The apparel and textile business blog from Petah Marian
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JC Penney begs customers to come back
03 May 2013 14:57
JC Penney has released a series of ad begging for consumers to give it a second chance, following the departure of former CEO Ron Johnson after his ambitious plan to transform the business failed.
"It's no secret, recently JC Penney changed. Some changes you liked and some you didn't, but what matters from mistakes is what we learn. We learned a very simple thing, to listen to you. To hear what you need, to make your life more beautiful. Come back to JC Penney, we heard you. Now, we'd love to see you," the ad implores.
One of the cornerstones of Johnson's plan was no-couponing, no discounting, "fair and square pricing", which saw the company move to an EDLP model, something that seemed to turn off consumers.
According to an article in Time Magazine, the retailer has now quietly started raising its everyday prices, mainly so that it can put them back on sale in the hope of wooing back customers.
Indeed, one bargain hunting website has begun tracking prices at JC Penney, and has found that the prices of certain items, particularly designer furniture, have risen by 60% or more at JC Penney almost overnight, the Time article said.
Now the question remains, if JC Penney gives its customers what they seem to want, will it be enough to get them back into stores?
New Billabong bid signals major step down for founder
10 Apr 2013 14:19
The news yesterday that Billabong has entered exclusive talks with a consortium led by former Americas boss Paul Naude after the bid was cut by 45% was lost in the frenzy around the the news that JC Penney's Ron Johnson has been dismissed from the ailing retailer.
The decision to enter an agreement is a significant step down for the Australian surfwear brand. When private equity first started sniffing around the brand, with TPG Capital, offering AUD3.30 a share early last year, founder Gordon Merchant was heard to declare that he wouldn't sell the business for AUD1bn.
The current bid or AUD0.60 per share values the entire company at AUD287m, significantly down on the AUD1.10 it and VF Corp put in when they began due diligence.
According to local press reports, at the company's peak in 2007, Merchant's stake in the company was worth close to AUD1bn, but is now worth about AUD40m.
The company has had a difficult year or so, issuing three profit warnings and receiving four bids, none of which progressed beyond due diligence.
Industry watchers have repeatedly expressed concerns as to why the bidders have walked away.
UBS analyst Ben Gilbert said early this year that the "lack of commentary as to why discussions ceased has not only fuelled concerns over the severity of the issues already known to investors, but also given rise to fears over issues not yet appreciated by the market".
Indeed, PVH faced a similar surprise when it completed the acquisition of Warnaco, leading it to downgrade its full-year earnings forecasts after discovering that the company would require more investment than initially expected.
Yet, this latest bid by company insider Naude means that the group has a strong understanding of the issues facing the brand there are unlikely to be any further surprises for its potential buyers. Here's hoping Billabong can reach a new deal before any more bad news gets out.
Target's Manatee label weighs on communication
08 Apr 2013 15:18
The importance of internal communication was highlighted last week when a Target consumer discovered a product naming discrepancy that some plus-sized shoppers found offensive.
Target customer Susan Clemens discovered the retailer's website labelled the same size of dress in the same colour differently depending on size. The name of the grey plus-sized version was "Manatee Grey", while the standard sizes were "Dark Heather Grey".
The manatee is an aquatic animal, often described as a "sea cow", and weighs 400-550 kilograms.
According to a report on Forbes.com, Target said there were two different teams of buyers responsible for the missy and plus-sized product lines, and the teams did not co-ordinate when they put the product information for the site.
One team used the colour's official name, Manatee Gray, which is used elsewhere on the site, while the other interpreted the colour's name.
Target, to its credit, responded quickly, apologised to Susan Clemens and, attempting to avoid any further offence changed the name of the colour on both standard and plus sizes to "grey".
@suzen We apologize for this unintentional oversight & never intend to offend our guests. We've heard you, and we're working to fix it ASAP.— Target (@Target) April 3, 2013
The only constant is change
04 Apr 2013 17:21
It's easy to forget how much the apparel industry has developed over the past 30 years. The apparel sector has evolved from being a slow moving local industry, with few suppliers based a short distance away, to the complex, fast-moving business it is today.
Rapid advances in technology, combined with rising affluence in many traditional sourcing countries have driven these changes, and mean that the pace of development is only going to get faster.
