Revenues and profits of the textile industry in China recorded double digit growth in 2021. A report by the Ministry of industry and Information Technology (MIIT) states, profit of textile firms with annual operating revenue of 20 million yuan ($3.16 million) and above recorded profits increased of 25.4 per cent y-o-y.to 267.7 billion yuan in 2021. Total operating revenue of these firms increased 12.3 per cent y-o-y to reach 5.17 trillion yuan in 2021. China’s garment exports also surged 8.4 per cent y-o-y to reach a record high of $315.5 billion in 2021.

Emergence of new COVID variants has caused continuous disruptions to fashion supply chains over the last two years. To become more resilient, retailers need to make certain permanent changes in their supply chain strategies. They need to avoid inventory pile-up by streamlining operations, says a Euromonitor International report.

The beginning of pandemic in 2020 halted fashion production and sales across the world. Retailers were compelled to shut shop leading to a huge inventory pileup in stores and warehouses. The pandemic also impacted production in many Asian countries forcing garment factories to either shutdown or operate at reduced capacity. Closing of international borders for trade with these markets not only created supply shortages but also impacted fashion production.

Reorganizing inventory management strategies

Retailers have always faced inventory challenges due to fast changing fashion trends. The pandemic further exacerbated these challenges as financial constraints and retail restrictions made consumer demand unpredictable. Consumers cut off discretionary spending during the first phase of lockdown leading to a surge in demand for home essentials like athleisure, pyjamas and T-shirts. This deepened the inventory crisis for retailers. Eruption of new COVID variants like Omicron and Delta further added to their woes as demand became more uncertain.

To avoid such hazards in future and make supply chains more resilient, fashion players plan to reorganize their current inventory management strategies.

Create regional production hubs to boost profitability

Fashion professionals are focusing on new technologies and cost management, as per Euromonitor International’s Voice of the Industry: Lifestyles Survey. However, they also need to make their production and inventory models more flexible and agile, says the survey. To achieve this, they need to adopt demand-driven inventory models and create localized and regional production hubs to enable companies to offset long-term impact on profitability.

Around 40.4 per cent respondents to the Euromonitor International’s Voice of Industry Survey, advised retailers to adopt the Vendor Managed Inventory (VMI) model that focuses on increased collaboration between vendors and retailers. This model offers vendors real-time access to inventory and point-of-sales data of a fashion retailer. Vendors can leverage this data to make their production schedule more flexible. This enables retailers adjust inventory according to demand.

The development of localized and regional supply hubs like Turkey helps retailers refresh stocks more quickly. It enables retailers diversify risks, reduce shipment costs and lead times. Most global fashion labels such as Ralph Lauren, Banana Republic and PVH’s Tommy Hilfiger and Calvin Klein, have shifted production to Turkey. Other fashion players are also reducing dependence on few production facilities to meet demand. However, they need to step up investments in localized productions, opine 36.5 per cent respondents to the Euromonitor survey.

Step up digitization and make production more flexible

A few manufacturers are already controlling their supply chain by adopting the on-demand manufacturing technique. Fashion retailers like Xunxi by Alibaba or Amazon Made for You in the US are producing only after order confirmation and receipt of payments. This allows them to customize orders as per demand, curb overproduction and manage inventory more efficiently. Around 15 per cent respondents to the Euromonitor International survey confirmed, they opt for sustainably produced apparel and footwear products while making a purchasing decision.

The shift to work from home and online mode of operation post pandemic has led to brands launching NFTs and virtual garments like adidas x Animal Crossing, Gucci Virtual 25 sneakers, or Zara x Ader Error or Nike launching its Nikeland in Roblox. Fashion players are launching products suitable for gaming and social media to offer brands a new mode of revenue generation.

To maintain their relevancy post COVID-19 pandemic, fashion players need to make their supply chains more flexible and resilient. They also need to increase investments in digitization and on-demand production models.

Cotton production in the 2021/22 season is currently projected to rise to 26.11 million tonne and consumption is likely to remain steady at 25.67 milliontonne, as per the March 2022edition of Cotton This Month published by the International Cotton Advisory Committee.

The cotton industry today is struggling to supply the fibre to the spinners as the COVID pandemic has disrupted global shipping across many industries. But the cotton supply chain is longer and more complex than it is for most other commodities, especially since so much of the production in the West has to be shipped halfway around the world to the countries where it's transformed into textiles.

Those challenges are forcing countries to adapt by streamlining their supply chains. China, Vietnam and Pakistan imported large amounts of cotton from the United States in 2020/21.

