The Guardian
Updated: August 26th, 2020
The Children’s Place cancels millions of dollars of garment orders from Ethiopia
The largest childrenswear retailer in the US has cancelled millions of dollars worth of clothing orders from suppliers in Ethiopia because of the coronavirus pandemic, pushing companies into debt and leaving employees facing pay cuts.
The Children’s Place (TCP), which has more than 1,000 stores in the US and 90 around the world and had a turnover of $2bn (£1.5bn) last year, cancelled orders from Ethiopia in March and delayed payments by six months for orders completed in January and February, suppliers told the Guardian…
Ethiopian suppliers claim that TCP has demanded retroactive rebates on products that had been shipped before the crisis. They said the company cited the force majeure clause (which frees companies from contractual obligations in the case of certain extreme events) in its contracts as a reason not to pay, due to Covid-19.
In a statement, Gregory Poole, TCP’s chief supply chain officer, said the company had cancelled fewer than 3% of orders from Ethiopian suppliers.
Suppliers said the cancellations have had serious consequences for their businesses.
Some producers said they have been unable to pay their lenders due to the cancellations, which has left them crippled with debt after already buying raw materials and paying workers. Others have said the cut in orders was enough to wipe out their profits for the year.
One supplier told the Guardian his company had lost its credit line after losing nearly $1m because of contract cancellations.
“We are a company with 95% women workers. Some [of the workers are] mothers,” the supplier said. Asked what the company could do legally to recoup the hundreds of thousands of dollars lost, the supplier responded: “How do you fight such a big US corporation? They have endless pockets.”
Another supplier said that although TCP had started to pay back some money for the cancelled orders, the company still owed it hundreds of thousands of dollars.
The Children’s Place is one of four leading US apparel brands sourcing goods from Ethiopia, alongside PVH, JC Penney and H&M. In its annual report last year, TCP cited Ethiopia as a “key sourcing region”. The Worker Rights Consortium said at least seven factories in Ethiopia were producing clothing for TCP stores, employing about 15,000 workers.