Speaking at an event looking at the 'Past Present and Future of Fashion Business', Morag Ashworth, consultant at Maitrise Consulting, described how the UK fashion industry progressed through the 70s and 80s and the shift from one with suppliers that were relatively close to home and easy to communicate with, to one with a base that was largely in the Far East.
Back then, the challenges were working with Telex machines, the slowness of drawing designs by hand and then posted to manufacturers.
From there, faxes "revolutionised" how companies worked together, said Ashworth, as it meant that companies no longer had to post images and designs to their suppliers.
In the 1990s and 2000s the rise of email changed things again, but led to the supply chain becoming increasingly complex. Multiple points of contact within brands led to confusion on the manufacturer's side about which version they are working from.
Now, PLM systems are working to ensure that everyone involved in a garment's design and development are singing from the same hymn sheet.
All of this has meant that most retailers will produce 10-12 collections per year, when previously they only had to manage two.
The industry is now poised for further revolution as smart phones and tablets provide new means of communicating information, and faster and more mobile internet connections improve its flow.
On the supply side, this will mean factories will be held more accountable, with companies able to ensure products are coming out of the correct factories, with geo-located images, and real-time feedback on audits.
But the key thing to remember is that with every new innovation comes a new challenge. Back in the old days, the problem was speed and a lack of information. These days, speed is still of the essence, but challenges of distance create their own problems.
Tomorrow, who knows? But the only thing of which we can be certain is that the only constant is change.
Bangladesh strikes cause apparel industry concerns
02 Apr 2013 14:38
Ongoing general strikes in Bangladesh are raising concerns among apparel manufacturers that foreign buyers will shift their orders to other countries as they face difficulties fulfilling orders on time.
General strikes have meant that many apparel exporters have failed to meet shipping deadlines, while others have had to resort to the more costly option of air freight, consequently pushing up the overall cost of production.
According to the Bangladesh Garment Manufacturers and Exporters Association, the overall cost of production in Bangladesh's apparel sector has increased by 20% to 25% due to political turmoil and the frequent general strikes.
The minimum wage for factory workers in Cambodia's garment and footwear sector is set to rise to US$75 a month from 1 May, rising from the current $61 a month.
Local unions in Cambodia who took part in the negotiations had called for a wage hike to between US$89 and US$150 a month.
The company is forecasting that its full-year earnings before interest on a non-GAAP basis will be approximately 20% lower than original expectations, driven by additional investments in developing the brands acquired through the Warnaco buy.
Investments are set to include enhancing the existing systems and supply chain infrastructure; upgrading the Calvin Klein jeanswear product design and quality with an emphasis on geographic differentiation, and investing in in-store marketing and the in-store customer experience.
It will also fill key design, marketing and merchandising positions, rationalise global excess inventory levels, and reduce and restructure the off-price and club sales distribution in Europe and North America.
The warning came as the group reported a jump in fourth-quarter net income, reaching US$80.7m from $35.5m in the same period a year earlier.
Meanwhile, H&M has been working to improve its sustainability credentials, with the release of its fifth annual sustainability report highlighting the brand's ongoing efforts.
The company said that it is currently working on closing the loop on textile fibres, combating climate change and water scarcity as well as ensuring that workers in supplier factories earn enough to live on.
Yet, the Clean Clothes Campaign (CCC) has taken the launch of H&M's sustainable clothing range Conscious as an opportunity to criticise its efforts with a spoof campaign called "Unconsciousness Collapses".
The spoof ad aims to highlight working conditions in Asian garment factories. The CCC said, that in Cambodia alone, more than 2,900 workers have collapsed since 2010, several hundred of them at H&M suppliers.
Lululemon caught out by fabric recall
25 Mar 2013 15:31
US activewear brand Lululemon suffered an embarrassing and costly error last week after it had to recall black trousers made with its Luon fabric after discovering they were sheerer than expected.
This is not the first product quality issue the brand has faced over the past year, leading some industry watchers to question the brand's quality control process. Lululemon said the move may cost it up to US$20m in sales during the second quarter.
Yet these issues have yet to hit the company's bottom line, with Lululemon reporting a 48.7% increase in net income on Thursday (21 March) to reach $109.4m.
Sourcing giant Li & Fung saw full year profits slump on the back of ongoing restructuring costs and weakness in its distribution business. Core operating profit tumbled 42% to US$511m, while net profit was down 9.4% to $617m. Revenue, however, was up 1% to $20.22bn.
