FW
British clothing label Superdry is set to quit the Mainland China market after five years of mounting losse.
Superdry launched in China in September 2015 with a catwalk show at the British embassy in Beijing. In partnership with Trendy International Group which has around 3000 stores on the mainland, Superdry originally planned to open two to five stores in the first year. Each of the two companies pledged to invest £9 million each over 10 years to develop the brand.
Since April 1, about 90 per cent of Superdry China employees, from store roles to head office, have been under pressure to take unpaid leave, while management and directors have accepted a 25-per-cent salary reduction.
Textile and apparel companies recorded worst sales in the first quarter of fiscal 2020 leading to a slew of bankruptcies and severe declines for manufacturers. Fibers firms Lenzing and Unifi saw their quarterly revenues decline on soft demand and weak pricing, causing profits to tumble. In the case of Unifi, its net loss grew 264 percent to $41.1 million.
For basics apparel manufacturers like Gildan Activewear and Hanesbrands that own most of their own production, sales were down 26.4 percent for the former and 11.9 percent for the latter, but earnings nosedived more than 100 percent and profit margins suffered. For Hanesbrands, which like many companies pivoted a share of production to personal protective equipment, earnings fell 109.7 percent to a net loss of $7.87 million.
For jeans mavens Kontoor Brands and Levi Strauss, revenue declines were less dramatic–Levi’s actually pulled off a 5 percent gain–but earnings tumbled, again with the exception of Levi’s, which posted a 4 percent increase. Wrangler and Lee parent Kontoor Brands saw earnings fall 118 percent to a net loss of $2.71 million, while earnings at VF declined a staggering 475.6 percent to a net loss of $483.8 million.
Specialized brands saw an equally unfortunate fate. Columbia Sportswear’s sales in the quarter were down 13 percent, but net income decelerated 99.7 percent to $200,000. Puma’s sales fell a slight 1.3 percent, but the sneaker-driven athletic company saw earnings decline 62 percent to $39.2 million.
Istanbul’s Laleli, Osmanbey and Merter districts expect up to a 40 per cent decline in overall trade volume over the course of 2020, in the wake of the normalization process after the coronavirus outbreak shuttered business activity.
According to a report published by Turkish daily Dünya, the number of closed businesses in Laleli has even increased after June 1, when the country started to reopen its economy by gradually lifting most of the previously imposed restrictions.
Gıyaseddin Eyyüpkoca, chairman of the Laleli Industrialists and Businessmen's Association (LASİ-AD) which represents some 2,500 tradesmen in Laleli, said the district recorded approximately $3 billion (TL 20 billion) of trade in 2019. Eyyüpkoca told Dünya that a significant part of the trade was carried out during the coronavirus restrictions through applications such as WhatsApp.
Eyyüpkoca, however, noted that the full normalization is also up to developments in countries such as Romania, Poland, Serbia and Russia, which are among their important commercial partners, noting that they had worked hard for the summer season, however, all those products remained unsold.
According to a report by India Ratings and Research, the domestic textile demand could revive in the third quarter of the current financial year with the onset of the festive season and reopening of retail spaces. However, export demand would depend on global economies such as the US and UK.
The agency expects a huge revenue downfall for textile companies in the first half of the current fiscal and a moderate recovery only over the second half of fiscal year 2022. With the stoppage of production and shortage of labour due to the lockdown, revenue is likely to bottom out over first half of the current fiscal. The report said the consumption demand is unlikely to revive in the current fiscal.
This is likely to result in a fall in EBITDA in the range of 20-50 per cent YOY, depending on the segments, leading to deterioration in credit metrics. Furthermore, players in spinning, readymade garments carry high debts on account of stretched working capital cycles with low cushion to borrow. The agency expects the working capital cycle to stretch for textile players over the next 9 months due to delays in collections and a longer inventory. WWF has welcomed the launch of the proposals for an EU Green Recovery Plan in the textile, apparel and footwear industry.
The proposals were developed by the Policy Hub a joint effort of the Sustainable Apparel Coalition (SAC), the Federation of the European Sporting Goods Industry (FESI) and Global Fashion Agenda (GFA) – and will help countries and this critical industry to ‘build back better’.
