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According to court documents, American Apparel fashion chain will soon have its most profitable years ever, if the company manages to achieve the bankruptcy turnaround it aims for.
Heavy losses bog down the company’s growth
The company, known for its sexually charged advertising campaigns, in a filing with the U.S. Bankruptcy Court in Wilmington stated that it would return to profit in 2018, its first money-making year since 2009. The brand had made repeated losses and its sales fell by 17 per cent in the second half of 2014. A lack of new styles was cited as a cause for this. The brand’s losses through the last five years have topped $340 million, and it has lost $45 million more in 2015.
The brand also runs the risk of being de-listed according to the New York Stock Exchange. It stated that the company’s financial condition is so critical that whether it would manage to stay in the business was questionable.
Dov Charney, the founder was fired as Chief Executive last year. In the court filing, the company stated that the ongoing legal battles with him, is one the risks to its future. Charney is accused by the brand of orchestrating protests at the headquarters and said he could undermine the ability to hire staff and executives.
American Apparel in turn, assured suppliers and other creditors that though they were going to get hardly anything for what the company owes them, they were key to the future.
The company filed for Chapter 11 bankruptcy to lower crushing interest costs and not to end contracts with suppliers and landlords, Scott Greenberg, one of the company's bankruptcy attorneys told the gathering of the brand’s creditors. He said that these relationships were critical to them.
The company’s unsecured creditors, who are collectively owed about $145 million, will receive $1 million to split among them, according to the company’s court filings. The creditors gathered in Wilmington, Delaware to form an official committee to represent their interests in the bankruptcy.
Surrounded by controversy
For years, American Apparel has been chased by changing spending habits among teen shoppers while also being embroiled in litigation related to Charney. Last year, Charney was fired for allegations of sexual harassment and potential misconduct after internal investigation.
However, an attorney for him said that he was never found guilty of committing sexual harassment. Keith Fink, in a statement said that Charney was fired as he wouldn't surrender control of his company.
The company creditors’ meeting was not attended by Charney, though he is listed among the creditors. By eliminating $200 million in bonds, the company plans to stabilise its finances by granting the bondholders a group of hedge funds, and ownership of the company.
American Apparel’s current shareholders could be wiped out due to the bankruptcy including Charney. His stake in the retailer, which he founded in 1989, was worth about $8.2 million until a few days ago. Now, the creditors would be in full control, including Standard General.
www.americanapparel.net
Doan Duy Khuong, Vice-Chairman, Vietnam Chamber of Commerce and Industry (VCCI) said that India had had great opportunities to provide raw materials to Vietnam's textile industry. He was speaking at the recently held Vietnam - India textile cooperation conference in Ha Noi.
Khuong said that the country’s cotton output met only 1 per cent of local producers' demand. Thus, the domestic garment and textile sector had to import a large quantity of cotton. Vietnam needs more than 500,000 tonnes of cotton per year to meet the rising demand. He added that India had enough supply of the material for the Vietnamese textile industry.
Leaders and business communities of Vietnam and India have been drawn towards bilateral cooperation in textile and garment sectors. DoThang Hai, Deputy Minister of Industry and Trade said, in October last year, when Prime Minister Nguyen Tan Dung visited India, the Indian Government offered a $300 million line of credit to Vietnam as an impetus to accelerate textile trade and investment between the two countries.
Khuong stated that the Vietnam textile industry had grown substantially in the past recent years and will continue to develop in the future. The country’s garment industry constitutes 20 per cent of its gross domestic product (GDP). Its garment exports’ turnover is forecasted at $40 billion in 2020.
Foreign enterprises have invested in Vietnamese textile industry with projects worth hundreds of millions dollars with the successful negotiation conclusion of the Trans-Pacific Partnership (TPP).
India and Vietnam’s bilateral trade ties have grown significantly, with a total trade turnover of $5.59 billion in last year, increasing by 9.84 per cent compared to 2013.
www.moit.gov.vn
This year, Uzbekistan has managed to achieve extremely high results in cotton harvest. About 98 per cent of the cotton harvested in the country this season belongs to the highest and first categories.
The high quality of the cotton was also achieved thanks to the good weather conditions during the harvest period. Uzbekistan has been consistently transforming the cotton industry structurally.
