By and  on June 7, 2007

The sidewalk sellers of fake designer goods now aren't the only ones on high alert.

In a case bound to send a chill through the retail industry, Fendi and Sam's Club, a division of Wal-Mart, have settled a dispute that claimed the U.S. warehouse club sold counterfeit handbags and leather goods in five states.

Under the sealed agreement, Sam's Club agreed to pay the Italian luxury firm a confidential amount to settle the dispute and dismiss the action, which had charged the retailer with selling "significant quantities" of counterfeit items valued "in the millions of dollars." Sam's Club is also offering its customers a full refund for any counterfeit Fendi bags, wallets and scarves they purchased.

"We're pleased with this outcome," Michael Burke, chairman and chief executive officer of Fendi, told WWD. "It's good for our customers, our trademarks and their customers, too. Counterfeiting is a global problem."

Burke declined to discuss specifics about the Sam's case, but pledged to continue Fendi's efforts against counterfeiting, disclosing that the luxury brand has filed suits against five other U.S. retailers: Burlington Coat Factory, Ashley Reed, Filene's Basement, Annie Sez and Colton International. Those cases continue. He noted that counterfeit goods were also widely distributed in Europe.

Sam's Club had earlier removed all Fendi-label products from its shelves. When Sam's Club was presented with the complaint, it initially balked at the idea of removing the products, maintaining they were not counterfeits but actual Fendi goods.

Susan Koehler, a spokeswoman for Sam's Club, said Wednesday that its statement about Fendi products not being counterfeits "was made early on. As the case evolved, we were provided additional information. We want to try to communicate to our members our apologies. We want to make this right."

Sam's Club will be sending letters to customers with information on how to return Fendi merchandise.

But the litigation seems to have done little to dampen Sam's thirst for designer merchandise. Patty Warwick, who oversees apparel, jewelry and handbags as the retailer's senior vice president, said recently the division was "trying to cement and develop direct relationships with companies such as Prada, Coach and Kate Spade, and with other high-end manufacturers."

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