Sales at Italian luxury brand Tod’s dropped almost 30 per cent in the first quarter of the year as the pandemic forced many of its stores to shut down. Chairman and Chief Executive Diego Della Valle said the brand’s sales were very strong in all regions at the beginning of the year but the group remained very prudent for the rest of the year, controlling costs and limiting inventories.

The brand’s first quarter sales fell by 29.4 per cent to €152.8 million ($165.60 million) at current exchange rates year-on-year, compared with an analyst estimate of around €162 million. Though Tod’s revenue fell slightly in 2019, marking a fourth straight annual decline, it picked up in the last quarter of the year, in a sign that the strategy to re-launch the group’s brands was starting to bear fruit.

The coronavirus emergency has, however, complicated efforts by the management to push sales.

Iconix Brand Group, a US-based premier brand management company, has posted 22 per cent dip in its revenue to $28.0 million in the Q1 of FY20 ended on March 31, 2020 compared to sales of $35.9 million in same period prior year. Operating loss of the group during Q1 FY20 was $4.9 million compared to operating income of $18.4 million.

While the group focused on continued stabilization of its business and its operational cost structure in the beginning of 2020, the COVID-19 pandemic has had a meaningful near-term impact on its business and licensees. Revenue from the brand’s women segment declined 23 per cent due to a fall in licensing revenue from its Mudd brand. Revenue from men’s segment fell 38 per cent to $6.8 million compared to $10.9 million due to decrease in licensing revenue from Buffalo and Umbro brands.

Home segment sales declined 9 per cent due to a decrease in licensing revenue from Royal Velvet brand. It’s international segment revenue declined by 12 per cent due to decreases in Latin America and Europe.

Clothing manufacturers in developing countries have been left reeling as international brands are refusing to pay for collections that have been completed and in some cases shipped. This has forced factory owners to let millions of their garment workers go, many of whom are young women supporting families.

A recent report by Pennsylvania State University in the United States shows, 80 per cent of factories in RMG manufacturing countries have reduced employment as a result of buyers cancelling orders; nearly 60 per cent have shut down most or all of their operations. Meanwhile, four out of five fired workers haven’t received severance pay, and hardly any fashion brands have offered them financial support.

However, there are some brands that are upholding their promises. Adidas, H&M, Nike, Target and Uniqlo, etc, have committed to paying for orders in full, including those currently in production. On the other hands brands like Arcadia – the owner of Topshop– ASOS, Walmart, Gap, Primark, etc have refused to pay, putting factory workers, mostly women in danger of falling into poverty.

After years of difficulties and previous rescue attempts, Gas Jeans, the historic denim brand owned by Grotto SpA is reaching encouraging financial results that may bring it to a recovery. In the first three months of 2020, the brand registered revenues of €11 million while its EBITDA was €1.4 million. Its cash reserves also increased to €6.6 million.

By moving the assembly for the composition with creditors from July 16 to September 17, the brand is earning more time and more actual possibilities to be saved. The company has to pay its debts to Dea Capital and Amco whose main exposures are respectively €34.6 million and €12.7 million.

Respecting anti-Covid 19 measures like all other companies, Gas, which employs 108 people, has started short working procedures, closed stores and outlets and reduced in part its activities, though without stopping them entirely thanks to smart working and other new projects. In June, for instance, it will start producing CE approved masks and aims to reach a production of about 20 million masks per year to be sold at competitive prices of €0.30 each.

Hikari (Shanghai) Precise Machinery Science & Technology, a leading Chinese sewing technology provider, has launched hot air seam sealing machine in India to produce the body coverall, a major product in PPE kits. The launch has come at a time when the manufacturing industry is witnessing scarcity of seam sealing technology in these unprecedented times of COVID-19.

Hikari has launched the machine under model number *QILi*-XL-A2, and the same is available in the markets wherever Hikari operates, including India. It’s worth mentioning here that the apparel manufacturers are now transitioning into PPE manufacturing in India to cater to not only domestic demand, but also the huge queries they are receiving from other countries.

