Birmingham, AL, May 10--Saks Inc. on Monday said it has fired its chief accounting officer and other top officers after an internal investigation into improper collections of markdown allowances found that $20 million was inappropriately taken from vendors between 1999 and 2003.
The company -- which is also the target of an informal inquiry by the Securities and Exchange Commission and U.S. Attorney's Office in New York -- said no improper collections were identified as having taken place last year. Saks said it would reimburse vendors for money taken.
Suppliers pay markdown money to compensate stores when they don't sell products or are forced to take a deeper markdown than expected. Over the past few years, stores have placed more financial pressure on suppliers, and that's expected to get worse as stores consolidate and have more power in negotiations.
As a result of the review, the retailer said it has asked Chief Accounting Officer Donald Wright and Saks Fifth Avenue Chief Administrative Officer Donald Watros to resign from their positions. Brian Martin, formerly the company's general counsel, was also asked to resign.
Saks said other employees "directly involved in the over-collection" will also be asked to resign. The company added that employees who failed to "adequately supervise" those involved in such over-collections will receive disciplinary actions including termination.
The company expects to restate of financial statements for fiscal 1999 through the third quarter of fiscal 2004. The restatement will be completed on or before Sept. 1.
