FW
Marks & Spencer has recorded substantial sales declines in clothing and home business due to the Coronavirus outbreak. The brand’s forecast for group pre-tax profit (PBT) for the quarter to date has been adversely affected by the virus but was within the range of market expectations and in line with the guidance issued in January until the current week”. The final result could be at or below the bottom end of the range of PBT of £440m-£460m, given probable very depressed trading in Clothing and Home.
The brand is now planning on the basis of a prolonged downturn in demand for clothing and home and may close some of stores temporarily. This dent to the clothing and home business is expected to last, at least, for three or four months into the new financial year, although it's possible that this may ease as summer trading gets under way. Its margins are likely to be severely impacted by the surplus of unsold seasonal stock and probable clearance activity in the marketplace.
The company has welcomed the UK government’s support on business rates as it paid out around £180 million for those property taxes in the UK last year. It's working to cut costs by postponing capital spending, deferring all pay increases and deferring or cancelling discretionary spend. That includes reducing its marketing spend. It's also reducing the supply pipeline by over £100 million and working to grow its online penetration.
Vietnam garment makers are struggling as EU and US buyers are cancelling orders over the Covid-19 crisis. A French company recently canceled orders placed with garment maker TNG over the spread of the novel coronavirus in France. Now about 200 containers that were supposed to go to the E.U. and the U.S. will remain in the country by the end of next month, each of them worth around $100,000.
Garment company Than Duc Viet might have to stop some production chains because U.S. buyers have delayed their orders. Its sea shipments in March have been postponed to April and May, and buyers have asked to stop the ongoing production of hundreds of thousands of products.
COVID-19 has already been a blow for Vietnam’s textile industry with producers struggling to source materials from China as factories there were shut down by the virus. Now that the supply chain has mostly been resumed, the industry faces the problem of selling to the E.U. and the U.S. where buyers have stopped ordering.
The EU on March 17 closed its borders for 30 days to contain the disease. Although the ban does not apply to goods, Vietnamese officials expect exports to the bloc to fall by up to 8 per cent in the first and second quarter due to lower demand.
Latest research by Panjiva, the supply chain intelligence unit of the impact of Voronavirus has led to brand’s diversifying their supply chain to newer countries. Levi Strauss and Adidas have increased their imports from Cambodia while Uniqlo parent Fast Retailing has moved sourcing to Vietnam. Ralph Lauren’s import mix has also changed over the past two years, with its seaborne imports declining to 25.4 percent of the total in 2019 versus 34.6 percent in 2018.
The same was also true in consumer staples, where membership warehouse club Costco Wholesale Corp. outperformed the sector by 16.5 percent with 0.29 TEU per million COGS and 0.09 percent reported Asian exposure. Data also showed imports from Asia fell 10.7 percent year-over-year in the three months ended Feb. 29, 2020. Pricesmart Inc had zero per cent reported Asian exposure, but it underperformed the sector by a negative 13.3 percent. That’s because its Asian supply chain exposure was much higher, at 1.43 TEU per million COGS.
Panjiva believes that using containerised freight imports, as measured by TEUs, from Asia against a neutral measure of a company’s supply chain is a more nuanced measure across an apparel company’s business.
Jeanologia is launched a new technology solution MissionZero to encourage all textile industry stakeholders to dehydrate and detoxify jeans industry by 2025. The solutions were developed by building an ecosystem of collaborators and helping them produce with zero water and zero discharge.
This disruptive laser and eco technology enables brands to increase productivity, reduce water and energy consumption, while eliminating contaminated waste and harmful emissions, guaranteeing zero pollution.
Jeanologia’s vision is to be the vehicle for transforming our world, generating a positive impact in society through a new way of doing business where the end objective is not focused purely on profit.
To do so, last year it started an ecological income statement through which it measures cubic metres of contaminated water that, thanks to its technology and services, do not go into our rivers and seas. It is Europe’s first company to deliver an income statement of this type.
In wake of the worldwide pandemic outbreak of Covid 19, resulting in thousands of stores getting closed across the world; Bangladesh is facing a very glooming future. Brands and buyers are cancelling their orders. Buyers and brands are avoiding responsibility towards their business orders as they themselves are facing disastrous situation.
Reports suggest, business orders worth Tk 20,000 - 25,000 crore ($2.36-2.4 billion) are expected tp be cancelled. This is the amount of projected value of goods that are in port, onboard and in production for delivery. In the same way, another Tk 20-25 million worth of cloth fabrics is stitched or has been cut for stitching. Another Tk 250-300 million worth of fabrics has been ordered to different suppliers whose value has already been paid from the bank. That is how, Bangladesh industry now already owes worth billion of Taka in this phase.
Bangladeshi manufacturers are scared, if the present crisis stretches further then most of the manufacturers will not have the money even to pay their electricity bills. And they are worried about expenses to meet ahead of Eid festivity for their workers, if things don’t improve.
Due to COVID-19, luxury brand Kering expects a 15 per cent decrease in its comparable sales in the first quarter of 2020, which ends on March 31. This decline would translate into a decrease of 13-14 per cent of its reported sales. The brand achieved an excellent first quarter in fiscal 2019, posting year-over-year increases of 21.9 per cent in reported sales and 17.5 per cent in comparable sales. Kering's revenues in Q1 2019 totaled €3.785 billion. Its quarterly revenues are expected to decline by around €550 million to €3.2 billion crisis.
The situation may impact its business during the entire first quarter, and also the second quarter of 2020. The company has implemented an initial action plan aimed at adapting its cost base and containing its working capital requirement. It is also considering additional measures that can be activated to mitigate the dilution of its recurring operating margin throughout the year, while protecting its houses’ market positions and preserving their growth potential and capacity to bounce back in the short and medium term.
