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American and European retailers filing for bankruptcies in the wake of Covid-19 pandemic has worried Indian creditors as their unsecured outstanding dues are estimated to be in excess of $50 million.
In the past two weeks, leading retailers like JC Penney, J Crew, Neiman Marcus and Stage Stores have filed for Chapter 11 bankruptcy protection in the US. True Religion filed for Chapter 11 protection last month. In Europe, Debenhams, Esprit, Oasis and Warehouse have gone into administration.
These companies import about $150-200 million worth of apparels and home furnishing products from India annually, said people in the know. As per industry estimates, the outstanding dues from these companies to Indian suppliers were well over $50 million since the January to March period is the busiest in terms of apparel exports due to high demand for summer collections.
These companies also outsource their back-end information technology operations to Indian firms.
J Crews owes over $21 million (Rs 159 crore) to three Indian apparel exporters, namely Fashion Accessories, RK Industries and Gaurav International, according to the list of the company’s 30 largest unsecured creditors given in its bankruptcy court filing. The top 30 creditors of True Religion include five Indian firms whom it owes $4.3 million (Rs 32.5 crore), as per the US bankruptcy court records.
JC Penney owes $6.7 million (Rs 50 crore) to Tata Consultancy Services (TCS) and $3.5 million (Rs 26.5 crore) to Delhi-based Elkay Overseas. Neiman Marcus owes TCS over $1.6 million (Rs 12 crore).
There could be several more Indian creditors to these companies whom they owe smaller sums and hence were not mentioned individually in their bankruptcy. For example two creditors to JC Penney who claim to have outstanding dues of about $4 million but were not mentioned individually in the claim.
Retailers across the world have been stressed due to lockdowns to contain the Covid-19 pandemic. Indian exporters say that many more could be in the pipeline to come up for bankruptcy.
Mango will donate 1 per cent of its sales from physical stores to the World Health Organization’s Covid-19 fund, in order to support the more vulnerable health care systems and groups during the pandemic
The fund) enables individuals, corporations, foundations and other organizations around the world to directly support the WHO’s global effort to assist countries in preventing, detecting and responding to the pandemic,
The initiative will last for the next two months, and will involve Mango’s monobrand stores in Europe, Russia, Turkey and New York, as they will gradually reopen.
Since the beginning of the pandemic, Mango has been active in a series of efforts to tackle the health emergency. At the end of March, it donated two million face masks to various hospitals in Spain. In addition, Mango put its logistics, production and distribution organisation at the Spanish authorities’ disposal, manufacturing 13,000 protective gowns for health care professionals.
Mango, founded in 1984 and based in Barcelona, is one of the world's leading fashion groups, with approximately 15,000 employees in 110 countries. In 2019, it generated a revenue of €2.374 billion.
Gap Inc. is preparing to reopen 800 of its apparel shops by the end of May, as states such as Texas and South Carolina slowly begin to lift lockdown restrictions that were put in place due to the coronavirus pandemic. The San Francisco-headquartered company, which owns Banana Republic, Old Navy and Athleta, joins a growing list of retailers including Macy’s, Nordstrom, Abercrombie & Fitch and Chico’s — that are taking steps to get back to business.
On April 23, the company warned investors it might not have enough cash to sufficiently fund operations, with its shops temporarily shut to try to help curb the spread of Covid-19. A day later, Gap issued $2.25 billion of new secured bonds to help it repay existing debt. At the end of March, Gap drew down its entire $500 million credit line and said it was suspending dividend payments. Looking for ways to cut costs, Gap also stopped paying rent to its landlords, with monthly rent expenses amounting to roughly $115 million in North America. Only about 20 per cent of Gap Inc.’s revenue comes from indoor shopping malls, she went on to say. Gap’s net sales totaled $16.4 billion in fiscal 2019.
