I can tell you how it works after being in the business for a seemingly a lifetime. The Lowes/HD's/Sears of the world really don't suffer from the returns.......it is the vendor whether it is Husky or Echo. The retailer has all the leverage, the vendor agreement is set up were they simply file a claim against the supplier for credit, most companies do not want to pay additional shipping and handling to have the product returned, especially when it has had gas in it. The retailer, gets 100% credit and gets to sell the returned product, unless they have a destroy clause in their agreement, most don't.
Today most companies try to get what is known as a defective allowance built into the vendor agreement based on the product's industry average failure rate. Hypothetical example: Lowe's get's Husky to allow a 3% defective allowance, this means Lowes deducts 3% off every invoice for defectives, they pool this in an account to cover every return, but retailers also put a clause in the vendor agreement if the return's exceed the defective allowance they can deduct 100% of the cost of the product directly from the next invoices. Of course companies/suppliers try to build this into there cost, but a bad model or a situation like hurricane returns can far exceed what they built in. Trust me I have negotiated this countless times over the years, all the retailers accounting departments can tell you to the penny what defective/return rates run and usually inflate it a couple percent to create extra profit. The suppliers are the losers, not the retailers. The suppliers have no choice but to agree to the terms if they want to sell to that channel of distrobution.
It's like being a drug addict, once they start selling box stores, they get hooked on the sales, after a couple of years of this especially with a publicly held company they can't just afford to stop as it would make the financials look horrible and people would dump their stock. It looks like Husky's fourth quarter profitability could take a major hit as a result, it's what you get for dancing with the devil. Their results for the year are already lackluster, they need to focus on the independent dealers.