Bestseller is “immediately releasing” payments on current orders, as well as implementing early payments until October in a bid to “ensure suppliers’ cash flows,” the Danish-headquartered retailer announced last week.
The news follows what was a frequently contentious back-and-forth with labor advocates over the past few months that saw Bestseller, which also owns the Jack & Jones, Mamalicious and Vero Moda brands, batting away accusations of imposing retroactive price reductions, order cancellations and extended delays in payment of invoices due to the financial uncertainty caused by the coronavirus crisis.
Suppliers told the Worker Rights Consortium (WRC) in May that Bestseller nixed up to 20 percent of completed and in-process orders without compensation while imposing price cuts of up to 25 percent on the orders it was accepting. The company, WRC said, was also enforcing a 90-day delay in all payments to suppliers, “without providing financing to enable suppliers to weather the delay.”
Bestseller previously told Sourcing Journal that suppliers had agreed to any changes in terms and conditions through “individual dialogues” and that it was paying all due invoices to allow suppliers to cover their expenses.
“We are actively tracking that workers are paid in due time in all factories working with Bestseller, and will continue to follow this process carefully over the coming months,” the spokesperson had said.
But Bestseller appears to have switched at least one of those courses, writing on its website that it will pay all current invoices early regardless of the date of the invoice. “By releasing payments early, we aim to instantly strengthen our suppliers’ cash flow,” it added.
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The company also alluded to its previous actions, noting the “significant challenges and disruptions” the pandemic has wrought, and the “difficult decisions” it had made to protect its colleagues, partners and “indeed our supply chain.”
“It has been necessary for us, due to lockdowns across the world, to adjust our business and indeed our inflow of goods,” the retailer wrote. “Our own order intake and own revenues have been hit hard, at times being close to zero, but we have tried our very best to minimize the impact passed on throughout our global supply chain. Due to our long-term commitments and close cooperation, we have supported each other and secured our mutual businesses’ immediate future, for which all of us at Bestseller are thankful.”
Bestseller does not own its own factories but rather manufactures approximately 220 million products for its brands at 700 factories across Europe and Asia that meet its code of conduct, which it says is “based on and follows the universal declaration of human rights, key United Nations conventions [and] International Labour Organization conventions and recommendations.”
The retailer ended the 2019 fiscal year with a revenue of 3.5 billion euros ($3.9 billion) and a pre-tax profit of 372 million euros ($420 million).
What, if anything, has changed is unclear, though momentum to hold brands and retailers accountable for unilaterally canceling orders without payment and leaving suppliers and their employees in the lurch—and on the brink of starvation—has intensified through social-media campaigns such as Remake’s #PayUp petition and efforts by labor-rights groups such as WRC and the Clean Clothes Campaign.
Just this week, Levi Strauss declared it was resolving its payment issues after it was highlighted on a list of offending brands on WRC’s “COVID-19 tracker,” which maintains naughty-or-nice lists of companies that have committed to paying suppliers on time and in full for completed and in-progress orders—and those that haven’t.
Levi’s has made the jump to the “good” side, though Bestseller remains on the list of deadbeat brands alongside the likes of Topshop owner Arcadia Group, C&A, J.C. Penney, Kohl’s, Sears, Urban Outfitters and Walmart-owned Asda.
“Assuming Bestseller is doing what the statement claims it is doing, the company will have ended one of three abusive practices that it adopted at the outset of the crisis: delaying payment to suppliers relative to agreed terms,” Scott Nova, executive director of WRC, told Sourcing Journal. “Beyond that, actually paying suppliers more quickly than normal is unquestionably positive.”
It’s not clear to Nova, however, that Bestseller has reversed its two other “abusive practices”—canceling some orders before the crisis and imposing retroactive discounts on some of those orders. Any changes in the company’s status on the WRC’s tracker will hinge on those two points.
“The question for Bestseller is this: has the company paid, at the prices and volumes originally agreed, for all orders that were completed or in production as of the outset of the crisis?” Nova asked. “If Bestseller is now saying that the answer to this question is ‘yes’—that it has reinstated all canceled orders and is reversing (and reimbursing suppliers for) all discounts imposed—then, pending confirmation from suppliers, we would switch their position on our tracker.”
A Bestseller spokesperson told Sourcing Journal that the company does not have any outstanding agreements with its suppliers.