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Major retailers plan to shut stores in the United States to limit the spread of COVID-19, including Nike, Under Armour , and Lululemon Athletica, a day after similar moves by several other US retailers. Coronavirus, which has already caused schools to close and put an end to sports events in the United States, is likely to hit retailers' sales as virus-wary shoppers in Europe and the U.S. stay home.
Nike stores in Canada, Western Europe, Australia and New Zealand will be closed from March 16 to 27, 2020. Its stores in South Korea, Japan, most of China and in many other countries, however, would continue their normal operations. Under Armour would shutter all of its stores in North America for about two weeks, while Lululemon’s stores would be closed in North America and Europe for a similar period.
Nike and Lululemon operate more than 650 stores in the US, while Under Armour has nearly 190 stores in North America, according to the companies' latest annual reports. Their online stores would continue to be available to shoppers.
Japan Textiles Exporters Association trade figures reveal the nation’s exports of textiles and apparel in 2019 decreased 1 per cent year-on-year to $7,742.66 million. Exports to Vietnam increased by 5 per cent to $1,053.32 million.
Exports of textile fibers decreased by 1 per cent to $827.34 million, while those of rayon staple fiber grew by 16 per cent to $73.23 million. Similarly, exports of polyester staple fiber declined by 3 per cent to $38.82 million, along with those of acrylic staple fiber also by the same 3 per cent to $534.29 million.
Yarn exports decreased by 8 per cent to $956.06 million with exports decreasing for rayon filament yarns, nylon filament yarns and polyester filament yarns. Exports of nylon filament yarns dropped 25 per cent to $178.96 million. Exports of woven and knitted fabrics remained about the same as the previous year at $2,811.27 million, and those of coated fabric decreased by 4 per cent to $458.54 million. Fabric exports increased for nylon filament fabrics, polyester filament fabrics and spun synthetic wovens, but decreased for cotton fabrics. Exports of nonwoven fabrics remained firm, while exports of apparel grew by 9 per cent to $536.97 million.
Indonesia plans to relax restrictions on importing goods as one of its fiscal measures to combat the harmful economic effects of the COVID-19. The number of restricted import goods will be reduced by up to 50 per cent to spur business activities. As many as 749 harmonized system codes will be scrapped. Stimulus packages are being prepared, including one that will expedite the import process for 500 importers with good reputations and another to reduce logistics costs in ports across the country. Items included in the list of restricted import goods include ceramics, soybeans, corn, textiles and textile products, vaccines, health equipment, telecommunication tools and equipment, footwear and food supplements, among many others. Manufacturing industries have complained of disruptions to their supplies of raw materials that have crippled factories across Indonesia. Twenty per cent to 50 per cent of raw materials for the country’s industries are usually sourced from China.
Indonesia might not be affected severely by the global health emergency, thanks to its minimal exposure to global trade and its wide room to maneuver in monetary policy. It isn't deeply integrated in the global supply chain. Indonesia is heavily dependent on domestic demand. Household consumption grew 4.97 per cent in the fourth quarter of 2019 and accounts for more than 50 per cent of gross domestic product.
India’s yarn exports fell 30 per cent in value terms in January to February 2020 compared to last year. Reason: COVID-19. There was a sharp fall in cotton yarn exports to China, Iran, Korea and Vietnam. China accounts for nearly one-third of Indian yarn exports. As for the performance of the cotton spinning industry, it has already been severely constrained in the current fiscal year amid multiple headwinds, including a demand slowdown in the domestic as well as export markets and unfavorable raw material prices. While the industry was pinning hopes on a gradual recovery in yarn exports from the fourth quarter onwards, aided by the softening of domestic cotton prices, recent developments could prolong tough times for Indian spinners.
Around 11 countries buy 41 per cent of India’s cotton yarn exports. India’s garment exporters depend heavily on China for their import requirements. They are exploring other sources like Japan for woven fabric made out of artificial filament yarn, slide fasteners and parts, sewing machines, furniture, bases and covers, and sewing machine needles.
Another opportunity for Indian exporters is that buyers in the US and Israel are interested in sourcing from India. They had been buying these products from China so far.
India has removed the anti-dumping duty on Purified Terephthalic Acid (PTA), a key raw material for the manufacture of manmade fiber and yarn. GST on cotton is five per cent across the entire textile value chain whereas GST rates on manmade fibers and textiles are 18 per cent, 12 per cent and five per cent on fiber, filament yarn/spun yarn and fabrics respectively. This inversion in the duty structure was corrected. So rationalization of GST on the manmade fiber value chain will help to boost growth of the manmade fiber sector.
Exporters are also provided assistance under the Market Access Initiative (MAI) scheme. The interest equalization rate for pre and post shipment credit for exports of the textile sector has been enhanced from three per cent to five per cent. To boost exports in the textile sector, including cotton clothing, the new RoSCTL (Rebate of State and Central Taxes and Levies) scheme was introduced. A special one-time additional ad-hoc incentive of up to one per cent of the FoB value will be provided for exports of apparel and made-ups. The benefits of the Interest Equalization Scheme have been extended to merchant exporters, which was earlier limited to only manufacturer exporters.
