After a challenging era, when its annual revenue shrunk $2bilion in the eight years since its acquisition, Adidas has finally put Reebok up for sale. In the past eight years, Reebok closed almost half its stores in North America besides deviating from its original aim of being a sportswear brand.

As per a Business of Fashion report, Adidas plans to sell Reebok at a steep discount on $3.8 billion it spent 16 years ago to buy the brand. The deal is expected to close in the first quarter of 2021 itself. As per the German business publication Manager Magazin, before the pandemic Kasper Rorsted, Chief Executive Officer, had sought €2 billion (about $2.4 billion) for the brand. However, post pandemic, this value has been downgraded to almost half.

Recovering losses

In the first nine months of 2020, Adidas’ revenues declined by 20 per cent year-on-year to €13 billion (about $16 billion). This decline was mainly driven by 22 per cent year-on-year drop in Reebok’s revenues. Hence, Adidas now plans to do away with Reebok and focus only on its core brand.

Through this sale, Adidas also aims to recover from its FY2020 Q3 loses, when China sales declined 5 per cent. As per Jamie Merriman, Bernstein analyst, the divestment will allow Adidas focus on its own operations and remove the lower margin business from the group.

Buyers interested in buying Reebok

Prospective buyers for Rebook include Chinese sportswear giant Anta and VF Corp., which recently acquired Supreme. Adidas may also consider other buyers like Percy Robert Miller, the rapper and entrepreneur known as Master P, with former professional basketball player and investor Baron Davis, as well as licensing giant Authentic Brands Group.

Reebok’s partnership with New York designer Kerby Jean-Raymond for a footwear range has helped it establish its credibility. With this partnership, Reebok has launched many new products and managed new projects. The partnership also helped the brand increase sales by around 20 per cent in December 2020 and January 2021, says Matt Powell, NPD Group. According to him, Reebok has an extremely strong value of the ‘80s and 90s product. Powell expects private equity firms to be interested in buying Reebok as well as footwear companies who aim to tap the retro trend. He also expects retailers looking for a strong in-house label to be interested.

Other buyers interested in buying Reebok include Master P and Baron Davis as they see opportunities for collaborations if the brand became Black-owned. The Authentic Brands Group also has its sights on this purchase as it already has a partnership with Shaquille O’Neal whose 1990s endorsement deal with Reebok had O’Neal had gained immense popularity.

The COSATU-affiliated Southern African Clothing & Textile Workers’ Union (SACTWU) has applauded the newly published textile rebate. As pr the union, this is an important concrete implementation component flowing from the signature of the Retail, Clothing, Textile, Footwear & Leather (R-CTFL) Masterplan which was signed by the industry's social partners on November 6, 2019, at the 2nd Presidential Investment Conference.

The rebate provision was published by the Deputy Minister of Finance on February 5, 2021. The publication was preceded by an intense four-month period of industry bilateral negotiations between SACTWU and other stakeholders in our industry pipeline. This process culminated in a historic agreement between the parties, which decisively resolved a over four decade deadlock on this matter.

The rebate provides woven fabric to be imported duty free for the local manufacturing of garments, provided that procurement commitments are made to local textile producers. Such imported fabric can only be used by companies that are signatories to the R-CTFL Masterplan and are compliant with minimum labor standards.

The employer association signatories to this agreement represent more than 75 per cent of SMME companies in the clothing manufacturing industry, and labor (SACTWU) represents 90 per cent of workers employed in these SMMEs.

As per an India Ratings and Research report, China’s demand for India’s cotton has pushed domestic yarn prices higher. Led by a strong export and moderate domestic demand during December 2020, India’s yarn production increased in January 2021.

Exports during the month increased in high single digits YoY due to healthy demand from neighboring countries. Cotton yarn prices increased 15 per cent MoM and 30 per cent YoY, resulting in higher gross margins. Higher cotton yarn demand is attributed to the global supply curbs on Xinjiang region (China) cotton, which is benefitting Indian domestic spinners. The report estimates exports to be moderate during January-February 2021 with likely shutdown of mills ahead of Chinese new year. It expects demand to resume by March 2021. As a result of this expectation, cotton prices surged by 7-10 per cent MoM during January 2021, led by a strong export demand for cotton yarn.

