Swedish fashion retailer Hennes & Mauritz (H&M) has said it will pay and take delivery of goods already manufactured by its suppliers, as well as those in production.
The retail group is thought to be the first – and only – retailer to have agreed to pay its suppliers for orders cancelled after the products have been made. A spokesperson for H&M said the company is not cancelling orders where manufacturing has already started.
“The rapid spread of the Covid-19 around the world has caused an exceptional situation for people, communities and businesses around the world. We are now working extensively across business functions to manage the situation in the best possible way, from a people, business and environmental perspective.”
As a consequence of the substantial drop in global demand, H&M says it is reviewing all parts of the business.
“In this extreme situation it is necessary to temporarily pause new orders as well as evaluate potential changes on recently placed orders. We will stand by our commitments to our garment manufacturing suppliers by taking delivery of the already produced garments as well as goods in production. We will of course pay for these goods and we will do it under agreed payment terms.”
Last week, Bangladesh ordered thousands of clothing factories to continue production throughout a ten-day countrywide lockdown in force since 26 March.
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By GlobalDataThe partial lockdown, however, comes as nearly 1,000 factories with as many as 1.96m workers have reported US$2.67bn in cancelled or suspended orders from retailers and brands who are facing falling sales and store closures as a result of the Covid-19 pandemic, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The president of the BGMEA has urged international apparel brands not to delay shipments or cancel orders, warning that to do so could result in factories failing to pay workers and subsequently create social unrest across the country.
Click here to see which retail stores are closing their doors, and here for how the outbreak’s development has impacted the industry.