In a recent meeting with local buying offices of foreign brands, leaders from the BGMEA said no confirmed placed orders should be cancelled. For brands that would like to postpone orders, it directed them to partly pay for goods so that the factories would have funds to pay workers. In its own concession to aid brands and retailers, BGMEA said factories would be willing to hold the goods until companies are ready to take them.
Brands and retailers in Bangladesh have been pulling back production orders as they face shrinking demand and closed stores that can’t currently benefit from shipments of new product. In the last one week, an estimated $100 million in orders have been cancelled in Bangladesh,
These brands and retailers are asking vendors to outline what fabric is ready for production and what isn’t, and cancelling orders for the latter. In some cases, they’ve agreed to delay use of the fabric, and in others, they’re washing their hands of it entirely. They are also asking for discounts on previously placed orders.
Some buyers are asking their Bangladesh suppliers if they can pay for the products they are taking 30 days later than when the would have. In some cases, they want to make their payments to manufacturers—who already face cash flow challenges—even further out than that.
Brands and retailers are reducing their production receipts by as much as 75 percent through July, or in some cases, through August. And despite corporate social responsibility efforts and aims, most companies have been focused on saving themselves as times get tough amid the COVID-19 pandemic, over considering the well-being of the workers who have been making the clothes to drive their earlier successes.
Zahid Mazhar, Chairman – All Pakistan Textile Mills Association, Sindh-Balochistan Region has demanded drastic measures to save export oriented textile industry from the negative economic impact of Novel Coronavirus (COVID-19) as since its outbreak in mid-December 2019, has caused turmoil in the world’s second-largest economy, China, with a trickle-down effect on nearly all big economies including those of the European Union, United States, Japan and South Korea.
Mazhar stressed the need for taking immediate steps by the Government of Imran Khan to address the major issues of the industry and exporters specially the liquidity problem otherwise all the measures taken by them for reduction in current account deficit would go in vein. He demanded the government to release the backlog of sales tax refunds including deferred sales tax refund and payment of outstanding DDTO/DLTL as this is the money that belongs to the business and should speedily be returned to help uninterrupted operation of the industry enabling to sustain employment and exports. He said that immediate payment of all refund and rebates is necessary due to delay in receipt of payment from domestic as well as international buyers in addition to cancellation of export orders even from big organisations and large scale buying houses and drastic slowdown in domestic market.
He said that the present situation needs special attention of the government to address problems of the trade and industry atleast for the period the recession would sustain due to Coronavirus. He demanded the government to restore SRO 1125(I)/2011 dated 31st December 2011 to provide relief to the five export oriented industries so that they may survive, play their role in the economic development of the country and earn much needed foreign exchange which is the need of the hour.
Mazhar also commented on reduction in discount rate by 75 basis points by State Bank of Pakistan said that it is too little and too late. He said that the discount rate in the regional competing countries lies between 4% to 8%, while discount rate has been reduced by United States of America to Zero Percent, Britain to 0.25 percent in sharp contrast with the present discount rate in Pakistan which is 12.5%. In this scenario how can Pakistani exporters compete with regional competitors in the international arena. He demanded Governor State Bank to further reduce discount rate by another 300 basis points so that Pakistani exporters may compete with their regional competitors. In addition to the above Government should also issue directives to the banks to liberally extend additional lines of working capital to spinners in order to survive and avoid immediate closure of spinning mills.
Government should also help the textile spinning industry by freezing utility bills both gas electricity for atleast two months so that the industry may operate without any interruption in these difficult times and also to avoid mass unemployment of the workers.
U.S. textile and nonwoven associations issued a joint statement urging federal, state and local governments to deem textile and nonwoven manufacturing facilities as “essential” when drafting “Shelter in Place” orders in response to the COVID-19 crisis.
These associations have demanded great clarity and assurance from the administration and state and local authorities for its companies and employees and demanded a clear exclusion of its manufacturing operations from “Shelter in Place” orders as the textile and nonwoven products that it make in the U.S. play an essential role in mitigating the shortages of critical supplies. Such a designation will help them to avoid disruptions of vital goods and services during this challenging time.
The associations recognise the serious challenges its elected officials, health administrators and others face when issuing orders to protect communities across the country and it understands the necessity for leaders to enforce a ‘Shelter in Place” order or quarantine orders.
Its members make a broad range of inputs and finished products used in an array of personal protective equipment (PPE) and medical nonwoven/textile supplies, including surgical gowns, face masks, antibacterial wipes, lab coats, blood pressure cuffs, cotton swabs and hazmat suits. These items are vital to the government’s effort to ramp up emergency production of these critical supplies.
In the overall gloomy situation due to the COVID-19 outbreak, Gujarat-based yarn manufacturers are seeing fresh inquiries from Chinese importers. Over the past two months, nearly 120 spinning mills across Gujarat have been passing through a tough period in the wake of sluggish international as well as domestic demands, said Bharat Boghara, chairman of Spinners Association of Gujarat (SAG).
According to him, the price of 30 counts cotton yarn was around Rs 205 per kg a couple of months back, which has come down to almost Rs190 to Rs 195 in the export market. Ishwarbhai Ghelani, Board Member of SAG says not only Chinese inquiries but domestic demand has also spurred slightly, which is encouraging for yarn makers in Gujarat and other parts of the country. Hopefully, in the coming one or two months everything will be normalised as the magnitude of the pandemic has reportedly reduced in China.
