H&M pays suppliers for work in progress but cancels further orders
H&M, the global fashion giant, is reported to have cancelled any new orders with its suppliers but has agreed to pay for orders fulfilled and in progress.
Like many fashion chains, H&M is seeking to reduce as far as possible the pile of clothes it will be sat on when its stores re-open as the Coronavirus crisis eases.
The Swedish chain, which operates more than 300 stores in the UK, has closed its stores across Europe due the outbreak. Most of its stores in China (334 out of the group’s 518) had been closed while the outbreak was concentrated there, but have since re-opened.
Various sources have reported that the company has written to suppliers in Bangladesh and elsewhere to cancel further orders but has agreed to pay and take delivery of any orders fulfilled or in progress, a move which manufacturers have praised.
The widespread cancellations of orders in Asia could lead to a widespread humanitarian crisis, experts fear. Many retailers have been criticised for refusing to pay or only agreeing to part-pay for orders in progress. Value chain Peacocks, for instance, is only paying 50% for orders in progress.
Rubana Huq, president of the BGMEA (Bangladesh Garment Manufacturers & Exporters Association) told The Sunday Times. “The cancellations blew us away. It’s not like we don’t understand the situation — we do, it’s apocalyptic. But they should work through the problems with us rather than just sending cancellation notices to their vendors who have been by their side for so many years. Where is the consideration? Where is the partnership?”
H&M has warned that the crisis could lead to thousands of job losses across its business and has warned landlords that it may exit leases early on stores which are unprofitable.