FW
For Q2 Guess’ revenues increased five per cent, operating margin expanded 120 basis points and operating profit grew 49 per cent compared to last year’s second quarter. There were positive results in Europe and Asia, where revenues saw double-digit increase, as a result of new store openings, wholesale growth and positive comp sales. Trends in operating margins for these two regions expanded this quarter compared to last year.
Net earnings rose 30.4 per cent. Adjusted diluted earnings per share grew 26.7 per cent compared to last year. But retail revenue in America dropped 11.2 per cent. E-commerce sales and retail comp sales fell 10 per cent. However, America’s wholesale revenue grew 6.6 per cent.
European revenue grew 20.1 per cent. Retail comp sales, including e-commerce, grew five per cent. Meanwhile, Asia revenues grew 17.5 per cent. Retail comp sales including e-commerce grew seven per cent.
Guess has achieved meaningful cost reductions, especially in its supply chain. It’s accelerating reduction of its footprint in the US, which currently makes up less than 36 per cent of its global sales. It has significantly increased adjusted guidance for fiscal 2018 and is now expecting to grow top-line, adjusted operating margin and adjusted earnings per share compared to last year.
Cambodia has urged garment factory owners to invest in the latest technology and machinery to increase efficiency and become more competitive as the country shifts to higher value-added manufacturing. Exports of Cambodia’s garment and footwear sector continued to increase at 7.2 per cent in 2016 from 2015.
Cambodia’s garment and footwear industry is undergoing a transformation from producing cheap, labor-intensive products to higher value-added products. The country gets 100 per cent preference from Australia, New Zealand, Norway and Switzerland and 99 per cent preference from the EU under the ‘Everything But Arms’ clause.
The country wants the US to review its Generalised System of Preference for Duty-Free and Quota Free granted to the kingdom, as a less developed country, for its exports to have better preferential access to the North American market. It has requested the United States to offer duty free preference to some of Cambodia’s main commodities, including luggage, leather goods and other products.
Improvement of working conditions for factory workers was one of the main criteria set by the US when it came to giving preferential trade treatment. And Cambodia says it has performed well in improving the conditions of garment workers and workers are now paid decent salaries, allowing many families to get out of poverty.
"Just like corporates in steel and automotive industries, apparel companies are increasingly waking up to sustainability and doing their bit to go green. In line with this, Pratibha Syntex, Indore, is going to be the first company to release its sustainability report. Last year, Arvind, had produced its first ever sustainability report for the year FY 2013-14. Madura Fashion & Lifestyle, a division of Aditya Birla Nuvo, also generated a sustainability report under its parent company Aditya Birla Fashion and Retail (ABFRL)."
Just like corporates in steel and automotive industries, apparel companies are increasingly waking up to sustainability and doing their bit to go green. In line with this, Pratibha Syntex, Indore, is going to be the first company to release its sustainability report. Last year, Arvind, had produced its first ever sustainability report for the year FY 2013-14. Madura Fashion & Lifestyle, a division of Aditya Birla Nuvo, also generated a sustainability report under its parent company Aditya Birla Fashion and Retail (ABFRL).
Green initiatives
Pratibha Syntex, winner of GLASA award, is India’s first textile factory to achieve the ‘bluesign system partner’ status. It has decided to convert all its materials to 100 per cent sustainable products regardless of whether buyers take interest in them or not. Some of its key efforts to achieve this goal cover both environmental as well as social aspects like using zero discharge facility when its 100 per cent processed water is recycled with 93 per cent efficiency and is reused in the operations of the plant. Rain water harvesting in one of its facility makes its water positive. Under solar powered facility, electricity generated from solar panels constitutes 30 per cent of power consumption by the company. It has replaced its entire lighting system with LED lights which leads to significant amount of energy savings. Sameer Bhand, VP-Strategy & Sustainability of the company states that Pratibha’s focus is not just on bringing change but inducing overall transformation.
On similar lines, Devadas PM, AVP, Business Excellence, IE & Sustainability, Madura Fashion & Lifestyle, says the company is working on seven sustainability missions with targets identified and fixed for each mission. Like energy, it reduced purchase of grid electricity by 25 per cent through demand/waste reduction and achieved 14 per cent reduction in consumption by implementing the LED lights across all the factories. Very soon, 60 per cent of Madura plants’ energy consumption will comprise of solar energy.
