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Levi Strauss’ Q2 results beat the company’s own expectations with a third straight quarter of double-digit sales growth across all regions. Levi Strauss has had a good run over the past three quarters, continuing to outpace industry peers even in a strong denim fashion cycle.
Levi’s growth was the strongest in Europe, with net revenue up 31 per cent and operating income up 51 per cent through the quarter ended May 28, about a month before the EU put a 25 per cent tariff on imported jeans.
Women’s apparel and tops were the strongest sales drivers in the quarter in Europe. Revenue grew 13 per cent in Asia compared with the year prior and 11 per cent in the Americas.
The company has a fairly complex supply chain so diversification is important. It sources from about 26 countries. No country supplies more than 20 per cent of its needs. Its direct-to-consumer business and retail partnerships are both growing. Direct to consumer, both store and online combined, logged its tenth straight quarter of double-digit sales growth. But the new 25 per cent tariffs on US jeans in the European Union and a trade war with China could spell trouble for Levi's and other iconic American brands.
Kenya's incapability to deliver orders has been responsible for the country’s inability to fully benefit from the apparel industry's duty-free access to the US market. Jas Bedi, Head, Kenya's Export Promotion Council, says it takes an average of 135 days to deliver goods to US buyers from the time an order is placed in Kenya.
Kenya’s total exports to the US under the Agoa peaked at Sh35.2 billion in 2015. The 75 days it takes for fabric from Asia to reach manufacturers in Kenya accounts for most of the delivery lag of finished products to the US. The varieties of fabrics needed to keep pace with the rapidly changing demand are not available to Kenyan factories in a timely manner.
Shortening supply chain would enable Kenyan manufacturers to reap greater gains through the US preferential trade program Agoa. As per US trade agency, 40,000 Kenyans currently hold Agoa-related jobs. Kenya ranks among the top supplier of apparel to the US, having exported $340 million worth goods to the US last year. Agoa is set to expire in 2025 and US officials have warned that duty-free exports from Africa are unlikely to continue after that date.
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Members of the US Congress are signaling they probably will not extend Agoa's envisioned 25-year lifespan.
Kenya is taking steps to expand exports and raise the country’s share of new investments. The country will particularly be focusing on trade windows such as the African Growth and Opportunity Act (AGOA) and the European Economic Partnership Agreement (EPA) which have not been fully exploited.
AGOA, for instance, grants quota and duty-free access to the US market of more than 6,000 product lines but has been dominated by exports of textile and apparel, which account for 65 per cent of total exports. The US is Kenya’s largest apparel export destination.
The aim is to increase manufacturing to 20 per cent of the GDP. Kenya’s textile sector seeks to grow exports to 20 per cent annually by 2022. Kenya is looking to expand the list of products it exports. With the country becoming more visible on the global map, local traders are increasingly opening more supply channels to the US, helped by increased interactions with American investors. Kenya’s volume of international trade in 2017 expanded by 15.4 per cent.
Textile and apparel products continue to dominate Kenyan exports under AGOA since it was enacted in 2000. AGOA exports constituted 60 per cent of all Kenyan goods shipped to the US in 2017.
Interfilière Paris was held July 7 to 9.
The event chose this year to highlight the latest eco-responsible innovations for the lingerie, swimwear, and activewear markets.
The innovation forum presented an overview of the environmental and social impact of fabrics and textile processes in order to guide the visitor through the latest innovations, following the major guiding principles of eco-design, reduce, reuse, recycle.
A range of sustainable exhibits included Billon’s jersey fabrics in environmentally friendly botanical polyamide, Brugnoli’s collection of functional knits made from 100 per cent bio-sourced polyamide, Aquafil’s Econyl, the polyamide made from fishing nets, Sofileta’s knits made using fibers recycled from post consumer waste, Maglificio Ripa’s knits that included Evo bio-sourced nylon fibers, a polymer made from castor oil.
A collection of knits including recycled 6.6 polyamide Q-Novafibres by Fulgar was also on display.
Consumers are asking more questions about the origin of fabrics and the chemical substances used, as well as the entire manufacturing process.
Many industrial stakeholders in the textile sector have already experienced this awakening and are now placing all their ingenuity at the service of protecting the planet and mankind by creating raw materials that meet the needs of the environmental and social challenges faced by this industry.
Alliance for Responsible Denim (ARD) is taking steps to make the denim industry more sustainable and better prepared for the future. ARD fosters collaboration and conversations between suppliers and brands with the goal of improving denim production’s ecological and sustainability impact. It is underscoring the importance of collaboration by highlighting how its members are advancing post-consumer recycled denim, minimizing their water, energy and chemical consumption, and designing for circularity.
ARD was founded in 2016 as an initiative from the Amsterdam University of Applied Sciences, Centre for Applied Research in Economics and Management, House of Denim, Circle Economy and Made-By.
By working with global platforms and showcasing a united front, ARD hopes to connect with the right policymakers and other global do-gooders to help scale its projects. Through highlighting the achievements of its members and giving insights into the inner workings of a multi-stakeholder collaboration, ARD hopes to align with other organizations who can aid in ARD’s mission.