Given Australia’s geographic proximity to East and South Asia, this provides a distinct advantage to Australia when shipping ocean freight to Bangladesh, Pakistan and Vietnam. Australia is clearly capitalising on their increased production capacity and impressive yields, especially in the 2021/22 season.

The Secretariat’s current price forecast of the season-average A index for 2021/22 ranges from 101 cents to 120 cents, with a midpoint at 109 cents per pound.

Kontoor Brands’ revenues are expected to increase at single digit percentage to reach approximately $2.7 billion in 2022. The company expects first half revenues to increase in the low teens range compared to the prior year. Kontoor Brands’ gross margin is expected to be consistent with adjusted gross margin of 44.6 percent achieved in 2021. Expected increases from continued structural mix shifts to accretive channels such as Digital and International, as well as benefits of strategic pricing, are anticipated to be offset by higher transitory expenses, including freight, in support of strong demand.

The company’s EPS is expected to be in the range of $4.65 to $4.75. Its capital expenditures are expected to be in the range of $35 million to $40 million, primarily to support manufacturing, distribution and information technology projects.

The company expects an effective tax rate of approximately 21 per cent. Its interest expense is expected to be approximately $35 million and average shares outstanding of approximately 59 million, excluding the impact of potential additional share repurchases.

Authentic Brands Group (ABG) has finally completed the acquisition of the Reebok brand from Adidas. The €2.1 billion deal was first announced in August and marks the brand marketing company’s largest acquisition to date, as per a report by Women’s Wear Daily.

As per the deal, Sparc Group will be the operating partner for Reebok in the US and oversee its Boston-based global brand hub, the Reebok Design Group — to New Guards Group, the buzzy Milan-based division of Farfetch that will be Reebok’s core operator in Europe and will collaborate with the brand to create luxury collaborations that will be sold in more than 50 countries. Jamie Salter, Founder, Chairman and CEO, ABG says, the company will target $10 billion in revenues from Reebok over the next five years. To achieve this, the brand plans to explore its heritage at the intersection of sports and style.

Under ABG, Reebok will represent the company’s sole premium sports brand and the focus will be solely on growing the business. It will focus on the three segments of Classic, Training and Running that represent 80 percent of the overall athletic footwear market.

The Tirupur garment industry is caught in a strange predicament. On one hand, the multi-billion dollar industry has survived another COVID wave without lockdowns or large-scale migration of workers. On the other, it is facing raw material and infrastructural issues. In 2020-21, Tirupur exported garments worth Rs 24,700 crore. This year, it plans to step up exports to Rs 33,000 crore, says Raja Shanmugam, President, Tirupur Exporters Association (TEA).

In 2021, increased vaccinations, lifting of lockdowns and an anti-China outlook, helped India boost apparel exports. Rise in demand for casualwear due to the shift to ‘work from home’ mode also gave a boost to garment exports during the year. The third pandemic wave also offered certain advantages to garment exporters from India. They received several inquiries from overseas buyers that are likely to soon turn into orders.

Apparel makers’ profits to drop to single digits

Yet, domestic players and small and medium units are likely to face challenges as yarn prices and inputs costs may rise. T R Sivaram, Managing Director, Classic Polo says, apparel prices may spike around 40 per cent. This may result in a decline in profit margins of certain companies to single digits from double-digits. This may prove highly unsustainable for the industry, adds Sivaram. He adds, consumption in the domestic market has stagnated as buyers are scaling down purchases. They are no longer buying lounge wear, he adds. Rise in Omicron cases has also impacted store walk-ins while increased marked retail prices have affected sales.

Apparel volume fails to match value growth

The volume of Tirupur’s garment exports has not grown in proportion to their value, says MP Muthurathinam, President, Tirupur Exporters and Manufacturers Association (TEAMA). Export turnover has increased due to a rise in product prices, especially for medium and players, he adds. The Union government has failed to support the industry, adds Muthurathinam. He urges the government to study the China market that has captured 40 per cent of the overseas market with the support of its government.

Despite abundant supply of cotton, manpower and manmade fibers, India lags in global apparel market share. The country holds only 4 per cent share in the global apparel market as against 13 per cent held by Bangladesh and 12 per cent held by Vietnam. This is attributed to lack of government support to the industry, Mutharathinam affirms.

