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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.
Bangladesh is increasingly turning towards non-traditional markets with garment shipments to these markets increasing by 11.69 per cent Y-o-Y to $5.46 billion in the July-January period of the fiscal year 2023-24. Among the identified potential export markets for Bangladesh, Japan stands out prominently.
In the fiscal year 2022, Bangladesh earned apparel export earnings worth $1.09 billion from Japan and aims to double this figure by fiscal year 2023. Japan ranked as the third-largest importer of apparel globally during the year, trailing behind the European Union and the United States, with imports totaling $27 billion, as per Statista. Japan's adoption of the China-plus-one strategy, driven by factors like rising costs in China and diversification efforts by Japanese companies, boosts Bangladesh's prospects.
As per data from the International Trade Centre, Bangladesh's share in the Japanese clothing market has been steadily growing since 2017, reaching nearly 5 per cent in 2021, With Bangladesh set to graduate from least developed country status in 2026, Japanese retailers express interest in maintaining duty-free market access, fostering a conducive trade environment between the two nations.
Moreover, Japanese apparel retailers such as Fast Retailing (owner of Uniqlo), Adustria, BAPE, GU, and Muji source millions of products from around 300-350 Bangladeshi factories. This collaboration underscores the potential for more garment exporters to tap into the Japanese apparel market, provided they conduct thorough market analysis to tailor effective marketing strategies that resonate with Japanese brands and buyers. Additionally, there's growing interest from buyers and brands in investing in Bangladesh's man-made fiber industry, signaling further opportunities for collaboration and growth.
Abacus Sportswear's Spring/Summer 2024 collection introduces a bespoke range of golf wear infused with cutting-edge technology.
The collection has been meticulously crafted to elevate both style and comfort on the greens. At the heart of the collection lies Drycool, a game-changing material innovation designed to keep golfers dry and comfortable even in the most sweltering conditions. Engineered to facilitate the movement of moisture from the inside to the outside of the garment, Drycool ensures rapid evaporation, thus ensuring a cool and dry experience throughout the game.
The collection features an array of technical garments, each meticulously designed to offer unparalleled comfort and style. From polos to shorts, skorts, and trousers, every piece is imbued with Drycool technology to deliver optimal performance.
The men's and women's polo shirts, for instance, seamlessly blend Drycool technology with stretch fabric, providing golfers with complete freedom of movement without compromising on cooling and moisture-wicking properties. Standout pieces include the Wickham Drycool polo, adorned with a vibrant palm tree print, and the Marco Drycool polo, boasting bold contrasting stripes across the chest.
For bottoms, the collection offers Kildare shorts and trousers, crafted from lightweight polyester/spandex material with 4-way stretch and Drycool. These versatile pieces ensure the highest levels of comfort both on and off the course, with thoughtful details such as multiple pockets and relaxed fits for women's shorts.
Ladies with a penchant for skorts can choose between the elegant Juliet and the functional Kildare skorts, both featuring 4-way stretch and Drycool technology. With breathable and wicking properties, these skorts offer the perfect blend of style and performance, complemented by convenient pockets and adjustable waistbands.
Completing the collection are the Kildare trousers, available in classic chino style for both men and women. With exceptional breathability and 4-way stretch, these trousers are ideal for hot summer days on the course, offering a perfect balance of comfort and style.
Abacus Sportswear's SS24 collection redefines golf apparel, combining innovative technology with timeless design to empower golfers to excel in every swing, while staying cool and comfortable under the sun.
China's luxury market, once a growth engine for global brands, has hit a rough patch. After years of double-digit expansion, sales dipped by 10 per cent in 2022, marking the first decline in five years reveals Bain & Company’s study, ‘Setting a New Pace for Personal Luxury Growth in China’. This shift in consumer behavior has sent ripples through the luxury industry, prompting brands to adapt their strategies.
Reasons for the downturn
Several factors have contributed to the market's turbulence viz:
Zero-Covid policy: Strict lockdowns and travel restrictions hampered in-person shopping and duty-free purchases, a significant portion of Chinese luxury spending says Daxue Consulting study, ‘China's luxury market: shifting consumer values & retail experience’. The strict lockdowns and travel restrictions severely hampered in-person shopping and duty-free purchases, which were a major driver of luxury sales.
Economic jitters: A cooling real estate market, rising unemployment, and Covid anxieties dampened consumer confidence and discretionary spending reports Jing Daily in ‘From boom to uncertainty: Luxury brands face uphill battle as China's growth slows’.