Even veterans of the industry concede that sustainability is too big a challenge for any one company to tackle by itself, and that it will take a joint effort by the industry as a whole to focus on the biggest challenges. To be able to enact real change in this complex system, all stakeholders need to rally around the cause.
With just a year to go for UK’s departure from the European Union, the Freight Transport Association (FTA) is urging the UK government to up the pace on the negotiation of trading arrangements, or risk damaging integrated supply chains. Pauline Bastidon, Head of European Policy at FTA stated it is unrealistic to expect logistics companies and supply chain managers to wait until the eleventh hour to learn what their new operational arrangements will be and change everything at the last minute.
The FTA made its call ahead of this week’s publication of the government’s Brexit White Paper. A meeting of the government last week has seen high profile ministers quit their positions, including Foreign Secretary Boris Johnson and Brexit Secretary David Davis, because they disagree with the proposals.
Businesses urgently need a confirmed action plan for how a smooth and efficient Brexit is to be achieved, without the constant political posturing and power grabbing which has dominated the past few days, says James Hookham, Deputy Chief Executive of FTA.
The FTA has produced an eight point roadmap, designed to ensure that the UK’s departure from the EU does not compromise or curtail trade across the Channel.
Automation is revolutionizing routine manufacturing processes. It’s estimated 56 per cent of workers in key apparel sourcing countries, including Cambodia, Indonesia, Thailand, the Philippines and Vietnam, will lose their jobs to automation by 2040. Because of their reliance on low-skilled labor and the already apparent labor rights violations, these countries will be particularly at risk when the impact of automation starts to fully set in.
The impending job losses bots are set to bring are expected to produce a spike in slavery and labor abuses across global supply chains. Displaced workers without the skills to adapt or the cushion of social security will have to compete for a diminishing supply of low-paid, low-skilled work in what will likely be an increasingly exploitative environment.
While it may not be news that the advent of automation will mean the ouster of certain human manufacturing jobs, the underlying effect on ethical labor has largely gone undiscussed. Automation is revolutionizing routine manufacturing processes and lowering labor costs to the extent that companies in China and even the US may be able to undercut cheaper rivals.
The apparel, textile and footwear industry employs 39 per cent of all manufacturing workers in Vietnam, and the number climbs to a higher 59 per cent for Cambodia. In both countries, 85 per cent of jobs in the sector are at high risk of automation.
In 2017 Bangladesh’s exports of denim products to the US grew 9.55 per cent compared to 2016. Bangladesh also imports denim fabrics. The top sources of denim imports are: China, Pakistan, Hong Kong, India, Thailand and Turkey.
But Bangladesh produces mostly 100 per cent cotton denim fabrics and not the blended denim variety which has high demand globally. Denim enterprises in Bangladesh will do well if they give due consideration to manufacturing blended denim as well. The Bangladeshi denim sector needs to consider the increasing global market preference for blended denim. Slim fit and stretch jeans are the preferred casual wear for men and women in the West. Fashion trend is shifting towards more body contour, flexibility, ease of wear, breathability and lightness of fabric -- all properties of blended denim. Those currently planning for investment in production of denim fabrics will be better off to include blended denim in their product line.
For cotton denim, the largest exporter to Bangladesh is Pakistan, followed by China and India. For blended denim fabrics, the top exporter to Bangladesh is China. China holds about 70 per cent of the import market share in Bangladesh for blended denim.
The US decision to impose tariff on an additional $200 billion worth of imports from China is expected to hurt American consumers, workers and businesses resulting in inflationary costs throughout the supply chain, ultimately paid for by American consumers. The list includes numerous textile, accessory, and travel goods products such as handbags, hats, and textiles on this additional list of products that will directly impact the American apparel and footwear industry and its retail partners.
More than 84 per cent of US travel goods come from China. The United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China last year. The US has railed against China for intellectual property theft and barriers to entry for US businesses and a 375 billion dollars US trade deficit with China.
The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks. While the initial volley of tariffs is not expected to have a major immediate economic impact, the fear is that a prolonged battle would disrupt makers and importers of affected goods in a blow to global trade, investment and growth.
Rockport has agreed to a sale to private equity firm Charlesbank Capital Partners, following its bankruptcy. Rockport expects the sale, which will require approval by the court overseeing the shoe seller's Chapter 11 case, to close by July 31. Reebok and its parent Adidas former owners of Rockport that continued an operating relationship with the company after selling it in 2015 have objected to the sale, stating it cannot transfer key assets to Charlesbank while failing to account fully for $54 million owed to the shoe brands.
The German sportswear multinational brought Rockport under the Adidas umbrella in 2005 when it bought Reebok, the brand's parent company since 1986. Adidas, known for actively protecting its intellectual property rights, added in its court papers that it has not yet given consent to Rockport to use its intellectual property rights. The company clarified that it does not object to the sale of the company in itself and actually wants to work together with Rockport, but it does have issues with the current terms proposed to the court.
