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Haiti has decided to reopen its textile factories from April 20. The poorest country in the western hemisphere had immediately declared a state of emergency after detecting its first two cases nearly a month ago, closing borders and shuttering schools, places of worship and industrial parks.
As the initial term of the state of emergency expires shortly, he government is considering whether to extend it. The textile manufacturing sector accounts for 90 per cent of the country’s exports.
The industry would start running at 30 per cent of its capacity to ensure social distancing in the workplace, according to global newswires.
Factories accounting for around a third of textile manufacturing workers were allowed to re-open two weeks ago to make cloth masks and medical garments.
Big-name international brands have cancelled billions of dollars in orders because of the pandemic, decimating Bangladesh's most important export industry and hurting in particular rural woman who dominate the workforce.
Making the shirts, pullovers, bras and socks for stores in wealther nations accounts for 80 percent of Bangladesh’s $40 billion of annual exports and has played a vital role in its growth of the past two decades.
More than four million people, mainly women from poor rural villages, are employed in the sector.
But the industry has a reputation for running sweatshops, with workers toiling in unsafe factories without labour protections or a social safety net.
The 2013 Rana Plaza diaster, when the collapse of the garment complex claimed the lives of 1,130 lives, exposed appalling safety conditions in Bangladeshi factories.
Now, with international brands walking away and a government lockdown stopped people in Bangladesh travelling, laid-off workers are complaining of being dumped without any help.
According to BGMEA, International brands have cancelled or held up orders worth $3.11 billion, affecting more than two million workers in the country.
As per the findings of a survey conducted by Rajesh Bheda Consulting (RBC), the impact of COVID-19 pandemic on business is unfathomable as of now but the total business impacted so far can be estimated at $3 billion. The combined value of orders cancelled and on hold is $1.49 million per respondent factory; 56 per cent respondents revealed payments were delayed, whereas in 19 per cent cases, customers refused to pay for the orders. Of the cancelled orders in 22 per cent cases buyers had paid for the material, in 35 per cent cases partial payment for the material was received and in remaining 43 per cent cases no payments were received.
RBC undertook a quick survey to understand the gravity of the situation in India. In all, 77 apparel exporting organizations from different manufacturing hubs of the country responded. Though the results are based on a relatively small sample, these do provide some much-needed data reflecting the scale of the challenge, as experienced by the respondents and its potential impact on the industry.
Brand Finance Apparel 50 index revealed Nike has retained its spot as the world’s most valuable apparel brand but the brand value of the sector could fall by 20 per cent due to the COVID-19 pandemic. The US sportswear brand’s value jumped 7 per cent to $34.8 billion as of January 1. Sporting goods rival Adidas stayed in third place as its brand value dropped 1 per cent to $16.5 billion, behind Gucci in second, which rose 20 per cent to $17.6 billion.
Jeans brand Levi’s was the fastest growing brand, rising 38 per cent to $4.1 billion, while Valentino and Gap suffered the sharpest falls in value. However, the report warned the brand value of the world’s biggest 500 companies could fall by up to $1 trillion, with the apparel sector one of the worst affected falling 20 per cent.
Nike and Adidas have both been forced to close stores around the world, with sales expected to be severely hit in the first half. Brand Finance also ranked sectors in terms of how severely they would be impacted by Coronavirus, with the brand value of apparel, airlines, restaurants, retail and auto parts industries all falling 20 per cent.
LVMH, which is largest luxury goods conglomerate in the world, plans to cut dividends by 30 per cent to €4.80 per given the current financial landscape. Chairman and CEO Bernard Arnault and the members of LVMH’s executive committee have already waived their salaries for the months of April and May, and will forgo their bonus compensation for the whole year.
LVMH generated revenue of €10.6 billion ($11.48 billion) for the first quarter of 2020. A 15 per cent drop for the three-month period ending March 31, with sales falling across all of its business segments – from its fashion and leather Goods group and perfumes and cosmetics division, where sales decreased 18 per cent, to watches and jewelry, and selective retailing, which saw sales sink by 24 and 25 per cent, respectively.
Responsible for 5 per cent of the country’s gross domestic product and employing more than 500,000 individuals, Italian luxury goods might face irreparable damage due to the prolonged lockdown. Carlo Capasa, Chairman of Italy’s National Fashion Chamber, stated in an online interview that Italy has been among the hardest countries hit by COVID-19, with death toll surpassing 20,000. He suggested, April 20 as a date to gradually reopen manufacturing activities in order to deliver fall/winter collections on time to shops around the world, and start production of spring/summer collections.
His sentiment was echoed by Claudio Marenzi, head of the fashion division at Rome-headquartered lobbying firm Confindustria, who feels while fashion factories have closed throughout Italy as a result of their status as non-essential businesses, “countries like France, Spain, Portugal, and Turkey” are gradually reopening manufacturing facilities.
Meanwhile, fashion giants like Gucci’s parent company Kering have put forth slashed outlooks for the year. Paris-based conglomerate Kering, whose brand Gucci sales consist of the bulk of annual revenues said last month it expects consolidated revenue for the first quarter of 2020, ending March 31, will be down by between 13 to 14 per cent in reported terms compared to the first quarter of 2019. The group expects sharp impacts for the second quarter, as well, as consumer opt out of luxury spending amidst the global health crisis.
