Blog: Leonie BarrieUncertainty still looms over industry

Leonie Barrie | 1 June 2010

Sir Stuart Rose last week presided over his last set of Marks & Spencer full-year results, declaring that the worst of the recession was over as underlying profit rose 4.6% to GBP632.5m (US$905.9m).

Sales in the year rose 3.2% to GBP9.3bn, with like-for-likes up 0.9%. There was particularly good news on the general merchandise front, which includes clothing, where revenues were up 4%, maintaining the company's position as the UK's leading clothing retailer by value and volume.

Nevertheless, caution remains. M&S is falling behind rivals like Next, Debenhams and John Lewis, and the UK recovery is fragile at best. And there is the retailer's change of leader to contend with too. Financial markets hate uncertainty more than anything else, and we now have a six-month period between the arrival of new chief executive Marc Bolland and his first thoughts on the future of the company at the November interims.

One part of the market that seems to be defying the recession, though, is that of organic cotton apparel and home textiles, where global retail sales soared by 35% last year to $4.3bn. C&A, Nike and Walmart were among top users of the fibre worldwide, with growth largely driven by consumer interest in 'green' products, and the expansion and launch of organic cotton programmes by brands and retailers.

Another report, meanwhile, points to a 4.2% rise in global fibre consumption in 2009 to 70.5m tonnes. But while this return to growth in 2009 may seem positive, if demand had continued at pre-recessionary levels, the industry could have been looking at a global fibre shortfall of between 15m and 19m tonnes.

And while an Indian ban on the export of raw cotton has been lifted, local executives say sales abroad are bound with so much red-tape that the resumption of trade could be very slow.

In the US, President Obama has signed into law a bill to extend duty-free benefits for some knit and woven apparel products imported into the US from Haiti in an effort to aid reconstruction in the earthquake-torn country. The Haiti Economic Lift Program (HELP) Act has been welcomed by trade groups.

US textile executives are also throwing their weight behind the first textile-specific customs enforcement bill which was introduced by lawmakers last week. The Textile Enforcement and Security Act of 2010 (TESA) contains more than a dozen measures to help US Customs and Border Protection crack down on customs textile fraud. 

And over in Japan, struggling apparel maker Renown Inc is selling a controlling stake in its business to Chinese textile firm Shandong Ruyi Science & Technology Group Co. The JPY4bn (US$44.2m) deal is significant because it is the first major investment by a Chinese firm in the Japanese apparel market, and the two companies now say they intend to work together to turn around Renown's troubled business.


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