FW
In Q1, FY’24, apparel imports by the US dropped by 7.14 per cent to 18.07 billion from 19.46 billion in the corresponding quarter of the previous year.
As per data from the Office of Textiles and Apparel (OTEXA), apparel imports by the US from Bangladesh declined by 17 per cent to $1.75 billion from $2.13 billion during Q1FY23, indicating a significant shift in sourcing preferences or market conditions.
Contrastingly, apparel imports from China, another heavyweight in apparel manufacturing, registred a marginal dip of only 0.71 per cent, reinstating China's dominance as the one of the major apparel supplier to the US.
Emerging as formidable competitor in the apparel industry, Vietnam recorded a modest increase of 0.91 cent in clothing exports to the US. This uptick signifies a growing reliance on Vietnam as a sourcing destination due to factors such as competitive pricing or manufacturing capabilities.
Similarly, Cambodia witnessed a notable surge of 11.13 per cent in clothing exports to the US. This trend was possibly driven by factors like favorable trade agreements or operational efficiencies within the Cambodian garment industry.
Conversely, US clothing imports from India declined by 8.79 per cent, indicating a potential challenge or shift in competitiveness within the Indian apparel sector vis-à-vis other sourcing destinations.
Overall, these fluctuations in apparel imports underscore the intricate dynamics of global trade relationships and the constant evolution of sourcing strategies within the highly competitive apparel industry.
Vardhaman Textiles unveiled its fourth-quarter financial results on May 9, 2024, showcasing resilience amidst market turbulence. Despite a slight dip in topline performance by 1.05 per cent year-over-year (YoY), the company witnessed a robust 26.36 per cent increase in profits. Quarter-on-quarter (QoQ) comparisons revealed a notable upswing, with revenue climbing by 5.58 per cent and profits surging by 25.19 per cent.
A closer look at operational metrics unveils a strategic tightening of expenses. Selling, general, and administrative expenses saw a significant 8.89 per cent decline sequentially, juxtaposed with a 7.1 per cent YoY uptick. Operating income surged impressively by 45.99 per cent QoQ and 33.74 per cent YoY, underlining the company's adept management amidst challenging economic conditions.
Earnings per share (EPS) stood at Rs 7.05 for Q4, marking a substantial 26.43 per cent YoY increase, reflecting positively on the company's bottom line growth trajectory.
Despite recent market volatility, Vardhaman Textiles has exhibited resilience in its returns, with a -3.07 per cent performance over the past week, while boasting a robust 14.71 per cent return over the last six months and a 10.54 per cent Year-to-Date (YTD) return.
Analyst sentiments remain predominantly bullish, with a consensus "Buy" recommendation as of May 11, 2024. Out of four analysts covering the company, two issued a "Strong Buy" rating, one a "Buy" rating, and one a "Sell" rating.
With a market capitalization of Rs 12343.43 Cr and a 52-week high/low of
Rs 475.5 & Rs 318.35 respectively, Vardhaman Textiles continues to navigate market challenges with a solid financial footing, positioning itself for sustained growth in the textile sector.
Indorama Ventures Public Company Limited (IVL), a leading global sustainable chemical producer, showcased a robust quarterly performance with a 32 per cent increase in Adjusted EBITDA1 (earnings before interest, taxes, depreciation, and amortization) to $366 million in 1Q24, signaling a positive shift amidst the prolonged destocking trend. Despite a 2 per cent YoY decline, the company's strategic advancements under its IVL 2.0 evolved strategy demonstrated resilience in navigating challenging market dynamics.
The quarter witnessed a 3 per cent QoQ growth in sales volume, indicating a gradual recovery across all sectors as customer destocking abated, although a US winter freeze posed a temporary setback. Lower utilities costs in Europe, supply chain optimizations, and favorable shale gas economics in the U.S. bolstered profitability.
While the recovery momentum is expected to persist through 2024, challenges loom due to industry-wide capacity surpluses, inflation, and high interest rates, particularly impacting the polyester value chain. However, IVL remains optimistic, with its HVA segment poised for a healthy 2024 post-destocking.
Under its IVL 2.0 plan, the company focuses on asset optimization, debt reduction, and cash flow generation to enhance shareholder value. Leveraging SAPS/4HANA ERP and AI tools, IVL aims to drive productivity and cost efficiencies while modernizing operations.
In line with its strategic objectives, IVL is optimizing sites and refinancing debt, ensuring ample liquidity. Additionally, preparations for IPOs of its packaging and surfactants businesses signify efforts to unlock further value.
Segment performances reflected the company's resilience, with CPET and Fibers segments posting notable gains amidst supply chain disruptions and demand recoveries.
Aloke Lohia, Group CEO of Indorama Ventures, expressed confidence in the company's trajectory, emphasizing a commitment to cost management and competitiveness as they navigate evolving market conditions.
The fabrics market is poised for robust growth, with projections indicating a surge from $116.67 billion in 2023 to $123.42 billion in 2024, and a further climb to $148.78 billion by 2028, according to ResearchAndMarkets. A compound annual growth rate (CAGR) of 5.8 per cent is anticipated for the immediate future, driven by factors such as economic dynamism in emerging markets and the burgeoning automotive industry.
