A new survey by consulting firm McKinsey & Company, in partnership with Italian Fashion Chamber (CNMI) and Pitti Immagine says, the crisis caused by the COVID-19 pandemic will leave long-lasting scars in the luxury sector, and recovery will be slower than predicted. The sector will to wait till the second half of 2021 to generate the same levels of shares as recorded in 2019. Global luxury goods sales are expected to drop by €130 to €140 billion in 2020, down from the €390 billion the industry was worth in 2019, and by another €40 to €50 billion in 2021.

Between January 1 and March 18, the fashion and luxury industries lost nearly 30 per cent of its stock market value. The market capitalization of leading fashion and luxury labels plunged with their share prices falling 32 per cent, while those of departments stores lost 50 per cent, and independent labels fared a little better, their share prices losing 26 per cent on aggregate. The survey found that personal luxury goods companies expecting their revenues to decline by 20 per cent - 60 per cent in 2020, while their EBITDA will suffer heavy losses too.

JC Penney is permanently closing 154 stores and will pursue store liquidations, as part of its Chapter 11 bankruptcy restructuring plan. The department store chain had previously planned to close 242 locations, leaving about 600 open. The company expects additional phases of store closing sales tol begin in the coming weeks. It believes that its store optimization strategy is vital to ensuring it emerges from both Chapter 11 and the COVID-19 pandemic as a stronger retailer with greater financial flexibility to allow it to continue serving its loyal customers for decades.

The company had reopened nearly 500 stores since government officials eased COVID-19 restrictions. The 117-year-old department store chain was already facing financial pressure before the COVID-19 crisis hit. In its most recent quarter, same-store sales fell more than expected and its net loss nearly doubled.

As per recent IBES data from Refinitiv, Gap Inc recorded $932 million loss in first quarter as against $2.11 billion loss predicted by analysts. This was mainly because the apparel retailer had to shut stores to curb the spread of COVID-19. The San Francisco-based brand, which operates nearly 2,800 stores in North America, had recorded a profit of $227 million year earlier.

The loss recorded by the brand also included a $484 million writedown on store and operating lease assets and an inventory impairment charge of $235 million. Net sales declined 43 per cent to $2.11 billion from $3.71 billion.

G-III Apparel Group, which reported a 36.1 per cent decline in Q1 sales, has shut down 200 stores as a result of disruption related to the COVID-19 pandemic. For the first quarter ended April 30, 2020, the company’s net sales totaled $405.1 million, declining from $633.6 million in the prior-year period. Quarterly net loss was $39.3 million, or $0.82 per share, compared to net income of $12.0 million, or $0.24 per diluted share, in the same period in the previous year.

G-III has taken specific measures to preserve its liquidity during the COVID-19 crisis, including the furloughing of a large portion of the company’s employee base, as well as significant temporary salary reductions for its senior management. G-III has also worked to reduce its inventory exposure. In addition, the group is conducting a comprehensive restructuring of its retail operations, which will involve the permanent closure of all 110 of the company’s Wilsons Leather stores and all 89 of its GH Bass locations.

The group has entered into agreements for the early lease termination of a large majority of these stores. Through these closures, G-III hopes to significantly reduce its retail losses and ultimately make the segment profitable. In the meantime, the company’s wholesale business, which achieved $2.86 billion in annual sales in the fiscal year ended January 31, 2020, will continue to be its “primary growth and profit engine.”

American Eagle Outfitters is receiving more than its share of pent-up demand. The brand’s sales are bouncing back quicker than expected amid the COVID-19 crisis. Its shares, that were initially falling, have shot up by over 15 per cent in trading. As the brand reopened its stores during the coronavirus pandemic, sales are averaging an impressive metric of roughly 95 per cent of their normal levels. The brand has reopened 556 out of its total 1,100 stores. Its strong recovery aligns with its sales bouncing back faster than expected.

American Eagle recently also collaborated with TikTok’s biggest star Charli D’Amelio for a video on its Aerie swim collection, receiving almost 2 billion impressions.

VF has started reopening its outlets, and now plans the mid-calendar year 2020 to reopen all stores globally. VF has since reopened its Asia Pacific retail stores including Mainland China.

VF has also begun a phased reopening of its retail stores in its Europe, Middle East and Africa region and is prepared to embark on a similar approach for North American stores, subject to local government guidance. E-commerce is still in the works.

Net revenues of retailer for the quarter ended March 28 fell 10.8 percent to $2.10 billion frtom $2.36 billion, with the decrease mostly due to lower consumer demand connected with the coronavirus outbreak and temporary store shutdowns as mandated by local authorities.

Gross margin for the period fell 150 basis points to 53.1 percent. That was driven by elevated promotional activity to clear excess inventory, but was partially offset by favorable mix shift toward higher margin businesses.

