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Falling sales lead to big global brands halting production

The likes of H&M, Zara and Mango have halted production. With sales plummeting and store closures are happening manufacturers are facing daily order cancellations. H&M has for now closed stores or will close in the US, Germany, two of its key markets, Canada, Portugal, Belgium, Switzerland, Greece, Slovakia, Lithuania, Peru, Ukraine, the Philippines, Malaysia and Cyprus. Inditex has temporarily closed 3,785 stores in 39 markets.

Since these apparel brand have halted production, vendors are at a loss for their next step—and others in the supply chain are at risk of losing their jobs as evaporating orders will see some factories hard pressed to pay their workers. If there’s any light at the end of the supply chain’s present tunnel, it will take a quick turnaround of events and a lockdown lift in the next couple of weeks that would see spending and production start to pick back up. Both situations, however, may be unlikely to unfold in short order. Beyond stalled production, the worry now is whether manufacturers will get paid. As a consequence of the substantial drop in global demand, they are now carefully scrutinizing and evaluating how to adjust and mitigate negative effects, both from a cost and risk perspective.

 
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