NEW YORK — Saks Fifth Avenue is in mea culpa mode.
The retailer’s parent, Saks Inc., said Friday that it has launched a “supplemental inquiry” into overcollections of vendor markdown money, even as Saks Fifth Avenue’s chairman and chief executive officer, Fred Wilson, has been personally calling on top vendors, offering apologies and promises that Saks will repay “every penny” it owes.
Saks Inc. said the supplemental inquiry, coming on top of its previously disclosed internal probe, is reviewing:
The timing of the recording of both inventory markdowns and vendor markdown allowances at Saks Fifth Avenue Enterprises.
Overcollections of vendor markdown allowances in any of the merchandising divisions of SFAE that were not the subject of the audit committee’s prior internal investigation.
Improper chargebacks, which are fees for failing to comply with the retailer’s logistics, transportation or billing policies.
While the company previously determined $20 million in improper markdown allowances from 1999 to 2003, it said Friday it is continuing to look at markdown allowances before fiscal 1999. It also said it believes some inventory markdowns and some vendor markdown allowances may have been incorrectly recorded at SFAE in one or more fiscal quarters prior to 2005.
Additionally, Saks said that results for the first quarter of fiscal 2005 released on May 17 reflected a $1.2 million reduction to net income, based upon a “preliminary determination” that $2 million in vendor allowances was “incorrectly accelerated” into the quarter.
Due to the internal reviews, Saks Inc. will adjust financial statements going back to 1999 and has delayed its annual report and Form 10-K covering 2004. The company expects that everything will be filed by Sept. 1, including its first-quarter report for the period ended April 30.
Saks is the subject of separate investigations by the Securities and Exchange Commission and the U.S. Attorney’s Office in Manhattan. The retailer has informed both the SEC and the U.S. Attorney’s Office of the supplemental internal inquiry and stated that the retailer is “continuing to cooperate fully” with the two governmental agencies.
Sources reiterated Friday that the bridge area was the subject of the earlier probe, and they believe contemporary sportswear could be part of the latest internal probe. Key contemporary vendors at Saks include Theory, Marc by Marc Jacobs, Cynthia Steffe, Diane von Furstenberg, Earl, Seven For All Mankind, Juicy and DKNY.
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