Gap Will Make Full Compensation To Suppliers Who Have Cancelled Orders

Gap Inc, a U.S. clothing retailer, said it would work with suppliers to fully compensate finished and in production items that were cancelled or needed to be packaged and held.

Gap Inc, whose brands include old navy, gap, ATHLETA and Banana Republic, said in a statement that although payment terms for some orders have been extended, the company is providing low-cost financing for its supply partners in the short term and is striving to work with its banking partners to increase the amount of financing available under the plan.

Gap said last month that the company is trying to determine the products available for sale in the short term and to examine which products are available for storage and later sale. The company will cancel the original planned orders, and it is bound to reduce orders whether it is necessary or not.

At the time, the retailer said: Overall, we have been maintaining close communication with our suppliers. In the past few weeks, we have met with each supplier separately to evaluate our orders, understand the local business capacity, or discuss whether the health and welfare protection of factory workers are in place according to the restrictions of each country of origin, and formulate plans for the next few months.

Gap pointed out that the number of cancelled orders was based on "less than 3% of the value of purchase orders for finished garments and finished garments in production," and said the company was working with suppliers to explore clearance opportunities for these finished garments.

Gap's latest position has been welcomed by the workers' Rights Alliance (WRC), which has developed an online tracker to monitor the response of major clothing and footwear brands and retailers to suppliers and workers during the coronavirus crisis.

The workers' rights alliance said in its statement that gap Inc does not cancel any orders and does not apply any discounts as a result of its commitment to pay in full for cancelled orders for finished and in production goods, as well as for orders that previously required packaging and holding storage charges.

Gap Inc is still extending payment terms for some suppliers. However, suppliers are now aware of the low cost of financing that suppliers have to offer to workers to finance the program at a low cost.

As a result, gap is now on our full payment list. Given the challenges faced by the company during the crisis, which were more serious than those of some competitors, and given the critical position of a large number of orders, gap Inc's contribution was to recognize the company's previous prioritization of supplier and worker obligations related to orders.

The retailer, which had been on a tracking list, had not yet promised to pay in full for goods produced before the outbreak of the new pneumonia crisis.

According to the workers' rights alliance, this is the reason for cancelling some orders, imposing considerable discounts on some orders related to storage charges, and extending the payment terms of some orders without providing sufficient low-cost financing for the affected suppliers.