Crisil Ratings predicts a 25-30 per cent decline in revenues of RMG makers in ongoing financial year due to the prolonged lockdown and lower discretionary spending. The agency expects this fall to be sharper for exporters due to tepid discretionary spending in the US and European Union, which account for 60 per cent of India's RMG exports.

The working capital cycle of RMG makers has elongated because of higher inventory and stretched receivables, which is expected to impair their credit profiles, the report said. The last fiscal ended with 20-25 per cent higher inventory as the COVID-19 pandemic took hold and lockdowns began in late March.

With demand depressed in the first half of this fiscal, inventories will remain high, which will add to the woes of exporters and will weaken credit profiles of some large global brick-and-mortar retailers, which will stretch receivables, the agency noted.

Consequently, retailers’ operating margins will contract 250-300 basis points (bps) to 7-7.5 per cent for the sample set, despite softer cotton prices, and cost-reduction initiative. Crisil Ratings Associate Director Kiran Kavala views that due to a sharp fall in profits, s RMG makers will not have sufficient cash accruals to meet repayment obligations in the first half of this fiscal. However, they are expected to utilize the cushion available in their working capital facilities, and will be helped by the moratorium on loan repayments, the government relief package to micro, small and medium enterprises, and the COVID-19 emergency credit lines

Though cash flows are likely to improve in the second half of this fiscal, the ratios of net cash accrual to loan repayments and interest coverage will still be significantly weaker at 1.4-1.7 times and well below 3 times expected this fiscal, compared with 2.4 times and 4 times, respectively, in FY20, it added.

Animal rights organization PETA has urged luxury fashion brand Ralph Lauren to ban both exotic skins and alpaca fleece from its clothing. Ralph Lauren has banned fur, angora wool and mohair in the past, off the back of PETA exposés highlighting cases of gross misconduct. More recent investigate work by the organization has demonstrated that such instances of violence are apparent in both exotic animal farms and those breeding alpacas.

Recently, both Uniqlo and Marks & Spencer banned alpaca wool from their apparel lines after the largest farm of its kind in Peru, Mallkini, was found to tie alpacas to stretching devices, almost dislocating limbs, before roughly shearing them.

Brands such as Chanel, Diane von Furstenberg, Jil Sander, Vivienne Westwood, and Brooks Brothers have all subsequently banned exotic skins. According to a survey by YouGov and Commissioned by Human Society International, consumers deem brands using animal product as being unethical, cruel and out of touch. Only three per cent of participants in this survey said they would wear real fur.

Itema, the leading provider of advanced weaving solutions, including best-in-class weaving machines, spare parts and integrated services, has finalized agreement for the acquisition of PTMT, in business lease since April 2019. This acquisition by subsidiary Itema Tech srl allows the company to expand its product portfolio by adding PTMT technology, with the aim of consolidating and establishing a new leadership in the field of technical fabrics.

The operation confirms Itema’s Board Directors intention to invest in the textile machinery sector. Gianfranco Ceruti, President, Itema views the acquisition as enriching Itema’s technological offer for weaving machinery, adding even more value to the company’s proposal to the market. Ugo Ghilardi, CEO, Itema Group, said with Itematech the company is ready to respond to the needs of this specific sector, through the widest range of technological solutions offered by a single partner. Itematech will be able to count on Itema Group’s production capacity and its commercial and service network, along with the technological solutions that have always been the flagship of the Panter brand, such as the loom dedicated to weaving carbon fiber, in what is a unique synergy on the market.

The Itema plant in Colzate, at the forefront was quickly equipped by the Itema engineering team for the production of the ex-Panter models thus guaranteeing the high quality standards of Itema weaving machines.

According to management consultancy, Bain & Company, COVID-19 is pushing luxury brands to focus on their digital businesses. At the start of 2020, digital accounted for 12 per cent of luxury sales. By 2025, online sales could account for as much as 30 per cent of the luxury market, Bain estimates. Moncler, which previously outsourced its digital operations to fashion-tech outfit Yoox Net-a-Porter, plans to bring those operations in-house and double its e-commerce sales to 20 per cent of its business by 2023.

