Korean Textile Group Cries Foul As Kohl’s Cancels $100M in Placed Apparel Orders

Date: Friday, April 24, 2020
Source: Sourcing Journal

Big-box retailer Kohl’s has reportedly canceled apparel orders across the board, much to the chagrin of its international supply chain partners.

The Korea Federation of Textile Industries (KOFOTI) is hitting back, demanding the store chain reconsider its commitments to manufacturers across the globe. The decision puts the livelihoods of about 200,000 workers at risk, the group said in a statement to Just-Style.

While the group appreciates the devastating impact that the pandemic has had on the textile industry, Kihak Sung, KOFOTI’s chairman, said Kohl’s has a responsibility to its suppliers, and shouldn’t leave them high and dry even as consumer demand plummets.

“We recently became aware of Kohl’s unilateral decision to cancel orders already produced and in production without prior consultation which has caused an unprecedented disruption to the supply chain,” he said, which puts hundreds of thousands of jobs at risk in countries like Indonesia, Vietnam, the Philippines, Guatemala, Nicaragua and Haiti.

The economic damages are being acutely felt by fabric mills in Korea, Sung said, which supply materials to manufacturers worldwide. So far, the sector has incurred more than $100 million in damages due to canceled orders or payment term extensions. About 150 Korean fabric mills, accessory mills, vendors and sample rooms have been affected.

Kohl’s informed its partners of the halt in production without prior consultation, and left “no room for any negotiation” when it came to payment terms on orders already in process or even those that were fully finished, Sung said. As COVID-19 closed stores in March and forced Kohl’s to furlough 85,000 staff, by CNBC’s count, the retailer said on March 30 it was “managing inventory meaningfully lower to align with anticipated sales.”

Sung suggested that Kohl’s look to the recent about-faces from H&MPrimark and Zara, which resulted in the fashion firms agreeing to pay textile workers after intense media scrutiny. The matter with Kohl’s could be resolved amicably, he said, urging the company not to leverage force majeure clauses in its agreements to get out of making payments.

“Now more than ever, all stakeholders in the supply chain must cooperate more closelyand look for more creative solutions to survive this crisis together,” he added.

Neither Kohl’s nor KOFOTI responded to requests for comment.

 

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