DALLAS (AP) — Jewelry retailer Zale Corp. said Monday the Securities and Exchange Commission has started a probe into its accounting, executive pay and other matters.
Shares of Zale fell $2.64, or 9.5 percent, to close at $25.16 on the New York Stock Exchange after the news. They have ranged from $24.02 to $34.42 in the past 52 weeks.
The SEC is looking into Zale's accounting for extended service agreements, leases and accrued payroll as well as other matters, Zale said in a statement.
The SEC has subpoenaed materials related to the accounting issues as well as executive pay and severance, earnings forecasts, stock trading and the timing of certain vendor payments.
The company's stock fell 8 percent in one day in November after it said a quarterly loss would be larger than expected and sales at stores open at least a year, a key marker in retailing, would fall instead of rise. The company also lowered its earnings outlook in January 2005.
Former CEO Mary L. Forte received a severance package worth $8.5 million when she resigned in January under pressure from the board. Company officials said financial results had been disappointing.
Forte was replaced by former Supercuts Inc. CEO Mary E. "Betsy" Burton, a member of Zale's board and its executive compensation committee. More recently, longtime Zale executive and chief operating officer Sue Gove also left.
Zale operates more than 2,300 stores under names including Zales Jewelers, Bailey Banks & Biddle Fine Jewelers and Piercing Pagoda.