One Hikari QILi-XL-A2 machine can seal seams of around 6 body coveralls per hour and, depending on how operators operate the machine, the output can be increased by 10 per cent. In an eight-hour shift, the machine can process 48 pieces.

The cost of this machine is 30 per cent less than what its competitors are offering in India in current situation. A few of the early adopters of Hikari seam sealing machines are Honeywell creation, CAREON Health Care, Sulochana Mills and Facctum Wears.

Many fashion industry bodies across the globe have stepped up to help smaller independent designers suffering from loss of orders due to COVID-19. The British Fashion Council has set up an emergency fund to help British designers but has called on the government to provide more aid, which it says is still needed.

Carlo Capasa, President of the Italian Chamber of Fashion, also asked his country’s government for help. Even Marc Jacobs, a well-known name in the industry, says he didn’t manufacture the clothes he designed for his last collection and won’t design a new collection next season. His brand is owned by LVMH.

Orders of many of these independent designers have either being cut or canceled by retailers who have closed stores and face a plunge in demand for new clothing. A March survey of designers by the British Fashion Council found 35 per cent of these designers believed they would go out of business within three months without external support. Half said they would go under by the end of the year.

These independent designers often operate on tight budgets, using the sales from one collection to fund the next. Many still rely on selling wholesale to retailers for the bulk of their earnings, and may sell just a few items straight to shoppers. Either way, any delays or disruptions in their sales can interrupt their cash flow and play havoc with the whole business. They may be unable to buy fabrics, pay manufacturers, or cover other bills, such as rent if they have a store.

Apparel Export Promotion Council (AEPC) has welcomed Union finance minister Nirmala Sitharman's decision to leave more money in the hands of individuals / companies, in the first set of measures announced by her, as a part of Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi to make India self-reliant.

Sakthivel, however, requested the government to extend the benefit under Pradhan Mantri Garib Kalyan Package (PMGKP) for payment of 12 per cent of employer and 12 per cent employee contributions towards EPF accounts, which is extended by another three months till August 2020, to cover all the apparel exporting units as they are highly labour intensive with a huge women workforce.

Welcoming the announcements related to MSMEs, Sakthivel said the facility of Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs, will help many businesses get over the liquidity crunch and lack of working capital due to disruptions brought in by the pandemic and resultant lockdown. Sakthivel thanked the finance minister for widening the definition of MSMEs in terms of investment and turnover, as this will enable many of the better doing MSMEs to continue taking benefit of schemes meant for MSMEs.

Other measures to improve the liquidity in the economy like Rs 30,000 crore liquidity facility for NBFCs/HCs/MFIs, Rs 90,000 crore liquidity injection for power discoms and increasing money in the hands of the people through Rs 50,000 crore liquidity via TDS and TCS reductions will go a long way in getting the economy back on tracks, he said.

CMAI has welcomed the measures announced by Nirmala Sitharaman, Finance Minister, especially those connected with the Government’s support to the MSME Sector – on which she focused on today.

According to CMAI, the enhancing of the upper limits of the sector, the merging of the manufacturing and service sectors, and the addition of a turnover based criteria, will all go a long way in enabling many more enterprises, especially in the garment Industry, to take advantage of the various schemes under the MSME umbrella.

The additional loans backed by Government guarantee and requiring no collateral or guarantee of the MSME will enable many of its members to get the much-needed working capital assistance that the Industry needs to kick start operations after the lock-down ends. However, it is important that the banks respond to these measures and implement the loan scheme within 4-5 weeks to allow quick start to operations to help the economic growth in the country.

Since a majority of the garment manufacturing units would come under the MSME criteria, CMAI believes that these sets of measures would be a boost for the sector.

A similar support is required for garment retailers and traders. Currently they are not covered by MSME registration. The survival of retailers is important to create demand and avoid bad debts to the MSME manufacturers. Further many MSME members are dependent on the sub-contract orders from large manufactures, exporters, and retailers. Since the entire value chain is impacted, support package has to be made available to the entire textile & apparel value chain.

Therefore, CMAI requested the finance minister to provide support to small manufactures by provide direct grants for in payment of wages for the lock down period and period up to September 2020. Small manufactures will not be able to sustain the losses from lock down and subsequent slow-down in demand. Absence of such grant could lead to up to 30per cent of the units closing down permanently leading to 1 crore job losses in the textile & apparel value chain.

