Blog: The good, the bad and the ugly...
Leonie Barrie | 21 July 2008
A deal that its backers claim could recreate the retail landscape in North America was signed last week when the owner of US retailer Lord & Taylor bought Canadian department store chain Hudson's Bay Company. NRDC Equity Partners says it plans to invest US$500m into the combined company which generates more than $8bn in retail sales, and has 75,000 employees and 55m square feet of stores in the US and Canada.
As if to emphasise its new standing, former Polo Ralph Lauren executive Jeffrey Sherman has been hired as the new chief executive officer of Hudson's Bay, with plans to grow its operations in Canada.
Fashion and accessories brand Burberry Group Plc, meanwhile, has shrugged off fears of a slowdown in the luxury sector by posting a 26% jump in sales in the first three months of its financial year, helped by a 43% hike in wholesale revenue and strong growth in Europe and the Americas. Earlier deliveries of its autumn/winter ranges also boosted results, driven by supply chain improvements in sourcing, logistics and distribution.
Chief executive officer Angela Ahrendts said the results proved that despite an increasingly challenging external environment: "Our brand momentum is strong, driven by product innovation and a focused management team."
But things aren't looking so good for off-price footwear retailer Shoe Pavilion Inc, which has filed for Chapter 11 bankruptcy protection according to a notice posted with the US Securities and Exchange Commission last Tuesday. The Sherman Oaks, California based retailer operates 113 stores and had been expanding its business to include consignment merchandise such as apparel and jewellery. But in its last financial statement it said net losses had widened to $6.284m.
On the trade and sourcing front, China's Guangdong province, home to thousands of textile and garment factories, has revealed a plan for substantial annual wage increases for workers. The proposal, designed to tackle labour shortages and rising consumer prices, will require profitable companies to increase workers' wages by 14% a year until 2012. The new plans, however, would erode the province's competitiveness at a time when factory costs have already risen by up to 40%.
Industry associations representing US importers and retailers are also angry at new plans to monitor apparel imports from China to see if they are being sold at an unfairly low price. The instructions are outlined in the House Appropriations Committee report accompanying the Commerce, Justice, and Science Appropriations Bill at the end of June – and would add new uncertainties to sourcing from China after safeguard limits on imports from the country expire on 31 December this year.
But new legislation that proposes to eliminate tariffs on imports of outdoor performance apparel into the US, as well as funding research into sustainable manufacturing technology has been welcomed by outdoor performance apparel manufacturers in the US.
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