Updates and Analysis
C&A has reinstated a large volume of orders, but some remain canceled or postponed to 2021
The billionaire family that owns the company has the resources to honor all of C&A’s obligations but has chosen not to do so.
May 27, 2020
C&A, a European clothing retailer with a massive global production footprint, canceled orders across the board, on all goods already completed and in production, at the inception of the crisis—including more than $125 million in Bangladesh alone (conservatively estimated). Extrapolating from data available from Bangladesh suggests that the total volume of C&A’s cancellations, globally, exceeded $1.5 billion, affecting hundreds of suppliers and hundreds of thousands of workers.
The company has shifted its position considerably over the ensuing weeks, reinstating a substantial portion of the orders originally canceled. The exact percentage is unclear, because the company’s statements to the WRC and other researchers, asserting that it is now paying for well over 90% of the original orders, are partially contradicted by reports from some suppliers, which indicate that reinstated orders, while sizable, represent a smaller percentage of the total.
One complicating factor is that C&A has been less than fully candid about a significant element of its approach: the fact that it is delaying delivery, and payment, for as long as a year on some of the orders it has nominally reinstated. This means that affected suppliers cannot ship the clothes they have already made and cannot request payment until well into 2021. Suppliers have already incurred the cost to produce these goods. Having to wait a year before they can request payment, and having to warehouse the goods in the meantime, is, for many suppliers, no better than an outright cancellation. These postponements appear to affect a modest, but consequential, percentage of C&A’s outstanding orders. Despite the lack of full candor on this issue, it is notable that C&A has not engaged in the aggressively misleading public relations gambits we have seen from some other corporations.
Overall, it is clear that C&A has reinstated hundreds of millions of dollars in orders, for which the company deserves credit. It is also clear, however, that a significant percentage of C&A’s orders remain canceled—or postponed for so long that they might as well be canceled—which is why the company remains on the negative side of our Tracker. Whether the reinstated orders represent most of those outstanding at the outset of the crisis, as the company asserts, requires further inquiry to reconcile the company’s statements with recent reports from some suppliers.
Another important and unanswered question is how C&A’s owners can justify any cancellations or postponements at all. C&A, via COFRA Holding, is under the exclusive ownership and control of the Brenninkmeijer family. The Brenninkmeijers are the richest family in the Netherlands. Recently available reports put the family’s wealth at $22 billion. It is self-evident that billionaires should not be seeking to offload the economic burden of the pandemic onto workers in Bangladesh and Cambodia who subsist on a few dollars a day.
Ross Stores reneges on commitments to factories
May 8, 2020As was previously reported in the press, Ross Stores, Inc., a chain of US-based clothing and home goods stores, which produces both in the United States and abroad, canceled completed and in-process apparel orders and demanded extended payment timelines from suppliers on orders already shipped from its suppliers.
Ross’s refusal to meet its obligations was first revealed in a letter to suppliers reported on in late March. The WRC responded to Ross’s letter to factories with a request for information clarifying whether, indeed, Ross planned to cancel orders or request discounts on previously agreed upon prices, harming suppliers and workers. This request went unanswered by Ross.
Now, the WRC has received reports from suppliers confirming Ross’s large-scale cancellation of orders and the decision to extend payment terms. This will leave suppliers, in turn, unable to pay workers, potentially resulting in mass layoffs and undue hardships on workers in a time of crisis.
Bestseller is imposing partial order cancellations and retroactive price cuts across its supply chain
May 5, 2020
Bestseller is imposing retroactive price reductions, retroactive order cancellations, and long delays in payment of invoices, across its supply chain. Suppliers report Bestseller canceling up to 20 percent of orders already completed or in process, without compensation, and imposing price cuts of up to 25 percent on the orders it is accepting. All of this is exacerbated by the company’s imposition of a 90-day delay in all payments to suppliers, without providing financing to enable suppliers to weather the delay.