Mall-based retailers, including apparel companies and department stores, have been some of the hardest hit during the pandemic that has kept families holed up at home. Even as lockdown restrictions lift, analysts say malls could be one of the venues consumers look to avoid, longer term, because of their enclosed nature. Nordstrom said Tuesday evening that it plans to permanently shut 16 of its department stores, after assessing the market. The biggest U.S. mall owner, Simon Property Group, notably has 412 Gap stores, including Banana Republic and Old Navy, at its malls and outlet centers. This makes Gap Simon’s biggest in-line tenant at its properties in terms of rent. Simon started opening some of its malls in the South last Friday.
“We feel confident that our online composition and street, strip, outlet and lifestyle [outdoor] malls give us an advantage,” Syngal said about Gap’s positioning away from enclosed malls. “That is exciting for us.” As Gap reopens its doors to customers again, the changes will be noticeable. And it is unclear how long some of them will be in place. Some could become permanent. Among them: Gap will be placing plexiglass dividers at registers to protect workers from shoppers. It will place signs in stores encouraging customers to wear face coverings and to follow social distancing protocols. Restrooms and fitting rooms will be temporarily closed. Hand sanitizer will be positioned at store entrances, and store hours will be reduced for the foreseeable future.
Gap will also be holding any returned merchandise for 24 hours before placing it back on the sales floor, a practice Syngal said the retailer agreed upon based on conversations with industry peers and the trade group Retail Industry Leaders Association. It remains unclear how long the Covid-19 virus lingers on materials such as clothing. Gap operated 3,345 stores globally, with an additional 574 franchise locations, as of Feb. 1. To meet online demand and to try to utilize inventory sitting in dark stores, the company currently is fulfilling and shipping online orders from 1,000 locations. And it has curbside pickup available at 75 shops.
Gap plans to double the number of locations where it is shipping from the store, as well as add additional curbside pickup options, according to Syngal. “When Covid hit, we saw a meaningful acceleration in our online performance.” When it warned about its financial situation last month, Gap also said it is possible that some of its stores never reopen. Syngal, who became CEO effective March 23 after leading the Old Navy brand, said the retailer is still thoughtfully evaluating its real estate. Gap shares have fallen more than 58 per cent this year. The retailer has a market cap of $2.7 billion.
American retail giant JC Penney is in hot water as its payment has now become uncertain after the company filed for bankruptcy protection recently.
The company, which provides budget-friendly clothing for families and reliable home furnishings, filed for bankruptcy protection after a prolonged decline over the past 20 years, becoming the latest and largest retailer to fall during the coronavirus pandemic, which has devastated the industry.
JC Penney’s collapse follows other retail bankruptcies of late including J Crew, the Neiman Marcus Group, the designer men’s clothing brand John Varvatos and British retail giant Debenhams.
The chain has more than 800 stores and nearly 85,000 employees across the world. Since the retailer filed for protection from bankruptcy, it will now set the priorities in payment now.
The Industrial Workers Federation of Myanmar, an affiliate of the IndustriAll Global Union recently signed an agreement with ACT, an ethical trading initiative-affiliated program that tackles the issue of living wages in the garment supply chain.
The framework has been endorsed by ACT participants like Bestseller, H&M, Zara owner Inditex, Next and Tchibo are among the ACT participants that have endorsed the framework. ACT members that have not thrown in their support include Asos, Topshop parent Arcadia Group, C&A, Esprit, Primark, New Look and Tesco.
The framework is expected to benefit around 100,000 garment workers in Myanmar as it will emphasise on cooperating in “good faith” to secure workplace health and safety and mitigating the economic fallout of the crisis on factories and workers.
Some of the specific actions outlined in the framework involve engaging with relevant organizations to mobilize resources for covering workers’ salary losses from April to July and supporting International Labour Organization research to identify the necessary funding for those losses. Parties have also agreed to support the development of social protection floors—which is to say, defined sets of basic social security guarantees—to extend social safety nets for workers and promote compliance with health and safety regulations, such as ACT’s Myanmar freedom of association guidelines.
Employers have pledged to promote safe and healthy workplaces based on COVID-19-mitigating recommendations set by the Myanmar government, to actively engage in dialogue with workers on their business strategy in response to the pandemic, and work on possible joint measures to blunt the sharpest edges of the crisis.
In addition, endorsing brands have committed to paying manufacturers for finished goods and goods in production while maintaining “quick and effective” open lines of communication with supply-chain partners about the status of business.
