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11 Jun 2020

Apparel brands pay large dividends to shareholders while order cancellations & delays leave suppliers & garment workers facing fallout of Covid-19

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As governments across Europe and North America adopted lockdown measures, including store closures, to combat the Covid-19 pandemic, major apparel brands and retailers cancelled and postponed orders. Apparel brands leveraged their power in global garment supply chains to cancel orders, demand large discounts, and invoke “force majeure” clauses in contracts to refuse to pay for completed orders.

Suppliers in garment-producing countries have been left struggling to face the financial fallout of the pandemic, with many having to reduce operations or cease operating altogether. This forced many suppliers to lay off or suspend millions of garment workers, often without pay and severance, pushing an already vulnerable group further into financial precarity.

Despite having cited financial constraints as an explanation for their actions, apparel brands have paid large dividends to their shareholders. Concerns have been raised about companies paying their shareholders after having offered little or no help to mitigate the impacts of the pandemic on suppliers and garment workers.