Rising prices threaten to derail growth

In China and Bangladesh, a single industrialist owns all verticals such as yarn making, knitting, dyeing and tailoring units. However, in Tirupur, profit margin of each player is fixed during sale to the next vertical. This increases the final price of the product, adds Muthurathinam. Raw material price hike is the single most dangerous threat facing the Indian garment industry, says Sivaram. Exporters are battling this fourth wave of the pandemic without any remedy in sight, he adds.

At a recent press meet of the association, Ravi Sam, Chairman, The Southern India Mills’ Association (SIMA) appealed to Prime Minister Narender Modi to allow duty-free import of 40 lakh bales of cotton to avoid stoppage of production and job losses due to cotton shortage during the end of the season.

Cotton yield to decline in current season

From April 2021 to January 2022, India’s exports of cotton yarn, fabrics and made ups increased 63 per cent from $7775 million to $12,681 million, Sam informed. India also witnessed 1.15 per cent acceleration in domestic cotton consumption during the current cotton season with the industry requiring 360 lakhs, surpassing the available crop size for the first time in the history. In 2021-22, India’s cotton yield is expected to decline by 7.2 per cent to 350 lakh bales against the requirement of 360 lakh bales due to a reduction in cotton acreage and crop damage in certain cotton growing states, Sam said.

India’s cotton supplies may reach 437 lakhs bales during the current season he estimated. Domestic cotton consumption estimates may reach 360 lakhs bales while exports may be 50 lakh bales, he added. India would have only 27 lakhs bales of closing stock, resulting in a shortage of 40 lakhs bales of good quality cotton to meet the industry demand and sustain its growth rate, he added.

TMC 2.0 to ensure clean cotton

To overcome shortage, Sam urged the government to implement the Technology Mission on Cotton 2.0 (TMC 2.0) to boost cotton production. As recommended by the Ministry of Textiles, TMC 2.0 will ensure technology development, technology transfer, clean cotton and branding Indian cotton and its textile products. The TMC 1.0 and Bt technology, has already boosted India’s cotton productivity from 275 kg per hectare to 585 ks per hectare, he added.

TMC 2.0 will benefit not just the existing 6.5 million cotton farmers but also several lakhs of new farmers in India. It will also create over 20 million new jobs in the country by increasing the total area under cotton cultivation, he added.

The Telangana state government and Texport Industries have teamed up to set up an apparel manufacturing factory on plug-and-play mode in the Sircilla Apparel Park. The factory will be set up with an investment of Rs60 crore

The company will initially install 800 machines and employ 1,600, and later expand to 1,000 machines to create more jobs over three years.

TIPL manufactures woven as well as knitted garments. It produces 1.6 million garments a month from 19 directly-owned facilities across the country. It employs more than 15,000 now and has an annual revenue of around Rs620 crore.

Two years on from France's first pandemic lockdown, Paris Fashion Week is returning to live shows.

The women's autumn-winter week commenced with Off-White, presenting the final collection by its founder Virgil Abloh.

Off-White retuned to the catwalk for the first time since the Covid-19 pandemic struck along with 45 other brands including Dior, Chanel and Hermes holding live catwalk shows.

Saint Laurent, which had dropped out of the official calendar during the pandemic, vowing to set its own schedule, returned to the regular line-up.

Others are presenting a mix of online films and in-house collections for buyers and press -- a concept that was devised during the pandemic and has remained popular with several houses such as Japan's Issey Miyake.

Before these shows, students from the French Fashion Institute will make a digital presentation focused on fashion for the metaverse.

Entrepreneurs have warned that Bangladesh may lose one of the most promising apparel export destinations if various Russian lenders are excluded from the SWIFT messaging system in response to the country's invasion of Ukraine

Western nations announced a harsh set of sanctions to punish Russia for its invasion of Ukraine, including blocking some banks from the SWIFT international payments system.

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the global financial artery that allows the smooth and rapid transfer of money across borders.

If the ban becomes effective, local exporters will face difficulties in receiving payments from Russian importers.

Russia is a growing export destination for Bangladesh's apparel items. In the July-January period of the current fiscal year, the country sent garment items worth $415.47 million, registering a 36.47 per cent year-on-year growth, data from the Export Promotion Bureau (EPB) showed.

Bangladesh shipped apparel items worth $593.66 million to Russia in the last fiscal year, comprising $373.25 million worth of knitwear items and $220.41 million worth of woven items.

The BGMEA has instructed its members not to accept any new work orders from Russia to avoid any hassles in payments.

Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association, said they are worried about the payment problem due to the uncertainty over the use of SWIFT in Russia.