Target severs ties with Welspun over Egyptian-cotton dispute

[NEW YORK] Target Corp is ending all business with Welspun India Ltd, one of the world's biggest textile manufacturers, after saying the supplier was sending it phony Egyptian cotton sheets.  The retailer said it discovered last month that 750,000 sheets and pillowcases labeled as Egyptian cotton were actually made with another type of cotton. The retailer pulled the items from its stores, and on Friday it began notifying customers that it will give them a refund on the products, which were produced between August 2014 and July 2016 and sold for as much as US$75. Customers seeking a refund can visit Target's help page on its website.

Target is Mumbai-based Welspun's second-biggest customer, behind Bed Bath & Beyond Inc., according to Bloomberg data. The company makes towels, sheets, rugs and carpets for 18 of the top 30 global retailers. Its other major clients include Wal-Mart Stores Inc, JC Penney Co. and Macy's Inc. It also manufactures the towels for the Wimbledon tennis championships and the Rugby World Cup.

"We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them," said Molly Snyder, a Target spokeswoman. "We value the trust that our guests place in us. The Target team will continue to work closely with all vendors to help ensure that the products we offer to our guests meet or exceed their expectations." Spokesmen for Welspun couldn't be reached after regular business hours in India.

Target said it is phasing out all of its products from Welspun, which it has used as a supplier for more than a decade, though the process will take time since some merchandise has already been shipped or paid for. The withdrawal only includes two lines of Egyptian cotton bedding, and not all of its Egyptian cotton sheets are affected.

Egyptian cotton, which has a longer fiber that creates a softer thread than other cotton, often carries a higher price because shoppers consider it to be higher quality.

Welspun India is part of Welspun Group, a conglomerate which also owns Welspun Corp Ltd, a pipe manufacturer that also supplies major oil and gas companies.

BLOOMBERG