International prices rose 13-17 per cent YoY, led by the buoyant China demand for US cotton, which is having a rub-off effect on cheaper Indian cotton prices. However, apparel exports declined in December 2020, after recovering over September-November 2020 on a YoY basis due to the impact of a second wave of COVID-19 in the US and Europe.

As per the report, this would also impact the near-term order book position of ready-made garment exporters for the upcoming fashion season. Already in November 2020, knitted apparels volumes remained stagnant with realizations gaining by high single digit yoy basis; on the contrary, woven apparels volumes increased by 8.2 per cent and realisations fell substantially yoy basis. During 2020, India exports to the US fell by 20-25 per cent YoY in both volume and value terms, the report said.

As per COVID-19 Brand Tracker of Workers Rights Consortium, despite the EU and German Governments providing a €113 million or Tk 3000 (€29.31 euro) per month for eligible Bangladeshi workers for three months, only 3,266 workers benefitted from the ILO’s Call for Action scheme. Launched in April 2020, the Call for Action was a well-timed initiative for brands as this was at the height of the cancelled orders crisis, a time when brands were cancelling orders with garment manufacturers in countries such as Bangladesh, Pakistan and India.

The initiative urged employers, workers, retailers and major brands would form an international working group – convened by the ILO – to address the already serious damage to the garment industry caused by the COVID-19 pandemic.

Signatories to the initiative included the Sustainable Apparel Coalition, adidas, H&M and Inditex as well as unions including IndustriALL and ITUC. The initiative covers only eight countries, and in only four of those are garment workers currently slated to receive cash transfers under a global multi-donor ILO initiative, with funding from the German Federal Ministry of Economic Cooperation and Development (BMZ).

A Chinese court has granted Burberry preliminary injunction against Xinboli Trading (Shanghai), owner of the Chinese brand Baneberry, for trademark infringement. As per Business of Fashion, A fast growing brand in China, Baneberry has opened 40 new stores in the last 18 months besides increasing its e-commerce business.

The Suzhou Intermediate People’s Court found that, although Baneberry legally obtained trademarks for its name and logo in 2009 and 2011 respectively, Burberry’s name and logo were already well-known at that point, having been in use internationally for more than 100 years. Trial is still underway and no final ruling has been made. Although permanent injunctions are a relatively common outcome in China for cases where intellectual property infringement is proven in court, preliminary injunctions, such as this one, granted while the case remains ongoing, are rare.

Following the commencement of COVID-19, vaccination, Bangladeshi apparel exporters are receiving new orders from global buyers. As per Mohammad Hasan, Managing Director, Cotton Group, flow of work orders is better than before. Syed Mohammed Tanvir, Managing Director, Pacific Jeans adds, work flow is close to normal. However, Rubana Huq, President, BGMEA opines, there is no change in the work order trend. Current order volumes are 40 per cent lower than pre-Covid levels as people have limited demand at this point in time. She acknowledged order flow is better for outerwear and knitwear products.

In the first seven months of this fiscal, garment, which typically accounts for 84 per cent of the export receipts, raked in about $2.9 billion, down about 4.7 per cent from a year earlier. However, some of the exporters have already booked enough orders to run their factories at a sufficient capacity for the next few months.

Faruque Hassan, Managing Director, Giant Group says orders increased in all categories. A significant change has been noticed for small quantity orders, which are mostly focused on e-commerce sales. Buyers are not placing bulk orders as they are focusing on online-based sales, which has become more vibrant during the pandemic, said Md. Shahidullah Azim, Managing Director, Classic Fashion Concept. He advises exporters to change the manufacturing pattern as the future marketplace is online.

