Blog: Leonie BarrieWal-Mart sees light at the end of the tunnel

Leonie Barrie | 25 February 2013

US retail giant Wal-Mart is finally starting to see the light at the end of the tunnel as far as its domestic apparel business is concerned - last week reporting the first full-year of positive comparable apparel sales for seven years.

The revelation that efforts to turn around its apparel business are finally starting to gain traction came as the world's largest retailer posted an 8.6% rise in fourth quarter profit to US$5.6bn, with revenue up 3.9% to $127.1bn.

A move away from image-led fashion items back towards basics and essentials like underwear, socks and T-shirts was attributed to the apparel gains, along with improved quality.

Gains were also seen at Wal-Mart's UK-based George at Asda clothing brand, which is ramping up its international expansion to give it a presence in 24 countries by the end of September. This will be driven mainly through online expansion.

The brand also said it remains committed to sourcing in Bangladesh - partly because it's the "right thing to do", but also because it has invested heavily in improving productivity in the country.

International growth is also topping the agenda at Iconix Brand Group, which has bought European denim brand Lee Cooper in a $72m deal. The acquisition of "another truly global brand" will help elevate the New York based firm's international business to around one-third of its total this year, the company said.

But struggling Australian surfwear firm Billabong International has swung to a first-half loss after writing off the value of its brands - and says that from next month it intends to slash the number of apparel suppliers that it uses to less than one-fifth of the current total. Billabong, which is currently a takeover target for two rival bidders, also lowered its full-year guidance for the second time since December, blaming difficult trading conditions in Europe and a poor performance at the Nixon watch and accessories brand.

Malaysia's textile and clothing industry, meanwhile, is planning to focus on three key areas - higher value fashion, dyeing and finishing, and technical textiles - to sustain growth and enable it continue to compete with lower-cost competition elsewhere in Asia.


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