These trends are supplemented by a heightened demand for man-made fibers. Looking ahead, the market is expected to witness a steady ascent, with a CAGR of 4.8 per cent through 2028, attributed to the rise of e-commerce, burgeoning sportswear demand, population growth, and technological advancements.
Key emerging trends include the adoption of blockchain, digital textile printing, and the development of smart fabrics. Additionally, the integration of robotics and artificial intelligence in manufacturing processes underscores a shift towards advanced production methodologies. Notably, the fabrics manufacturing market stands to benefit from the surge in online shopping, enabling manufacturers to expand their reach globally.
Furthermore, the demand for home furnishing fabrics is expected to soar, propelled by consumer preferences for personalized decor. Market players are strategically focusing on natural fabrics to bolster their product offerings. Asia-Pacific leads the market, followed by Western Europe, with a comprehensive global market analysis covering key regions including North America, South America, Middle East, and Africa.
The rapid adoption of smart fabrics across diverse sectors, ranging from fashion to healthcare, signifies a transformative shift in textile technology. These fabrics, capable of interacting with their environment, offer a spectrum of applications from medical diagnostics to performance monitoring in sports. Major companies are investing in natural fabric innovations, signaling a paradigm shift towards sustainable and eco-friendly textile solutions.
Milan's Centro Congressi Fondazione Cariplo is set to become the epicenter of sustainable fashion innovation on May 14th and 15th as it hosts the fourth edition of CTF-Challenge The Fabric. Organized by Ekman & Co and the Swedish Fashion Council (SFC), the event aims to unite stakeholders across the supply chain of man-made cellulosic fibers (MMCF), including industry leaders from fashion, textiles, and forestry.
MMCFs, derived from sources like wood and agricultural waste, are gaining prominence for their regenerative properties. With sustainability at the forefront, CTF 2024 emphasizes the importance of responsibly sourced cellulose and eco-friendly manufacturing processes.
This year's event reintroduces the CTF Award, spotlighting designers who harness MMCF materials. Among the speakers are representatives from industry giants like Birla, Kering Group, and Puma Sodra, alongside emerging talents like Forbes-listed Paolina Russo.
Russo's debut capsule collection, featuring Spinnova—a sustainable, mechanically produced fiber—challenges perceptions of vibrant, eco-conscious fashion. The collection, comprising a mini skirt, oversize jacket, and jeans, showcases the creative potential of bio-based materials.
As part of the Challenge the Fabric Award, designers are encouraged to embrace MMCFs and explore alternatives to traditional fabrics. With a full-day symposium facilitating dialogue and action, CTF 2024 is poised to drive meaningful change in the fashion industry's sustainability landscape.
The U.S. Department of Agriculture (USDA) released its May World Agricultural Supply and Demand Estimates (WASDE) report on May 10th, 2024, providing insights into the future of cotton production and consumption. The report offers a more optimistic outlook for the 2024/25 season compared to the previous year.
U.S. production poised for increase
The May WASDE report projects a significant increase in U.S. cotton production for the upcoming season. Here's a breakdown of the key data points:
|
Factor |
2023/24 (Actual/Estimate) |
2024/25 (Forecast) |
Change |
|
Planted Area (million acres) |
Not Applicable |
10.67 |
N/A |
|
Harvested Area (million acres) |
6.4 |
9.1 |
+2.7 |
|
Production (million bales) |
12.1 |
16 |
+3.9 |
The projected increase in production is attributed to a rise in planted area and lower abandonment rates compared to 2023/24. This is welcome news for cotton producers who have faced challenges in recent seasons.
Global cotton trends
The May WASDE report also forecasts a global increase in cotton production and consumption in 2024/25. Here's a glimpse into the global projections:
|
Factor(million bales) |
2023/24 (Estimate) |
2024/25 (Forecast) |
Change |
|
Production |
120 |
125.4 |
+5.4 |
|
Consumption |
118 |
121.5 |
+3.5 |
|
Ending Stocks |
80.5 |
83 |
+2.5 |
The larger global production is expected to be driven by increased plantings and yields in major cotton-producing countries like Brazil, Turkey, and the United States. However, this growth is likely to outpace consumption, leading to a projected rise in ending stocks.
Market implications
The May WASDE report's projections for increased cotton production could put downward pressure on cotton prices in the upcoming season. However, the overall supply and demand situation remains dynamic and will be influenced by various factors, including global economic conditions and trade policies.
Looking ahead
The USDA's WASDE report serves as a valuable tool for cotton industry stakeholders to make informed decisions. While the May report offers a positive outlook for production, it's crucial to monitor future WASDE reports and other market indicators to stay updated on the evolving cotton market landscape.
The company behind Coach and Kate Spade, Tapestry anticipates fiscal 2024 revenue to exceed $6.6 billion, slightly lower than the initial expectation of about $6.7 billion.
