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UPDATE 1-Zale to restate 2008, some 2009 results
September 18, 2009 / 10:56 PM / 8 years ago

UPDATE 1-Zale to restate 2008, some 2009 results

*Zale plans to file restated financials by Oct. 29

*Restatement pertains mainly to accounting of prepaid ads

LOS ANGELES, Sept 18 (Reuters) - U.S. jeweler Zale Corp ZLC.N will restate its financial statements for fiscal 2008 and interim periods in 2008 and 2009 to record a “significant” portion of its prepaid advertising costs as expense rather than capital costs, according to a securities filing on Friday.

The company plans to file the restated financials in its annual report for fiscal 2009, on or before Oct. 29, the filing showed.

Internet retailer Overstock.com (OSTK.O), which restated its financials in 2006 and 2008 to change the way it accounted for some expenses, said on Thursday it was under scrutiny from government regulators over the restatements and other matters.

Zale’s restatement arose from prepaid advertising of $23 million in fiscal 2008 and $18 million in fiscal 2007, as well as $9 million in other pre-tax adjustments.

In addition, Zale will record a $4 million charge in fiscal 2008 related to federal income taxes on the expiration of net operating loss carryforwards.

Those adjustments, however, have not been finalized and the restatement was not complete as of the filing on Friday.

The Dallas-based diamond and jewelry retailer twice postponed its fourth-quarter earnings release earlier this month to deal with accounting issues.

Affordably priced jewelers like Zale and even higher-end ones like Tiffany & Co (TIF.N) have grappled with weak sales in the recession, where consumers have largely refrained from buying expensive and unnecessary items.

Zale has closed stores and liquidated some inventory.

In August, Zale said it would take a $50 million pretax charge in the fourth quarter that ended July 31, tied to store closures.

Shares of Zale were unchanged in after-hours trade on Friday after closing down 2 percent at $7.16. (Reporting by Gina Keating; editing by Carol Bishopric)

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