Blog: Leonie BarrieUnderlying issues take their toll

Leonie Barrie | 9 March 2015

Bangladesh's textile and clothing exporters, still reeling from the impact of continuing political unrest in the country, now say they are facing a second shock wave: the freefall of the euro. Industry lobbyists and analysts fear the decline in value of the European single currency will cut exporters’ profit margins, weakening their ability to compete in the 19 countries using the euro.

The recent move by the Myanmar Garment Manufacturers Association (MGMA) to establish a voluntary Code of Conduct for its members is seen as a sign of its commitment to responsible sourcing. But what more needs to be done for the Code to be implemented and become effective?

Sporting goods giant Adidas recorded a much-reduced fourth-quarter net profit, impacted by currency headwinds, a slump in Russia and a weak golf market. But it now has its sights set on North America.

And apparently positive fourth quarter figures disguise some worrying underlying issues for US retail giant Gap Inc. The main challenge seems to be the need for more “newness” in its product designs if it is to gain a greater share of consumer spend.

A torrid year for Abercrombie & Fitch reflects wider underlying trends in the teen retail segment in which slow store traffic, declining sales, store closures and changing strategies are a key feature. But what is really required to carve out a recovery?

US apparel retailers reported mixed comparable store sales in February, as significant headwinds including severe winter weather, additional costs and delays from the West Coast ports slowdown, foreign exchange rates and higher gas prices all weighed on results.

India’s garment makers, meanwhile, have expressed disappointment at the annual budget for its lack of measures to promote apparel production in the country. And buried in the fine detail, there’s another reason they and their workers might also be annoyed, suggests Mike Flanagan.

In other news, German fashion house Hugo Boss has come under attack from union activists over its treatment of factory workers in Turkey; Target Corp is to axe several thousand jobs over the next two years as it looks to save US$2bn in costs; Sri Lanka’s newly elected government is calling for a rise in worker salaries; and UK retailer Marks & Spencer is to close five stores in Shanghai as its Asia head steps down.

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