NEW YORK,NY - U.S. retailers including J.C. Penney, Wal-Mart and Bed, Bath and Beyond are scrutinizing whether sheets Welspun India Ltd. had said were high-end Egyptian cotton were actually cheaper knock-offs, questions that have sent the textile company’s shares plunging more than 40 percent. Since Target announced recently that it was pulling the sheets from its stores and online and was terminating its relationship...
with the company, other retailers have launched investigations into the certification claims from Welspun, one of India’s largest textile makers. Target said an investigation confirmed that Welspun had used another type of non-Egyptian cotton between August 2014 and July 2016, and the retailer
is offering refunds to its RedCard and Target.com customers who bought the sheets during that time. Target declined to say what spurred its investigation.
Welspun told investors that it is conducting an audit. It said the product in question with Target is about 1 percent of the textile company’s overall sales and about 10 percent its business with Target.
Wal-Mart spokeswoman said Welspun supplies the retailer with a number of products including some of the sheets. She said Wal-Mart is reviewing Welspun’s certification records and plans to have “additional conversations” with the company. “If we discover an issue, we will handle it appropriately,” she added. Bed, Bath & Beyond said it is working with an independent third party to audit the supply chain and will “aggressively pursue its investigation and take appropriate action, if needed.” Penney said it was too early in its review to determine what actions may be necessary. Macy’s said Welspun produces some of the chain’s private-brand products but they are not involved in this situation because they are not marketed as 100 percent Egyptian cotton. But it said it was monitoring developments.
Target said it is in the process of taking out all products made by Welspun under the ‘Fieldcrest’ label, and has already removed 750,000 Fieldcrest bedding products from stores and its website. Those were sold between 2014 and 2016, and Welspun claimed they were made from Egyptian cotton. The investigation at Target, which routinely audits its products, finished at the end of July.Target declined to comment on how this product quality issue was not caught by its internal buying team for two years.
Target is offering a refund, in the form of a gift card, to affected customers, who either have a loyalty card or bought the products online.
Reacting, Welspun said it would hire a major accounting firm to review its supply processes.
Some retailers such as Swedish home furnishing giant IKEA AB said they would continue doing business with Welspun while awaiting the outcome of the firm’s probe. Other Indian manufacturers distanced themselves from Welspun, but many fretted over the broader impact as the country tries to bet on quality, not just cheap workers, where it faces constant competition from regional rivals.
“It’s high time exporters improve the quality of their products,” said S.C. Ralhan, president of the Federation of Indian Export Organisations, set up by the government and industry to promote exports. He said the group would take up the issue of quality with its members. Arvind Sinha, national president of the Textile Association of India, said India’s image as a manufacturing destination for textiles could be tarnished. “This is another blot on the Indian exports resume,” said an analyst at a local brokerage, who asked not to be named as it would violate his firm’s policies. “The Welspun fiasco could have ripple effects and force companies to scout for options in other regions in Asia that have unscathed records.” Government officials say the Welspun case is an exception, and don’t expect much damage to India’s reputation as a manufacturing hub. “We hope it will be one of the stray incidents that will not have much impact on our near $42 billion textile exports,” said a senior textile ministry official.(Agencies)
is offering refunds to its RedCard and Target.com customers who bought the sheets during that time. Target declined to say what spurred its investigation.
Welspun told investors that it is conducting an audit. It said the product in question with Target is about 1 percent of the textile company’s overall sales and about 10 percent its business with Target.
Wal-Mart spokeswoman said Welspun supplies the retailer with a number of products including some of the sheets. She said Wal-Mart is reviewing Welspun’s certification records and plans to have “additional conversations” with the company. “If we discover an issue, we will handle it appropriately,” she added. Bed, Bath & Beyond said it is working with an independent third party to audit the supply chain and will “aggressively pursue its investigation and take appropriate action, if needed.” Penney said it was too early in its review to determine what actions may be necessary. Macy’s said Welspun produces some of the chain’s private-brand products but they are not involved in this situation because they are not marketed as 100 percent Egyptian cotton. But it said it was monitoring developments.
Target said it is in the process of taking out all products made by Welspun under the ‘Fieldcrest’ label, and has already removed 750,000 Fieldcrest bedding products from stores and its website. Those were sold between 2014 and 2016, and Welspun claimed they were made from Egyptian cotton. The investigation at Target, which routinely audits its products, finished at the end of July.Target declined to comment on how this product quality issue was not caught by its internal buying team for two years.
Target is offering a refund, in the form of a gift card, to affected customers, who either have a loyalty card or bought the products online.
Reacting, Welspun said it would hire a major accounting firm to review its supply processes.
Some retailers such as Swedish home furnishing giant IKEA AB said they would continue doing business with Welspun while awaiting the outcome of the firm’s probe. Other Indian manufacturers distanced themselves from Welspun, but many fretted over the broader impact as the country tries to bet on quality, not just cheap workers, where it faces constant competition from regional rivals.
“It’s high time exporters improve the quality of their products,” said S.C. Ralhan, president of the Federation of Indian Export Organisations, set up by the government and industry to promote exports. He said the group would take up the issue of quality with its members. Arvind Sinha, national president of the Textile Association of India, said India’s image as a manufacturing destination for textiles could be tarnished. “This is another blot on the Indian exports resume,” said an analyst at a local brokerage, who asked not to be named as it would violate his firm’s policies. “The Welspun fiasco could have ripple effects and force companies to scout for options in other regions in Asia that have unscathed records.” Government officials say the Welspun case is an exception, and don’t expect much damage to India’s reputation as a manufacturing hub. “We hope it will be one of the stray incidents that will not have much impact on our near $42 billion textile exports,” said a senior textile ministry official.(Agencies)
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