Target issuing refunds for fake Egyptian cotton sheets

Target issuing refunds for fake Egyptian cotton sheets

US retailers like J.C. Penney and Wal-Mart are scrutinizing whether sheets Welspun India Ltd. said were Egyptian cotton are actually knock-offs, sending its shares plummeting.

Target announced on August 19 that it has ended its relationship with Indian textiles company Welspun after an investigation revealed that the company was supplying fake Egyptian cotton 500-thread count bed sheets for its consumers.

Last week, Target cut ties with Indian home textiles maker, Welspun, after the latter had labeled thousands of non-Egyptian cotton sheets as Egyptian cotton for almost two years.

Welspun's share price has more than halved since the Target allegations surfaced Friday. The 36 percent two-day slide - the steepest since 1999 - cut the company's market value to 66.2 billion rupees ($990 million).

Wal-Mart, the world's largest retailer, plans to hold further discussions with Welspun and "handle it appropriately" if any issues are discovered, according to spokeswoman Marilee McInnis.

Approximately 750,000 sheets and pillowcases manufactured by Welspun India Ltd. were labeled to be 500-threat count Egyptian cotton, Bloomberg reports, but found to be a knockoff instead.

Target is pulling the items from its stores, while Walmart is investigating Welspun's cotton certification records.

Sales from the USA account for two-thirds of Welspun's sales.

"We have initiated immediate actions to investigate the root cause".

"We are now reviewing Welspun cotton". Several U.S. retailers such as Target and Wal-Mart are in the center of controversy when it comes to bedding.

Swedish furniture retailer Ikea, meanwhile, said that it would continue to do business with Welspun while the Mumbai-based textile vendor conducts its own investigation. It also manufactures the towels for the Wimbledon tennis championships and the Rugby World Cup.