Exporters’ initiatives
While large corporates are leading the pack, exporters are also doing their bit. A Sakthivel, Chairman, Poppys Knitwear, Tirupur, says the company uses 100 per cent BCI cotton and organic cotton yarn for its garment orders as required by buyers. It is first factory in Tirupur to initiate the green factory project. The company has fitted solar street lights, sewage treatment plants, servo motors in sewing machines, which consume less energy. Even more than 30 per cent of the normal tube lights have been replaced by LED lights. One more such company making commendable efforts is Raj Group, Panipat. The company has converted 40 per cent load of electricity by solar rooftops, converted pet-coke boilers to LPG and is running printing rotary machines totally through LPG plant. With rain water harvesting in place, the company is developing three big parks nearby its factory and has planted 500 trees in these parks for ensuring fresher, cleaner air.
Investments needed
But these efforts need substantial investments to gain sustainable status. Poppys Knitwear plans to spend approximately 2 per cent of its total budget on sustainability. It also envisions replacing remaining normal tube lights with LED lights, incorporate windmill power projects and solar panel roofings. Making it a core agenda of the organisation, for Pratibha Syntex, sustainability is not a programme with certain budget; it is in the company’s DNA and therefore its entire operation is very much aligned with it. Madura Fashion & Lifestyle has spent Rs3 crore till date and further plans to invest in solar installation at 4 of their facilities, rain water harvesting systems in 5 facilities and reduction of waste in all their activities. Raj Group is putting 500 KLD plant for ZLD, using recycled cotton, BCI cotton and GRS cotton in our products.
High input costs are resulting in the closure of a large number of textile mills in Pakistan engaged in making yarn and fabrics. The spinning industry is incurring heavy losses by supplying yarn below cost. The textile industry has been hit hard due to the high cost of energy, resulting in making Pakistan’s exports uncompetitive in the global market.
The industry now wants measures to be taken on an immediate basis to improve the efficiency and viability of the textile industry. These include: expeditious payment of long outstanding sales tax refunds and other refunds to address liquidity issue and check the large scale influx of imported yarn and fabrics in the country to save the domestic industry.
Pakistan has been facing a drastic decline in exports during the last four years. The country will encourage investment in the spinning and weaving sectors in such a manner that the maximum cotton can be converted into yarn and downstream products as it will facilitate farmers and the spinning industry while helping the whole textile chain and national economy in general.
Pakistan is helping the entire chain of textile sector to adopt and upgrade to new technology. Funds have been allotted to carry out research activities and bring about a qualitative improvement in industry-academia linkages.
Vietnam’s pact with the Eurasian Economic Union (EAEU) which took effect in October 2016 has enabled the country to access a market of 183 million people with a GDP of nearly $2.2 trillion. The union include: Russia, Belarus, Kazakhstan, Armenia and Kyrgystan.
Currently about 900 Vietnamese exporters are active in the EAEU market, with key exports including seafood, coffee, rubber, tea, rice, apparel, woodwork products and confectionery. From 2017, there has been a strong increase in Vietnam’s import of Russian food, coal, steel, paper products and chemicals, while healthy growth has been recorded for Vietnamese shipments of mobile phone components, apparel and farm produce to Russia.
In fact, Vietnam-Russia trade makes up 90 per cent of total trade revenue between the country and the EAEU, while trade between Vietnam and Belarus and Armenia in 2016 even recorded a decrease from 2015. The reason: Vietnam has a long-time trade partnership with Russia and an inadequate understanding about other EAEU markets.
So Vietnam-EAEU trade has fallen short of potential, staying at just over $3 billion on an annual average. Vietnamese enterprises have to study these markets and boost their product quality to maximize trade before the EAEU signs free trade agreements with more nations.
US’ imports of men’s and boys’ outerwear increased 4.1 per cent in the first half of the year. An increase in men’s outerwear was responsible for most of the gain. China maintained its position as the largest exporter to the US for outerwear, increasing its share by 2.1 percentage points to 43.4 per cent of total outerwear imports in the first half of 2017. China is the largest source of both men’s and women’s outerwear in both the knit and woven fabrication segments.
Canada’s outerwear shipments to the US have skyrocketed this year, with dollar volumes up by 126 per cent and units ahead by 46 per cent. The average cost per garment of imported Canadian outerwear has increased by 54 per cent in the first half of 2017.
Indonesia, India and Bangladesh, also key suppliers to the US, gained import share in the period. Though the second largest source of outerwear in the first six months of 2017, at 18 per cent of the total, Vietnam lost 0.9 percentage points of share in the period, with the biggest decline in the women’s and girls’ categories. The first six months of the calendar year typically represent less than 30 per cent of annual outerwear imports.