Finland now offers new groundbreaking solutions in sustainable materials and business models. The country’s solutions span every level of ecosystem, from waste handling, treatment, sales and usage, collection and recycling to identification and waste handling

Leading Finnish firms experts like Rester, NordShield, Emmy, Spinnova and Infinited Fiber Company offer innovations across the textile ecosystem. As per Marika Ollaranta, Head-Bio and Circular Finland Program, Business Finalnd, these innovations include evolutionary solutions that cover the whole life cycle of a textile. Governments, consumers and the industry are waking up to the challenges of a very single-use oriented industry, but more work is needed to build awareness and change mindsets and behavior to make the cycle more sustainable, he said. His company, Rester collaborates closely with Southwest Finland’s municipal waste management company LSJH in a project that brings together the private and public sectors in textile waste handling.

NordShield’s patented technology enables natural antimicrobial treatment of textiles while Spinnova and Infinited Fiber Company introduced innovative ways of making fiber out of wood pulp and discarded textiles. Emmy Clothing Company has created a transparent resale-as-a-service for clothes, which makes it possible for all actors in the ecosystem to participate in prolonging a textile’s life cycle. Responding to growing issues of textile waste, Finland also aims to introduce new textile recycling regulations by 2023.

International Finance Corporation (IFC) proposes to set up a $50 million long-term financing facility for Brandix Lanka to sustain operations and preserve jobs in the country. As per a Daily Mirror report, last year IFC had proposed a similar financing facility to Sri Lanka’s MAS Holdings for its workforce in Sri Lanka. However, the status of that proposed facility is currently pending.

IFC’s $50 million loan will help Brandix finance medium and long-term working capital requirements and the growth and maintenance of capital expenditure in Sri Lanka. The proceeds from the proposed investment will be used exclusively for the company’s Sri Lankan operations.

The proposed funds would allow operating subsidiaries of Brandix retain employment, generate export revenues and continue as going concerns. At the market level, the proposed project will help protect exports growth and promote resilience while limiting disruptions along the domestic and global supply chain.

Brandix is considered the largest apparel exporter in Sri Lanka and it also has operations in India, Bangladesh, Haiti and Cambodia. Overall, it employs a workforce of over 60,400 and around 35,000 staff is based out of Sri Lanka, consisting of 33,260 associates and staff and 1,740 executives.

An April 2020 report issued by The Apparel Coalition concludes, henceforth, transparency will be highly relevant for all industry stakeholders. The industry will leverage sustainability through technology to drive innovation across design, supply chain management, and new business models.

In Australia, the coalition adopted the Better Cotton Initiative, a mass balance system which tracks the trade of cotton produced under BCI determined practices and allows it to be used with conventional cottons, so long as they are used in equal proportions. This platform reaches over 10,000 supply chain participants, whilst supporting sustainable farming practices in developing countries.

The coalition is also using various methods to trace cotton back to the farm level. There are traceability technologies currently being used in Australia, Oritain and Fibre Trace which provide different methods for retailers to trace and verify the raw cotton that makes up the yarn and fabric they are sourcing. BCI is itself launching a project to explore a traceability system and the planning phase is underway.

In Australia, its MyBMP program covers 10 key areas farm operations and includes online self-assessment mechanisms and practical tools and auditing processes to ensure that Australian cotton is produced according to best practice. MyBMP underpins our BCI registration and is an excellent opportunity to promote our social license to operate; the reach can expand beyond proving to ourselves and our legislature that we are a responsible agricultural industry.

The spring editions of the three fairs – Intertextile Shanghai Apparel Fabrics, Intertextile Shanghai Home Textiles and Yarn Expo Spring – that were due to take place from March 10 – 12, 2021 will be postponed, with a new date to be announced shortly.

Intertextile Shanghai Apparel Fabrics is co-organised by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Textile Information Centre. The co-organisers of Yarn Expo are Messe Frankfurt (HK) Ltd and the Sub-Council of Textile Industry, CCPIT. Intertextile Shanghai Home Textiles is co-organised by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Home Textile Association (CHTA).

Messe Frankfurt’s China textile fairs form a part of the company’s Texpertise Network, which consists of some 50 fairs around the world.