Claire’s Stores will delay filing its fiscal 2007 annual report and fourth-quarter results to pre-clear an accounting issue with the Securities and Exchange Commission staff.
The costume jewelry and accessories retailer explained that while reviewing its results and discussing certain accounting positions with its independent auditors, it decided to ask for a determination regarding the proper treatment of “key money” paid to secure lease rights for the company’s stores in France.
Under Claire’s current accounting practice, key money is an intangible asset with an indefinite life, but it might also be considered a direct cost of the leases. If Claire’s changes its accounting practice, the company added, it would be required to amortize these costs and to record a non-cash charge, reducing net income and diluted earnings per share.
Claire’s stressed that it does not believe amortization will have a material impact on its net income or financial position for this fiscal year. The company added that it expects to meet or exceed its prior fourth-quarter and 2007 guidance.