Exchanges and refunds

Received a dress as a gift and it did not fit around the arms, tried exchanging it and the manager was happy and was about to exchange, the sales lady takes the dress and smells it and stops the manager saying it does not smell so good 'weird smell', then the manager does the same and says "sorry it is not in a resaleable condition" I am so disappointed, can't even put my arms through the sleeves. It seems like this is what they are famous for 'trying by all means to avoid exchanges and refunds by using the term NOT in a resaleable condition'