C&A is finally footing its pre-coronavirus bill.
Though the Belgium-based retailer had reinstated in May a “large portion” of the estimated $1.5 billion in garment orders it canceled at the outset of the Covid-19 pandemic—including more than $125 million worth in Bangladesh alone—it still owed suppliers a “modest, but significant, amount of production,” labor rights activists said Friday. The exact amount, according to the Worker Rights Consortium (WRC), has been difficult to determine because of conflicting reports from the suppliers and C&A itself.
This week, however, C&A announced it will be ensuring “100 percent compensation” for all pre-coronavirus orders that it “previously placed on hold” in anticipation of the closure of 1,400 of its European stores. All in-shipment, already produced and in-production orders, it said, will be paid for at their original prices and according to previously agreed-upon payment terms.
In addition, the retailer has been placing new orders “despite the economic headwinds the fashion industry is facing across Europe,” though it did not specify the second wave of the contagion currently tearing across the continent and forcing new lockdowns in countries including Belgium, France and Germany. Many of its suppliers, it added, are receiving support through C&A’s supplier finance system in cooperation with the company’s partner bank.
“Actions speak louder than words,” Martijn van der Zee, chief merchandise and sourcing officer at C&A, said in a statement Thursday. “We have taken concrete actions to support our suppliers. We greatly value our suppliers with whom we have built strong and close relationships over many years. Our aim was to leave none of our suppliers alone during this global crisis.”
The move has knocked C&A off the “naughty” column of WRC’s “Covid-19 tracker” and placed it among brands such as Adidas, H&M and Zara owner Inditex that have committed to pay suppliers in full for previously canceled finished and in-production orders.
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Still, WRC takes issue with C&A’s characterization of the situation, which took seven months to resolve and “has no doubt been costly to many suppliers.”
“It is concerning to see that C&A’s public statement does not communicate honestly about the fact that they originally canceled orders outright with major impacts on suppliers and workers, and instead now says the orders were merely ‘put on hold,’” the group said. “Given the ample resources available to its ownership, C&A’s original cancellations were never defensible nor is the slow pace at which C&A has rectified the problem.”
That said, “late is better than never,” WRC noted, and C&A’s decision to “set things right, even at this late juncture, will benefit many suppliers and workers.”
According to WRC’s tracker, 22 apparel companies have now committed to shell out for pre-pandemic orders in full, but it remains incumbent on all companies that have yet to act to “do so swiftly,” crisis response coordinator Liana Foxvog told Sourcing Journal.
Payment laggards include Topshop owner Arcadia Group, Edinburgh Woollen Mill, Esprit, J.C. Penney, Sears, The Children’s Place, Urban Outfitters and Walmart-owned Asda.
U.S. and European Union apparel sellers likely canceled more than $16 billion in orders from April to June in the United States and April to May in the EU, according to an analysis of trade data by the WRC and the Center for Global Workers’ Rights at Penn State University. The fallout has been immense. The International Labour Organization estimated last week that the average garment worker lost out on at least two to four weeks of work because of factory closures or suspensions, and only three in five have since returned to production lines.
“The longer that suppliers go without payment for costs they already incurred producing clothing for apparel brands and retailers, the greater the risks are to workers, many of whom are struggling to feed their families in highly precarious conditions having suffered significant loss of income during temporary factory closures,” Foxvog added.