"We are in the process of reviewing and canceling certain orders. There has been some delay in payments as we determine what merchandise will be needed for the season and what should be returned to suppliers," Vice President and Treasurer David Sternblitz told CNBC. "Many of our contractual agreements with suppliers allow for the return of a percentage of merchandise."
The company said it does have cash on hand to pay its suppliers, and it expects sales momentum will build heading into the Christmas holiday, according to the Journal.
CL King & Associates analyst William Armstrong said much of the company's struggles can be attributed to marketing. The retailer — which had $465 million in debt at the end of October — hasn't had the money to invest as much in advertising, while Signet's Kay Jewelers has ads running frequently during popular time slots, such as during football games.
The jeweler has closed more than 200 locations in the past year. Armstrong also noted that 400 of the retailer's leases are set to expire in the next 19 months, which likely means the company will shutter more shops.
Zale management has repeatedly said it will not slash prices on its jewelry this year, but Armstrong said it's getting to the point where they may have no choice.
"Something is seriously wrong, and I don't know what they can do to fix that this late," he said.
Zale has been under scrutiny for some time, including a SEC investigation into financial irregularities.
Over the past year, a record number of jewelry stores have filed for bankruptcy and liquidated inventory. The narrowing competition appears to have strengthened the business of some jewelers, but not Zale.
"I don't know if they're in danger of bankruptcy at this point, but let's see what kind of numbers they report in January," Armstrong said.