The organization reported a net loss of $483.8 million, or $1.22 a diluted share, against a year-ago net profit of $128.8 million, or 32 cents. The results of the quarter included a loss from discontinued operations, its workwear business and the spin-off of its jeans business which now operates under the name Kontoor Brands Inc. a year ago. In constant dollars, earnings per share fell 69 percent to 10 cents on an adjusted basis.

The company expects sales from the first quarter of fiscal 2021 to fall significantly more than 50 percent, and to reach $600 million in full-year fiscal 2021 free cash flow.

Spinnova, the sustainable fiber company, has entered long-term collaboration with the global chemicals company Kemira, to develop a highly eco-friendly inherent dyeing method of fiber. 

Inherent dyeing in the Spinnova process means that the cellulosic fibre mass is dyed before extruding into filament. This avoids the excess use of water, energy, heavy metals and other harmful substances that go into dyeing fibre, thread and fabric as subsequent processes.

Spinnova’s sustainable fiber and the possibility of inherently dyeing could be an environmental game changer and could disrupt e.g. the denim dyeing process. The textile dyeing and finishing industry is one of the most chemically intensive industries globally, and one of the worst polluters of fresh water. The traditional textile industry uses thousands of chemicals in various processes of manufacture, including dyeing and printing.

 In addition to being the most sustainable way of dyeing, the fiber maintains this in-built color really well. Spinnova’s innovation originates from the pulp and paper industry, which is also one of the areas of expertise for Kemira and an important focus in the company’s R&D work towards bio-based chemicals.

The International Apparel Federation (IAF) is expected to decrease apparel sales 50 per cent by 2020  as clothing retailers are trying to get back their feet on e-commerce or other strategies. The brands are already reopening stores in many countries. On the other hand, 65 per cent of consumers are cutting their apparel spending.

Retailers and brands are going forward with their strategies and manufacturers also getting new orders. But apparel manufacturers are the most sufferers because they are facing a significant crunch in liquidity.

To save theirs worker, the Pakistan government issued a concessional loan to partly cover 3-month salaries provided no layoffs moratorium on payment of principal. To prevent bankruptcies Pakistan took the resumption of work under strict SOP’s (standard operating procedure) with partial capacity utilization and extra overheads but without the help of brands’ receivables of payments, it will get tough.

The Re-Set of the supply chain will occur at the end of the pandemic. Fast fashion will go to slow fashion, change in order rhythm, e-commerce will go fast but it will take more time to replace shops, reconsideration of the sourcing strategy and the relationship between buyer and supplier will be re-balanced. Manufacturers around the world are taking a new initiative to get back on track again.

Likewise, RMG companies in Bangladesh reopened their factories and are receiving new orders. The garment sector in Bangladesh follows SOPs to maintain worker health security. In factories daily temperature control, proper sanitization and social distancing are provided.

The Garment Manufacturers Association in Cambodia (GMAC), the Cambodia Footwear Association (CFA) and the European Chamber of Commerce in Cambodia (EuroCham) recently requested the European Commission (EC) to postpone its withdrawal of the Everything But Arms (EBA) scheme for 12 months.

The letter said the Covid-19 pandemic has halted production and slowed global demand to a crawl, delivering a devastating blow to Cambodia apparel, footwear and travel goods manufacturers and workers.

It said some 250 Cambodian apparel, footwear and travel goods factories have had to suspend operations and more than 130,000 workers in the sector, most of whom are women, have lost their jobs and this number is likely to rise sharply.

In the first quarter of the year, the letter said, many buyers cancelled orders after they were completed or while in process. It is estimated that the Cambodian apparel, footwear and travel goods sales in the second quarter of the year will likely fall by 50 to 60 per cent on a yearly basis.

GMAC chairman Van Sou Ieng said that in this context the EC’s scheduled August 12 implementation of the decision to withdraw the tariff preference for 20 per cent of apparel imports, 30 per cent of footwear imports, and all travel goods imports from Cambodia would be a massive blow to the Kingdom.

The Bangladesh Garment Manufacturing and Exporters Association (BGMEA) has extended the deadline for blacklisting British clothing retailer Edinburgh Woollen Mill (EWM) to June 05 instead of the earlier May 29.

On May 21, the BGMEA threatened to halt production and any further orders with EWM over nonpayment of dues and demands for unreasonable discounts, despite concluded contracts.

In a letter sent to EWM owner Philip Day, the BGMEA president said the association’s step came after receiving dozens of complaints from suppliers that EWM was avoiding contacts with the suppliers that it owes money to for previous orders.

EWM Group, owned by the British billionaire Philip Day, has quite an impressive array of brands under its fold – Peacock, Jaeger, Austin Reed, Jacque Vert, Country Casuals, Windsmoor, Baumler of Germany, and Bonmarche & Ponden Home.