India has launched schemes for knitwear cluster at Ludhiana, Kolkata and Tirupur which will be developed. The Amended Technology Upgradation Fund Scheme (ATUFS) is being implemented for the textile industry. This is expected to incentivize production, attract investments and generate employment in the textile sector. Production linked additional incentive of 10 per cent is provided under this scheme. A special package is aimed at boosting investment, employment and exports in the garmenting and made-ups sector. Full refund is provided under the Remission of State Levies to exporters for state level taxes. Power Tex India is a comprehensive scheme for the powerloom sector. Silk Samagra is an integrated scheme for development of silk. Jute ICARE increases the income of farmers through different interventions. And there is the North East Region Textile Promotion Scheme (NERTPS).
The textile industry is facing problems like technological obsolescence, high input costs of power and capital, poor access to credit, fragmented units, absence of fiber neutrality etc. These schemes are expected to address these issues/problems. India in addition is formulating a new textile policy. This will cover cotton, silk, jute, wool, manmade fiber, handloom, handicrafts, powerloom, technical textiles, technology and machinery upgradation, infrastructure (spinning, weaving and processing) and human resource development.
India has put forth a mechanism for reimbursement of all taxes or duties or levies that are currently not being refunded under any other mechanism, but which are incurred in the process of manufacture and distribution of exported products.
The scheme called Remission of Duties and Taxes on Exported Products (RoDTEP) aims to boost the domestic industry and provide a level playing field for Indian producers in the international market. Refunds, in the form of transferable duty credit/electronic scrip, will be issued to exporters and will be maintained in an electronic ledger. The scheme will be implemented with end-to-end digitization and is a step toward zero-rating of exports, along with refunds such as drawback and the integrated goods and services tax. This is expected to lead to cost competitiveness of exported products in international markets and better employment opportunities in export-oriented manufacturing industries. A monitoring and audit mechanism, with a risk management system, would be put in to physically verify records of the exporters. As and when rates under the RoDTEP scheme are announced for a tariff line/ item, the Merchandise Exports from India Scheme benefits on such tariff line/item will be discontinued.
The introduction of the scheme across sectors, prioritisation of the sectors to be covered and the degree of benefit to be given on various items will be decided.
Goods are piling up in Bangladesh’s readymade garment factories. Buyers from European countries have asked their suppliers to delay product shipment due to the global COVID-19 outbreak. This means that the factories will incur huge losses for putting shipments on hold and might face a shortage of working capital as payment from buyers would be deferred till delivery of products. So they are facing difficulties including shortage of space in warehouses and scarcity of running capital due to the shipment delay. Manufacturers produce products taking bank loans against back-to-back letters of credit and now bank loans taken by factory owners might be classified due to non-payment.
Buyers want shipments to be delayed for a few weeks as stores in buyers’ countries face a dwindling number of shoppers due to the coronavirus outbreak. Some buyers in Europe especially from Italy, Spain and Ireland have cancelled orders and some have downsized their requirements.
The pandemic broke out in China in December last year and has now spread to over 115 countries. Three people were tested positive for coronavirus for the first time in Bangladesh on March 8 and two more cases were detected recently.
The buyers of Ludhiana garment exporters in European countries, particularly those based in Italy, Spain and France, have put on hold the orders in view of COCID-19 outbreak. Therefore, garment exporters have either curtailed or halted production. As an industrialists says, if the situation does not improve soon, they will suffer unprecedented losses in coming days.
Italy, a big market for garments, there is complete shutdown of malls and shops in view of spread of Coronavirus. A number of importers have cancelled their orders. If the situation remains same in April, Ludhiana exporters will suffer losses worth crore of rupees. Buyers based in European countries like Spain and France have put their existing orders on hold. They are seeking more time to make payment of the already dispatched shipments due to the current situation.
American luxury goods makers are proving particularly vulnerable as the Coronavirus pandemic erodes spending on non-essential goods and keeps shoppers away from fashion boutiques. Amid historic market decline, a host of luxury companies have seen sharp plunges that have outpaced the general market: Capri Holdings., owner of Michael Kors and Versace, is down more than 40 per cent this week, while Coach and Kate Spade owner Tapestry Inc. has fallen by about 31 per cent and Ralph Lauren Corp. has declined 27 percent. PVH Corp., the owner of Calvin Klein and Tommy Hilfiger, has lost almost 40 per cent.
Data is piling up that US shoppers are stocking up on food and health items as they prepare for an extended period of working from home and social distancing. Luxury retailers, meanwhile, are joining apparel chains and department stores as net losers from the outbreak.
Reflecting the broadening pessimism, Deutsche Bank downgraded seven apparel and footwear stocks including Ralph Lauren, Tapestry and Capri. The bank also lowered its investment rating on Tommy Hilfiger and Calvin Klein owner PVH. Deutsche Bank cited concerns about supply chain disruptions, falling tourism and the potential that slower demand for luxury goods is sustained.
Luxury companies in particular could see their earnings hurt. These companies could also see a more limited recovery upon market stabilisation. Citigroup Inc. also downgraded a long list of apparel and luxury companies, including Tapestry, Capri, PVH, Ralph Lauren, Signet Jewelers, Abercrombie & Fitch Co. and Steve Madden, citing a weaker demand environment.
