NEW YORK — Saks Inc., completing an internal investigation, said Wednesday that it will reimburse vendors for more than $48 million in improperly collected markdown allowances from 1996 to 2003.
The company, which made the disclosure after the stock market closed, said that it also expected to restate financial results for 1999 through 2004 because Saks improperly timed the recording of the overcharges.
The conclusion of the inquiry by the firm's audit committee and board and the restating of financials might help expedite the Birmingham, Ala.-based retailer's plan to sell off its department stores and possibly its Saks Fifth Avenue division for which it received bids this week. Saks still faces investigations by the U.S. Attorney for the Southern District of New York and the Securities and Exchange Commission.
The company said its Saks Fifth Avenue division owes vendors $26 million for markdown allowances during the 1999-2003 fiscal years, and another $8.2 million during the 1996-1998 fiscal years. In addition, vendors will be paid interest at the rate of 7.25 percent annually, totaling about $14 million for the improperly collected markdown allowances.
Saks previously said that it owed $20 million to 12 vendors, including three owned by the same corporation. The three are believed to be Dana Buchman, Ellen Tracy and Juicy Couture, which are owned by Liz Claiborne Inc.
Important bridge labels include Elie Tahari, Eileen Fisher and Lafayette 148. Tahari and Fisher executives could not be reached for comment. Deirdre Quinn, president of Lafayette 148, said the company is not anticipating any payment from Saks.
Sources speculated that contemporary sportswear also has been affected. Key contemporary vendors at Saks include Theory, Marc by Marc Jacobs, Cynthia Steffe, Diane von Furstenberg, Earl Jean, Seven For All Mankind, Juicy Couture and DKNY.
The scandal resulted in the ouster of three senior executives on May 9: Donald Watros, chief administrative officer of Saks Fifth Avenue Enterprises; Brian Martin, a senior vice president of Saks Inc., and Donald Wright, chief accounting officer of Saks Inc. Martin is the brother of Saks Inc. chairman and chief executive officer R. Brad Martin.
In addition, the audit committee said the bonuses of several executives, including R. Brad Martin and the chief financial officer, Douglas Coltharp, "should be reduced or eliminated."
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