WWF agrees with the Policy Hub that the pandemic has occurred in a period when sustainability programs and commitments are increasingly becoming the norm in the industry, and how relevant these are to efforts to prevent and mitigate future crises. Given this fact, and the opportunity that the EU Green Recovery Plan presents, there is a need to ensure this progress is maintained and strengthened in the recovery phase.
WWF expects that the COVID-19 recovery plans will strengthen the progress of recent decades in water stewardship and in addressing climate change, air and water pollution, ecosystem degradation and other environmental challenges.
With the entire fashion industry reeling under the COVID-19 effects, could the luxury industry remain unaffected? Hardly, says the latest study by McKinsey & Co in association with Italy’s Camera della Moda and trade show organizer Pitti Immagine. The study says, he personal and experiential luxury business, valued at €390 billion in 2019, is likely to decline almost 45 per cent by 2020-end while the leather and accessories goods sector is likely to decline by around 35 per cent. Since January 1, 2020, global luxury apparel and fashion segment has lost almost 40 per cent of market capitalization with retailers losing revenues worth 50 percent of their market capitalization.
Global luxury sales to fall as shoppers shun stores
Around 31 per cent of the 2,100 executives interviewed by McKinsey expect global sales of luxury goods to drop by around €140 billion in 2020 and
by €150 billion by 2021. This can be attributed to the fact that 50 per cent of luxury shoppers now prefer to spend time with their loved ones rather than buy desirable goods. Buyers also prefer to buy sustainable goods from local and nearby shops rather than from big brands.
E-commerce to pique sales
E-commerce is likely to gain ground with around 24 per cent shoppers opting for online channels to gain their first luxury shopping experience. Brand promotions with commitments to fight COVID-19 are some of the factors driving these consumers towards online shopping. The research states, jewelry, watches and eyewear are likely to be some of the categories most affected by the pandemic with consumers delaying their purchases of these for later date. Around three quarters of consumers expect to resume their pre-COVID-19 luxury spending habits after the emergency, but 80 percent of them plan to adopt special measures to prevent infections.
Wholesalers to face liquidity crunch, increased digital competitions
Amongst various categories, 46 per cent of independent wholesalers are expected to face liquidity crunch and aggressive competition from global online retailers offering early discounts on spring 2020 collections ranging from 30 to 40 per cent. As digital channels have become a key support for these luxury brands, developing partnerships with specialized e-tailers will help them to provide good service and meet their shoppers through different touch points. The survey states, COVID-19 has also disrupted traditional fashion calendar digital events. Designers and brands are also planning to reduce the size of their collecteion besides organizing shows closer to in-store sales
Value creators versus value destroyers
The problem of excess inventory is also likely to compound this season with unsold inventory accounting for 150 per cent of expected spring/summer ’20 sales. Labels having strong fashion content and a limited directly controlled distribution system will be more affected than established brands. COVID-19 will also widen the polarization between value creators and value destroyers in the industry with the former accounting for 177 per cent of its profits.
Abercrombie & Fitch Co’s indirect wholly-owned subsidiary, Abercrombie & Fitch Management Co.plans to offer up to $300 million aggregate principal amount of senior secured notes due 2025 (the “Senior Secured Notes”) in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended.
The Senior Secured Notes will be guaranteed on a senior secured basis, jointly and severally, by A&F and each of the existing and future wholly-owned domestic restricted subsidiaries of A&F that guarantee or will guarantee A&F Management’s existing senior secured asset-based revolving credit facility.
The Senior Secured Notes and the related guarantees will be secured by a first priority lien on certain of A&F Management’s, A&F’s and the other guarantors' real property, intellectual property, equipment, equity interests in A&F Management and the guarantors other than A&F, and general intangibles, subject to certain exceptions and permitted liens, and by a second priority lien on security interests in accounts and credit card receivables, inventory, deposit accounts, securities accounts, intercompany loans and related assets, which security interests will be junior to the security interests in such assets that secure the Amended ABL Facility.
