Clothing retailer Stage Stores Inc announced that it will delay the release of its second quarter results pending the completion of an internal review of its inventory valuation methodology.
As such, the company's previously provided earnings guidance for the 2006 second quarter and 2006 fiscal year should no longer be relied upon. The company, which is working as diligently and expeditiously as possible to complete its review, will issue its second quarter results as soon as is practicable.
Jim Scarborough, Chairman and CEO, stated, "In the course of reviewing our preliminary financial results for the second quarter, it became apparent that our Peebles division gross margins were significantly higher than our forecast. After evaluating the positive second quarter business trends that could account for the large upside variance, we determined that a review of our inventory valuation methodology used to calculate our cost of goods sold might be appropriate. As a result, we began an internal review of our methodology to determine the scope and magnitude of this issue. We will report our findings as soon as we have completed our review."
Because the review is still underway, the company and Deloitte & Touche LLP, the company's independent registered public accounting firm, are unable to quantify with certainty at this time the impact on the company's historical financial statements. However, it has concluded that either a retrospective application of a preferable accounting methodology or a restatement of its previously issued financial statements may be required.
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