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For the first half of the year, Burberry’s profit increased by 11 per cent. After remodeling its commercial network, sales of Burberry’s directly operated stores rose by six per cent during the period. The revenue of the licenses, on the other hand, also experienced an increase of six per cent while the revenues of the channel multibrand had a flat evolution. While sales in Hong Kong fell by double-digits, sales rose six per cent in the rest of Asia Pacific. In Europe, the group’s sales increased six per cent while in America the increase was two percent. Burberry delivered financial results in line with guidance despite the decline in Hong Kong. Luxury sales overall in Hong Kong have been down by as much as 60 per cent in the quarter to September. The problems in Hong Kong have led some companies to start negotiating with landlords in order to try to get reductions on the territory’s traditionally sky-high rents.
Burberry is undergoing a major transformation. The British luxury company is rationalizing its distribution and refreshing its retail stores in all major cities. The company has seen a successful launch of its new go-to-market model. The brand’s strategic focus is on igniting brand heat.
Global cotton prices are rising. The trigger for the welcome price rise has emanated from the definite signs of easing in the ongoing trade tensions between the US and China. After protracted negotiations between the two warring sides, there are signs of some kind of reconciliation, even if partial. This is seen as giving a bit of a boost to all commodities in general.
While the US is the world’s largest exporter of cotton, the Asian major is the largest importer. As the world’s largest consumer, China builds stocks from time to time. In recent years, it has been destocking, and now there is greater conviction in the market that the destocking cycle has ended and restocking will begin. China is reported to have purchased some cotton recently.
A combination of plentiful supplies, modest demand growth and large inventory will not let the market run amok. At the same time, as and when the trade conflict shows more concrete signs of easing, there will be a pickup in export trade which in turn will boost prices. Once the market begins to move upwards, speculative capital is sure to move in and exert an exaggerated impact. Some Indian exporters are reported to have concluded a few export deals with China, apart from regular buyers such as Bangladesh.
Cambodia’s exports to Japan were up 8.4 per cent in the first nine months of this year. Imports from Japan increased 36 per cent in the same period last year. The main products that Cambodia exports to Japan are: garments, footwear, sugar, fish and seafood. Imports from Japan are mainly machinery, automobiles, electronic products, beef, iron, steel and pharmaceutical products. Increasing bilateral trade volume Japan is a result of the efforts from both countries to mobilise business and investors. The growth in exports to Japan can be attributed to an increase in Japanese investors in Cambodia over the past few years. Most Japanese factories in Cambodia are located in special economic zones, which produce a lot of products that are exported to Japan. Japanese investment in non-textile manufacturing has contributed to diversifying Cambodia’s economic base and human resource development. There are 141 Japanese investment projects in Cambodia, of which 66 are in special economic zones.
Cambodia’s exports have been buoyed by efforts to assist its exporters, including the simplification of export procedures and in particular the implementation of an online system to process export documents. Of Cambodia’s total exports, Japan ranks fourth with a market share of 7.7 per cent.
Younger American consumers are becoming aware of the devastating effects of fast fashion on the environment. They are increasingly aligning their social and environmental beliefs with their shopping habits. A fast fashion brand quickly and cheaply produces clothing to keep a constant flow of what is in style on its shelves. But younger adults are getting more involved with trends like the capsule wardrobe, a collection of essential garments that can be worn for multiple occasions.
Another growing trend involves holding on to pieces that bring one joy. People are less interested in the trendy, easily-disposable garments a brand like Forever 21 specializes in more drawn to pieces that support their identity. One value, Gen Z shares is sustainability, which is only expected to grow with the expansion of initiatives that bring awareness about poor practices in the fashion industry.
Generation Z once flocked to Forever 21’s revolving collection of trendy clothing that hung haphazardly from its cluttered racks. Now, the once-popular fast fashion retailer, which targets a young adult audience, has filed for bankruptcy. As a result, it will close 400 stores. Forever 21 isn’t the only prominent retailer in trouble. Many other fashion brands have shuttered stores or filed for bankruptcy over the past couple of years. The decline of these fashion giants marks a shift in the industry and the behavior of its customer base.
In the second quarter Grasim Industries revenue grew three per cent. Ebitda grew seven per cent and PAT was up six per cent cent driven by superior performance of the company’s subsidiaries, UltraTech Cement and Aditya Birla Capital. In the viscose staple fiber business production and sales volume recorded an increase of eight per cent and five per cent.
Liva, the company’s brand for viscose staple fiber products, continues to grow its reach in the domestic market. Today, Liva partners with over 40 retail brands and is available across 3,500 exclusive brand outlets and large format stores in addition to many more multi-brand outlets in 250 cities of India.
Sustainability has been the core focus area for the company. The business along with its global joint ventures has been the first one in the industry to be carbon positive on scope 1 and scope 2 emissions. Grasim’s viscose staple fiber business will continue to focus on expanding the market in India by partnering with the textile value chain, achieving better customer connect through its brand Liva and extensions into new categories. Grasim is incurring capex to increase capacities across its key business lines and is potentially well positioned to leverage the next phase of economic growth.
