Apparel makers and retailers H&M, Calvin Klein and Tommy Hilfiger agreed on Monday (May 13) to financially support a plan to improve fire safety and building improvements in factories in Bangladesh, the New York Times reported.
H&M, the largest buyer of apparel made in Bangladesh, said it has already signed the five-year Accord on Fire and Building Safety in Bangladesh. PVH (NYSE:PVH) owns the Calvin Klein, Tommy Hilfiger and Van Heusen brands and said it will sign the agreement, which is an expansion of an agreement PVH signed in 2012. PVH will also spend up to $2.5 million to underwrite the program. U.K. retailers Primark and Tesco also said they would sign.
Under the legally binding agreement, apparel factories in Bangladesh will have independent and rigorous safety inspections. Reports will be made public, and repairs will be underwritten by retailers. The agreement also requires retailers to stop buying from any factory that fails to make required safety improvements.
The agreement comes in the wake of the April 24 collapse of an illegally constructed garment factory building that killed at least 1,127 people.
Other large retailers, including Walmart (NYSE:WMT), Gap (NYSE:GPS), Sears (NASDAQ:SHLD) and JCPenney (NYSE:JCP), say they already have their own factory inspection requirements. But those chains are under increasing pressure with H&M's decision to sign on.
However, the decision by PVH may provide cover for some large retailers. Although PVH operates some 700 stores in U.S. outlet malls, it also sells its apparel through other chains such as Penney's, Macy's (NYSE:M), Kohl's (NYSE:KSS) and Dillard's (NYSE:DDS), under its own and private-label brands. That could be enough of a fig leaf to reduce pressure on some of those chains to sign onto the agreement and make direct financial contributions to the factory inspections and improvements.
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