Trying to put the best possible public face on these destructive practices, Bestseller describes its policy as follows: “Bestseller is committed to accept delivery of orders already made and those in production through individual dialogue with all suppliers.” What is missing from the statement is a commitment to pay in full for these orders. Instead, Bestseller, through “individual dialogue”, is telling suppliers they must accept retroactive cancellations and price reductions on its orders, which vary in size from supplier to supplier and which, in the aggregate, constitute a huge financial blow to Bestseller’s supplier base and to the workers who make its clothes.
Bestseller insists that it has “not cancelled orders unless it has been in agreement with the given supplier” (emphasis added). When Bestseller retroactively cancels an order, in part or in whole, this means large financial losses for the affected supplier. No supplier would voluntarily agree to accept such losses, allowing a customer to ignore its contractual obligations at the suppliers’ expense. Suppliers are agreeing to sacrifice their own bottom line to bolster Bestseller’s because they believe they have no choice—that if they do not accept Bestseller’s terms, Bestseller will not give them business in the future. Unfortunately, the balance of power in apparel supply chains allows buyers to impose their will on suppliers, a dynamic that is playing out across global supply chains, at enormous cost to suppliers and to workers.
Bestseller says it is “actively tracking that workers are paid in due time in all factories working with Bestseller, and will continue to follow this process carefully over the coming months.” Notably, Bestseller does not say what it will do if workers, as a result of Bestseller’s price cuts and order cancellations, are not “paid in due time”. As research by the Center for Global Workers’ Rights has shown, the refusal of brands like Bestseller to honor their obligations, and pay in full, causes factories to suspend or fire workers, often without pay. If Bestseller wants workers to be paid on time and to continue to have jobs in the months ahead, it will pay in full, and on time, for all of the clothing it ordered.
Walmart subsidiary Asda abandons suppliers, despite packed stores
May 1, 2020
Asda, a UK-based supermarket chain and a subsidiary of Walmart, is refusing to meet obligations to suppliers producing for its George brand of apparel. Thus far, Asda has not made any public statements concerning its policy on payment for orders, but its actions have been revealed by suppliers around the world. Asda is refusing to accept up to 20 percent of orders that suppliers had already shipped to Asda before the crisis began. Asda is also demanding 40 to 70 percent price reductions on orders completed but not yet shipped and on in-process orders. This makes Asda one of the worst actors in the industry.
Unlike most apparel retailers, Asda has been allowed to keep its stores open throughout the crisis and thus does not face the same financial challenges confronting many of its competitors. It is difficult to see any explanation for Asda’s behavior other than an unfortunate combination of opportunism and indifference to its ethical obligations and to the consequences for workers.
Suppliers have not reported similar problems with orders produced for Walmart, but Asda’s misdeeds are nonetheless the responsibility of its American corporate parent. It is also important to note that Walmart, while it is apparently not canceling orders for its private label brands, has canceled orders placed with third-party, name-brand vendors with serious consequences for those vendors and the suppliers and workers that make their goods.
Primark is better at public relations than at honoring its obligations to suppliers and workers
April 29, 2020
Notwithstanding Primark’s April 20 announcement that it will pay for some apparel orders it previously canceled, the company remains on the list of brands and retailers that have not committed to honor their obligations in full. Though public pressure has led Primark to improve its position somewhat since the outset of the crisis when it canceled orders across the board without payment, its current approach falls well short of a commitment to pay in full for all orders in process or completed.
In its announcement, Primark pledged to pay for about $460 million dollars in orders it had previously canceled. Primark did not, however, disclose what percentage of its total unpaid commitments this figure represents. It is clear from communications with suppliers that there are additional orders, worth hundreds of millions of dollars more, for which Primark has made no commitment to pay. This will mean large-scale financial damage for suppliers and lost jobs for workers.
Moreover, on the orders for which Primark has agreed to pay, it is doing so on a drastically delayed payment schedule. Primark itself won’t pay a penny for any of these clothes until autumn 2020, preserving its own cash flow, and that of its already cash-rich corporate parent, Associated British Foods, at the expense of suppliers a tiny fraction of their size.
As a result of the unpaid commitments and the extensive payment delays, many Primark supplier factories will likely close and terminate workers en masse.