Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

The BBC's Ian Pollock
"Marks and Spencer has rejected the claim and says it will fight in court vigorously"
 real 28k

David Suddens, Chief Exec. William Baird
"We always said we would look for compensation"
 real 28k

Tuesday, 11 January, 2000, 15:41 GMT
M&S sued by supplier

M&S protest Textile workers protested recently about job losses

Clothing maker William Baird is to sue Marks & Spencer over the sudden termination of its supply agreement last October.

Baird has issued a High Court writ against the troubled retailer claiming that it breached the contract it had held with Baird for 30 years.

In a statement to the stock market, the company said it was claiming 53.6m for the costs and damages it faced which could force it into the red.

Baird chief executive David Suddens said: "We regret that M&S has been unwilling to make proposals which properly reflect the notice that ought to have been given on the unilateral termination of a 30-year business relationship.

Although there was no written contract between the two, Mr Suddens said the long-term relationship was legally enforceable and the company was "confident as to the legal basis of our claim and will pursue our action vigorously."

The GMB union has called for a government investigation into Marks & Spencer's practice of stipulating that suppliers work exclusively for them.

Legal fight looms

An M&S spokesman said: "We would strongly refute any claims that William Baird are making concerning the terms of our disengagement from them and will be vigorously fighting any legal action.

"We're disappointed that after the open discussions covering disengagement they've chosen to take this course of action. Our legal advisers tell us there is not a legal case to answer."

William Baird makes lingerie, women's coats and men's clothes for M&S.

Up to 4,500 jobs could be lost at 14 factories as a result of the M&S contract being lost.

Mr Suddens told BBC Radio 4's Today programme that the jobs would be lost whatever the outcome of the compensation case.

Sudden termination

The claim for damages is based on the difference between the company receiving three years' notice and the summary termination which it received on 22 October.

While it had agreed to continue to make spring clothing lines for M&S until the end of April, no provision was made for providing adequate compensation for ending the contract, the company said.

Baird estimates that the costs it faces will include a 33m charge to cover redundancy payments. It faces a further 21.4m loss in respect of asset write-downs, including IT equipment it used to help fulfil its M&S clothing contract.

The company said trading for its operations which supplied M&S remained "poor" during the second half of its financial year.

It also warned that the costs associated with the ending of the M&S contract would force it to reduce dividend payments to shareholders this year.

The writ, lodged on Monday, is more bad news for the troubled retailer, which is due to unveil a trading statement on Wednesday that is expected to show a poor performance over the crucial Christmas period.

Search BBC News Online

Advanced search options
Launch console

See also:
05 Dec 99 |  Business
Textiles in decline
02 Nov 99 |  The Company File
M&S profits plummet
22 Oct 99 |  The Company File
M&S down-turn threatens 4,300 UK jobs
11 Nov 99 |  The Company File
Third M&S supplier hit
06 Nov 99 |  Business
M&S axes another supplier

Internet links:

The BBC is not responsible for the content of external internet sites
Links to other Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories