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Macy’s Inc has raised a total of $4.5 billion in funds, including $3.15 billion in new borrowings against its real estate assets, as the department store chain tries to navigate through the fallout from the COVID-19 pandemic.
The funding gives the retailer sufficient flexibility and liquidity to steer the business for the foreseeable future.
The company would be able to purchase new inventory as stores reopen and repay upcoming debts in fiscal 2020 and 2021.
Like other retailers, Macy’s has been severely impacted from store closures due to the coronavirus health crisis that forced governments to announce lockdowns to curb the spread of the infection.
The funds from the offering and existing cash will be used to repay outstanding borrowings under an existing $1.5 billion unsecured credit agreement. The retailer said it has amended the $1.5 billion credit agreement to reduce the available credit commitment and modify the agreement’s covenants.
Italian luxury company Gucci has reduced its environmental impact year-over-year by 21 percent. As part of its 10-year Culture of Purpose strategy, spanning 2015 to 2025, the company plans to reduce its total environmental impact by 40 percent within its direct operations and across the entire supply chain. It has also pledged to reduce by 50 percent its greenhouse gas emissions by 2025.
The company has extended sustainable processes and manufacturing efficiencies, such as the Gucci Scrap-less for leather, a program that runs in association with eight tanneries to significantly reduce the quantity of leather that is treated during the manufacturing process, leading to energy, water and chemical use savings, and Gucci-Up, a circular economy initiative focused on the upcycling of waste leather and textiles generated during the production process.
Gucci has switched to green energy, reaching 83 percent renewable energy for its stores, offices, warehouses and factories, with a 100 percent target by the end of 2020.
Tanzania plans to more than double its cotton production in the next five years as farmers increase cultivation, encouraged by higher prices for the fiber. The government’s goal is to boost its cotton production to 1 million metric tonne by 2025.
The country’s output for the 2020-21 season is expected to increase to 400,000 metric tonne from 348,882 tonne in 2019-20.
Cotton is Tanzania’s fourth-biggest cash crop after cashews, tobacco and coffee, and fetched the East African nation $68.4 million of export earnings in 2018. Output in Tanzania peaked in the 2005-06 season at about 370,000 tonne before falling to just under 133,000 tonne in 2016-17.
Berlin plans to move its most important fashion trade shows – Seek, Premium and the environmentally conscious Neonyt – to Frankfurt. The event will be called Unveiling The Unexpected: Summer 2021. It will involve five different fashion platforms, three trade fairs and two conferences. Around 2,000 designers are expected to take part.
The conferences run by Premium about sustainability and technology will also move to Frankfurt. Frankfurt is generally better known as being Germany’s financial capital and home of the European Central Bank. Messe Frankfurt is the world’s largest trade fair organizer.
Though plans on how to reopen schools in the US in fall remain in flux, American Eagle Outfitters CEO Jay Schottenstein is optimistic about demand for back-to-school merchandise. Similarly, its back-to-school merchandise offers Old Navy an opportunity to serve families as its parent company Gap Inc begins to reopen stores across the US.
Old Navy currently operates more than 2,100 stores as mini fulfillment hubs through ship-from-store and more than 500 stores as curbside pickup locations. Additionally, the retailer has welcomed tens of thousands of its employees back to work and expects to have the vast majority of its North American stores opened by the end of June.
Meanwhile, Gap continues to look at merchandising opportunities, though the heritage brand will not step away far from its roots: modern American classics. The brand introduced its first teen denim collection during the pandemic.
According to the UK-based data analytics company, GlobalData, COVID-19 will wipe off $297 billion revenue from the global apparel market in 2020. The US will account for 42 per cent of total loss. Asia-Pacific (APAC) markets, including China, India and South Korea, will raise their position in the ranks of top 10 global apparel markets by 2023 with China surpassing the US as the largest apparel market in the world.
Apparel sales in the APAC markets will take some time to rebound amid dampened consumer confidence, slump in tourism, threat of an impending global recession and high unemployment rates. However, lost sales will be compensated by ‘revenge buying’ as witnessed in China recently where some brands saw their store sales return to 80-100 per cent of pre-COVID-19 trading levels.
Kazi Iftekhar Hossain, President, Bangladesh Garment Buying House Association (BGBA) has urged the textile and apparel industry to explore the huge opportunity that rising demand for functional items like masks, personal protective equipment, hospital bed sheets and isolation fabric, offers them. Speaking at a recent press conference Hossain said, this will also benefit the backward linkage industries in the country. Bangladesh can easily grab this opportunity as the market size of these items is worth billions of dollars and the country has already set-up garment factories.
