independent Auditors Quality Control. The Committee shall obtain and
review a report from the independent auditors, at least annually, which
describes (a) the audit firms internal quality-control procedures and (b) any
material issues raised by the most recent internal quality-control review, or
peer review, of the audit firm, or by any inquiry or investigation by
governmental or professional authorities, within the last five years,
respecting one or more independent audits carried out by the audit firm, and
any steps taken to address any such issues.

5.          External Audit Plans. The Committee shall review and discuss with the
independent auditors the plans for, and the scope of, the annual audit and
other examinations, including the adequacy of staffing and compensation.

6.          Conduct of the Audit. The Committee shall review with the independent
auditors any audit problems or difficulties and managements response,
including any restrictions on the scope of the independent auditors activities
or on access to requested information, and any significant disagreements with
management. The Committee, consistent with Section 303 of the Sarbanes-Oxley
Act of 2002 and Regulation 13B-2 promulgated thereunder, shall not influence
the conduct of the audit in any improper manner.

7.          Review of Audit Results. The Committee shall review and discuss with
the independent auditors the report of their annual audit, or proposed report
of their annual audit, and (a) major issues regarding accounting principles and
financial statement presentations, including any significant changes in the
Companys selection or application of accounting principles, and major issues
as to the adequacy of the Companys internal controls and any special audit
steps adopted in light of material control deficiencies, (b) analyses prepared
by management or the independent auditors setting forth significant financial
reporting issues and judgments made in connection with the preparation of the
financial statements, including analyses of the effects of alternative GAAP
methods on the financial statements and (c) the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures, on the
financial statements of the Company.

8.          Assurances Under Section 10A of the Exchange Act. The Committee shall
obtain from the independent auditors assurance that Section 10A of the
Securities Exchange Act of 1934 (generally relating to the auditors
identification of illegal acts and related party transactions) has not been
implicated.

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9.          Financial Statements and Disclosures. The Committee shall review with
management and the independent auditors the annual and quarterly financial
statements to be included in the Companys periodic reports, including
disclosures in the Managements Discussion and Analysis section contained
therein. This review will occur prior to filing of the annual or quarterly
report, as applicable, and the Committee shall recommend to the Board whether
the audited annual financial statements should be included in the Companys
Form 10-K. The Committee shall review and consider with the independent
auditors the matters required to be discussed by the Statement of Auditing
Standards (SAS) No. 61.

10.          Financial Press Releases. The Committee shall review and discuss in
advance the Companys earnings press releases (including any use of pro
forma, or adjusted non-GAAP, information). In addition, the Committee shall
review financial information and earnings guidance provided to analysts and
rating agencies (which review may occur before or after issuance and, as
appropriate, may include a review of the types or substances of information to
be disclosed and the form of presentation to be made).

11.          Internal Audit Plans. The Committee shall review and discuss with the
partner of the audit firm performing the internal audit function and
appropriate members of his or her staff the plans for and the scope of their
ongoing audit activities, including adequacy of staffing and compensation.

12.          Internal Audit Results. The Committee shall review and discuss with
the partner of the audit firm performing the internal audit function,
management, the independent auditors and the appropriate staff members of each,
the results of any internal audits.

13.          Internal Accounting Controls. The Committee shall review and discuss
with the partner of the audit firm performing the internal audit function,
management, the independent auditors and the appropriate staff members of each,
the quality and adequacy of the Companys internal accounting controls, the
Companys financial, auditing and accounting organizations and personnel, and
the Companys policies and compliance procedures with respect to business
practices which shall include the disclosures regarding internal controls and
matters required to be reported to the Committee by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 of the Securities
Exchange Act of 1934.

14.          Separate Meetings. The Committee shall meet separately and
periodically with management, with internal auditors (or other personnel
responsible for the internal audit function) and with independent auditors.

15.          Risk Management Policies. The Committee shall discuss policies with
respect to risk assessment and risk management in order to govern the processes
by which management assesses and manages the Companys exposure to risk.

16.          Hiring of Employees of Independent Auditors. The Committee shall set
clear hiring policies for employees or former employees of the independent
auditors.

17.          Complaints Regarding Financial Statements or Accounting Policies. The
Committee shall establish procedures for the receipt, retention and treatment
of accounting or auditing complaints and concerns, including providing for the
confidential, anonymous reporting of concerns regarding questionable accounting
or auditing matters by employees of the Company.

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18.          Proxy Statement Report. The Committee shall prepare the report
required by the rules of the Securities and Exchange Commission to be included
in the Companys annual proxy statement.

19.          Review of Other Matters. The Committee shall review and discuss such
other matters that relate to the accounting, auditing and financial reporting
practices and procedures of the Company as the Committee may, in its own
discretion, deem desirable in connection with the review functions described
above.

20.          Other Duties. The Committee shall perform any other duties or
responsibilities delegated to the Committee by the Board from time to time.

21.          Reports to the Board. The Committee shall report regularly to the
Board, which report may include issues that arise with respect to (a) the
quality of integrity of the Companys financial statements, (b) the Companys
compliance with legal or regulatory requirements, (c) the performance and
independence of the Companys independent auditors or (d) the performance of
the internal audit function.

22.          Annual Evaluation. The Committee shall conduct and review with the
Board annually an evaluation of the Committees performance with respect to the
requirements of this charter.

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Annex AAudit Committee
Independence Requirements

A director who receives, or whose immediate family member receives, more
than $100,000 per year in direct compensation from the Company (other than
director or committee fees or pension or other forms of deferred compensation
for prior service so long as the compensation is not contingent on continued
service), is presumed not to be independent until five years after he or she
ceases to receive more than $100,000 per year in such compensation. In
addition, the following directors shall not satisfy the definition of
independent:



| |  |  | A director who is affiliated with the Company, which
means a person that controls, is controlled by, or is under
common control with the Company;                                                                                                                                                                                                                                                                                                            
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|
| |  |  | A director who accepts, directly or indirectly, any
consulting, advisory, compensatory fee or any other fee from the
Company other than directors fees;                                                                                                                                                                                                                                                                                                     
|
| |  |  | A director who is affiliated with or employed by, or
whose immediate family member is affiliated with or employed in a
professional capacity by, a present or former internal or
external auditor of the Company until five years after the end of
either the affiliation or the auditing relationship;                                                                                                                                                      
|
| |  |  | A director who is employed, or whose immediate family
member is employed, as an executive officer of another company
where any of the Companys present executives serve on that
companys compensation committee until five years after the end
of such service or the employment relationship; or                                                                                                                                                          
|
| |  |  | A director who is an executive officer or an employee,
or whose immediate family member is an executive officer, of
another company (1) that accounts for at least 2% or $1 million,
whichever is greater, of the Companys consolidated gross
revenues, or (2) for which the Company accounts for at least 2%
or $1 million, whichever is greater, of such other companys
consolidated gross revenues, until five years after falling below
such threshold.

No member of the Committee may simultaneously serve on more than three
audit committees of companies with registered debt or equity (including the
Company), unless the Board determines that such simultaneous service would not
impair the ability of such member to effectively serve on the Committee.

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