Cancellations, Longer Terms Could Take Out British Clothing Suppliers

As merchants call off orders and lengthen payment terms amid the COVID-19 pandemic, fashion industry suppliers in Britain are cautioning that they could be taken out. Suppliers to one fashion chain with over 400 British shops were told last week that they would not receive payment for orders currently being made, the Financial Times reported.

U.K. Fashion and Textile Association Chairman Nigel Lugg said, according to the outlet, “The majority of major retailers are extending payment terms and there are widespread cancellations even of orders in progress.” Lugg continued, “Terms are routinely being taken from 60 days to 120 or even 150 days … it could take out a lot of suppliers.”

The shuttering of apparel stores is also making a possible sizable unsold inventory challenge. Parker Lane Group Founder and Chief Executive Raffy Kassardjian told the paper, “One leading retailer that initially told me to expect 2m pieces in a quarter is now telling me to expect 10m or more.”

Suppliers are also concerned that retailers that are encountering their own financial challenges could go out of business prior to the settlement of their invoices. In addition, lengthier payment terms as leading to severe cash flow problems as a number of smaller suppliers are noting delays in getting a hold of the coronavirus business interruption loan program of the government.

In separate news, it was reported that H&M would take shipments of products that have been already made as clothing manufacturers face the impacts of late deliveries and work cancellations amid COVID-19.

H&M said in a message per a past report, “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.”

The company also noted, “We will, of course, pay for these goods and we will do it under agreed payment terms. In addition, we will not negotiate prices on already placed orders.”

The fashion firm sources textiles and attire worth nearly $4 billion from more than 230 Bangladeshi factories.