Outdoor clothing and equipment retailer Kathmandu yesterday pleaded guilty to seven charges of breaching the Fair Trading Act.
The charges follow a Commerce Commission investigation and related to the way discontinued items were displayed and priced during sales.
The company is due to be sentenced next month.
Kathmandu is oneof the country's leading sellers of jackets, tents and sleeping bags and made headlines in April when a 51 per cent stake sold in a deal that valued the Christchurch-based company at $275 million.
Kathmandu is well known for its regular sales.
Court documents show that the commission warned Kathmandu about its in-store signs advertising items for sale in 2003.
It visited Kathmandu's Queen St, Auckland, store during sales in 2004 and found that in certain colours, some items advertised at a 50 per cent or 60 per cent discount had been marked down for months before the sale - and remained at the discounted price for months after.
The commission would not comment on the case but a court document read: "Had consumers been aware that, for example, the Astra jacket in colour 'moonlight' was available at the discounted price from January through to August 2004, they may not have felt pressured to purchase this item during the period of either the Easter or Winter Sale."
The charges related to four products, Astra Jacket, Toscana Jacket, Everest Vest, Shetland Jumper, that, in many cases, were discounted because they were an outdated style or colour.
Since the investigation, Kathmandu has changed the way it displays its already discounted goods during sales and has appointed a compliance officer for its New Zealand operation.
"The commission has visited our stores during the intervening period and observed the changes we have now made," said Kathmandu general manager Mark Todd.
He would not make further comment until after sentencing.
The Consumers' Institute chief executive, David Russell, said the case was a reminder for retailers to follow the law.
He said Kathmandu used a marketing technique of frequently offering large reductions.
"Their marketing is regularly based around sales. This is where retailers have to be very careful."
Retailers must be "absolutely sure" their sale products are on sale and clearly identify limitations.
