Didn't know where to put this, but this is pretty crazy. Apparently Saks has had a commonplace tactic of passing the cost of weak sales onto its suppliers. 
From The New York Times:
From The New York Times:
May 10, 2005
3 Saks Executives Fired Over Vendor Payments
By TRACIE ROZHON
Saks Inc. is cleaning house after an internal audit committee found wrongdoing in how its Saks Fifth Avenue chain was collecting "markdown money" from vendors.
Saks, which also owns Carson Pirie Scott, Parisian and other chains, said yesterday that it had fired three senior executives, including the brother of R. Brad Martin, the Saks Inc. chief executive, along with "anyone who was directly involved" in any improper behavior concerning vendor allowances at Saks Fifth Avenue.
Yesterday's news release also noted that the audit committee found no direct "culpability" among other senior corporate level officers. But directors nevertheless criticized "the level of communication" between them and the audit committee and, in a rare move, determined that bonuses for several executives - including the chief executive, Mr. Martin, and the chief financial officer, Douglas E. Coltharp - "should be reduced or eliminated."
Those fired included Brian Martin, the chief executive's brother, who was general counsel at Saks Inc. in 2002 - when a previous markdown investigation was done - and is now a senior vice president; Donald Watros, the chief administrative officer of Saks Fifth Avenue, who was also asked to forfeit vested options and face "other financial penalties"; and Donald Wright, now the chief accounting officer at Saks Inc.
The company also announced that it was taking away accounting and financial reporting matters from Mr. Coltharp, leaving him with "treasury, strategic planning, external development and real estate."
Although Saks said its own investigation was almost complete, both the Securities and Exchange Commission and the United States attorney for the Southern District of New York are still investigating markdown money at Saks Fifth Avenue.
In the traditional practice of collecting markdown money, retailers demand payment from suppliers to cover the cost of putting items on sale when demand is soft - or, at least, when the stores say it is. If the vendors do not go along, suppliers say, the retailers often threaten not to order their clothes again.
Vendors say the stores are increasing their demands, in their rush to bolster profits, and some privately label the practice blackmail and extortion.
Spokesmen for Saks Inc. also could not be reached.
Saks's internal audit committee said it had completed its work - aside from a few interviews - and management would now try to assess the amount improperly collected from vendors, in what a Saks press release termed "overcollection" from vendors. Initially, Saks announced the amount improperly collected from 1999 to 2003 was about $20 million.
But yesterday's announcement by Saks said management would also be looking into money collected before 1999, adding that "no improper collections during the 2004 fiscal year were identified."
That announcement was significant because a new team took over the leadership of Saks Fifth Avenue at the beginning of 2004, including a new chief executive, Fred Wilson, and three other top managers.
The investigations have had a significant impact on the company's stock: last week, the New York Stock Exchange notified Saks that its stock would start trading with LF attached to its ticker symbol. That means the company has not filed its periodic reports with the S.E.C. "in a timely manner," according to a news release yesterday. Nevertheless, Saks's stock rose 9 cents yesterday, closing at $17.70.
The investigations have affected the possible sale of Saks Inc., which this spring asked Goldman Sachs to help it consider its options. While some private equity firms said they would be interested in acquiring the whole of Saks Inc. - with or without Saks Fifth Avenue - the company recently announced it would sell two department store units to Belk, a privately owned chain, for $622 million.
Last night, Bill Dreher, a retail analyst with Deutsche Bank, said he and his fellow analysts were having a difficult time evaluating the company because of what the company itself, in a previous announcement, called the unreliability of its past financial statements.
"It's like building a house on a sandy foundation," Mr. Dreher said. "We need the bedrock of reliable financial results to forecast."
While the new management at Saks Fifth Avenue was working toward a turnaround, and while Goldman was talking with potential buyers, "the pressure on the shares has been caused by a lack of conviction behind the numbers," Mr. Dreher said. "How can we gauge their improvement?"
Yesterday, C. Warren Neel, chairman of the audit committee of Saks's board, said the committee "believes that its investigation was thorough and deliberate, leaving no stone unturned."
Saks said it would name a new chief accounting officer. Yesterday's announcement said the job had been "upgraded to report directly to the chief executive" of Saks Inc. and to the audit committee.
Management has also been asked by the audit committee to develop "an action plan for enhanced ethics training," the release read, as well as an "ethics 'hotline.' "
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