The US Group has been Pakistan’s top denim and twill exporter for 20 years. With two brands - US Denim Mills for fabrics and US Apparel and Textiles for garments-the group has been building on its reputation for reliability.
Known for its selvedge and innovation strengths, the US Group is now focusing on technology usage to enhance great denim styles from the past with new comfort, performance, sustainability and fashion benefits. This year, the company’s inventions are targeting authentic styles that helped launch denim in the 1970s. A range of fundamental denim fashion, including rigid and office-smart as well as selvedge, are being re-imagined to create greater sustainability, refine vintage styles and advanced fibers and weaves.
The company is also revamping it processes for reductions in water usage, while moving to harm-free chemicals. US Group is boosting organic production of bottom-wear cotton to satisfy the fashion industry's increasing demand. More recycled denim is being produced - including super-soft jeans that re-use the fluff that flies during weaving. Further techniques are being perfected to allow more post-consumer up-cycling. And new fabrics are being invented to utilize discarded bottles, unwanted poultry down-feathers, and even collected spider silk.
The Woolam Gin in the US has been awarded the Global Organic Textile Standard certification. This makes it the first certified US organic cotton gin utilizing Applied DNA’s molecular tagging system, which provides a single platform to tag, test, and track the organic cotton fibers throughout a certified supply chain.
The GOTS standard provides a chain of custody assurance covering cotton processing, manufacturing, packaging, labeling, trading and distribution of home and apparel textiles made with organic fiber. The standard prohibits the use of toxic inputs during the processing stages and includes strong labor protections, including prohibitions on child labor. As of January 2017, more than 1.4 million workers in more than 4,600 facilities in over 60 countries were certified under GOTS.
Woolam Gin is a third-generation family operated cotton gin. In 1991, it became the first gin in the United States to gin organic cotton. It is committed to processing cotton of the highest standard.
Applied DNA offers molecular technologies that enable supply chain security, anti-counterfeiting and anti-theft technology, product genotyping and DNA mass production for diagnostics and therapeutics. It provides innovative, molecular-based technology solutions and services that can help protect products, brands, entire supply chains, and intellectual property of companies, governments and consumers from theft, counterfeiting, fraud and diversion.
India has requested Uzbekistan to consider reduction of import tariff imposed by Uzbekistan, especially on fabrics and made-ups. India’s commerce and industries minister Nirmala Sitharaman urged visiting Uzbek ministers to reduce duty on readymade garments and to simplify the procedure for registration and certification.
Uzbek minister of foreign trade Elyor Ganiev and minister of foreign affairs Abdulaziz Kamilov held detailed discussions with Sitharaman on deepening trade and economic ties between India and Uzbekistan. Sitharaman suggested setting up and activation of a private industry led Joint Business Council to develop and enhance business relations at all levels including investments, trade in goods and services.
Sitharaman also requested Ganiev to consider reduction of import tariff which are comparatively higher especially on fabrics and madeups (up to 30 per cent), MFN duty on readymade garment products which is 31.1 per cent and simplifying the procedure for registration and certification.
The Indian side also requested Uzbekistan to become a member of multilateral INSTC Agreement which would facilitate increased international transit cargo traffic through Iran. Both sides underlined the high importance of transport and logistics infrastructure for strengthening bilateral trade ties.
The International Apparel Federation (IAF) has secured a partnership agreement with World Textile Information Network (WTiN), delivering members major savings on subscriptions to WTiN’s comprehensive textile information portal.
The portal is organised into a series of insight channels, each focusing on a textile community such as knitting and weaving, effects or technical textiles. Additionally the portal delivers an expanding suite of deep market intelligence channels, currently comprising textile economics, digital textiles, medical textiles and performance textiles channels.
WTiN will offer a discount of 23 per cent on new subscriptions to IAF members and associate members. In addition, new subscribers introduced by the IAF will be entitled to one year’s free subscription to their choice of business-to-business magazines from WTiN’s portfolio.
WTiN is a leader publisher of business and technical insights for the global textile industry. The magazine portfolio includes Digital Textile, the world’s most important source of information for digital printers; Twist, for traders, processors and brands using natural fibers; and International Dyer a heritage of almost 140 years, and covers the full range of textile finishing applications.
IAF is the world’s leading federation for apparel manufacturers, brands, retailers, their associations, and the supporting industry. Associate members of IAF are prominent companies or institutes in technology, business services, retailing, logistics, culture and education.
