More reports on: Retail, Textiles

Target Corp could shift some orders to Trident Ltd after terminating business with Welspun

26 August 2016

Target Corp is considering shifting some orders to Trident Ltd after its termination of $90 million of business with rival supplier Welspun India Ltd over labelling of bedsheets as premium Egyptian cotton, Bloomberg reported citing people familiar with the discussions.

The US retail giant had started sampling sheets manufactured by Trident, according to the people, who requested anonymity as the talks were confidential. The people said, Trident, based in the northern state of Punjab, currently supplied terry towels to Target and was among the few Indian companies with the capacity to produce more bedsheets.

''We have previously shared that we were actively working with existing vendors on our matrix to determine where we move the business. Trident is one of our current vendors,'' said Target spokeswoman Molly Snyder, Bloomberg reported. ''It would be premature to speculate on how we will plan for, and distribute our business."

The company's shares soared 13 per cent to Rs56.45, the biggest jump since November in Mumbai trading today.

On 19 August, Target snapped business ties with India's largest home textiles exporter after it found that sheets and pillows labeled as premium Egyptian cotton were actually made with another type of cotton (See: Investors target Welspun India after Target severs business ties ).

The retailer withdrew the items from its stores and offered refunds to customers.

Meanwhile Walmart, Bed and Bath and other buyers have begun a review of products supplied by the Indian company (Bed Bath joins Target, other US buyers in Welspun probe ). 

Target terminated its entire, long-standing relationship with Welspun though the problem was limited to a small fraction of the products it supplied.

Meanwhile, Welspun has admitted "a failure" and said it was appointing one of the Big Four auditors to review its supply chain and processes.

Welspun had however, not give any explanation as to what went wrong with its supply chain or why a big customer refused to give it the benefit of the doubt. The company itself avoided using the phrase "Egyptian cotton" in referring to the controversy and instead chose to vaguely refer to it as an issue around the "provenance of the fiber".

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