Mill’s billionaire owner crippling suppliers, claim

PHILIP Day, the Brampton billionaire and owner of The Edinburgh Woollen Mill, has been accused of pushing his company’s suppliers in the UK and overseas to the brink of collapse, according to an investigation by The Sunday Times

EWM’s silence, in the face of pleas for payments for goods ordered and shipped, is causing hardship among employees who work for the clothing manufacturers which supply EWM Group’s businesses.

They also include Austin Reed, Jaeger, Peacocks, Jane Norman and Bonmarche.

Philip Day’s handling of the impact of the coronavirus on his retail empire was exposed in an article in The Sunday Times.

It focused on a Hungarian manufacturer, which has had to close its doors, and has received no communication from its “English owner”, although Day denies he owns the factory which makes items for Austin Reed and Jaeger.

The owner of Denim Expert in Bangladesh, Mostafiz Uddin, says he is owed £168,000 for 43,600 pairs of jeans, a third of which are finished and sitting in his factory.

He claims EWM is not replying to phone calls or emails and he can’t recover from the damage it has done to his business.

The company refused to take delivery of all orders which had not been shipped, totalling £26.8m in Bangladesh alone.

On some orders, which had already been despatched, EWM said it would pay only 50 per cent of the agreed price before backing down after the Bangladesh Garment Manufacturers and Exporters Association threatened to blacklist it.

EWM said it had already paid for most of its future stock when the crisis hit.

On orders sitting at British ports, EWM has haggled with suppliers over the shipping company bill for holding uncollected goods.

Most suppliers have consented to being paid in the autumn for clothing shipped as far back as February.

Many suppliers with orders in production have still received nothing, forcing some to take out high-interest loans to pay the mills which sold them the fabric.

The cash squeeze means they are struggling to buy the materials needed to make orders for the autumn/winter season.

EWM has fanned the flames of their anger by quietly courting new suppliers, a process it describes as a routine cost comparison exercise.

EWM Group has about 1,100 high street stores and the article says the company is struggling because of its emphasis on operating shops and doing very little online.

The tourists, who snapped up its tartan scarves and shortbread, are staying away as are the over 60 shoppers on whom Day heavily depends.

Recognising that many of its customers are nervous about venturing out, only 300 of its 1,100 outlets are open.

The article says Day entered the crisis without a substantial online business. He has resisted investing heavily in e-commerce and spent £4.5m buying shop freeholds last year, a testament to his belief that the appeal of old-fashioned retail would endure.

When lockdown was declared, Day furloughed almost all of EWM’s 24,000 employees and has not said whether he will reject the government’s £1,000 a head bonus for keeping furloughed staff until the end of January.

A spokesperson for EWM Group said: “The shareholders and directors of EWM Group have categorically never owned or controlled in any form the factory in Hungary which supplies Austin Reed and Jaeger.
“As a customer of the factory, we have been told it will officially close once it completes a consultation process required by Hungarian law and cannot do so before then.”
On its suppliers, he said: “When this global crisis hit, we had already paid for most of the future stock and we have since had productive discussions with individual suppliers about remaining stock.

“We have engaged with all our individual suppliers with openness, honesty and the best of intentions, even when the circumstances are difficult.

“We have now reached agreements with almost all our suppliers and helped many of them with their demurrage costs. We’ll continue to talk to our partners to resolve outstanding issues.
“We firmly view these negotiations to be a reasonable approach in the face of a collective and global industry challenge, which isn’t just disrupting a single link in the supply chain.

“Nobody planned this international crisis and it’s only by working together constructively that we can tackle a challenge as unprecedented as coronavirus.
“Our discussions with most of our suppliers have been positive and they have understood we’re trying to find a balanced way forward which matches the immediate, urgent challenges faced by high-street stores nationally and those of suppliers.” 
He added: “We’ve taken a particularly cautious approach to reopening stores because we know some of our customers are still anxious about shopping.

“In some cases, we have opened our stores on a trial basis to test footfall before closing them again and we’re keeping landlords up to date on this process.”