E-commerce companies such as Flipkart, Amazonand Snapdeal, as well as vertical etailers including Lenskart, Nykaa, and Firstcry, resumed full operations from Monday after the central government removed all restrictions on online retail as part of its plan for Lockdown 4.0.
These platforms were so far restricted to selling non-essential goods like smartphones and electronics in government designated green and orange zones, while being allowed to sell essential items such as food and grocery nationally.
But in its latest guidelines, the Ministry of Home Affairs said that all activities, except those specifically prohibited, will be now be opened up. However, states would still take the final call on allowing businesses to function based on their local needs and situations, the guidelines added. Online sales will continue to be restricted in containment zones across the country, where only essential activities will be permitted, as per the latest MHA guidelines
The move to reopen e-commerce will deliver a major boost to companies that were allowed to sell only essential goods since the lockdown was announced on March 24. Even the opening up for non-essential sales had seen low demand from areas outside of red zones.
ET had reported that Flipkart and Amazon had been able to recover only 20 per cent of their sales a week after the May 4 order that allowed them to resume business in green and orange zones.
Giorgio Armani reopened around one hundred boutiques in his global retail network with added security measures and a new system of booking appointment. He also plans to open Armani Silos this week.
The Armani Group termed the measures "Phase 2" and promised that the boutique re-openings would be done in full compliance with regulations laid down by the authorities as part of its overall efforts to focus on guaranteeing maximum safety for its employees and customers.
In a global rollout, Armani reopened flagships in such major fashion destinations as Milan, Paris, Munich, Beijing, Hong Kong and Sydney. All told, almost one hundred Giorgio Armani and Emporio Armani stores will be back in business worldwide. The Italian designer has also converted his iconic billboard on central Milan on via Broletto, probably the most famous fashion signage in Italy, into an image honoring Italian healthcare workers.
As noted, the designer will not participate in the new virtual menswear runway season the Camera della Moda is planning to stage in mid-July. But he is currently planning to stage a joint menswear and womenswear catwalk show in the second half of September, in Milan.
Finally, the designer also plans to reopen his iconic museum and art space Armani Silos in south Milan later this week, another step in the careful reawakening after the two-month lockdown.
Florentine show organiser Pitti Immagine is revolutionising its e-Pitti virtual trade show by introducing the Pitti Connect platform. E-Pitti was launched in 2011 to amplify on the web the experience of the trade shows staged by Pitti Immagine. Pitti Connect will instead anticipate the shows: it will slot in at the start of the Spring/Summer 2020 season, at the end of June, ahead of the new digital versions of the Paris and Milan fashion weeks. The goal is to maximise visibility for the exhibitors of Pitti Immagine’s regular shows, especially menswear event Pitti Uomo, which has been postponed to September 2,3 and 4 owing to COVID-19.
The crisis has prompted Pitti Immagine to accelerate its digital transformation by creating an “advanced digital platform and marketplace designed to generate new business opportunities, which will anticipate and integrate the physical shows scheduled in September. Pitti Connect is a response to the exceptional present circumstances, and its launch provides a new, essential tool that will contribute to the recovery of the fashion system as a whole,” said Pitti Immagine.
Pitti Connect will enable the exhibitors of the Pitti Uomo, Pitti Bimbo, Pitti Filati, Fragranze and Super trade shows to boost their visibility and activate commercial contacts in order to generate orders from June onwards. The plan is to reach out to buyers and retailers - Pitti Uomo’s 90,000 registered and certified users - including those who will not be able to travel to Florence in September, allowing them to browse the range of products on offer and discover the most interesting ones. As well as to “get in touch with exhibitors, plan meetings and view collections via video chats and virtual showrooms.”
Pitti Immagine stated in a press release that, with Pitti Connect, it wants to “transpose to the digital world the quality, selection, segmentation, design, communication and contemporary mood of its shows.” The service will be operational from June to September, when it will integrate the physical Pitti Uomo show, held as usual in Florence.
