Upscale retailer Saks Fifth Avenue is defrauding independent businesses by not paying them for their products, the companies allege.
Sellers say they are entitled to tens of thousands of dollars in some cases after the department store failed to pay for orders. Wall Street Journal reported.
According to Tony Brands, the brand generated sales of approximately $6 billion last year. WSJ.
Reports that Saks was cheating suppliers first surfaced last year, around the time parent company HBC was negotiating a $2.65 billion deal to acquire rival Neiman Marcus.
One of the people speaking out is Emiliano Shnitzer-Bartocci, who claims that Saks Off Fifth, the discount retailer’s brand, owes his company CTE Watch $40,000.
Independent companies including Luna Bronze, founded by Maddy Balderson (pictured), claim they are being ripped off by upscale retailer Saks Fifth Avenue.
“You have the money to make an acquisition, but you can’t pay the people you owe money?” Shnitzer-Bartocci told the WSJ.
“They sold the merchandise we gave them. They made money from it, and yet they still haven’t paid us back.”
Saks Fifth Avenue has entered into a deal to acquire luxury rival Neiman Marcus Group, owner of department stores Neiman Marcus and Bergdorf Goodman, with online giant Amazon taking a minority stake.
The new entity will be called Saks Global and will create a luxury giant at a time when sales in the sector are declining.
Other small businesses who say they are in a similar situation include self-tanning entrepreneur Maddy Balderson, who claims Saks owed her company Luna Bronze $9,000.
She says she placed five orders for Saks and received a sixth before deciding to leave the retail giant.
Merchants say they are owed tens of thousands of dollars in some cases after the department store failed to pay for orders
Balderson says she bombarded Saks with emails, to no avail. In March, she was told her products would no longer be sold by the retailer.
Skincare company Terre de Mars claims Saks owes it more than $8,000. Founder Pouland Djmali was dismayed when he initially received a check for just $74, despite waiting for payment on 19 orders
On Wednesday he received another one for just over $5,000, but Saks has told him its products will no longer be in stock.
Skin care company Terre de Mars claims Saks owes them more than $8,000, founder Pouland Djmali says
Meanwhile, the company Jolie Skin, which makes shower head filters, says it is waiting for a $15,000 payment.
“There is no credibility in the world that can outweigh not getting paid,” CEO Babenzien said. “Brands are not banks for retailers, and that’s how many of them have been treating brands for years.”
Some suppliers have even been forced to take legal action to regain their revenue.
Last year, jewelry brand Phillips House was owed more than $100,000 and only received payment after it filed a lawsuit accusing Saks of breach of contract by failing to pay.
But for smaller suppliers, missed payments can threaten their survival.
“We watch every penny,” says Lisa Strain, owner of a skin care company. “We can’t take this kind of hit.”
Reports that Saks had defrauded suppliers first emerged last year, around the time the company was negotiating a $2.65 billion deal to buy rival Neiman Marcus
Emiliano Shnitzer-Bartocci claims his company CTE Watch is owed tens of thousands of dollars by Saks Off Fifth, the brand’s discount outlet
Strain said Saks owed her company Kari Gran Skin $1,400, but she finally paid last month.
According to experts, most retailers aim to pay suppliers within 60 days.
A Saks spokeswoman told the Wall Street Journal that the company is committed to meeting its obligations to its suppliers.
“Any delayed payments are a result of us navigating our business through the current challenging macroeconomic conditions,” she said.
She added that no money earmarked for suppliers would be used for the Neiman Marcus acquisition.