Blog: Leonie BarriePakistan pressures continue to flow

Leonie Barrie | 23 August 2010

The flooding disaster in Pakistan, and its impact on the global textile and clothing industry, has again dominated headlines on just-style over the past week as the implications for the sector continue to emerge.

For instance, firms around the world are bracing themselves for more disruption to cotton supplies and a possible rise in garment prices after the floods hit Pakistan's cotton industry, squeezing companies just as they head into the important summer buying season.

And sources report that garment exports from the country are likely to be down by nearly one-third as orders for the Christmas season shift to Bangladesh and Sri Lanka over fears that supply will be disrupted as a result of the floods.

In the wake of the disaster, Pakistan's textile and clothing industry is also stepping up calls for greater access for its products to the US and EU markets to help boost economic recovery and employment. Industry executives also claim the measures would help improve security in the country.

Once the epitome of health with its young, slick, urban fashion sense, American Apparel is also in trouble thanks to a succession of disastrous setbacks. Preliminary figures for the company’s delayed second quarter results, which were released last week, suggest a haemorrhaging of retail sales, leading to a loss of several million dollars and increased debt levels. The company has admitted it might go out of business within a year.

The new boss of Wal-Mart Stores' US unit has again reiterated the need for improvement in the retail giant's apparel business. Speaking after the world's largest retailer filed its second quarter results, Bill Simon president and CEO of Walmart US said: "We are focused on improvement in our apparel business and believe we will see better comps by the fourth quarter." Despite the challenges facing the retailer in the US, it still managed to file a 3.6% rise in second quarter earnings, with profit up to $3.60bn.

Meanwhile, specialty clothing retailer Gap Inc has reaffirmed its full-year earnings guidance after higher sales at the Old Navy and Banana Republic chains helped lift second quarter profit by 3%. But the company’s boss admits to being disappointed that sales at its namesake chain continue to run below par. One of the missed opportunities, he confessed, was "not enough tops in the business" after the retailer focused instead on its revamped 1969 denim range and a new and improved line of black trousers being launched for autumn.

And the UK's largest clothing retailer Marks & Spencer is planning to change its current monthly pay cycle for general merchandise suppliers, in a move that will see a longer delay in payments. Under new plans, M&S payment terms will move from 30 days to 60 days for its Freight On Board (FOB) suppliers from 1 September, while its Full Service vendors (FSV) will change from a four week payment cycle to a five week payment cycle from 1 December.


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