Blog: Leonie BarrieWeather weighs on October sales

Leonie Barrie | 7 November 2011

Growth in US same-store sales appeared to cool in October as weather and economic malaise weighed on retailers, putting extra pressure on businesses as they transition into the crucial holiday season. Indeed, sitting between the back-to-school spending rush and the all-important shopping fest that lies ahead, it is probably not surprising the month's sales growth slowed to 3.9%, according to figures released last week.

Retailers have put the blame on several factors, including unseasonably warm weather curbing demand for winter apparel early in the month and a snowstorm in the north eastern US at the end of October keeping shoppers at home.

UK-based online fashion retailer Asos, meanwhile, plans to focus its energies on its international business - revealing that its overseas sales are worth more because they are exempt from VAT and are skewed towards higher-margin own label lines. The company has just booked a 66% hike in underlying pre-tax profit.

But Limited Brands, which operates the Victoria's Secret, Pink, Bath & Body Works, La Senza and Henri Bendel stores, has sold a controlling stake in its Mast Global Fashions apparel sourcing division to New York based private equity firm Sycamore Partners. There are plans to expand the unit, which will be spun off as a standalone company, leaving Limited Brands to focus on its intimate apparel, beauty and personal care lines.

On the footwear front, a World Trade Organization (WTO) dispute panel has largely backed a complaint by China that anti-dumping duties imposed by the European Union (EU) on certain leather footwear imports breached global rules. But while the panel said the anti-dumping duties were inconsistent with the EU's obligations under the WTO, it rejected most of China's claims of violation in connection with the original investigation and expiry review.

And Mexican shoe makers have been lifted by news that Tempe Grupo Inditex, the shoe-making franchise of the Spanish fashion giant, plans to triple its footwear production in the country. Meanwhile, other international brands such as Nike, Steve Madden and Puma are also mulling boosting their output in the Guanajuato region, which has become well-known for making high quality leather shoes.

Following a period of turmoil over the past year as apparel retailers, brands and manufacturers grappled with soaring cotton costs, this month's management briefing from just-style looks at the latest fluctuations in the market. Natural fibres and yarns still hold strong, there is talk of a rise in domestic yarn and fibre sourcing in the west, man-made fibres are waiting in the wings, and cotton supplies fuel the struggle between Indian producers and users.

But while China's domestic cashmere market appears to be booming according to figures released at the annual Cashmere World trade show in Beijing - rising costs cause concern. Cashmere experts have also attacked claims that their industry is unsustainable, and have greeted new China cashmere quality standards with scepticism.


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