Tapestry’s third-quarter net sales fell short at $1.48 billion compared to the anticipated $1.50 billion, while adjusted earnings per share stood at 82 cents, surpassing estimates of 67 cents.
Recently, Tapestry had to cut its annual sales forecast as it missed third-quarter revenue estimates. This company reported subdued demand for its handbags and accessories in both North America and China.
Reduced consumer spending in North America, fueled by escalating prices, coupled with a fragile post-pandemic recovery in China, contributed to the weakened demand for Tapestry's products.
Joanne Crevoiserat, CEO attributed this decline to low consumer confidence in North America, likely influenced by persistent inflation. Revenue in North America, which comprised 61 per cent of the 2023 revenue, saw a 3 per cent decrease, while sales in Greater China slipped 2 per cent.
Analysts, such as Rachel Wolff from Emarketer, anticipate a gradual recovery in mainland China, potentially driven by increasing demand for international travel.
Despite the sales slump, Tapestry exceeded profit expectations, thanks to improved margins from full-priced product sales, reduced freight costs, and disciplined expense management.
Tapestry's $8.5 billion acquisition of Capri, the owner of Michael Kors, faces legal challenges from antitrust regulators, who argue it would eliminate healthy competition between the flagship brands. However, Tapestry remains optimistic about the deal's merits and its potential benefits for consumers.
In 2024, the nylon filament yarn (NFY) market experienced a notable shift from the previous year. While full drawn yarn (FDY) reigned as the star product during 2023, commanding advance orders and supply shortages across specifications, in 2024, the spotlight turned to Drawn Textured Yarn (DTY).
This change stems from underlying shifts in supply and demand. In retrospect, DTY's profit fluctuations have historically been intertwined with surface price trends and demand fluctuations, notably seen during the challenging period in the latter half of 2022. During this time, an influx of new production capacity coincided with decreased consumption due to the pandemic, leading to severe losses.
However, the tide turned in 2023 as the pandemic situation improved and demand surged, particularly driven by sun protection products. This sparked a significant uptick in DTY applications across various sectors, from leisurewear to intimate apparel, and even specialty items like shark pants and Barbie pants. Notably, exports also soared, indicating a broader market embrace of DTY.
In 2024, the demand momentum from the previous year persisted, with a continued focus on porous filament applications. While no groundbreaking new applications emerged, DTY's market resilience outshone FDY due to supply dynamics. Unlike FDY, which saw a rapid expansion in production capacity in response to heightened demand, the DTY market had seen its last significant capacity expansion in 2021-2022. This led to a tighter supply-demand balance for DTY, especially as demand continued to grow steadily in 2024.
Despite the absence of major new applications, the existing DTY capacity is already stretched thin, running at full capacity. Consequently, supply struggles to keep pace with demand, resulting in backlogs and supply tightness. This trend is expected to persist as the lead time for planning and commissioning new projects elongates.
Net sales of leading US-based apparel manufacturer, Hanesbrands declined by 17 per cent to $1.16 billion during Q1, FY24 as against the corresponding quarter previous year.
The global sales of the Champion brand grew in regions such as Japan, China, and Latin America. However, this growth was overshadowed by a 26 per cent decrease in the sales of the brand on a reported basis and a 25 per cent decrease on a constant currency basis compared to the corresponding period last year.
Both gross profit and adjusted gross profit of Hanesbrands increased by an approximate 2 per cent Y-o-Y during the quarter. Notably, it’s gross margin and adjusted gross margin improved by 750 and 720 basis points to reaching 39.9 per cent, underscoring the effective cost management and operational efficiencies of the company.
The company’s selling, general, and administrative expenses rose by 4 per cent to $409 million. It’s operating profit increased by 4.5 per cent to $52 million while adjusted operating profit rose by 32 per cent to $84 million.
On a less favorable note, the company’s net loss widened to $39 million during the quarter as against the corresponding quarter of the prior year. However, the adjusted net loss improved to $7 million from a loss of $21 million in the first quarter of 2023.
Segment-wise, innerwear sales dropped by 8 per cent due to higher-than-anticipated inventory management actions by certain retailers. Activewear sales saw a steep decline of 31 per cent, or $97 million. International sales also decreased by 12 per cent on a reported basis.
Gap has appointed Fabiola Torres, Marketing Head, PepsiCo as its new Global Chief Marketing Officer. At PepsiCo, Torres spearheaded marketing activities for both the energy drinks division and the Hispanic business unit.
Prior to this, Torres was engaged with several esteemed companies such as Nike and Apple. At Nike, she served as the head of the global sneaker division, playing a pivotal role in the launch of the groundbreaking Nike Sneakers destination mobile app.
As the global chief marketing officer at Gap, Torres is mandated with overseeing the various facets of the brand's operations, including marketing strategies, creative endeavors, visual merchandising, store experiences, and operational efficiencies.
Expressing confidence in Torres’ ability to lead the company, Mark Breitbard, CEO, Gap brand, highlighted her aptitude for navigating transformational landscapes, her ability to cultivate brands that resonate with culture, and her steadfast commitment to purpose-driven leadership.
