Saks Inc. announced that the Securities and Exchange Commission has launched an informal investigation into vendor markdown allowances collected by one of six merchandising divisions of its Saks Fifth Avenue stores. The probe also is examining the adequacy of a 2002 Saks internal investigation into this matter.
Markdown allowances are payments to retailers by vendors whose merchandise didn’t sell at its original price, and thus had to be marked down.
The company stated that according to a preliminary estimate, from 1999 through 2003 Saks Fifth Avenue improperly collected as much as $21.5 million in markdown allowances from vendors. Saks added that most of these allegedly improper collections occurred from 2000 through 2002, and that it currently believes no improper collections were made in 2004.
The company stressed that it will reimburse or compensate the affected vendors for any improperly collected markdown allowances and will take appropriate personnel actions after it fully reviews the investigation’s findings.
In a separate matter, Saks said it will restate results from 1999 through the third quarter of fiscal 2004, stemming from the way it accounts for certain operating leases. That issue has led to restatements at scores of other retailers in the past few months.