H&M also posted a decline in profits, with net earnings falling 10.2% to SEK2.4bn (US$370m) over the first quarter. The world's second largest clothing retailer blamed the declines on weaker than expected sales due to poor weather in much of Europe and North America.
The company also announced plans to release its list of supplier factories as part of efforts to promote transparency across its business. The list covers 95% of its total production volume.
PVH has begun to consolidate its Warnaco operations following its acquisition of the company last month. It revealed that it will make between 900-1,000 staff redundant and close Warnaco's offices in Florence, Italy, as well as those in Duncansville and Huntingdon in Pennsylvania, with further redundancies in its New York City, Milford, Connecticut, Hong Kong and other Far East locations.
Meanwhile, French luxury group PPR has revealed plans to change its name to Kering as it works to position itself as a luxury and sportswear business. The company said the new name, pronounced as "caring" in English, expresses its culture of taking care of its brand, people, stakeholders and the environment.
Burma faces some serious challenges if it is to develop a first-class garment exporting industry, David Birnbaum wrote following a visit to the country. He said that not one of the factories visited would meet minimum standards of compliance, with the employment of underage children, excessive overtime and seven-day working weeks.
Flash fashion show launches UKFT awards
25 Jan 2013 10:17
A flash fashion show took place at St Pancras station on Tuesday night
Commuters at London's St Pancras station were surprised on Tuesday night as a flash fashion show took place to launch the NatWest UK Fashion and Textile Awards 2013.
The awards are set to take place on 23 May at One Mayfair. The awards mark a new partnership with NatWest and the ceremony, formerly known as the Export Awards, have been renamed the NatWest UK Fashion and Textile Awards 2013.
- UKFT Rise Newcomer Award
- Brand of the Year
- Designer Business of the Year
- Textile Business of the Year
- Accessories Business of the Year
- Exporter of the Year
- Supplier of the Year
- Let's Make it Here UK Manufacturer of the Year
- Retailer of the Year
- Outstanding achievement Award
The Awards are open to members and non-members of UKFT and can be entered at www.ukftawards.org. The deadline for entries is 8 March 2013.
H&M and M&S talk clothing recycling schemes
06 Dec 2012 15:43
Retailers offering clothing collection schemes has become a bit of a theme today with H&M launching a clothing recycling scheme and Marks and Spencer extending its Shwopping scheme into workplaces.
H&M said it the move is part of its efforts to find technical solutions to reuse and recyle textile fibres on a larger scale and that one of the goals of its Conscious Foundation - to support innovation on closing the loop on textiles and social projects along H&M's value chain.
Meanwhile, M&S, which garnered lots of attention for the launch of its Shwopping scheme earlier this year, plans to extend the scheme into people's offices, by placing Shwop Drops in their offices for a one day eco drive.
The retailer will deliver the Shwop Drops and provide marketing materials such as banners and notices. Oxfam, M&S' partner in the programme will collect the clothing and re-sell, re-use or recycle it.
And every employee who recycles will receive a money off voucher.
Adam Elman, head of Plan A delivery at Marks & Spencer, said: "We're passionate about giving used clothes a future. One man's old shirt is another's retro classic and we can even transform tatty clothing into new products, such as mattress or car seat fillings. There's no excuse for sending textiles to landfill and that's why we're doing everything we can to make it easy for people to recycle with Oxfam."
H&M and M&S aren't the only two retailers to take back consumers' old clothing, with Uniqlo launching a recycling programme in Japan during 2006 after starting a fleece recycling programme in Japan in September 2001.
American Apparel finds itself in hot water... Again.
05 Dec 2012 14:55
American Apparel has found itself in hot water on two fronts as the company reportedly faces a lawsuit which accuses CEO Dov Charney of being physically and verbally abusive and it was censured by the Advertising Standards Authority over its racy ads.
An ASA ruling found three images displaying hosiery on the retailer's website must not be displayed as it considered them inappropriate in a hosiery ad that could be viewed by children.
However, this is possibly the least of the worst of the racy retailer's woes. Michael Bumblis is reportedly suing the retailer, accusing Charney of being verbally and physically abusive to the point of rubbing dirt in his face.
Bumblis is alleging assault, battery, intentional infliction of emotional distress, violation of civil rights, discrimination and harassment based on sexual orientation and religious affiliation and wrongful termination.