Among other features are an advanced certification system in accordance with international standards and a modern cotton sale system in the form of zonal cotton terminals. An effective logistics system and the choice of optimal routes and corridors allows timely delivery of Uzbek cotton fiber to all consumers. The country’s cotton fiber holds a leading position through using a fully transparent pricing system.
Uzbekistan annually produces about 3.5 million tons of raw cotton and 1.2 million tons of cotton fiber. It ranks sixth in the world in the production of cotton. Its policy in the sphere of cotton growing is characterised by preservation of stable production volumes of cotton and further improvements in quality and technical characteristics.
The International Cotton Fair was held in Uzbekistan, on October 13 and 14, 2015. Since 2005, Uzbekistan has concluded contracts involving about seven million tons of cotton fiber at the fair.
The NGO Redress is doing its bit for sustainable fashion. With a mission to reduce waste in the fashion industry, it is urging designers to come forward with the launch of The EcoChic Design Award Alumni Network. This is a platform to connect designers with industry opportunities to further support their growth. Designers within the network are all alumni of The EcoChic Design Award, which is the world’s largest sustainable fashion design competition.
The award has gathered over 100 talented alumni from across Asia and Europe who continue to practice sustainable fashion design over the past five years since its inception in 2011.
The previous players are posing as catalysts for change and evidence of the competitions’ positive impact as they showcase waste reducing collections on catwalks across the world, launching their own sustainable brands, and pass on knowledge to their peers.
Christina Dean, Founder of Redress said that they were seeing a great response among their alumni for an active role in transforming the fashion industry to be more eco-conscious.
The award’s programme acts as a springboard for sustainable design with the education it offers and a global platform for designers’ innovative designs. However, Redress believes it is as essential to support the competitors onwards into their careers.
www.ecochicdesignaward.com
To enhance investment and trade volume, Pakistan and Korea are looking forward to sign Free Trade Agreement (FTA). The two countries already have bilateral trade and diplomatic relations for over three decades. Pakistan’s Commerce Minister had visited the Republic of Korea in July to discuss bilateral trade and possibilities of FTA.
However, it will take at least four to five years, as the process is still at initial stage said Muhammad Waseem Vohra, CEO, Eastern Enterprises, and Vice President, Federation of Pakistan Chambers of Commerce & Industry (FPCCI), the apex trade body of Pakistan. Trade figures would have to be compared by the two nations and they would also have to scrutinise certain other implications before finalising everything.
In view of its experience with China, Pakistan needs to negotiate the FTA carefully. China exports goods to Pakistan worth $12 to 13 billion annually against Pakistan’s exports amounting hardly to $2.5 billion causing closure of several local industries in the country as the zero tariffs under FTA benefit China.
However, with Korea, this should not be the case, as the current trade volume of Pakistan with Republic of Korea is around one billion dollars, which could be augmented to a great level if Korea allows access to its market.
Fpcci.org.pk
India’s exports of cotton textiles during April to August 2015 declined by 2.16 per cent compared to the same period last year. The declining trend may continue in financial year 2016 due to subdued Chinese demand and the sluggish European economy.
India’s over-dependence on China, especially for cotton and cotton yarn exports, is magnifying the overall decline in exports as China slows down. Further, the high cost of export finance in India of around 10 per cent, compared with three to four per cent in competing countries like Vietnam, Bangladesh and Pakistan, is also having an impact on the country’s competitiveness.
The industry has made representations to the government like interest rate subvention and re-calibration of the product-market matrix to include exports to emerging markets so that linkages can be strengthened with the value chains in these markets.
If China and Turkey were persuaded to reduce duties on Indian textile products, it would help. Measures that have been taken to support the industry include an increase in the allocation of funds from Rs 18,000 crores to Rs 21,000 crores under the export incentive scheme; a reduction in the repo rate; setting up of textile parks; and a relaxation of coastal shipping.
Greenshowroom and Ethical Fashion Show Berlin will be held January 19 to 21, 2016. The events will focus on resource efficiency and examine recycling concepts within the fashion industry. The spotlight will be on international labels with first-rate fashion collections.
Greenshowroom will showcase an exclusive selection of international high fashion, while Ethical Fashion Show Berlin will offer an overview of contemporary street and casual wear with a clear focus on design and sustainability.
