Sir Philip Green, the retail tycoon who has made billions from high street fashion retailers Topshop and Dorothy Perkins, is forcing his clothing suppliers to accept harsher payment terms.
According to the Mail, Arcadia, the holding company run by Green, wrote to suppliers this week informing them it will slash the sums it is prepared to pay, starting at the end of this month.
This will hit firms hard because many had already agreed a price for the garments they are supplying.
Those suppliers will now receive lower payments for items that they are committed to produce – almost equal to a retrospective price cut. Arcadia already expected some suppliers to give it a 14.25% discount on their bills, which are paid in 60 days. Now it’s forcing them to extend that discount to 16.25%
In a letter seen by the Mail, CEO Ian Grabiner wrote: ‘We are notifying you of a further 25% payment discount – this will be effective from September 1, 2015 and will apply to all existing orders with a payment due date after August 31, 2015, as well as to all orders going forward.’
One supplier told the Mail: “They screw you to get the lowest prices and then they screw you to get another 2%. We have no choice but to stomach this. If we turn it down, we won’t get orders next time. Anyone prepared to take on Philip Green is braver than we are.’
Arcadia justified the extra discount as necessary, citing that it would be used to pay for additional investments connected to “13 years of developing our various brands in a continually changing global market place”. The group said it is investing more than £100m to help accelerate overseas growth.
The email also said: “Additionally, our investment in marketing will continue to increase in this highly competitive environment.
These developments are crucial to both yours and our business.”
Arcadia told the suppliers it hoped they would “understand and be supportive” of the changes “to help mutually grow our business together”.