May 18, 2020 / 11:01 PM / 14 days ago

FACTBOX-Fashion brands cut orders with Asian garment makers

May 19 (Reuters) - As stores closed across Europe and the United States in March and April in response to the new coronavirus, many fashion brands and retailers cancelled orders for clothes, bags, and shoes worth billions of dollars from Asian garment factories, forcing them to close and lay off hundreds of thousands of workers.

After a public outcry, some Western companies agreed to pay for orders that have already been shipped or are in production. Others asked for discounts or have delayed payment, leaving suppliers struggling to stay afloat.

A few retailers are making new orders, but the long-term survival of Asia’s garment factories and the welfare of its laid-off workers are uncertain.

Following is a list of companies, the status of their orders with Asian garment makers and the companies’ comments on the situation.

- C&A (owned by COFRA Group)

Order status: Sent a letter to suppliers in March cancelling all orders through to June. Later backtracked, promising to pay for 93% of orders that are finished or in production and negotiate settlements for the remaining 7%. Has started to discuss new orders.

Comment: “We have been reaching out to our suppliers to identify ways to mitigate the devastating economic impact of this crisis on our business and our suppliers.”

- Next Plc

Order status: Cancelled some orders but will pay for orders that were due to leave supplier factories up to and including April 10. Selecting ranges and continues to order stock for later in the year.

Comment: “Our product teams have cancelled stock that we no longer need and identified stock that we can carry over to future seasons. We have made good progress and saved around 290 million pounds ($354 million) on stock purchases. We have endeavoured to be fair to our suppliers.”

- Walmart Inc

Order status: Will pay for orders, with a few exceptions. Has placed new orders in South and Southeast Asia.

Comment: “Based on our discussions, we estimate that such exceptions will amount to less than 2% of our estimated annual private brand apparel orders in Bangladesh.”

- Gap Inc

Order status: Reuters could not determine status of orders.

Comment: “We are focused on reducing expenses while doing what is in the best interest of our employees, customers and partners, as well as the long-term health of our company. This work requires diligently managing our inventory, including identifying those products we can sell in the short-term, those we can store now to sell later, and those orders we need to cancel.”

- Bestseller A/S

Order status: Committed to paying for orders already made and in production, but has negotiated changes in terms with suppliers. Says it is placing reduced volume of orders for Autumn.

Comment: “Any changes in terms and volumes have been agreed with all our suppliers through these individual negotiations and all due invoices to suppliers have been paid enabling suppliers to cover their expense.”

- H&M

Order status: Will pay for orders and is placing new ones, though the crisis is impacting plans.

Comment: “We highly value the relationship with our suppliers – they are our partners – and now, in this difficult situation, it’s more important than ever to stand by commitments, being transparent and having responsible purchasing practices.”

- Inditex (owns Zara and other brands)

Order status: Will pay for orders, whether finished or in production.

Comment: “We are ensuring that all orders that are in production are completely paid according to the original payment schedule, making full payment even in the event that current circumstances mean that it’s not yet possible for the products to be shipped.”

- Marks and Spencer Group Plc

Order status: Paying for orders shipped before March 24, paying for all made garments for almost every order not shipped before March 24.

Comment: “We have paid for all shipped products and for the vast majority of orders we will pre-pay for all garments and committed fabric - which is the most expensive cost for a supplier - and across all our partners we will aim to ensure that no fabric goes to waste and is used at a later date.”

- Tesco Plc

Order status: Committed to paying for orders, shipped or unshipped.

Comment: “We know how difficult this time is for our suppliers, so we are not changing our payment terms or asking for discounts, and will use most of the fabric suppliers have already bought on future orders.”

- J Sainsbury Plc

Order status: Has paid for everything manufactured for it.

Comment: “We have honoured every contract with our clothing suppliers.”

- ASOS Plc

Order status: Delayed and canceled orders worth between 5 million pounds and 6 million pounds ($6 mln to $7.3 mln). Will pay for orders that were shipped by March 13. Negotiating settlements with suppliers individually.

Comment: “We have had to work with our suppliers to react to this change in demand, reviewing our stock intake, reducing our reliance on categories that have been affected such as dresses and tailoring, and shifting into higher-demand product, like loungewear and activewear. As a result, we have had to delay some orders and cancel others.”

- Mothercare Plc

Order status: Reuters could not determine status of orders.

Comment: “We have been working very closely with our manufacturing and franchise partners since the beginning of the crisis to mitigate the impact on their businesses during these unprecedented times and will continue to do so.”

- Primark (part of Associated British Foods Plc)

Order status: Said it will pay for 370 million pounds in orders either finished or in production for handover by April 17. Primark did not say what percentage of its total commitments that represents.

Comment: “Following extensive one-to-one conversations with its own suppliers... Primark has committed to paying for some 370 million pounds ($450 mln) of additional orders for product over and above the 1.5 billion pounds of stock in stores, depots and in transit.”

- Mango

Order status: Will pay for orders already shipped but delaying payment for those in production. Has made new orders from factories in China and Bangladesh.

Comment: “We have committed to pay for products already shipped and for those that are still in production we have negotiated with the suppliers to extend the payment time by one month.”

- Debenhams

Order status: Reuters could not determine status of orders.

Comment: Did not respond to requests for comment.

- Fast Retailing Co Ltd (owns Uniqlo)

Order status: Has committed to paying for orders and is placing new orders.

Comment: “We believe that brands in our industry have an important role to play in mitigating the humanitarian and economic threats posed by the COVID-19 pandemic.”

- Arcadia Group (owns Topshop and other brands)

Order status: Reuters could not determine status of orders.

Comment: Declined to comment.

- Sports Direct (owned by Frasers Group Plc)

Order status: Reuters could not determine status of orders.

Comment: Did not respond to requests for comment.

- New Look

Order status: Cancelled 20% of spring/summer orders from Bangladesh.

Comment: “We regrettably had to inform suppliers at the beginning of April that we could not place new orders until further notice and would be temporarily postponing outstanding supplier payments until the situation improves.” It said it has since started making some supplier payments.

- Edinburgh Woollen Mill

Order status: Reuters could not determine status of orders.

Comment: Did not respond to requests for comment.

- Urban Outfitters Inc (owns Anthropologie, Free People, Terrain and other brands)

Order status: Reuters could not determine status of orders.

Comment: Did not respond to requests for comment.

- JC Penney Co

Order status: Delaying payment for orders.

Comment: “As many retailers have done, JC Penney extended payment terms to 60 days as a result of the Coronavirus (COVID-19) pandemic.”

- Kohl’s Corp

Order status: Reuters could not determine status of orders.

Comment: Did not respond to requests for comment.

$1 = 0.8199 pounds Reporting by Sonya Dowsett in Madrid, James Davey in London, Ritsuko Ando in Tokyo, Poppy McPherson in Bangkok and Ruma Paul in Dhaka Compiled by Poppy McPherson Editing by Bill Rigby

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