FW
The sales of high-end lingerie is outpacing China's generally downbeat luxury market and is heating up competition between international brands and local rivals looking to go up market.
Several World Lingerie brands eye Chinese market
While U.S. brand Victoria's Secret is set to open its first store in China, Italy's ultra-luxury La Perla and Germany's Triumph are on the course of adding stores and penetrating mainland China to tap a lingerie market that has more than doubled in five years to $18 billion, according to the Mintel Group.
By next year, it is estimated that China's women's underwear market would have a retail value of $25 billion, double than that of the United States and is expected to grow to $33 billion by 2020, according to Euromonitor.
Local firms also vying for attention
Not just foreign firms, Chinese firms such as Beijing Aimer, Maniform and Ordifen are also trying to make their strong presence in the market by targeting affluent customers by raising their quality. Thus, foreign brands will have to be one up on the local ones not just on quality, but also in innovation, observed Matthew Crabbe, director at Mintel.
Fragmented Market
For now, the market is highly fragmented with none of the leading firms having more than around a 3% share. International brands see China as a priority to help bolster their overall sales amidst a fairly bleak global outlook.
La Perla, which sells bras priced around 2,000 yuan ($300), has eight stores in China and plans additional outlets in Chengdu and Chongqing within the year. It also aims to open a men's store in Beijing. “Luxury is … not about buying to show off, it's about buying items that make you feel good,” said Chiara Scaglia, La Perla's Asia chief.
Taking over a prime downtown location that used to house a Louis Vuitton store, Victoria's Secret will open a 20,000 square foot (1,860 square meter) flagship store in Shanghai this year.
Triumph, which already has 1,000 stores in China plans to open in five new cities this year and up to 11 cities next year.
Cosmo Lady, a Chinese firm that has focused on the mass market, selling bras from 50 yuan ($7.50), last year bought Ordifen to increase its presence in the luxury segment.
International brands have admitted that they don't offer products specifically for the Chinese market, though La Perla said that some colours viz red and baby pink sell far better in Asia than in Europe or the United States. The Italian brand has also used Chinese supermodel Liu Wen in its campaigns.
Not to be left behind, Japanese and South Korean brands such as Wacoal and Narue are also growing in popularity in China. But there are bumps in the lingerie market too.
Cosmo Lady, which has 8,600 outlets including Ordifen's 550 China stores, saw a robust growth in its mass market sales last year but warned about its profits for the first half of this year citing China's slowing economic growth, consumer caution and competing online sales.
Hong Kong-listed Embry Holdings, which owns the Embry Form lingerie brand, said that its group retail sales fell by nearly a fifth in April-June on tougher competition and the economy.
For the quarter ended June 2016, Suryalakshmi’s net profit was up 11.7 per cent. Total income for the first quarter of financial year ’17 was up six per cent. EBITDA too was up 10.3 per cent year on year. EBITDA margins came in at 15.2 per cent versus 14.1 per cent year on year.
The company expects a good growth both in top line and margins and expects a 10 per cent growth in top line for financial year ’17.
Realisations are expected to increase in the second and third quarter as cotton prices have also increased. The company has increased the earnings before interest, taxes, depreciation and amortisation (EBITDA) margins both in spinning and the denim divisions. It expects a better result in the second and the third quarters particularly from the spinning division.
Suryalakshmi is fulfilling the earlier contracts but for the new contracts it will be able to increase the realisation but that effect will be visible in the second and the third quarters.
Suryalakshmi is one of India’s leading integrated premium yarns to denim to garment manufacturing companies with over five decades of market leadership. With cutting-edge designs, the latest spinning technology and end to end manufacturing plants, it creates the finest yarn, premium denim and garments for leading private labels, fashion brands and retail chains in 29 countries across the globe.
UK fashion tradeshow Pure London was held July 24 to 26, 2016. Over 700 brands showcased their collections.
The number of brands from abroad and the variety of brands on show was one of the striking things about Pure, and this year there were a number of Swedish brands. WeSC was at Pure for the first time to show its new women’s wear collection by designer Carin Wester.