Shifting priorities: Younger generations, a crucial growth engine, are prioritizing experiences and value over logos, with a growing focus on sustainability and social responsibility say McKinsey & Company study. Sustainability and ethical practices are becoming more important purchase drivers.
Impact on global brands
The 2022 market decline hit major brands hard. Kering, which owns Gucci and Saint Laurent, reported a 13 per cent sales drop in China. LVMH, home to Louis Vuitton and Dior, saw a more moderate 3 per cent decline. Indeed, China's share of global luxury sales is significant. For Kering, China accounted for 32 per cent of sales pre-pandemic, while LVMH got around 30 per cent from the region.
Table: Dip in sales of leading luxury brands
|
Brand |
Parent Company |
% Share of China Sales (Global) |
Sales Growth in China (2022) |
|
Louis Vuitton & Christian Dior |
LVMH |
~40% |
-10% |
|
Chanel |
N/A |
~30% |
Not publicly available |
|
Gucci & Bottega Veneta |
Kering |
~35% |
-15% |
|
Hermès |
N/A |
~40% |
Low single-digit decline |
|
Prada & Miu Miu |
Prada Group |
~35% |
-8% |
To adapt to the changing situation luxury brands are ramping up their online presence, offering seamless e-commerce experiences and leveraging social media marketing to reach younger consumers. They are also expanding their domestic store networks due to less international travel in smaller cities and tailoring marketing campaigns to local preferences. Experiential retail is on the rise as luxury brands are creating immersive in-store experiences to engage customers and build brand loyalty. This includes exclusive events, personalized services, and interactive displays.
China's allure endures
Despite the challenges, China remains a crucial market for luxury brands in the long term. In the short-to-mid term recovery is expected with ease as consumer confidence rebounds. However, pre-pandemic growth rates might not be immediately replicated. In the long term China's luxury market is projected to see continued growth, driven by a rising middle class and evolving consumer preferences. Brands that adapt to the changing landscape and cater to a more sophisticated shopper will be well-positioned to succeed.
The highlight is China's luxury market is undergoing a significant transformation. While the immediate future might be bumpy, brands that embrace digitalization, cater to local preferences, and prioritize sustainability are likely to thrive in the long run. The focus is shifting from conspicuous consumption to a more discerning and experience-driven approach to luxury.
Q1 FY24, Italian luxury group, Salvatore Ferragamo experienced a significant 16.6 per cent decline in revenues at constant exchange rates. The group attributed this downturn to challenges in the Chinese market, alongside a broader slowdown in sales across all regions and channels.
Highlighting the ongoing volatility in China, Marco Gobbetti, CEO, named persistent weakness in wholesale and travel retail as key factors impacting their performance. Revenues for the period declined to €227 million, falling short of analyst expectations.
Sales in the direct-to-consumer channel saw a slight negative trend in April, though Gobbetti said, these improved over the quarter, with revenues in this channel remaining stable from February to April.
Despite the tough market conditions, Gobbetti assured that the gross margin was not expected to deteriorate further. He emphasised a focus on enhancing top-line performance, pointing out a positive trend in direct-to-consumer sales in Europe.
While facing headwinds in key markets like China, Gobbetti reiterated Salvatore Ferragamo’s commitment to navigate these challenges and seek new growth opportunities for growth, particularly in their direct-to-consumer channels.
J Crew has unveiled its new flagship store on the Spring Street in New York’s Soho neighborhood.
Representing a significant milestone for the brand, the two-story establishment marks the brand’s return to Soho's womenswear scene since the closure of its Prince Street location in 2018 due to declining sales.
Following a tumultuous period that included bankruptcy in 2020, J Crew has undergone extensive restructuring efforts. With Libby Wadle at the helm since November of that pivotal year, the company has experienced a remarkable resurgence, aided by the creative direction of women’s creative director Olympia Gayot and her menswear counterpart, Brendon Babenzien.
Gayot played a pivotal role in the design of the new Soho store, which boasts the largest collection of women’s apparel and accessories typically found exclusively online.
The store allows the brand’s customers to immerse in the J Crew lifestyle, seamlessly blending two key style influences – coastal and urban, notes Wadle.
The American apparel industry is facing a double whammy: rising import costs for clothes and a consecutive decline in consumer confidence. This trend, reported by Cotton Incorporated in their ‘Executive Cotton Update: U.S. Macroeconomic Indicators & the Cotton Supply Chain - May 2024’, could have significant implications for businesses.