Isko’s latest series of performance fabrics is made with certified recycled materials. These textile concepts are all woven, even if many have the look and hand feel of knitted fabrics, ensuring superior durability and great recovery. They provide a broad range of performance properties, such as moisture management, UV and wind protection, heat retention, water and stain repellency. Nylon is used for the first time, presenting super light woven and cozy outdoor fabrics, reversible and packable styles, as well as patented fabrics, such as four way stretch Isko Blue Skin for a 360° elasticity. Finally, the collection offers super compact fabrics that are made suitable also for fully bonded garments with body shaping and high recovery properties.
The men’s and women’s garment collection is based on three lifestyles – Active, Outdoor and Club Sports. Active is ideal for a wide range of sports from yoga to fitness to running. The Outdoor collection has fabrics with superior comfort, durability, water repellency and breathability. The Club Sports collection offers essential features such as maximum flexibility, fit and performance.
Isko is the first denim producer in the world to be recognised with the Nordic Swan and EU Ecolabel certifications. The company has a production capacity of 300 million meters of fabric a year with 2000 high-tech automated looms. Isko has a global presence with offices in 35 countries, and is part of Sanko Tekstil, the textiles division of the Sanko Group.
Patagonia recently launched a new range called ReCrafted which uses worn out, damaged goods and transforms them into entirely new, one-of-a-kind products at a workshop in Los Angeles. Each item in the ReCrafted collection is made up of between three and six pieces of used clothing.
The first series of items consists of down jackets and vests, a sweater, a T-shirt, a toolkit, and four bags, all available on Patagonia’s Worn Wear websit for prices that range from $27 to $327. The aesthetics feature a kind of bricolage effect, with fabrics of different colors and textures stitched together.
This is just the latest part of Patagonia’s broader strategy of keeping garments in circulation for longer. The ReCrafted products are available starting today on the Worn Wear website, along with Patagonia’s first dedicated Worn Wear pop-up, which opens tomorrow in Boulder, Colorado—along with a repair workshop on-site.
Will such projects inspire other brands to launch similar programs? It’s hard to say. It takes a relatively large company, with plenty of resources, to redirect worn-out clothes and bring on designers to create new pieces. This may prove too much of a hurdle for many brands.
Cotton processors in Tanzania are facing a pile up of cotton yarn. China is the main market for Tanzania’s cotton yarn exports but cotton ginners are finding it difficult to sell their goods due to slowing demand. Trade war between the United States and China has cut down the volume of garments exported to the US and hence from Tanzania to China.
Cotton processing factories in Tanzania have cut down on the amount of cotton lint they buy from ginners and also the amount of yarns they export. That means they have tons of cotton yarns un-exported. Other challenges are transportation challenges due to the introduction of a new policy which needs cargo to be transported by truck with only specified documents.
Over 4,00,000 tons of cotton were harvested this season in Tanzania. But the trade war between the US and China has caused the crop’s price in the world market to drop. This is also being reflected in the domestic market, but the Bank of Tanzania has established a mechanism to mitigate the effects of price volatility. Ginners and other buyers are unable to buy cotton from farmers. Some companies are organising seminars for farmers.
Pakistan’s textile industry is facing a liquidity crunch. Five export-oriented sectors were removed from zero rating from July 2019. This was followed by a 17 per cent sales tax on exports on the assurance that refunds would be paid within 72 hours. However, the software developed for payment of refunds has failed to operate properly, resulting in blocking of significant sums. Exporters say promises of timely payment of refunds never materialise.
Zero rating, which means no collection of sales tax but no refunds, helps exporters fulfill their commitments without facing a liquidity crunch. As of now exporters say they cannot meet their commitments when they have no funds to pay salaries, utility bills or purchase raw materials for new orders. They say such a situation will directly damage the country’s exports.
Pakistan has faced a failure of cotton crop, which is not expected to be more than nine million bales. The target was an estimated production of 15 million bales. The next cotton crop is expected to be even smaller in size because of issues related to quality. Another issue is that of the supply of substandard pesticides to growers. There are some 700 pesticide supplying companies operating in Pakistan.
The tariffs on Chinese imports continue to unsettle the fashion apparel industry in the US. The impact will vary based on how exposed companies and brands are as well as how nimble they are in diversifying their sourcing. The costs will vary by sector. Apparel manufacturers and brands with the highest exposure to the department store channel are seeing the greatest impact from an uptick in tariffs. Apparel manufacturers may be more nimble relative to footwear companies in their ability to shift production out of China. Footwear manufacturers would likely follow the same playbook as apparel manufacturers in dealing with tariffs by diversifying production, negotiating vendor concessions, and taking price increases. The near-term impact of a tariff on footwear may weigh more heavily on margins as pricing and shifting supply out of China takes time.
For specialty retailers, exposure to Chinese-sourced goods averages about 30 per cent. Retailers in this segment have shifted their sourcing from China over the past few years. For department stores, the approach requires diversification of private label sourcing. Being a step removed from manufacturing in China can help buffer both department stores and off-pricers on the margin front from any potential tariff impact. Department stores’ private label goods may take a similar approach to apparel manufacturers including diversifying sourcing, negotiating with vendors and taking price increases.