Shanghai-based brand Cubic's stall was one of the busiest at the fair. That was the brand’s second time here. Cubic hadn't yet noticed any effect from the Brexit vote.
Beyond Retro was showing at Pure for the second time. It had buyers coming back from last year. Swedish denim brand Cheap Monday was at Pure for the first time and the brand signed some new accounts. Both Cheap Monday and Nottingham-based menswear brand Lizard King were yet to see any effect from the Brexit vote. Lizard King mainly has UK buyers. WeSC is keeping its prices stable for retailers.
London-based brands Collectif and Beyond Retro both took the opportunity to use Pure as a showroom and set up plenty of buyer meetings. Fifty per cent of Collectif’s orders come from existing customers, but it picked up new ones too. The brand has Korean and US buyers.
International Textile Group (ITG) has launched the Carlisle Cotton Company and its innovative line of luxury and performance cotton fabrics.
Combining the heritage and expertise of Cone Denim and Burlington, the Carlisle Cotton collection brings a unique blend of colour, comfort and performance innovations to create a new generation of cotton fashions that are versatile, from fashion shirtings to bottom-weights for jeans wear and rugged casual styles.
Carlisle Cotton fabrics are made in the USA and named after the Carlisle Finishing plant where they are dyed and finished. Located in Carlisle, S.C., and surrounded by the Sumter National Forest, Carlisle has been a leader in dyeing and printing for more than 60 years.
The said fabrics are versatile and come in many different constructions and finishes ranging from heavy-weight ducks, twills and canvases that are durable yet comfortable all the way to luxury brushed-cotton spandex blends and sulfur and pigment piece dye fashions that appeal to the jeans wear customer.
Additional styles are offered for lightweight, breathable uniform fabrics and brushed, no-wrinkle cotton twills and shirtings for everyday wear.
India is planning to extend the proposed India-Myanmar-Thailand highway to the CLMV (Cambodia, Lao PDR and Vietnam) countries in the second phase, despite the first phase being stuck on procedural issues.
The India-Myanmar-Thailand (IMT) trilateral highway is facing inordinate delays, and has already missed a couple of deadlines. It may now become operational by 2018-19. However, a lot of work needs to be done. Firstly, on the Indian side there are as many as 69 bridges that are in a dilapidated state, which have to be rebuilt. Although work is on to modernise these bridges, the progress is slow.
The implementation of the trilateral highway got delayed for reasons that are beyond India’s control. But assuming it gets operational by 2018, it may be extended to the CLMV countries. This will then give India direct access to the South-East and East Asian markets.
The trilateral highway is crucial for the success of the Modi regime’s Look East policy.
India and Thailand have also agreed to speed up negotiations on the India-Myanmar-Thailand Motor Vehicles Agreement (MVA). However, India is not keen on signing the MVA now unless work on the highway progresses.
Myanmar is now creating hurdles to the project. It has demanded a renegotiation of the MVA and its applicability on the trilateral highway as the agreement was negotiated under the previous military government.
Nigeria imports a high proportion of fabrics and textile materials. This affects the textile industry as these commodities could have been produced within the country. The high rate of imports of textile materials do not allow the revival of the country’s ailing textile sector.
In Nigeria for instance, more than 80 per cent of all finished consumer products are imported.
Cotton farming in Nigeria over the years has suffered because the opportunity cost of planting cotton has remained high. Cotton does not compete favorably against other lower risk crops and this has led to a dwindling of farmers involved in cultivating the crop over time.
The electricity supply is still below 20 per cent. Since manufacturers cannot produce enough material, this means that textile traders down the line must rely on imports, much of which is smuggled.
At the same time, importers have tightened the supply chain, insisting on upfront payment since the local currency was devalued.
In the face of stiff Asian competition, manufacturers are asking for government protection. Traders, on the other hand, want a quick propping up of the local currency to make imports affordable.
Employment of casual workers is not allowed in the industry.
Protecting the interests of domestic manufacturers, India has imposed anti-dumping duty on imports of Purified Terephthalic acid (PTA) from five countries.
The countries slapped with anti-dumping duty are China, Iran, Indonesia, Malaysia and Taiwan. Imports of PTA from these nations now attract an import restrictive tax in the range of 85.87 dollars to 168.76 dollars per metric ton.