Rising import costs, a challenge
Import costs for apparel, particularly cotton-based items, have seen a significant increase compared to pre-pandemic levels. Cotton Inc. reports a 6.2 per cent rise in sourcing costs compared to 2019. This can be attributed to several factors:
Disrupted supply chains: The global pandemic caused major disruptions in global supply chains, leading to increased transportation costs and port congestion. These issues persist even as economies reopen. "The global supply chain disruptions caused by the pandemic haven't fully resolved," explains Dr Kayla Harrison, a textile economist at the University of North Carolina. "This, coupled with rising fuel costs and ongoing geopolitical issues, is pushing production costs higher for apparel manufacturers overseas, which gets passed on to US importers."
Rising cotton prices: Cotton prices have been volatile in recent years, impacted by factors like weather events and geopolitical tensions.
Increased demand: As consumer demand for apparel rebounds post-pandemic, pressure is placed on already strained supply chains, pushing prices up.
Falling consumer confidence and spending squeeze
The Conference Board's Consumer Confidence Index has seen a worrying trend. It has dropped for three consecutive months, reaching a low not seen since July 2022. This decline in confidence indicates that consumers are feeling cautious about their finances and may be less likely to spend on non-essential items like apparel.
“Consumers are feeling the pinch of inflation across the board," says Mary Peterson, a retail analyst at Bain & Company. "Rising grocery prices, gas prices, and interest rates are all putting a strain on household budgets. This leads to a shift in spending priorities, with apparel likely taking a backseat for many." Cautious spending attitude among consumers, likely due to factors like:
Inflationary pressures: Rising prices across various sectors, including food and energy, are putting a strain on household budgets, leaving less discretionary income for apparel purchases.
Interest rate hikes: The Federal Reserve's decision to raise interest rates could further dampen consumer spending power, as borrowing becomes more expensive.
Economic uncertainty: Geopolitical tensions and concerns about a potential recession are contributing to a sense of unease among consumers.
Impact on businesses
Apparel businesses are caught between rising import costs and declining consumer confidence. With import prices rising, businesses face the challenge of absorbing the additional cost or passing it on to consumers through higher prices. Meanwhile some businesses might choose to reduce inventory levels to manage costs, which could lead to stockouts and lost sales. Businesses might also resort to increased promotions and discounts to attract price-conscious consumers, further impacting profit margins. "We're seeing a lot of companies struggling to find the right balance," says John Lee, CEO of ABC Clothing, a major US apparel retailer. "If we raise prices too much, it could deter customers. But if we don't raise them at all, it could eat into our profits."
According to a recent article in Retailing Today, a major US clothing retailer reported a decline in sales of non-essential items like apparel in their latest quarter. The company attributed this to rising costs and a shift in consumer spending towards necessities.
In fact, some companies are opting for strategic discounts and promotions to entice cost-conscious consumers. Others are focusing on innovation, developing more affordable product lines or using alternative materials with lower costs. For example, XYZ Apparel, another major retailer, recently launched a new line of ‘essential’ clothing items made with recycled materials at a competitive price point. This strategy aims to cater to budget-conscious consumers while maintaining profitability.
Adapting to the new landscape
To move ahead in tough times, the apparel industry needs to adapt to the new economic landscape. For this, they need to diversify their sourcing strategies to reduce dependence on specific regions and mitigate risks associated with supply chain disruptions. Focus on efficiency as optimizing operations and logistics can help businesses manage costs and improve profitability. Highlighting the value proposition of products and focusing on quality and sustainability can resonate with cost-conscious consumers.
Defying expectations amidst heightened promotional activity and stiff competition, Victoria’s Secret & Co recorded an upsurge in sales during the quarter ended May 4. The brand’s net sales dipped by only 3 per cent during the quarter against the anticipated 6 per cent. Online sales notably surpassed brick-and-mortar results.
The lingerie giant has been contending with declining sales over the past couple of years. In efforts to attract customers and revitalise its image, the brand revamped its fashion show, and also expanded its swim and apparel offerings. Its new products received positive response from customers, affirms Martin Waters, CEO, indicating improving sales trends for both Victoria’s Secret and its PINK line.
However, marked by heightened discounting and intensified competition, the brand may continue to face challenges in the North American market, warns Waters. Also, despite the encouraging quarter, the company maintained its full-year guidance unchanged, acknowledging the ongoing complexities of the market.
