Luxury retailer Saks Fifth Avenue is ripping off independent businesses by failing to pay them for their products, the companies say.
Sellers say they are owed tens of thousands of dollars in some cases after department stores failed to pay for orders. The Wall Street Journal reported.
The Tony brand had sales of around $6 billion last year, according to WSJ newspaper.
Reports that Saks had been ripping off its suppliers first emerged last year, around the same time its parent company, HBC, was negotiating a $2.65 billion deal to buy rival Neiman Marcus.
Among those who have spoken out is Emiliano Shnitzer-Bartocci, who claims that Saks Off Fifth, the retailer’s discount brand, owes his company CTE Watch $40,000.
Independent businesses including Luna Bronze, founded by Maddy Balderson (pictured), say they are being ripped off by luxury retailer Saks Fifth Avenue.
“Do they have the money to make an acquisition, but they can’t pay the people they owe them to?” Shnitzer-Bartocci told the WSJ.
“They sold the merchandise we gave them, made money from it, and still haven’t paid it back.”
Saks Fifth Avenue has signed a deal to buy luxury rival Neiman Marcus Group, owner of department stores Neiman Marcus and Bergdorf Goodman, with online giant Amazon holding a minority stake.
The new entity will be called Saks Global and will create a luxury powerhouse at a time when sales in the sector have been weakening.
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 had completed five orders for Saks and received a sixth before deciding to stop buying from the retail giant.
Sellers say they are owed tens of thousands of dollars in some cases after department stores failed to pay for orders.
Balderson says she bombarded Saks with emails, to no avail. In March, she was told the retailer would no longer stock her products.
Skincare company Terre de Mars claims it is owed more than $8,000 by Saks. Founder Pouland Djmali was stunned when he initially received a check for just $74, despite expecting payment for 19 orders.
On Wednesday, she received another one for just over $5,000, but was told her products would no longer be available at Saks.
Skincare company Terre de Mars alleges Saks owes them more than $8,000, according to founder Pouland Djmali
Meanwhile, shower head company Jolie Skin says it is expecting a $15,000 payment.
“There is no credibility in the world that can make up for not getting paid,” said Babenzien, CEO of Jolie Skin. “Brands are not banks for retailers, which is how many of them have treated brands for years.”
Some suppliers have even been forced to take legal action to recover their profits.
Jewelry brand Phillips House was owed more than $100,000 last year and managed to secure payment after filing a lawsuit alleging Saks had breached its contract by failing to pay.
But for smaller providers, late payments can threaten their survival.
“We watch every penny,” said Lisa Strain, owner of a skin care company. “We can’t absorb hits like this.”
Reports that Saks had been ripping off suppliers first emerged last year, around the same time its parent company, HBC, was negotiating a $2.65 billion deal to buy rival Neiman Marcus.
Emiliano Shnitzer-Bartocci claims that Saks Off Fifth, the brand’s discount outlet, owes his company CTE Watch tens of thousands of dollars
Strain said Saks owed her company, Kari Gran Skin, $1,400 before finally paying up last month.
According to experts, most retailers aim to pay suppliers within 60 days.
A Saks spokeswoman told the WSJ that the company is committed to meeting its obligations to its suppliers.
“Any delays in payments are due to the need for our business to navigate the current difficult macroeconomic environment,” the spokeswoman said.
He added that no money designated for suppliers would be used in the Neiman Marcus acquisition.