At the conclusion of 2022, the top five luxury brand values indicate that even though most of the world is in a fix with never-ending inflation, luxury just carries on as if all is well with the world. The top five luxury brands closed 2022 with brand values of: Louis Vuitton $124,273 million, Hermès $80,323 million, Chanel $53, 021 million, Gucci $37,887 million and Dior $10,534 million. Year 2023 is turning out be quite similar as the first quarter 0f 2023 shows Louis Vuitton’s sales growing 17 per cent and Hermès sales grew 23 per cent compared to the same period last year.
The buoyant lifestyle of ultra-high wealthy is clearly keeping the luxury sector in the black. Compared to the ultra-high net worth individuals, income-groups lower down the ladder are actually slashing spends on designer items by half. The return of Chinese consumers after nearly three-years of self-imposed lockdown has added to the buoyancy of luxury goods as witnessed by the LMVH collective of Louis Vuitton, Christian Dior and Celine whose sales increased 30 per cent in mainland China in the first quarter of 2023 compared to the first quarter of 2022. European luxury stocks have been on a jubilant run, gaining 23 per cent on average this year compared to 14 per cent rise in the MSCI Europe index.
Luxury goods could be the best to invest in
The flush of the luxury sector continuous success has been noted by wealth managers as they have now begun advising investing in the sector. Luxury is actually an interesting market to secure money. Beyond representing history, know-how, prestige and scarcity, it is an industry that resists crises, since luxury customers, due to their financial wealth, recover very quickly or even do not suffer when they arrive. Luxury goods might become to best assets to invest on in the coming years.
Almost recession-proof, the flourishing luxury goods market is still one of the most successful industries worldwide and has a very bright future ahead. With a high profitability in a short period of time, it is going to be the biggest rival of real estate or stock market investments for wealthy people. However, in terms of investing in stocks, the investor has to be careful in choosing. Last year, three companies — LVMH, Hermès and Richemont — took home 75 per cent of the industry's incremental revenue, revealed a Bank of America analysis.
When rivals report their results, it will become clearer who is winning or losing market share. It’s even more interesting for people living in emerging countries where financial markets and domestic currencies are not stable. The reason to believe in luxury is because the industry has been surprisingly resilient in previous economic downturns. In the global financial crisis, the sector had two quarters of lower sales before it began to grow again, while global gross domestic product contracted for four.
Experts question if this growth is sustainable in the long run? It looks like it really is. This year, bullish analysts expect luxury industry sales to increase by 8 to 10 per cent compared with the International Monetary Fund's 2.8 per cent forecast for global growth.
Luxury’s big new playground India
India, the world’s fifth largest economy now supports a 105 per cent rise in millionaires by 2026 and living in India will be the single largest consumer group of all things luxury. In India though, luxury real estate and automobiles top the list of luxurious acquisitions with experiential luxury coming in a close third with holidays, staycations, F&B and of course lavish destination weddings. Luxury fashion and accessories such as watches and exclusive jewellery have been around but now they are full on as brand after luxury brand make Indian metros their must have destinations.
Pitti Immagine, owner of the Pitti Filati yarn show, has delayed making any decision about this summer’s fair. The direction taken by Pitti Immagine was welcomed with satisfaction by the Technical Committee – composed of representatives of various components involved in Pitti Filati: exhibiting yarn manufacturers, knitwear factories, buyers – which started a wide-ranging discussion on the main issues currently under discussion.
Along with an evaluation on extension of containment measures and forecasts for recovery of production activities in the textile-clothing sector, the owner also discussed operatively on different issues: timing schedule (presentation of the color chart, sending of samples, collection of orders), new formulas for a setting up of stands, with the aim to reduce the production costs for the exhibitors and the ideal position of Pitti Filati in the events calendar.
Given the complexity of the situation, where many elements are still in progress the Technical Committee asked for three more weeks to decide on the format and dates of the show and the next meeting was convened in the first week of May.
Data from BGMEA indicates, garment export fell drastically, by 83.74 per cent to $194 million in the first 15 days of April compared to the same period last year. In the first 15 days in 2019, the earning from garment shipment was $1.19 billion. The pandemic affected shipment of garments significantly as a majority of Western retailers and brands shut down their stores in Europe and the US.
Apart from the steep fall in shipment, international retailers and brands have already cancelled work orders from different local factories worth more than $3.11 billion as of this week due to the COVID-19 pandemic. The receipts from garment shipment also declined significantly in March this year. Garment export declined by 26.70 per cent to $1.97 billion in March this year compared to the corresponding month in 2019, when export netted $2.69 billion.
Canada has registered a massive fall of 13.54 per cent in its apparel import values during January-February ’20. The country imported apparels worth $1.40 billion during this period as against $1.62 billion in the corresponding period of the prior year.
India, China, Bangladesh and Vietnam dwindled significantly and that’s one of the rarest occasions when all top four apparel exporting destinations fell in value-wise RMG exports to Canada. Shipment from China to Canada was worth $440 million, marking 26.79 per cent downfall on Y-o-Y basis. Bangladesh shipments fell 13.10 per cent to. On the other hand, Vietnam’s shipment value of $148.43 million. India’s shipment to Canada valued at $48.38 million, reduced by 17.45 per cent on a yearly basis. Exports to Canada did not pick even in March as India and Bangladesh were facing industry closures to stop COVID-19 spread.
While China recovered in early March, there are no buyers from any part of the world coming forward to place orders for now.
