Zale Plunges, Despite Citibank Pardon

Zale is tanking, even after Citibank agrees to push back the due date of a $6 million fee related to its credit card business.

Author:: Jeanine Poggi
Publish date:: Mar 30, 2010 3:56 PM EDT

NEW YORK (

TheStreet

Zale

(ZLC)

is plunging, even after the jeweler was let off the hook by Citibank for a $6 million fee that was due on Thursday.

Citibank originally said it would end its agreement to handle Zale credit cards if the fee was not paid by the due date. It also said it would discontinue the deal when it ends in March 2011.

But Citibank agreed on Tuesday to push the deadline for payment until the end of April.

Zale said in a Securities and Exchange filing that it is still reevaluating its alternatives. A bulk of its sales are made through credit cards, and without the financing Zale could lose a significant portion of its business.

Shares of the jeweler are severely falling, dropping by 18.8% to $2.63 in afternoon trading.

-- Reported by Jeanine Poggi in New York.

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