Edinburgh Woollen Mill (EWM) Group has been accused of taking advantage of coronavirus to demand discounts from factories in Bangladesh.
In a letter to EWM, which owns brands including Peacocks and Jaeger, the Bangladesh Garments Manufacturing and Exporters Association (BGMEA) said the company owed £27m to clothing manufacturers.
EWM denied it owed suppliers £27m and said the figure was £2-3m.
In the letter, seen by The Guardian, the BGMEA accused EWM of taking “undue advantage of the Covid-19 situation” by demanding discounts, cancelling orders or withholding payment for goods already shipped or manufactured.
BGMEA demanded payment by 29 May for goods already handed over to EWM’s shipping agents and payment by 5 June for orders already in production, adding discounts requested by the retailer “beyond permissible limits” could lead to legal action.
“We will have no option but take the decision to place an embargo and blacklist the buyers and their agents who do not comply with our instructions, which will prevent them from conducting business with our members in the future either directly or indirectly,” the letter said.
An EWM spokesperson said: “We believe that the £27m figure is the amount they [BGMEA] have pulled together on all outstanding future stock when the crisis first hit... Over the last three months of talks, we have agreed to deals on 90% of this stock.
“We are still in active discussion with two to three factories who we have not reached agreed financials with and the outstanding amount left is £2-3m.”
EWM added discussions with the majority of suppliers had been “positive” in the wake of Covid-19.
The company said: “When this global crisis hit, we had already paid for the majority of future stock, and we have since had productive discussions with individual suppliers about remaining stock. We have engaged with all our individual suppliers with openness, honesty, and the best of intentions, even when the circumstances are difficult.
“We have looked at literally every option on the table and worked hand-in-hand with all our suppliers to find solutions, but we also need to recognise that these are difficult and complicated issues. These are not simple problems, and every potential quick solution has long-term implications. If we took delivery of remaining unmade stock for the spring season with all our stores closed, this stock would only be stored for next year and depress 2021 orders.
“Our discussions with suppliers have been had on the basis of the trust and mutual respect we have built up working together for decades. We have worked in Bangladesh for more than 30 years, and we're disappointed that the BGMEA appears to be questioning our honest intentions and sidelining the time and energy we have put into trying to find forward-thinking solutions.”
Retailers including Primark, Asda and the Arcadia Group have been criticised over their decisions to cancel orders with suppliers.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.