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Exclusive: Urban Outfitters invokes 'force majeure' terms

Urban Outfitters has written to suppliers informing them that it can no longer accept delivery of goods on purchase orders, and will cancel all undelivered orders, in a bid to protect the business during the coronavirus outbreak.

The retailer also told creditors that any products with freight forwarders will be discounted by 30%.

In a letter sent to suppliers from Urban Outfitters European managing director Emma Wisden, seen by Drapers, the company said: “A material amount of our UK/EU countries are operating either under government forced requirement and/or restriction advice.

“Under these exceptional circumstances, we can no longer accept delivery of goods on retail POs [purchase orders - the official confirmation of an order]. We must regretfully invoke the force majeure provision of our contract and cancel all undelivered POs as of today. The same conditions are also impacting our direct business.

“Further, [on] any and all FOB [free on board] product that are as of today with freight forwarders, we will impose a 30% discount. We are aware that these decisions have significant financial implications for both our companies, but under the above duress we have little alternative.”

An Urban Outfitters spokeswoman told Drapers: “Unfortunately, like any business, we are doing our best to navigate these unprecedented circumstances. With our stores closed, we simply don’t have the capacity to accommodate all the stock on order. As such, our buying and merchandising teams have been in discussions directly with suppliers, negotiating on a case by case basis to reach an amicable end.”

Since the coronavirus outbreak, retailers including Arcadia Group, PrimarkEdinburgh Woollen Mill Group (EWM) and New Look have also written to suppliers to cancel orders until further notice.

What is force majeure? 

Stephen Sidkin, partner at law firm Fox Williams, explains: “As the coronavirus news keeps on coming, it is inevitable that some fashion companies will seek to use the outbreak to justify failures to fulfil contractual obligations. This is likely to focus on what lawyers call “force majeure” or ”frustration”.

“Force majeure is usually taken to mean the occurrence of an event outside of the control of two parties that prevents one or both sides from fulfilling the contract. 

“It is a provision often found in commercial contracts. ‘War’, ‘strike’, and ‘riot’ are often listed in a force majeure clause, and their meanings are quite clear.” 

Readers' comments (5)

  • Reading all these larger companies discounting and cancelling orders while claiming they are and ethical company, is just laughable! Its not a question of discussing and lets work through these difficult times together, no we will cancel and discount! Thank you!

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  • Urban never needed "force majuere"in the past to cancel orders,just a few slow days trading.
    Useless company.

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  • For years brands would always say 'We're in Urban Outfitters' as a seal of approval. There are other examples of where a brand is more interested in being in an account than actually getting paid on time - if at all.

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  • Callous, disgraceful and short sighted, reveals a total lack of understanding by leadership that these knee jerk reactions will have on the supply chain. The only way that these companies will trade out of this is by planning and working with supply chain not just cutting it off in its tracks. What happens when this is all over ??? i guess they will again knock suppliers on stock holdings, for the suppliers left i sincerely hope that they drop Urban as an account as any order is not worth the paper its written on till the money is in your bank account, your better off betting on a Horse !!!! #PayUp

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  • Cancelling is one thing; BUT surely this 30% discount on delivered goods is legally wrong and certainly immoral?!!...or will they say, they are faulty!!!!

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