Wrangler, a part of Kontoor Brands, Inc. has launched first ever denim dyed with foam, an innovative technique that uses 100 percent less water than conventionally-dyed denim. The introduction of this Indigood foam-dyed denim represents the brand’s continued commitment to using its global scale to advance the denim industry while maintaining the authenticity, quality and style that consumers expect from Wrangler.

Indigood Foam-Dye entirely replaces the traditional water drums and chemical baths of traditional indigo dyeing, reducing by 100 percent the amount of water required to turn denim that beloved shade of indigo blue. The new dyeing process also reduces energy use and waste by more than 60 percent compared to the traditional denim dyeing process.

The Indigood products will be featured in the Icons collection, giving consumers access to Wrangler’s most iconic products with the highest level of sustainability available on the denim market today. In addition, with absolutely no compromise to quality, the Indigood products include recycled cotton, laser and ozone finishing. The collection includes both male and female jeans, shirts and jackets in dark and light shades.

The launch of Indigood demonstrates Wrangler’s continued commitment to sustainability, reflected in the brand’s global sustainability goals, which include:

• Conserving 5.5 billion liters of water at owned and operated facilities by 2020;

• Using 100% preferred chemistry throughout our supply chain by 2020;

• Powering all owned and operated facilities with 100% renewable electricity by 2025; and,

• Sourcing 100% sustainable cotton by 2025.

Lack of customer activity is increasing brands’ dependence on fashion forecasters who are guiding them to navigate the ongoing crisis. Firms like WGSN and Stylus are holding in-depth video meetings with clients to advise them on what the post-COVID-19 world might look like.

These forecasters are not just providing seasonal trend analysis but also guiding brands on surviving the current morass. They reveal that fashion firms are keen to know more about the consumer response in more open economies like China and hear predictions about how people will behave after lockdowns end.

However, macro trends like a consumer call for sustainability or a move away from seasonality have not drastically changed in light of Covid-19. On the contrary, they are accelerating at a faster than anticipated pace, in effect putting trend forecasters into a more pivotal role.

Reliance on trade shows and fashion events

According to Carla Buzasi, Managing Director, WGSN, fashion firms are now looking at forecasters as one of the main forms of data on the market. To cater to increasing demands, forecasters are speaking to their clients and sending them information much more regularly. Stylus is running webinars with live Q&A sessions to its subscriber base. These webinar are included within current subscription models as raising prices or cashing in on the situation would play badly with clients.

Heuritech, which switched from monthly to weekly updates at no extra cost, is helping clients with short-term inventory movement rather than long-term planning that was the norm before.

Forecasters rely on trade shows and fashion weeks to know the direction designers are heading and gauge the reaction of social media influencers to emerging trends. However, as many of these events have been postponed or cancelled, firms like WGSN are reaching out to keynote speakers and exhibitors to find out future plan of action. Similarly, Stylus is prioritizing a number of cross-sector reports on subjects like: homeware, sleep, sex, hygiene and personal care.

Line of predictions

Market analysts firm Bain & Co predicts a revival of China’s luxury market with the country is likely to grab an even greater share of the luxe market at a much faster rate than anticipated, as Western economies go through sluggish recoveries. However, another trend forecaster and consultant Geraldine Wharry cautions against making any rash predictions about how the industry is likely to look when lockdowns and social-distancing measures end.

Many forecasters agree Covid-19 outbreak could force many brands to reevaluate their business models. Some of these brands may also have to change their mode of operations in order to survive. Emily Gordon-Smith, Director, consumer product at Stylus, anticipates a move to more trendless and seasonless approaches by fashion brands, with collections driven by individual vision of the brand rather than one tapping into shifting seasonal trends. According to her, clients are showing interest in these types of collections right now and evolving their own brand identity into something that's stronger and more individual.

Brands embracing the principle of design with purpose are also gaining more popularity than those more tied into the traditional fashion calendar. This benefits everyone from consumer, brands’ to the planet, Buzasi notes.