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Suppliers squeezed by struggling multiples

Suppliers are being put under increasing pressure by multiples as they cut volumes, impose extended payment terms and even cancel orders.

After a lacklustre start to 2018, many retailers have reviewed their order books for both the high summer season and autumn collections.

One supplier to high street chains said his forward orders had been affected: “We are seeing high summer taking a hit. They’re all holding stock because it did not sell through. Arcadia is holding a lot of stock and it is pushing financial stress down the supply chain.”

Arcadia Group declined to comment.

Another supplier said: “Retailers are making cuts as the figures just aren’t coming through. They are trying to put us off and are not taking stock as they don’t have the money to pay for it.”

One industry source agreed: “I am hearing across the board that [retailers] are either cancelling, reducing orders or stretching payment terms on order. It is a combination to help cashflow.”

One recruitment source told Drapers the slackening in orders is leading to redundancies at suppliers: “The lack of sales is having a domino effect. We have been told one firm that worked with New Look has made redundancies. In the past month three or four other high street suppliers have made similar decisions.”

New Look declined to comment.

Another source said: “The issue is that [suppliers] are cash strapped. There isn’t the investment and they are having to cut costs, too. Not everyone is going to make it.

“The big suppliers will either slim down or cease to exist. A lot of retailers are trying to cut out third-parties altogether.”

Another industry insider said suppliers will be forced to reduce their flexibility: “[Cancellations] cause so much paperwork and can be a headache financially. It slows everything down and adds to lack of confidence.

“Suppliers will in future want to know if orders are real, or simply wish-lists before buying in fabric.

“What they absolutely don’t want is to be left with reams of fabric that a client ordered but then doesn’t want. It also means they will be less flexible in payment terms.”

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