Inventories

12 Months Ended

Jan. 29, 2012

2. Inventories

As described in note 1(c), during the fourth quarter of fiscal 2012, the Company elected to change its method of accounting for inventory from the retail inventory method to the weighted average cost method. The Company believes the cost method is preferable to the retail inventory method because it more accurately measures the cost of the Company's inventory and provides better matching of revenues and expenses. Prior to fiscal 2012, the Company could not determine the impact of the change to the weighted average cost method, and therefore, could not retroactively apply the change. Had the Company not changed its policy for accounting for inventory, pre-tax income for the year ended January 29, 2012 would have been $2.6 million lower ($0.67 effect on both earnings per basic and diluted share). As a result of the accounting change, retained earnings as of January 30, 2011, decreased from $64.3 million to $62.7 million. There was no impact to net cash provided by operating activities as a result of this change in accounting policy.

Fiscal year 2012 quarterly financial data has been revised by the following amounts to reflect the change in accounting for inventory:

	Increase/(Decrease)
(in thousands, except share data)	Q1 FY2012			Q2 FY2012			Q3 FY2012

Cost of sales	$	(638	)	$	(1,699	)	$	101
Operating income (loss)	638			1,699			(101		)
Income tax expense	178			474			(28		)
Net income	460			1,225			(73		)
Basic earnings per share	0.12			0.32			(0.02		)
Diluted earnings per share	0.12			0.32			(0.02		)

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

+ References+ Details