According to ABCNews, Bumblis said one of Charney's earliest encounters with Bumblis was when Charney greeted him and an unnamed woman at a Las Vegas convention in February.
In April, Bumblis claims Charney called him and "launched into an expletive ridden diatribe," asking if he was "banging that girl you were with in Vegas" and berated him for having "negative same store sales."
Bumblis claims Charney said, "You should have been f***ing fired months ago," and called him slurs related to being Jewish and gay, though Bumblis says he is neither.
According to the report, during an argument about the store's new inventory system, Bumblis said Charney dove at him and grabbed his throat and began to forcibly squeeze his throat in an attempt to choke him.
During that same visit, Charney noticed dirt in a narrow space between a fitting room wall and the store wall and called to Bumblis and said: "Come here! Look how disgusting you are."
"Rub it on your face," the suit claims Charney said, he then "proceeded to scoop up the dirt and forcibly attempt to rub the dirt on plaintiff's face," the suit states.
The Los Angeles based firm is no stranger to controversy. Not only has Charney already faced several sexual harassment suits, but the retailer has also faced continued outcries over its racy advertising, and was forced to dismiss thousands of illegal workers.
The retailer has also been posting continued losses, lowering its full-year earnings outlook as it booked a US$19m net loss over the third quarter.
Bangladesh fire brings safety back into spotlight
03 Dec 2012 15:11
A fire in a Bangladeshi factory last week, which killed at least 111, has brought factory safety back into the spotlight. The fire, which raged through Tazreen Fashion in Ashulia, on the outskirts of Bangladesh's capital Dhaka, was producing garments for Wal-Mart, C&A, Li & Fung, and Piazza Italia.
The tragedy was not an isolated incident, with more than 350 perishing through ten other fires in Bangladesh since 2005, and another 300 losing their lives in factory fires in Pakistan in September this year.
The latest fire has prompted calls from trade unions and labour rights groups for immediate action from international brands who source from Bangladesh.
The fire was not the only example of human rights abuses last week, with a tribunal taking place in India to discuss poverty, pay, harassment and abuse in factories that make clothes for Western brands and retailers.
Around 250 garment workers from Bangalore, Gurgaon and Tirupur attended, as did international brands including H&M and Adidas, who were joined by government representatives.
Workers spoke out about sexual harassment, verbal abuse, low wages, and the endemic problems around overtime and the right to join a union.
Meanwhile, Zara owner Inditex joined an industry-wide initiative that will see it cut hazardous chemicals from its clothing by 2020. The decision follows a report by Greenpeace that accused the brand of selling clothing that contain the dangerous chemicals. The move will see the fast fashion operator become increasingly transparent by publishing chemical use and discharge information from many of the factories it uses.
The retail side is also facing challenges, meanwhile, with a strong performance over Thanksgiving and Black Friday week sales offering little match for the disruption caused by Hurricane Sandy.
Terry Lundgren, the chairman, president & CEO of Macy's - which recorded a 0.7% decline in same-store sales decline over the month - summed up the situation for many retailers: "Despite the largest-volume Thanksgiving weekend in our company's history, we were not able to overcome the weak start to the month, which included the disruption of Hurricane Sandy. Yet," he noted, "we remain on track to deliver a very strong sales performance in the fourth quarter, consistent with our guidance."
PVH, however, recorded a positive third quarter, as sales of its Calvin Klein and Tommy Hilfiger brands compensated for a decline in demand for its heritage brands. In a call with analysts, chairman & CEO Emanuel Chirico backed Warnaco's plans to turnaround the Calvin Klein jeans and underwear businesses, a company it is set to take over next year in a deal worth US$2.9bn.
"I think Warnaco has been very transparent about the challenges in [the jeans] business, particularly in Europe, and some of the difficulties that they have worked through in North America," he said. "And I think a number of the initiatives that they have put in place really will start to benefit next year, particularly in the second half of the year."
Finally, just-style published a research report last week that suggested emerging markets are set to drive growth of the performance outdoor apparel sector - a segment that is set to grow by US$3.5bn over the next six years. While North America, Europe and Asia are the current top three performance outdoor apparel markets, the rapid economic growth and expanding middle classes in China, South Korea and Hong Kong are set to help the market develop further.