Missguided suspended from Ethical Trading Initiative

LONDON – Fast fashion brand Missguided, which was recently placed into administration, has been suspended by the Ethical Trading Initiative (ETI). Missguided, which has now been purchased by Frasers Group, has been an ETI member since 2017. ETI said it has been working with the company since that time, “to develop standards in their supply chain to improve respect for human rights at work.”

This work clearly has had little impact if stories of the trail of destruction Missguided has left in its wake are to believed. Several suppliers of Missguided claim they have been left owed six and even seven figure sums by the company, whose CEO – Times Rich List member Nitin Passi – rode off into the sunset in April while the company was teetering on the brink.

In a statement, ETI said: “We have been made aware of the company’s commercial struggles in the last year and this week learned that they have been placed into administration. We understand this is the result of considerable debts to suppliers. Debts of this nature place garment workers, already subsisting on low wages, at an increased risk of unpaid work. We have reached out to the company without success and will be suspending their ETI membership. The decision to terminate an ETI member sits with the ETI Board which meets in June.

“Unfortunately, this case raises familiar issues, that risks and costs within the fashion industry are too often passed onto suppliers, with long payment terms and unfair purchasing practices that ultimately cost workers. When a brand goes into administration, suppliers are typically left with little or no chance of payment, and certainly not at full value. This translates into significant financial loss, unpaid wages for workers and often loss of employment. This is not a fair share of the risks of doing business.”

This raises questions for Missguided but also points to serious inconsistencies at ETI. During 2020, the ETI issued clear guidance to its members about the issue of cancelled orders. In early April 2020, it said it expected brands to pay for completed orders “in reasonable time” while sharing supplier costs with ongoing orders.

After this guidance was issued, several prominent ETI members – notably Primark, C&A and Asda (George) – clearly breached the guidelines. George, the clothing arm of Asda, was exposed as demanding 50 per cent discounts from suppliers for completed orders. This was a black and white case for the ETI, if ever there was one, but no suspension was forthcoming.

German retailer C&A and UK retailer Primark, meanwhile, both dragged their heels over the issue and only eventually paid for orders later in 2020 after a huge global outcry led by NGOs (most notably Remake).

Notable here is that Frasers Group, which has purchased Missguided, is not an ETI member and it seems reasonable to assume that ETI membership was not on the list of priorities for Frasers Group when purchasing the brand. ETI’s decision, therefore, is likely to make very little difference given that Missguided would unlikely be a member moving forwards. On the contrary, a decision to suspend or fully expel, say, Primark back in 2020 could have sent a huge signal to the market that poor purchasing practices would not be tolerated.