2. CHANGES IN ACCOUNTING PRINCIPLE

During the fourth quarter of Fiscal 2012, the Company elected to change its method of accounting for inventories from the retail inventory method to the average cost method. In addition, the Company has elected to capitalize additional supply chain costs, which were previously expensed as incurred. We believe that the changes are preferable because they better reflect the value of inventory as of the balance sheet dates, provide a better reflection of periodic net income and improve comparability with our peers.

The Company has applied the changes in method of inventory costing to all prior periods presented within the consolidated financial statements in accordance with accounting principles relating to accounting changes. The cumulative impact of the retrospective application of the changes in accounting principle as of January 30, 2010 was a $22.1 million increase in retained earnings. The impact of these changes in accounting principle to our income from continuing operations, net income and earnings per share for the year ended February 2, 2013 were increases of $0.5 million, $0.5 million and $0.03 respectively. The following tables detail the impact of the retrospective application on previously reported periods included in the consolidated financial statements (in thousands, except per share amounts).



CONSOLIDATED BALANCE SHEETS
January 28, 2012
	As reported		Effect of Change			As adjusted
Inventories	$	212,916	$	24,870		$	237,786
Deferred income taxes	17,188		(9,267		)	7,921
Accumulated other comprehensive income	12,685		195			12,880
Retained earnings	$	384,051	$	15,408		$	399,459

2. CHANGES IN ACCOUNTING PRINCIPLE (Continued)



CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Year Ended
	January 28, 2012							January 29, 2011
	As reported		Effect of Change			As adjusted		As reported		Effect of Change			As adjusted
Cost of sales	$	1,051,649	$	4,564		$	1,056,213	$	1,006,752	$	7,126		$	1,013,878
Gross profit	664,213		(4,564		)	659,649		667,247		(7,126		)	660,121
Income from continuing operations before income taxes	109,317		(4,564		)	104,753		134,806		(7,126		)	127,680
Provision for income taxes	32,092		(1,684		)	30,408		51,219		(3,299		)	47,920
Income from continuing operations	77,225		(2,880		)	74,345		83,587		(3,827		)	79,760
Net income	$	77,225	$	(2,880	)	$	74,345	$	83,124	$	(3,827	)	$	79,297

Basic earnings per share amounts
Income from continuing operations	$	3.03	(0.11		)	$	2.92	$	3.09	(0.15		)	$	2.94
Net income	$	3.03	(0.11		)	$	2.92	$	3.07	(0.14		)	$	2.93

Diluted earnings per share amounts
Income from continuing operations	$	3.01	(0.11		)	$	2.90	$	3.05	(0.14		)	$	2.91
Net income	$	3.01	(0.11		)	$	2.90	$	3.03	(0.14		)	$	2.89



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Year Ended
	January 28, 2012									January 29, 2011
	As reported			Effect of Change			As adjusted			As reported		Effect of Change			As adjusted
Net income	$	77,225		$	(2,880	)	$	74,345		$	83,124	$	(3,827	)	$	79,297
Other Comprehensive Income (Loss):
Foreign currency translation adjustment	(472		)	53			(419		)	5,596		102			5,698
Comprehensive income	$	76,753		$	(2,827	)	$	73,926		$	88,720	$	(3,725	)	$	84,995

2. CHANGES IN ACCOUNTING PRINCIPLE (Continued)



CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
	January 28, 2012								January 29, 2011
	As reported			Effect of Change			As adjusted		As reported			Effect of Change			As adjusted
Net income	$	77,225		$	(2,880	)	$	74,345	$	83,124		$	(3,827	)	$	79,297
Reconciliation of income from continuing operations to net cash provided by operating activities of continuing operations:
Deferred taxes	3,953			(1,684		)	2,269		27,473			(3,299		)	24,174
Inventories	(2,760		)	4,564			1,804		(2,476		)	7,126			4,650

As the Company elected to change its method of accounting for inventory during the fourth quarter of Fiscal 2012, the following table shows the effect of the change on the unaudited quarterly results of operations for the first three quarters of Fiscal 2012 and the Fiscal 2011 interim periods (in thousands, except per share amounts). Refer to Note 15 for the adjusted quarterly financial information.



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Fiscal Year Ended February 2, 2013
	First Quarter						Second Quarter								Third Quarter
	As reported		Effect of Change		As adjusted		As reported			Effect of Change		As adjusted			As reported		Effect of Change		As adjusted
Gross profit	$	176,918	$	1,728	$	178,646	$	114,606		$	98	$	114,704		$	206,246	$	3,287	$	209,533
Income (loss) from continuing operations before income taxes	35,282		1,728		37,010		(26,919		)	98		(26,821		)	50,216		3,287		53,503
Provision (benefit) for income taxes	11,690		585		12,275		(8,930		)	33		(8,897		)	15,192		1,006		16,198
Income (loss) from continuing operations	23,592		1,143		24,735		(17,989		)	65		(17,924		)	35,024		2,281		37,305
Diluted earnings (loss) per share from continuing operations	$	0.96	$	0.04	$	1.00	$	(0.74	)	$	—	$	(0.74	)	$	1.44	$	0.10	$	1.54

2. CHANGES IN ACCOUNTING PRINCIPLE (Continued)



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Fiscal Year Ended January 28, 2012
	First Quarter							Second Quarter
	As reported		Effect of Change			As adjusted		As reported			Effect of Change			As adjusted
Gross profit	$	183,587	$	(2,158	)	$	181,429	$	116,126		$	1,448		$	117,574
Income (loss) from continuing operations before income taxes	48,505		(2,158		)	46,347		(16,092		)	1,448			(14,644		)
Provision (benefit) for income taxes	19,421		(844		)	18,577		(6,315		)	558			(5,757		)
Income (loss) from continuing operations	29,084		(1,314		)	27,770		(9,777		)	890			(8,887		)
Diluted earnings (loss) per share from continuing operations	$	1.10	$	(0.05	)	$	1.05	$	(0.38	)	$	0.03		$	(0.35	)

	Third Quarter							Fourth Quarter
	As reported		Effect of Change			As adjusted		As reported			Effect of Change			As adjusted
Gross profit	$	200,539	$	(2,513	)	$	198,026	$	163,961		$	(1,341	)	$	162,620
Income (loss) from continuing operations before income taxes	54,378		(2,513		)	51,865		22,526			(1,341		)	21,185
Provision (benefit) for income taxes	20,686		(958		)	19,728		(1,700		)	(440		)	(2,140		)
Income (loss) from continuing operations	33,692		(1,555		)	32,137		24,226			(901		)	23,325
Diluted earnings (loss) per share from continuing operations	$	1.33	$	(0.06	)	$	1.27	$	0.97		$	(0.04	)	$	0.93