Similarly, Kering accelerated its digital growth by 6 per cent to account for 13 per of cent of its total retail sales in the first half of 2020. LVMH saw strong performance across its own e-commerce channels, as opposed to online sales through other retailers, which have tended to dominate online luxury sales.

E-commerce hasn’t been nearly enough to offset the tremendous losses luxury companies have suffered from closed stores and the plunge in international tourism, which makes up a large share of their sales. But it has softened the blow. For instance Prada’s online sales grew by 150 per cent in the first half of year versus the same period last year, despite total sales falling 40 per cent.

Chimney Sheep will soon start its sourcing project ‘Operation Wool’ for the third year in a row. The Cumbrian firm will collect approximately 22 tonne of Herdwick wool throughout August directly from local farmers. This equates to the wool from just over 20,000 Herdwick sheep which is 20 per cent of the UK Herdwick population and will fill five lorries.

This wool will be used to create the company’s chimney draught excluder, the Chimney Sheep. The project will provide financial support to the farmers at time the wool industry is declining due to the pandemic.

The farmers will be paid a better rate compared to selling the wool to British Wool whilst making it more cost effective for Chimney Sheep d by cutting out several sourcing steps.

A consortium of five Egyptian researchers have developed the world’s first high-performance fibers and reinforcements extracted from the byproducts of pruning of date palms, such as fronds and fruit branches, also known as PalmFil. The fiber is not only sustainable but also economical in manufacturing, compatible with textile and composite processing and offers the properties needed for lightweight cars of the future. PalmFil consortium succeeded in extracting the first long textile fiber from date palm byproducts and converting them into fiber tow, chopped fiber, spun yarn/ roving, nonwoven mat, woven fabric, and unidirectional tape. The new fiber represents a sustainable material base for a wide spectrum of industries ranging from natural reinforcements for composites in automotive and sporting goods, plaster reinforcements in construction, burlap sacks for packaging, ropes, and twines, non-wood papers, and other consumer products.

The R&D conducted by PalmFil consortium demonstrates the potential of date palm fibre; its use in the modern context and in industrial settings, says Dilip Tambyrajah, Secretary-General, International Natural Fiber Organization. The use of most natural materials like the date palm fiber contributes towards maintaining biodiversity, provide employment and income and enable sustainable development in general. However, the key to its revival will be the national will and support to encourage the development of a reliable supply chain that can service the various production sectors that could use the fiber, he adds.

The self-supported research was conducted for five long years. It relied completely on the consortium funds and was driven by a strong belief on the impact of such innovation on the sustainable development of rural communities and their livelihoods, adds Dr Ahmed Hassanin, Partner, PalmFil Consortium.

Turkish denim mill Calik Denim has postponed its annual event ‘Ever Evolving Talks’ due to COVID-19. The seminar was scheduled for October 27, just a day before Kingpins trade show. The seminar was launched in October 2018 with an ambition to change the way the sector thinks about not only its material ‘denim’, but more widely the ‘Fashion Industry and business in general. The first edition of this seminar focused on concepts such as innovation, technology and sustainability. It also highlighted fashion and denim trends guiding the future of the sector hosted experts such as Ken Segall of Apple, Matthew Drinkwater of London College of Fashion's Innovation Agency, Adriana Galijasevic of G-Star Raw, Roian Atwood of Wrangler and Matthew Williams of Alyx.

Last year’s edition gave a stage to topics such as Blockchain system, consumption habits of generation Z and climate change discussed by speakers such as Gen Z expert Matt Britton, Jessi Baker, Provenance and Leland Devon Melvin, ENFL player and NASA astronaut. The next edition of Ever Evolving Talks is scheduled for April 2021 in Amsterdam.

