Blog: VF turns a negative into a positive
Leonie Barrie | 1 November 2011
Apparel giant VF Corporation last week raised its full-year earnings and revenue guidance after a strong third quarter in which profits and sales both increased by more than 20%. The company recorded organic revenue growth of 16%, but gross margin declined thanks to higher product costs.
Even so, it managed to turn the potential negative of rising cotton prices, especially in its denim products, into a positive - claiming that the scenario is playing out "just as we had planned". Jeans prices in the US went up in the third quarter, leading to a drop in unit volumes, but leaving the business on track to hit its forecast mid to high single-digit decline in US jeans for the second half, and about 4% for the year as a whole.
Performance-apparel maker Under Armour, meanwhile, believes innovation has not only enabled it to charge a premium for its products, but has also helped the company to a 32% hike in third quarter profit. The US firm said apparel sales had risen 31% to $466m in the three months to 30 September, boosted by its new Charged Cotton and Fleece products.
For suppliers to Marks & Spencer, sustainability can pay off, not just ecologically but financially too. The retailer's first eco-factories were opened in Sri Lanka in 2008 in partnership with Brandix and MAS Holdings, and the most recent was Courtaulds, whose hosiery plant in Derbyshire became the first UK facility to attain the accolade. But what exactly does does it take to reach eco factory status with M&S? just-style takes a look.
Cambodian garment factories, however, continue to be hit by mass faintings, with more than 200 workers collapsing last week at a facility producing clothing for fashion retailer Hennes & Mauritz AB. The retailer says it has taken immediate action, and blames "mass sickness, rather than mass fainting." Neverthesss, a wider investigation is ongoing to look into the cause and try to avoid future occurrences.
And China must let the value of its currency rise, open its market to US apparel and footwear brands, tackle piracy and intellectual property theft, and lower barriers to retail distribution if firms are to compete on a level playing field, say representatives from the US retail, apparel, footwear and textile industries. Their concerns were aired at a hearing of the House of Representatives Ways and Means Committee last week on the US-China economic relationship, the opportunities presented by the Chinese market and the barriers faced there by US firms.
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