Factbox: Fashion brands cut orders from Asian apparel makers

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

FILE PHOTO: Mg More, union president of the Myan Mode garment factory, examines a contract outside his hostel, in an industrial area on the outskirts of Yangon, Myanmar April 24, 2020. REUTERS/Myat Thu Kyaw/File Photo

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

A few retailers are placing new orders, but the long-term survival of Asian garment factories and the well-being of its laid-off workers are uncertain.

Here is a list of the companies, the status of their orders from Asian apparel manufacturers, and the companies’ comments on the situation.

– C&A (property of the COFRA Group)

Order Status: Sent a letter to suppliers in March canceling all orders through June. He later backtracked, promising to pay for 93% of orders completed or in production and to negotiate settlements for the remaining 7%. Started discussing new orders.

Comment: “We have reached 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: canceled some orders, but will pay for orders that were to leave supplier factories until April 10 inclusive. Selecting ranges and continuing to order stock for later in the year.

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

– Walmart Inc.

Order Status: Will pay for orders, with some exceptions. Placed new orders in South and Southeast Asia.

Comment: “Based on our discussions, we estimate that these exceptions will represent less than 2% of our estimated annual private label clothing orders in Bangladesh.”

– Gap Inc.

Order status: Reuters could not determine the status of the orders.

Comment: “We are focused on reducing expenses while doing what is in the best interests of our employees, customers and partners, as well as the long-term health of our business. This job requires diligent management of our inventory, including identifying which products we can sell in the short term, which ones we can stock now for resale later, and which orders we need to cancel.

– Bestseller A/S

Order Status: Committed to paying for orders already placed and in production, but negotiated changes in terms with suppliers. Says he is placing a reduced volume of orders for the fall.

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

-H&M

Order Status: Will pay for orders and place new ones, although the crisis is impacting plans.

Comment: “We place great importance on the relationship with our suppliers – they are our partners – and now, in this difficult situation, it is more important than ever to respect our commitments, to be transparent and to have good practices. ‘responsible purchasing’.

– Inditex (owns Zara and other brands)

Order Status: Will pay for orders whether completed or in production.

Comment: “We ensure that all orders in production are fully paid for in accordance with the original payment schedule, making full payment even where current circumstances mean that it is not yet possible to ship the products.”

– Marks and Spencer Group Plc

Order Status: Payment for orders shipped by March 24, Payment for all garments made for almost all orders not shipped by March 24.

Comment: “We have paid for all products shipped and for the vast majority of orders we will prepay for all garments and fabrics incurred – which is the most expensive cost for a supplier – and at all our partners we will endeavor to ensure that no tissue is wasted and used later.

– 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 fabrics that suppliers have already purchased on future orders.”

– J Sainsbury Plc

Order status: paid for everything made for it. Comment: “We have honored all contracts with our clothing suppliers.”

-ASOS Plc

Order Status: Originally canceled between 5 and 6 million pounds ($6 million to $7.3 million) of orders, but has now committed to full payment for all orders placed that it had previously cancelled.

Comment: “We have worked closely with our own-brand suppliers to reduce the volume of cancellations each day by restoring orders and responding to customer demand. After taking the time to fully work through the affected volumes, we have now committed to fully pay for all orders placed that we had previously cancelled. »

– Mothercare Plc

Order status: Reuters could not determine the status of the orders.

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

– Primark (part of Associated British Foods Plc)

Order Status: Said it would pay £370 million in orders completed or in production for delivery by April 17. Primark did not specify what percentage of its total commitments this represents.

Comment: “Following lengthy one-on-one conversations with its own suppliers… Primark has committed to paying some £370 million ($450 million) in additional orders for products in addition to the 1, £5 billion of stock in stores, depots and in transit.

– Mango

Order Status: Will pay for orders already shipped, but delay payment for those in production. Placed new orders with factories in China and Bangladesh.

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

-Debenhams

Order status: Reuters could not determine the status of the orders.

Comment: Did not respond to requests for comment.

– Fast Retailing Co Ltd (owner of Uniqlo)

Order Status: Committed to paying for orders and placing new orders.

Comment: “We believe 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 the status of the orders.

Comment: Decline to comment.

– Sports Direct (part of Frasers Group Plc)

Order status: Reuters could not determine the status of the orders.

Comment: Did not respond to requests for comment.

– New look

Order Status: Canceled 20% of Spring/Summer orders from Bangladesh.

Comment: “We unfortunately had to inform suppliers in early April that we could not place new orders until further notice and were temporarily deferring payments from unpaid suppliers until the situation improved.” He said he has since started making some payments to suppliers.

– Edinburgh Woolen Mill

Order status: Reuters could not determine the status of the 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 the status of the orders.

Comment: Did not respond to requests for comment.

– J.C. Penney Co.

Order status: late payment for orders.

Comment: “Like many retailers, JC Penney has extended payment terms to 60 days in response to the coronavirus (COVID-19) pandemic.”

– Kohl’s Corp.

Order status: Reuters could not determine the status of the 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

Michael O. Stutler