Embattled retailer Saks Inc. announced that its audit committee has launched a supplemental internal inquiry into the timing of the recording of inventory markdowns and vendor markdown allowances at Saks Fifth Avenue Enterprises.
The audit committee will also investigate possible overcollections of vendor markdown allowances in merchandising divisions that were not the subject of the committee’s prior investigation. In addition, it will look into
whether the company has improperly assessed “chargebacks” on merchandise vendors for not complying with the company’s logistics, transportation, or billing policies.
Saks stated that the new inquiry is connected to its previously disclosed restatement of its financials from fiscal 1999 through the third quarter of fiscal 2004 and the preparation of its annual report for the fiscal year ended January 29, 2005. The company added that although the new inquiry should not further delay its restatement, it might necessitate a restatement of 2004 fourth-quarter results as well.
The company added that it expects its 2004 annual report to be filed by September 1, and that its report for the fiscal quarter ended April 30, 2005, will be filed at about the same time.
In March, the Securities and Exchange Commission launched an informal investigation of Saks that it subsequently upgraded to a formal order; the U.S. Attorney’s Office for the Southern District of New York has initiated an investigation of its own. Last month Saks asked for the resignations of three senior executives, including its chief accounting officer.