Bed Bath & Beyond to Audit Egyptian Cotton Supplier
August 24 2016 - 2:40PM
Dow Jones News
NEW DELHI—Bed Bath & Beyond Inc. said Wednesday it had
started an audit to determine if an Indian supplier had sold it
authentic Egyptian-cotton products, days after Target Corp. alleged
the same vendor had sold it fraudulent Egyptian-cotton sheets.
Bed Bath & Beyond becomes the third American retailer, after
Wal-Mart Stores Inc. and J.C. Penney & Co., to open an
investigation into Welspun India Ltd. this week. The Indian company
is under fire for allegedly shipping sheets labeled as made with
Egyptian cotton to the U.S. when they were made using another
source of cotton.
While Welspun has reaffirmed products in Bed Bath & Beyond's
stores are made with Egyptian cotton, Bed Bath & Beyond said it
has "engaged an independent third party to perform an audit of the
supply chain to confirm this information. We will aggressively
pursue our investigation and take appropriate action, if
needed."
Welspun on Saturday said it had hired an accounting firm "to
audit our supply systems and processes" and "investigate the root
cause" of the problem. "This is an issue of highest priority for us
and we will take all necessary steps to address it," the company
said. Welspun had no additional comment on Wednesday.
Cotton grown and sourced from Egypt is believed to be softer and
more durable than other varieties, and is sold by companies seeking
to charge a premium on home-furnishing products.
Target said on Friday it had severed ties with Welspun after it
found the company "substituted another type of non-Egyptian cotton
when producing" sheets for it between August 2014 and July 2016. It
said about 750,000 sets of sheets under the Fieldcrest brand were
affected, and that it had pulled the product from its stores.
J.C. Penny and Wal-Mart, two other big Welspun clients, said
this week they would conduct their own reviews. "JCPenney is
conducting a thorough investigation of its Welspun textiles to
ensure the integrity of its product claims," the company said
Wednesday.
Welspun is one of Asia's biggest textile manufacturers, and
makes everything from bed linen and bath rugs for stores in the
U.S. to towels for the Wimbledon tennis tournament. American
retailers accounted for two-thirds of Welspun's $878 million in
sales in the year ended March 31.
Welspun's share price has halved after the Target allegations
surfaced on Friday. Trading in its shares was suspended on Mumbai's
stock exchange Wednesday, after the stock fell to its maximum daily
limit for a third-straight day.
Write to Preetika Rana at preetika.rana@wsj.com
(END) Dow Jones Newswires
August 24, 2016 14:25 ET (18:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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