Cotton passes through a cleaning machine in the ginning mill of a factory in Yavatmal, Maharashtra, India (Photographer: Dhiraj Singh/Bloomberg)

Wal-Mart Drops Welspun Egyptian-Cotton Sheets After Review

(Bloomberg) -- Wal-Mart Stores Inc. will stop selling Welspun India Ltd.’s Egyptian-cotton sheets over concerns about the products’ provenance, dealing a fresh blow to a supplier embroiled in controversy.

Wal-Mart took the step after a review of Welspun’s cotton sheets, a move spurred by rival Target Corp. cutting ties with the Indian vendor. Unlike Target, Wal-Mart said it won’t end all business with Welspun, which is putting stronger quality controls in place and adopting new labeling practices.

“Our customers trust us to provide products that are what they say they are on the label,” Marilee McInnis, a spokeswoman for Bentonville, Arkansas-based Wal-Mart, said in an e-mail on Friday. “Welspun has not been able to assure us the products are 100 percent Egyptian cotton, which is unacceptable. While the sheets are excellent quality, we are offering our customers a full refund.”

Wal-Mart’s move threatens to further tarnish Welspun’s image, though the Indian company will at least maintain a relationship with the world’s largest retailer. Target said last month that it would end all business with Welspun, one of the world’s biggest textile manufacturers, because the vendor was sending it phony Egyptian-cotton sheets. Since Target’s decision was announced, Welspun shares have fallen 45 percent. And other retailers have said they will probe the authenticity of their Welspun products.

Trusting the Label

“We take the current traceability concerns around some of our product lines very seriously and have been working closely with our retail partners to support their actions toward a comprehensive resolution program,” a Welspun spokesman said in an e-mailed statement Saturday. “The affected products represent around 6 percent of Welspun’s total business.”

The controversy has raised awareness about cotton certification, and whether household products are indeed manufactured in their labeled country of origin. Customers often pay a premium for Egyptian-cotton products because they are perceived to be softer and more durable. Sheets made from cotton grown in other countries don’t always carry the same cachet among Americans.

Wal-Mart announced on Aug. 23 that it was reviewing Welspun’s cotton certification records, as well as checking other suppliers of Egyptian-cotton products. Wal-Mart is one of Welspun’s largest customers, along with Target and Bed Bath & Beyond Inc., which also is reviewing its Welspun products.

Welspun is part of a roughly $3 billion conglomerate headed by Balkrishan Goenka -- with interests spanning textiles, steel, pipes, energy and infrastructure. The company says it makes every fifth towel sold in the U.S. and counts J.C. Penney Co. and Macy’s Inc among its customers.

Wal-Mart sold the Welspun sheets and pillow cases under the names Better Homes & Gardens and Canopy.

“If a customer believes they have these sheets, they can bring in the sheets, tags off the sheets or receipt into one of our U.S. stores and receive a refund,” McInnis said.