I really don't like celebrating the loss of anyone's job, but enough was enough at jewelry retailer Zale (NYSE:ZLC). Though the newly departed CEO did resign, management's commentary on the conference call suggested to this Fool that it was a "jump or be pushed" sort of situation.

And why not? Zale has been losing market share left and right -- to mass retailers Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), online retailer Blue Nile (NASDAQ:NILE), and probably to other mall-based operators such as Signet (NYSE:SIG), the operator of Kay and Jared. It appears that this holiday season was the last straw -- Zale's new strategy seemed to actually interfere with sales, and comps at the namesake chain actually fell.

Fourth-quarter results were nothing to get excited about. Sales were just 2.3% (2.8% if you exclude the impact of store closures), and after-adjustment net income was down slightly from the year-ago period. That's not the sort of thing you want to hear about the company's biggest quarter of the year.

So where do we go from here? Putting the head of Zales Canada in charge of all of Zales stores for North America is a good first step. It should also be noted that while Zales and Piercing Pagoda did poorly this quarter, the other concepts such as Gordon's, People's, and Bailey Banks & Biddle all posted mid-single-digit same-store sales growth. Unlike, say, Pier 1 (NYSE:PIR), the company's performance isn't a totally unmitigated disaster at this point.

Here's additionally relevant food for thought. People like to buy bling, and Zales still has some level of brand recognition among customers. The company remains profitable, and after being so poorly run for so long, it probably has a fair bit of untapped and/or squandered potential lurking within.

I'm not buying shares today, or even when my Foolish trading restrictions lift in 10 days. But I'm going to start looking more closely at this stock and the overall market sector. Blue Nile seems more enticing today, but as we've seen with Tiffany (NYSE:TIF), these sorts of turnaround situations can hold market-beating potential.

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Blue Nile is both a Motley Fool Hidden Gems and Motley Fool Rule Breakers recommendation. To learn why this stock makes the cut for both small-cap savant Tom Gardner and his growth-stock guru brother, David, sign up today for free 30-day newsletter trials.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).