The country also employs around four lakh employees in 826 apparel buying houses. However, these buying houses have to bear the cost of their increasing rents and staff salaries.
Recent data from the Ministry of Industry and Information Technology indictes, decline in revenues and profits of China's garment industry narrowed down during the first four months of this year. From January to April, the decline in combined operating revenues of major garment enterprises narrowed by 4.99 percentage points to 18.47 percent year-on-year from the first quarter.
Similarly, the decline in profits narrowed 8.73 percentage points to 34.77 per cent from the same period in the previous year. The decline in output narrowed 8.93 percentage points to 11.36 per cent while the exports of clothing and accessories declined by 22.3 percent year-on-year.
Organizers of Performance Days, the trade fair for functional materials, have rescheduled the trade show from October 28-29, 2020 as visitors to the fair reported an overall drop in sales. The show will now be held from December 9-10, 2020 at the Messe München. Parallel to the countdown for the physical event, organizers will also create digital tools for public.
Due to a drop in their sales, stationary traders had less in-store and warehouse space for additional products. Additionally, buyers, designers and product developers were unable to work as they usually did. Rescheduling the show, allows visitors to reposition themselves, said Lena Weimer, Senior Marketing Manager of the trade show.
The Bavarian government has allowed trade fairs to be held in the country from September 1, 2020. According to the Performance Days organizers, the upcoming fair will meet the health, legal, safety and quality requirements. The Bavarian Ministry of Health will devise the required hygiene concept along with trade fair authorities.
The fashion industry was slowly warming up to the concept of sustainability before the outbreak of COVID-19. However, the crisis has reemphasized its importance to brands and retailers. A recent study titled ‘Weaving a better future: Rebuilding a more sustainable fashion industry after COVID-19’, published by the Boston Consulting Group (BCG), the Sustainable Apparel Coalition (SAC) and technology company Higg Co, reiterates the importance of following sustainability goals to these brands, retailers and other industry stakeholders not just during but also after the pandemic as well.
Abandoning sustainability to lead in irrevocable losses
The report says, closed stores across the world are likely to result in a business loss of 30 per cent for fashion retail in 2020. In this scenario, concerns regarding sourcing of
sustainable materials, reduction in carbon levels and issues of workers’ rights are likely to be relegated to the background as companies will focus on managing short-term economic distress. However, the industry may face irrecoverable losses if it abandons sustainability and value chain partnerships in the face of COVID-19, warn experts. In fact a recent survey suggests, only companies that embrace sustainability will emerge as leaders of the resurgent fashion industry post the pandemic.
Need to protect critical assets, upgrade facilities
Post COVID-19, the BCG survey advises fashion companies to protect their critical assets such as workers, employees, capital, value chain partnerships, channels and the trust and support of customers. Till now, these companies focused on maintaining their cash flows. However, now they need to shift this focus to upgrading facilities with the recommended health and safety requirements, opines Nikhil Hirdaramani, Director, Hirdaramani Group. These companies also need to abide by their contracts, pay for completed and near complete orders and avoid cancelling orders. They should also engage in an open dialogue and constructive partnership across their value chain to find shared solutions for protecting worker livelihood and sustaining trust.
Make sustainability integral to operations
COVID-19 is likely to change the value system of fashion companies. Brands will make sustainability central to their post-pandemic decision-making. Another BCG COVID-19 consumer sentiment survey of almost 6,000 consumers in the US, UK, Germany, Italy, and China, indicates brands that pay furloughed employees, repurpose facilities to produce PPE or donate to their communities will be viewed favorably by consumers. The standards of clothing will also change to include durability and good quality as customers will now associate them with their well-being and the collective good.
Adopt transparent business models
In order to demonstrate the positive environmental and social impact of their operations to stakeholders, fashion companies will leverage innovative business models and end-to-end solutions. They will also adopt a transparent model to showcase their verified sustainable practices, points out Sanjeev Bahl, Founder and Chief Executive, Saitex.
Based on their sustainability initiatives, the BCG study divides companies in three groups: companies that have not yet prioritized sustainability; those on the path; and trailblazers. According to the study, companies that have not yet prioritized sustainability need to immediately make this transition, while those on the journey need to safeguard operations by recommitting to goals. On the other hand, the trailblazers need to hasten the adoption of sustainability within the entire sector.
Though it won’t be easy for fashion companies to manage this once-in-a-generation economic crisis besides taking up the mantle of environmental and social concerns, leaders who weave sustainability into their business strategies will emerge clear winners.
