The story sounds fishy, but one way to have returns exceed sales is to ship 1,000 to stores on consignment, the store sells 500 of those for cash, the buyers return their 500 for refunds, and the store returns the remaining unsold 500. So 500 actual sales but 1,000 returns.
The 500 sent back by the consignment store aren't "returns" though, as they were never sold. That's just the equivalent of moving inventory from one warehouse to another.
