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14 Apr 2020

Tara Donaldson, Sourcing Journal

Bangladesh: Arcadia Group insists on right to cancel, asks for discounts as suppliers struggle under economic fallout of COVID-19 crisis

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“Topshop Parent to Suppliers: Cancel Everything or 30 Percent Discount”, 10 April 2020

In a letter to suppliers … Ian Grabiner, CEO of [Acardia Group], said … that the company is entitled to cancel “any order” at any stage of production.

 … Grabiner said: “You will note that we are able to cancel any order at any stage. This includes orders in production and orders in transit. …”

[T] letter omitted … concern for the serious challenges Arcadia’s cancellations would pose for factories lacking the cash flow to … to pay already low-wage workers. … Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Rubana Huq said cancellations at factories in the country have already ballooned beyond $3 billion…

[Owner of Denim Expert Ltd.] Uddin said … “… [A] 30% discount will just remove the wages  … plus a significant shortage for paying raw material … which means the suppliers [will be unable to cover] their own raw material cost and wages for their workers.”

But little of this appears a concern for Arcadia, which told suppliers it would also be cancelling goods in transit…

For the few things Arcadia Group is willing to pay for, it has alerted suppliers of a 30-day extension to its payment terms, taking the new terms to 90 days.