The Better Cotton Initiative (BCI) and its strategic partner and funder, the Sustainable Trade Initiative (IDH) have introduced an insurance scheme that guarantees a one-time payout to those affected by COVID-19. The scheme alleviates concern that if a farmer were to fall ill, their families would not go without money, says farmer Vaghela Sureshbhai Jesabhai. It is paid off by the two organizations on behalf of 170,000 smallholder farmers in India, to enable them to continue to operate safely in the know that they will retain an income even if they were to be struck by the virus.

The insurance cover will provide a one-time lump sum pay-out to the insured in case s/he becomes infected with the novel coronavirus, explains Pramit Chanda, Global Director-Textiles and Manufacturing, IDH. It eases the financial burden of COVID-19 infections and offsets for the loss of income farmer families may experience.

Implementing partners that will work with BCI to afford insurance to these farmers include: AFPRO, Ambuja Cement Foundation, Arvind Limited, Cotton Connect India, Deshpande Foundation, Lupin Foundation, Spectrum International and STAC India.

COVID-19 forced investors across the world to go into ‘life-raft’ mode and shore up their businesses. However now, investors are reconnecting with potential partners leading to some significant deals in the last few months. Some of the most significant deals that were cracked recently include KKR’s deal to buy 60 per cent stake of Wella from Coty Inc for $4.3 billion and L Catterton’s purchase of $400 million stake in Norwegian Cruise Line Holdings.

Deals across categories

In the fashion segment, prominent deals were signed by the Authentic Brands Group to buy bankrupt brands Brooks Brothers and Lucky Brand. Strategic players like PVH Corp and VF Corp also plan to consolidate their market positions by acquiring bankrupt retailers Neiman Marcus Group and J.C. Penney Co. Inc. Though some of these deals may eventually materialize, some could fall apart as the situation improves and companies start feeling confident to operate alone. Whatever the situation, buyers are looking for new acquisitions in skin-care, hair-care, food and beverage, health, wellness, and pet care categories.

Companies look to shore up balance sheets

While well-positioned companies are looking for partners to help them shore up their balance sheet, others are seeking an operating partner to help them through this crisis. Levi Strauss & Co is looking for partners to invest both in its store network and its burgeoning e-commerce business. The pandemic offers an opportunity to invest in companies that were profitable earlier but now lack liquidity, feels Rick Perkal, Managing Partner and CEO, Firelight Capital Partners, which an investor in Hobo Bags. Companies with e-commerce sites are doing quite well, wholesale brands are moving away from department stores.

Fresh perspectives on valuation

Deals are now being valued by reviewing the company’s past performance, brand heat, an evaluation of management and gut instinct. Market entrants are coming up with fresh perspectives to value deals. Brookfield Asset Management, which launched its $5 billion Retail Revitalization Program this May, is targeting retailers with normalized revenues of $250 million or more that have been operation for at least two years with “non-control” investments.

Advantage fresh starters

Investors making recent start are in advantage as access to talent is a lot more robust now, points out Jessie Cole, Founder, Seed Lab. According to her, as companies have laid-off employees, there’s abundant human resource available in the market and it’s the best time to staff up operations. The pandemic has made struggling companies weaker and strong firms stronger. Investors have moved away from mall-based retailers to focus on brands having direct relationships with consumers. This may shape the future of the fashion industry by highlighting companies backed by deep-pocketed investors.

Global denim manufacturer Advance Denim and Italian denim specialist Paolo Gnutti have collaborated to create Advance Denim By Paolo Gnutti, a selection of special fabric capsule collections aimed at the US and Asian markets.

The first capsule will be launched starting from October 2020 and will include a total of about 40 fabrics of whose each part is catered upon the needs of each geographical area.

Gnutti, who has been dedicated to denim innovation and creativity for his whole career, is expert in reinventing indigo bases by completely transforming them thanks to the use of flocks, 3-D prints, colored foils and metallic effects while adding funky touches of fashion-driven ideas to denim.

For this collection Gnutti selected a series of specific cotton and yarn types with high quality characteristics to develop Made in China high-quality products at very profitable price-quality ratio, though meant to reach different customers, from premium to the mass market.