Polish fashion retailer LPP has suspended new sourcing orders from Bangladesh as a $40 million payment dispute with local garment exporters escalates.
In a letter dated 30 July, the company informed suppliers that it would pause new orders and product developments while reviewing its sourcing strategy and exploring production options in other countries.
The dispute involves around 40 Bangladeshi garment manufacturers and buying houses that supplied products for Russia-based FES Retail under contracts reportedly guaranteed by LPP. Exporters claim LPP initially processed payments through FES Retail after the Russia-Ukraine war disrupted operations but stopped paying about 18 months ago, leaving approximately $40 million outstanding.
Industry leaders have criticized the move. Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem warned that LPP could face blacklisting if it fails to settle the dues. Meanwhile, Bangladesh Garment Buying House Association President Abdul Hamid said the industry wants to retain a buyer that sourced more than $700 million worth of garments annually from Bangladesh, but stressed that exporters must receive full payment.
Exporters said LPP had proposed settling the outstanding dues at a 50% discount, an offer they rejected. They have since filed legal cases, while LPP has reportedly requested that the lawsuits be withdrawn before any negotiations.
Several factories say they have suffered significant losses, with some goods remaining unsold in warehouses and millions of dollars tied up in unpaid shipments. Exporters believe the suspension of new orders is intended to pressure Bangladeshi suppliers during the ongoing dispute.
LPP had not responded to media requests for comment at the time of publication.
