News & Press

Thinking About Canceling on Your Factory? Here’s What You Need to Know

March 23, 2020

According to Anchin’s Marc A. Federbush, there’s no easy way to wrangle the thorny issue of cancelations.

“If a retailer has placed a P.O. and the goods have not been shipped yet, the retailer usually can cancel,” said Federbush, a partner and leader of the fashion group at the accounting advisory. This scenario is playing out across the industry as “almost every major retailer has shut down” amid government and health officials’ mandates to contain COVID-19’s spread.

The real problem, Federbush said, is there’s no real business playbook for surviving a pandemic, and wholesalers are struggling to rehome canceled orders. “What if it’s made, but not shipped? Where do wholesalers store the goods?” he said. “Should they keep it overseas? I’m telling clients don’t pay the duty because there’s nobody to accept them if the retailers’ distribution centers are not open.”

For replenishment orders, the solution is easy. “The factories have fulfilled their responsibilities [and you] tell them to hold it for core basic products,” Federbush said, noting that wholesalers can use the product for next year’s spring season, although trends might move on by then.

He’s advising clients to forget about now and to focus work future seasons. Spring 2020 is “lost,” he said, “and maybe part of the summer, too.”

Read the complete article in Sourcing Journal.