PTA is a vital raw material for polyester yarn production. Reliance Industries is the sole manufacturer of PTA in the country.
Anti-dumping steps are taken to ensure fair trade and provide a level-playing field to the domestic industry.
In Asia, the growth in PTA consumption has been driven by strong polyester fiber demand, which is the largest segment accounting for nearly two-thirds of global polyester demand. Polyester fibers are used to make fabrics for apparel and home furnishings such as bed sheets, bedspreads, curtains and draperies. They are also spun together with natural fibers such as cotton to produce a cloth with improved properties such as wrinkle resistance.
Other PTA applications include coatings and composite materials, based on unsaturated polyester resins, and hot-melt adhesives.
India currently imports two to three lakh tons of purified terephthalic acid every year while domestic production is six lakh tons.
Total production for the 2015-/2016 cotton season in Zimbabwe is estimated at between 70, 000 and 80,000 tons.
Merchants have already started buying cotton at the common collection points with prices averaging 36 cents per kilogram, a price which may change if farmers are allowed to have their way at the bargaining table. The 2016 cotton marketing season is currently in progress.
The price continues to be negotiated between farmers and ginners and farmers are being paid according to the grade of their cotton seed, hence the price adjustments will be paid after grading.
Cotton production has declined over the past years due to viability challenges. Contractors complained of side marketing while farmers said buyers were offering low prices.
The government had to intervene last year by assisting cotton growers with inputs under the Presidential Inputs Scheme.
Farmers are complaining over the cotton producer prices, which they say are not viable. Farmers say some of the contractors do not give adequate inputs. In other words farmers have lost trust in ginners’ paying adjustments.
But farmers hope buyers will be fair and pay firm prices that will enable the farmers to go back to the land. Buyers say they will give an adjustment at the end after the crop has been graded.
The Directorate General of Customs Valuation (DGCV) of Pakistan has drastically increased customs duty with an average of over 400 per cent on unbranded garments. This has forced commercial importers to find other illegal means to bring imported attires into the country.
According to market sources, an unprecedented increase in customs duty with an average of over 400 per cent on unbranded garments as compared to previous valuation ruling is compelling importers to divert around 175 containers which was grounded at Karachi port to UAE for bringing all these containers under the guise of Afghan Transit Trade (ATT) cargoes into the country.
However, sources have ruled out the possibility of any negative impact on import of garments after duty increase, saying that all garments consignments would now enter into the country under ATT cargoes. Moreover, they said that this initiative would create negative impact on customs revenue collection besides encouraging smuggling and corruption. In short, the customs department may be deprived of collecting revenue of over Rs 1.5 billion from garments importers.
Meanwhile, a customs official who was closely involved in evolving this new valuation ruling, on condition of anonymity, said that department did not increase customs duty on unbranded garments but did rationalise its value as per international prices.
Moreover, he said that this was the first time when the department had taken Pakistan Readymade Garment Exporters and Manufacturers Association (PRGEMA) on board for rationalising the valuation of unbranded garments as per international prices adding that this new valuation ruling would also protect local garment industry.
The Coats Group had lower sales growth in the second quarter due to tough market conditions. Operating profit was up 24 percent on an adjusted basis. Industrial profit growth was 27 per cent delivered by market share gains and cost productivity. Adjusted EPS was up 24 per cent with higher operating profit and reduction in tax rate offset mainly by unrealised losses on foreign exchange hedges.
Adjusted free cash flow for the last twelve months was 82 million dollars primarily due to higher profitability. The revenue of 718 million dollars was maintained. Americas Crafts margin increased, despite tough market conditions, due to focus on costs.
Coats, based in the UK, is the world's leading industrial thread manufacturer and a major player in the Americas textile crafts market. At home in more than 60 countries, Coats employs 19,000 people across six continents.
Coats' pioneering history and innovative culture ensure the company leads the way around the world: providing complementary and value added products and services to the apparel and footwear industries; applying innovative techniques to develop high technology specialty threads and yarns in areas such as automotive and fiber optics and extending the crafts offer into new markets and online.