International labels will present fashion and accessories of a special kind. Living Blue is a renowned label from Bangladesh that stands for high-quality, handmade products. The trade fair brings together top players from the eco fashion segment. Danish label Knowledge Cotton Apparel will present its new winter collection for the first time, including shirts, pullovers, long-sleeved tops and more.
The main theme is circular economies, something that industry giants like Adidas and H&M are currently focusing on with extensive campaigns. The outdoor arena will tackle the issues of quality recycling concepts and new technologies for procuring recycling materials. The event program also places the spotlight on additional aspects of a circular economy and will present future models for the fashion economy.
The Frankfurt Style Award is a platform for up-and-coming creative people in the fields of design and fashion. Visitors to the trade fair can look forward to exciting presentations and inspiring designs.
www.messefrankfurt.com
Chinese cotton imports reached an all-time low in September, as large domestic inventories reduced reliance on foreign supplies, at a time when economic slowdown is weighing on demand. China’s cotton imports in September declined 59 per cent year-on-year.
This is the lowest monthly import since records began in 2005, and the second month of record low imports in a row. Chinese imports for the first nine months of the year fell 42 per cent. Chinese cotton demand has been hit by a range of factors, including massive domestic stocks, a weaker industrial sector, and competition from synthetic fibers, which have become cheaper as a result of low petrochemical prices.
Chinese inventories accumulated as a result of government price support policies, which encouraged rising domestic production, while mills favoured cheaper imported cotton. The end of the price support policy left the government with ample stocks, while mills turned to domestic supplies, which were now priced at closer to international levels.
Chinese cotton imports are expected to fall to a 13-year low over the 2015/16 season. But there are concerns about the quality of Chinese cotton stocks. Large quantities of cotton have been kept in bales for several years. This can cause the fiber to become brittle and difficult to spin. And this leaves the door open for imports.
Sweater exports from Bangladesh to Europe dropped 3.54 per cent, although exports of other apparel items have risen. In fact sweater exports from Bangladesh have been fluctuating for the last few years. Reasons include shorter winters in Europe coupled with the devaluation of the euro. Customers are reducing orders because of the falling euro.
On top of that, many sweater makers installed automated machines for higher productivity and to maintain quality. This led to overcapacity. Also, the euro has started falling against the taka since September last year, further affecting the exports.
With climate change, the demand for thick sweaters, widely produced in Bangladesh, is going down in Europe. As a result, customers like light sweaters, which can be worn all year round. But Bangladesh is still not a strong producer of light sweaters, although investors are importing expensive machinery to produce such sweaters. It’s necessary that Bangladeshi entrepreneurs change their sweater production patterns to match climate changes in the west.
As compared to sweater exports, exports of other garment items like shirts increased. Trouser exports have remained almost constant. But jacket and T-shirt exports from Bangladesh have risen. The effects of climate change can be observed in Europe and further changes in climate are projected to take place in the future. Warming has been stronger in most regions in winter than in summer.
Under the National Plan of Action, many readymade garment (RMG) factories are still unwilling to go through fire, electrical and structural assessment being carried out by the International Labour Organisation ILO-nominated engineers.
Recently, a list of about 88 factories was sent by the ILO to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) that these factories were not interested in undergoing assessment. It again sought the apparel apex body’s cooperation. They said that these factories were members of the BGMEA and running their manufacturing activities. Faruque Hassan, Senior Vice-President, BGMEA confirmed the receipt of a list of factories that were not interested in being inspected.
Industry insiders said that some factories are unwilling to be assessed as they are planning to relocate, while others were unwilling to be assessed by the Western retailer groups. Some units’ compliance situation is poor; hence they are unwilling for an inspection, while others operate as and when they have orders.
The ILO had extended the free-of-cost inspection opportunity until October 31 next year earlier. Around 1,400 factories have been inspected under the national initiative so far, which started in November 2013.
Hassan said that if they want to do business, all factories have to undergo inspection under any of the three initiatives and they would ask them again to undergo it. He added that factories will have to take the liability if not inspected within the deadline as the BGMEA will not take any responsibility. Besides, the Association will stop providing service to those listed factories that would fail to be assessed, Hassan said. Apart from this, the BGMEA will also ask its members not to provide any work order to the non-compliant factories.
www.bgmea.com.bd
