A Walmart spokesperson said: “We are now reviewing Welspun cotton certification records and plan to have additional conversations with Welspun”. “This is an issue of [the] highest priority for us”, the company said in a statement.
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USA retailers including J.C. Penney and Wal-Mart are scrutinizing whether sheets Welspun India Ltd. had said were high-end Egyptian cotton were actually cheaper knock-offs, questions that have sent the textile company’s shares plunging more than 40 percent. Customers seeking a refund can visit Target’s help page on its website.
Shares of Welspun India hit lower circuit for the third day in a row on Wednesday, as the fallout from Target Corp’s decision to terminate business with the firm for passing off cheap sheets as premium Egyptian cotton escalated. “This was 100 per cent a Welspun issue”, she said. Target is now terminating its relationship with Welspun. 64 million from its market valuation to Rs 82.
Target announced last week that it has ended all business with the supplier and halted the sale of all pillow cases and bed sheets from both, its outlets and online platforms, after its investigation confirmed fears of deception. Wal-Mart and JC Penny have earlier initiated review of Welspun’s products.
“This is a serious issue”, said S.P. Tulsian, who runs investment advisory firm sptulsian.com. Its other major clients include Wal-Mart Stores Inc, J.C. Penney Co and Macy’s Inc.
“The error is on our side, so we have to take responsibility for it”, said Rajesh Mandawewala, Welspun’s managing director.
Welspun, which was one of Target’s vendors, produced and supplied over of 500 Egyptian cotton bedsheets. Target had claimed that the supplier sent counterfeit Egyptian cotton sheets.
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The stock recovered to trade largely flat by midday on Thursday after Welspun sent a clarification to exchanges reiterating that an external audit of the supply chain has been sought and would be completed in 6-8 weeks.
