US retailer Bed Bath & Beyond said on Thursday that it ordered an external audit of textiles from Welspun India putting more pressure on the embattled bedding and towel maker, which has seen nearly half its market value wiped out this week.
Welspun has been caught in a maelstrom after US retailing giant Target last week accused the Indian manufacturer of passing off cheap sheets as premium Egyptian cotton for two years.
After Target said that it is severing ties with the company, Welspun clients, including Walmart Stores and JC Penney, also announced probes.
Bed Bath spokesperson Leah Drill said that the retailer will pursue an investigation and take appropriate action. The company’s announcement came after Walmart said that it is reviewing Welspun’s cotton certification records. Macy’s had said on Wednesday it is also monitoring the situation.
A Walmart spokesperson said, “We are currently reviewing Welspun cotton certification records and plan to have additional conversations with Welspun. If we discover an issue, we will handle it appropriately.”
Earlier in the day, Welspun managing director Rajesh Mandawewala told analysts in a conference call that the firm is in the process of appointing an external independent ‘Big Four Auditor’ to audit all of its supply systems and processes to understand the root cause. “The audit will give us clarity on a number of questions, including where and how the issue occurred and what steps we will need to take to tighten our processes,” he said, adding the audit is likely to be completed in six to eight weeks.