A&F Management intends to use the net proceeds from the offering of the Senior Secured Notes to repay all outstanding borrowings under A&F Management’s existing senior secured term loan facility, to repay a portion of the outstanding borrowings under the Amended ABL Facility, and to pay fees and expenses in connection with such repayments and the offering of the Senior Secured Notes.
A number of major fashion brands—including Esprit, Gap Inc., and H&M Group—have cut ties with a major alpaca wool producer. High street retailer Marks & Spencer has also announced that it will phase out alpaca wool. This follows the release of an animal cruelty exposé.
Animal rights organization People for the Ethical Treatment of Animals (PETA) released the “first-of-its-kind” undercover investigation.
The exposé revealed instances of abuse documented at Mallkini. The Peruvian farm is the largest privately-owned alpaca wool producer in the world.
The footage shows workers holding crying alpacas by the ears. The workers roughly shear the animals with electric clippers. In the video, some alpacas vomit. Workers also slammed the alpacas onto tables. Some of the animals are pregnant.
After being shorn, the alpacas appear visibly cut up. Some appear to have deep wounds, some of which are bleeding. According to PETA, workers sewed the wounds up without using pain relievers.
Stein Mart Inc is the latest retailer to hint at COVID-induced challenges that could precede a tour through bankruptcy court.
The off-price chain issued a going-concern warning in its annual report filed with the Securities and Exchange Commission, though it has struggled since at least 2018, with factors in the past year predicting financial turmoil ahead.
Stein Mart sought to head off its liquidity problems by selling itself to Stratosphere Holdco, an entity to hold the operations, and other related assets for parent firm Kingswood Capital Management in a deal inked on Jan. 3. But when the coronavirus pandemic hit, Stein Mart and Kingswood mutually agreed to terminate their merger agreement on April 16. Under the terms of their agreement to end the planned transaction, neither party will be required to pay the other a termination fee.
In completing the final audit for the year ended Feb. 1, Stein Mart’s independent auditor KPMG said in a letter to shareholders and the company’s board that the temporary closure of all stores due to COVID-19 caused a material adverse effect on the company’s sales, results of operations, liquidity and cash flows. The impact raises substantial doubt over the company’s capacity to continue operations.
The International Apparel Federation (IAF) is launching the first Digital Global Apparel Sourcing Expo 2020 for the ready-made garment industry together with Sourcing Journal as media partner. The Global Apparel Sourcing Expo will be powered by Foursource, who will provide the technological platform for the event with a specific focus on B2B matchmaking.
The show will be launched on the July 15 and will run for 30 days until August 14, 2020. The IAF already has a strong existing partnership with Foursource, the largest digital sourcing platform for the apparel industry. Other than traditional tradeshow event software solutions, Global Apparel Sourcing Expo will benefit from Foursource’s B2B matchmaking technology with proven success in connecting international buyers and readymade garment manufacturers.
Exhibitors will benefit from a powerful tool to personalize their company booths and profiles with dedicated product showrooms and verified company certificates through Foursource’s partnerships with GOTS, OEKO-TEX, Textile Exchange, WRAP and many others. Participating companies will be showcased to a global network of thousands of international buyers along with extensive digital marketing to promote exporters publicly, maximizing traffic on the tradeshow and securing relevant business opportunities.
Welcoming the decision to reduce value added tax (VAT) on all kinds of yarn from Tk4 to Tk3 per yard in the proposed budget for fiscal 2020-21, the Bangladesh Textile Mills Association (BTMA) has demanded that VAT be removed altogether on all yarn.
It also urged the government to raise the existing alternative cash assistance from 4 per cent to 10 per cent for six months to compensate for the losses faced by export-oriented textile mills due to aggressive promotional strategies by competing nations.
The association earlier proposed waiving VAT on all kinds of yarn as the industry had lost around Tk20,000 crore during the COVID-19 lockdown imposed by the government, it said in a press release.
A fixed Tk6 ad valorem VAT has been proposed to be imposed on yarn produced from man-made fibres (MMF) that, the association thinks, will not benefit the related textile mills due to a dearth of export orders for yarn and buyer shortfall the textile mills have been plunged into. Therefore, BTMA urged a reconsideration of the proposal and clamping of a Tk2 ad valorem VAT on every MMF yarn.
