You will be redirected back to your article in seconds
Skip to main content

Missguided Asking Suppliers for 80% Discounts

New Missguided is asking its former suppliers for up to 80 percent in discounts for clothing they made but didn’t ship after old Missguided canceled the orders just before falling into administration.

Insiders said that the current iteration of the British fast-fashion e-tailer, which is now owned by Frasers Group, framed the request as a way to “help” the manufacturers, who are in the hole for hundreds of millions of pounds in unpaid orders.

The discounts are being presented in tiers: gold, silver and bronze. “Gold” suppliers were offered price cuts of 20 percent, “silver” 50 percent and bronze the aforementioned 80 percent.

“Short and simple, they want to screw the suppliers, not help them,” one factory owner in Leicester, who was offered the most afflictive bronze level, told Sourcing Journal.

The supplier has had to lay off more than half of his staff, of whom only about 30 are left. Missguided, which made up more than half of the factory’s production, he said, owes him more than half a million pounds ($579,000) for shipments extending back to January. He’s still hanging onto several hundred pounds’ worth of jersey wear. Laden with debts to his own creditors, he’s had to sell his wife’s and mother’s gold jewelry to make his payments, though even that hasn’t been enough.

Related Stories

“It’s really hard paying suppliers and wages,” he said.

Another supplier, who is based in Guangzhou in China, has fielded queries from Missguided at all three discount rates. The factory retains some $900,000 worth of clothing that was never shipped. When old Missguided unilaterally imposed discounts of 30 percent last year, citing financial difficulties, the manufacturer lost out on $1.2 million.

The factory owner doesn’t want to work with new Missguided, but she doesn’t think she has a choice. Missguided made up 70 percent of the company’s production line. “We were just in too deep with them,” she said.

Neither Missguided nor Frasers Group responded to requests for comment.

Dominique Muller, policy director at workers’ rights group Labour Behind the Label, has heard innumerable stories of struggling suppliers. One factory owner in England started driving a cab part-time to make ends meet.

“Shocking isn’t the word,” she said of Missguided’s behavior. “It’s an affront. Not only does this highlight the impunity of companies in the U.K. and the almost Wild West approach to company regulation, but it also highlights the abusive purchasing power of brands in the industry.”

Many manufacturers have struggled to find clients to replace Missguided, particularly with Britain’s cost of living crisis reining in orders by brands. Clothing store sales volumes fell by 1.2 percent in July, following a 3.9 percent drop in June, according to the Office of National Statistics. Goldman Sachs warned on Tuesday that the U.K. inflation rate could spiral to 22 percent in January if energy prices don’t cool down. And even if costs moderate, inflation could still top out at 14.8 percent.

Meanwhile, Missguided’s suppliers are being left hanging. An administrators’ report dispatched to creditors last month said that factories can expect to be paid less than 2 percent of what they’re owed following the sale of old Missguided’s assets.

Frasers Group, on the other hand, has been on an acquisition spree, following up its purchase of Missguided by snagging I Saw It First in July. It also fattened its stakes in Hugo Boss and Australian marketplace MySale.

But Missguided’s suppliers aren’t even the worst off. That would be their workers, who have zero avenues for recourse.

In Leicester, a popular manufacturing locale for British e-tailers that desire to more quickly respond to the changing whims of their target market, exploitation is rife, according to a report last month by the Low Pay Commission, which advises the government on the national minimum wage.

Despite the shifts that happened in the wake of the Boohoo supply-chain scandal in 2020, the majority of garment workers in the city are still being subjected to underpayment and other non-compliant practices, the study found. Workers, for instance, told researchers of situations where they were paid for a stated number of hours at the minimum wage, but in reality, toiled longer than was officially recorded. Others described fake clock-card machines meant to mislead auditors about how many hours employees were working.

Intimidation and harassment were also problems, workers said. “The workers we met were scared of directly complaining about working conditions to their supervisors: ‘no one complains; if they did, the boss would say ‘there’s the door, use it,’” the report noted. “There was a culture of fear among workers who assumed their boss would find out if they complained and they would be fired.”

When asked what they would like to see their factory do differently, one worker asked for a strong contract with “long-term” prospects. Another wished for a “safe environment with no mental torture.”

Muller places the bulk of the blame on brands that squeeze suppliers’ margins so thin that it’s an uphill challenge for them to operate ethically.

“This report highlights the very real abuses and risks faced by workers in the U.K. garment industry,” she said. “It highlights the contradictions between the relentless pressure on today’s workers and the failure of the U.K. authorities to uncover the truth. In part this is due to the continued lack of investment in labor enforcement in the U.K., in part because of the risks workers face when speaking out and in part because of the continued power of the big brands who call the shots.”

The country’s cost of living crisis, low wages and poverty, she added, stand in “stark contrast to the increase in profits in many fashion brands that reward CEOs and shareholders while standing on the backs of the seamstresses and packers.”

Referring to Missguided’s discount requests, one Leicester-based supplier who made an assortment of clothing for the brand said she isn’t surprised by its actions. The apparel purveyor owes her factory half a million pounds, but it too is eyeing 80 percent price cuts on most styles.

“I didn’t expect anything else,” she said. “The damage has already been done.”