American Vogue and CFDA had launched a fundraising initiative last month called ‘A Common Thread’ to relay the struggles and plight of those in the fashion community that have been deeply impacted by the onset of the pandemic.
The initiative had many designers turn in their videos, describing the impact on their personal and professional lives. Each video has a link at the bottom leading the viewer to the platform where they can donate to ‘A Common Thread’ to support the fashion community.
In the latest development, Vogue has partnered with Amazon to sell a special selection of garments made by 20 designers on its platform. The wide reach of Amazon will help these designers gain more visibility as they are struggling during the lockdowns.
The designers that will be part of this platform will be able to set their own prices and pay a referral fee to Amazon. If the Amazon Vogue store catches attention, it may become a new opportunity for brands to sell their products as up till now, Amazon only catered to the masses. Vogue store will likely serve a niche population. ‘A Common Thread’ has already raised l$ 4.3 million, with the first distribution to be made by the end of May and the second by mid-June.
Like every adversity offers an opportunity, the current lockdowns to curb the spread of COVID-19 has become a period of profound adaptation for all industries across the world including fashion. The most recent example of this is Monte-Carlo Fashion Week, which recently launched its digital version on Instagram.
The fashion week has also changed its format. From its usual 45 runway appearances, the event is now holding a series of essential discussions on issues facing the fashion industry. Organizer Chambre Mmonégasque de la Mode (CMM) revealed its impressive lineup of speakers as well as the various sustainable brands showcasing their work. The select lineup of speakers included Pauline Ducruet, Daughter of Princess Stéphanie of Monaco, who inaugurated the weekend in an interview conducted by Sara Maino, Deputy-Editor of Italian Vogue. Panelists, including Tommy Hilfiger and Dee Ocleppo Hilfiger discussed current trends and styles, exploring the present and future state of the industry. At this event, sustainable brands are displaying their work in a short video which will be later uploaded to the fashion week’s social media accounts.
On the final night of the event the organizers host a digital awards night which will felicitate brands and designers for their dedication to the fashion
industry.
Digital Mercedes-Benz Fashion Week Russia sees huge response
Held in Moscow, the Digital Mercedes-Benz Fashion Week Russia fashion week showcased various socially distanced catwalks earlier this year. Around 32 designers displayed their shows via pre-recorded videos at this two-day event held from April 4-5, 2020. Its presentations appeared on TikTok and Facebook, as well as on Aizel and Megogo, two of Russia’s most popular online retailers.
Around 830,000 people watched the shows. On TikTok, the hashtag #CтильНаДому (#styleathome) was viewed 39.9 million times. Famous designers such as Valeria SAAD and House of Leo showcased their Autumn/Winter 2020 collection, allowing Russian brands to expand their reach on said digital platforms.
Innovative visual effects at Shanghai Fashion Week
The organizers of the Shanghai Fashion Week also digitalized their event as numerous brands urged them to allow them an opportunity to sell their ranges. The organizers collaborated with Tmall Marketplace, a platform owned by Chinese e-commerce giant Alibaba, to broadcast the event on WeChat, the popular Chinese messaging app. Held from March 24-30, 2020, designers and brands showcased their Autumn/Winter 2020 collections at the event. Shows at the event used a green screen and visual effects, which compensated for the offline atmosphere.
London Fashion Week to unite health and economic context
Another event, the London Fashion Week, aims to unite the current health and economic context with a general slowing of the industry. To be organized by the British Fashion Council, London Fashion Week, from September 18-22, 2020, it will feature a series of interviews, podcasts, designer diaries, webinars and digital showrooms, aiming to give brands the chance to generate sales directly from the event.
Consumer demand declines across the world
One reason for brands reorganizing the fashion weeks is a 30 per cent decline being faced by the fashion industry. As a recent report by the Business of Fashion indicates almost half of US and European consumers plan to reduce their shopping habits when the high street opens its doors again. A report by Retail Times also asserts consumer demand in France has dropped by 16 per cent in March 2020. This decrease has further escalated to 49 per cent in Italy. Though revolutionizing these fashion weeks may be vital to the survival of countless brands worldwide. However, they will have to wait and watch before taking future actions.
